Section 6.12. Further Assurances. Whenever and so often as requested to do so by the Trustee, the Insurer or any Owner, the Corporation and the City shall promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Trustee, the Insurer and the Owners all advantages, benefits, interests, powers, privileges and rights conferred or intended to be conferred upon them hereby or by the Assignment Agreement, the Ground Lease or the Lease Agreement.
24 4160-4945-2900.4
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Action on Default. If a Lease Default Event shall occur and be continuing, such Lease Default Event shall constitute an Event of Default hereunder. In each and every case during the continuance of an Event of Default, the Trustee (a) may, with the prior written consent of the Insurer, at the direction of the Owners of not less than a majority of the aggregate principal evidenced by Certificates then Outstanding, and (b) shall, upon being indemnified to its reasonable satisfaction, so long as the Insurer is not in default in its payment obligations under the Insurance Policy, at the direction of the Insurer, upon notice in writing to the City and the Corporation, exercise any of the remedies granted to the Corporation under the Lease Agreement and, in addition, with the written consent or at the written direction of the Insurer, take whatever action at law or in equity may appear necessary or desirable to enforce its rights as assignee pursuant to the Assignment Agreement or to protect and enforce any of the rights vested in the Trustee or the Owners by this Trust Agreement or by the Certificates, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.02 hereof.
Section 7.02. Other Remedies of the Trustee. If an Event of Default shall have occurred and be continuing, the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the City or any member, director, officer or employee thereof, and to compel the City or any such member, director, officer or employee to perform or carry out such Person’s duties under law and the agreements and covenants required to be performed by such Person contained herein;
(b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Trustee or the Owners; or
(c) by suit, action or proceeding in any court of competent jurisdiction, to require the City to account as if it were the trustee of an express trust.
Section 7.03. Non-Waiver. So long as the Insurer is not in default in its payment obligations under the Insurance Policy, the Trustee shall not waive any default or breach of duty or contract hereunder without the prior written consent of the Insurer. A waiver of any default or breach of duty or contract by the Trustee shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Trustee by law or by this Article may be enforced and exercised from time to time and as often the Trustee shall deem expedient. 25 4160-4945-2900.4
If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee, the Insurer or any Owner, then subject to any adverse determination, the Trustee, the Insurer, such Owner, the Corporation and the City shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
Section 7.04. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Trustee is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by any law. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy.
Section 7.05. Application of Amounts After Event of Default. If an Event of Default shall occur and be continuing, all payments received by the Trustee with respect to the rental of the Property as a result thereof, including any proceeds received in connection with the sale, assignment or sublease of the Corporation’s right, title and interest in the Ground Lease, and all damages or other payments received by the Trustee for the enforcement of any rights and powers of the Trustee under Article VII of the Lease Agreement, shall be deposited into the Base Rental Payment Fund and as soon as practicable thereafter applied:
(a) to the payment of all amounts due the Trustee under Section 8.07 hereof; (b) to the payment of all amounts then due for interest evidenced by the Certificates, in respect of which, or for the benefit of which, money has been collected (other than Certificates that have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of interest evidenced by such Certificates due and payable;
(c) to the payment of all amounts then due for principal evidenced by the Certificates, in respect of which, or for the benefit of which, money has been collected (other than Certificates that have become payable prior to such Event of Default and money for the payment of which is held by the Trustee), ratably without preference or priority of any kind, according to the amounts of principal evidenced by such Certificates due and payable; and
(d) to the extent not included in clause (b) or clause (c) above, to the payment of all amounts then due hereunder to the Insurer.
Section 7.06. Trustee May Enforce Claims Without Possession of Certificates. All rights of action and claims under this Trust Agreement or the Certificates may be prosecuted and enforced by the Trustee without the possession of any of the Certificates or the production thereof in any proceeding relating thereto, and any such proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for the payment of the reasonable compensation, expenses, disbursements and advances 26 4160-4945-2900.4
of the Trustee, its agents and counsel, be for the ratable benefit of the Owners of the Certificates in respect of which such judgment has been recovered.
Section 7.07. Limitation on Suits. No Owner of any Certificate shall have any right to institute any proceeding, judicial or otherwise, with respect to this Trust Agreement, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Owner shall have previously given written notice to the Trustee of a continuing Event of Default, (b) so long as the Insurer is not in default in its payment obligations under the Insurance Policy, such Owner shall have obtained the Insurer’s consent to such institution or appointment, (c) the Owners of not less than 25% of the aggregate amount of principal evidenced by Certificates then Outstanding shall have made written request to the Trustee to institute proceedings in respect of such Event of Default in its own name as Trustee hereunder, (d) such Owner or Owners shall have afforded to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, (e) the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such proceedings, and (f) no direction inconsistent with such written request shall have been given to the Trustee during such 60 day period by the Owners of a majority of the aggregate amount of principal evidenced by Certificates then Outstanding; it being understood and intended that no one or more Owners of Certificates shall have any right in any manner whatever by virtue of, or by availing of, any provision of this Trust Agreement to affect, disturb or prejudice the rights of any other Owner of Certificates, or to obtain or seek to obtain priority or preference over any other Owner or to enforce any right under this Trust Agreement, except in the manner herein provided and for the equal and ratable benefit of all the Owners of Certificates. 27 4160-4945-2900.4
ARTICLE VIII
THE TRUSTEE
Section 8.01. Duties and Liabilities of Trustee. The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default that may have occurred, perform such duties and only such duties as are expressly and specifically set forth in this Trust Agreement.
The Trustee shall, during the existence of any Event of Default that has not been cured or waived, exercise such of the rights and powers vested in it by this Trust Agreement, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
Section 8.02. Qualifications; Removal and Resignation; Successors. (a) The Trustee initially a party hereto and any successor thereto shall at all times be a trust company, national banking association or bank having trust powers in good standing in or incorporated under the laws of the United States or any state thereof, that is (or if such trust company, national banking association or bank is a member of a bank holding company system, its parent bank holding company is) (i) a national banking association that is supervised by the Office of the Comptroller of the Currency and has at least $250 million of assets, (ii) a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets, or (iii) otherwise approved by the Insurer in writing. If such trust company, national banking association or bank publishes a report of condition at least annually, pursuant to law or to the requirements of any supervising or examining agency above referred to, then for the purpose of this subsection the combined capital and surplus of such trust company, national banking association or bank shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
(b) The City may, by an instrument in writing, upon at least 30 days’ notice to the Trustee, remove the Trustee initially a party hereto and any successor thereto unless an Event of Default shall have occurred and then be continuing, and shall remove the Trustee initially a party hereto and any successor thereto if at any time (i) requested to do so by the Insurer (as long as the Insurer is not in default in its payment obligations under the Insurance Policy) or by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority of the aggregate amount of principal evidenced by the Certificates at the time Outstanding (or their attorneys duly authorized in writing), or (ii) the Trustee shall cease to be eligible in accordance with subsection (a) of this Section, or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed, or any public officer shall take control or charge of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, in each case by giving written notice of such removal to the Trustee.
(c) The Trustee may at any time resign by giving written notice of such resignation by first class mail, postage prepaid, to the City, the Corporation and the Insurer, and to the Owners at the respective addresses shown on the Registration Books. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of subsection (a) of this Section, the Trustee shall resign immediately in the manner and with the effect specified in this Section. 28 4160-4945-2900.4
(d) Upon removal or resignation of the Trustee, the City shall promptly appoint a successor Trustee by an instrument in writing, which appointment shall be subject to the prior written approval of the Insurer. Any removal or resignation of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee; provided, however, that any successor Trustee shall be qualified as provided in subsection (a) of this Section. If no qualified successor Trustee shall have been appointed and have accepted appointment within 45 days following notice of removal or notice of resignation as aforesaid, the removed or resigning Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of competent jurisdiction for the appointment of a successor Trustee, and such court may thereupon, after such notice, if any, as it may deem proper, appoint such successor Trustee. Any successor Trustee appointed under this Trust Agreement shall signify its acceptance of such appointment by executing and delivering to the City, the Corporation and its predecessor Trustee a written acceptance thereof, and thereupon such successor Trustee, without any further act, deed or conveyance, shall become vested with all the moneys, estates, properties, rights, powers, trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named Trustee herein; but, nevertheless at the written request of the City, the Corporation or the successor Trustee, such predecessor Trustee shall execute and deliver any and all instruments of conveyance or further assurance and do such other things as may reasonably be required for more fully and certainly vesting in and confirming to such successor Trustee all the right, title and interest of such predecessor Trustee in and to any property held by it under this Trust Agreement and shall pay over, transfer, assign and deliver to the successor Trustee any money or other property subject to the trusts and conditions herein set forth. Upon acceptance of appointment by a successor Trustee as provided in this subsection, the successor Trustee shall, within 15 days after such acceptance, mail, by first class mail postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to the Owners at the addresses shown on the Registration Books. (e) Any trust company, national banking association or bank into which the Trustee may be merged or converted or with which it may be consolidated or any trust company, national banking association or bank resulting from any merger, conversion or consolidation to which it shall be a party or any trust company, national banking association or bank to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided such trust company, national banking association or bank shall be eligible under subsection (a) of this Section, shall be the successor to such Trustee, without the execution or filing of any paper or any further act, anything herein to the contrary notwithstanding.
Section 8.03. Liabilities of the Trustee. (a) The recitals of facts herein shall be taken as statements of the City, and the Trustee shall not assume responsibility for the correctness of the same. The Trustee shall, however, be responsible for its representations contained in the Certificates.
(b) The Trustee makes no representations as to the validity or sufficiency of this Trust Agreement, the Lease Agreement or the Ground Lease, or of the assignment made to it by the Assignment Agreement, or in respect of the security afforded by this Trust Agreement, and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to (i) the delivery of the Certificates for value, (ii) the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, 29 4160-4945-2900.4
or (iii) the application of any moneys paid to the City or others in accordance with this Trust Agreement, except as to the application of any moneys paid to it in its capacity as Trustee. (c) The Trustee shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. (d) No provision of this Trust Agreement or any other document related hereto shall require the Trustee to risk or advance its own funds.
(e) The Trustee may execute any of its powers or duties hereunder through attorneys, agents or receivers and shall not be answerable for the actions of such attorneys, agents or receivers if selected by it with reasonable care.
(f) The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts.
(g) The immunities and protections extended to the Trustee also extend to its directors, officers, employees and agents.
(h) Before taking action under Article VII, under this Article or upon the direction of the Owners, the Trustee may require indemnity satisfactory to the Trustee be furnished to it to protect it against all fees and expenses, including those of its attorneys and advisors, and protect it against all liability it may incur.
(i) The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate amount of principal evidenced by the Certificates at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Trust Agreement. (j) The Trustee may become the Owner of Certificates with the same rights it would have if it were not Trustee and, to the extent permitted by law, may act as depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners, whether or not such committee shall represent the Owners of a majority in aggregate amount of principal evidenced by the Certificates then Outstanding.
(k) The Trustee shall have no responsibility with respect to any information, statement, or recital in any official statement, offering memorandum or any other disclosure material prepared or distributed with respect to the Certificates.
(l) The Trustee shall not be liable for the failure to take any action required to be taken by it hereunder if and to the extent that the Trustee’s taking such action is prevented by reason of an act of God, terrorism, war, riot, strike, fire, flood, earthquake, epidemic or other, similar occurrence that is beyond the control of the Trustee and could not have been avoided by exercising due care.
30 4160-4945-2900.4
(m) The Trustee shall not be deemed to have knowledge of an Event of Default hereunder unless it has actual knowledge thereof.
(n) The permissive right of the Trustee to do things enumerated in this Trust Agreement shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct.
(o) The Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of any moneys that shall be released or withdrawn in accordance with the provisions hereof.
Section 8.04. Right to Rely on Documents and Opinions. (a) The Trustee shall be protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bonds or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties.
(b) Whenever in the administration of the duties imposed upon it by this Trust Agreement, the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter, unless other evidence in respect thereof be herein specifically prescribed, may be deemed to be conclusively proved and established by a Written Certificate of the City, and such Written Certificate of the City shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Trust Agreement in reliance upon such Written Certificate of the City, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
(c) The Trustee may consult with counsel, who may be counsel to the City or the Corporation, with regard to legal questions, and the opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
Section 8.05. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with prudent corporate trust industry standards, in which accurate entries shall be made of all transactions made by it relating to the proceeds of the Certificates, the Base Rental Payments received by it and all funds and accounts established by it pursuant to this Trust Agreement. Such books of record and account shall be available for inspection by the City, the Corporation and the Insurer during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the City a monthly accounting of the funds and accounts it holds under this Trust Agreement; provided, however, that the Trustee shall not be obligated to deliver an accounting for any fund or account that (a) has a balance of zero, and (b) has not had any activity since the last reporting date.
Section 8.06. Preservation and Inspection of Documents. All documents received by the Trustee under the provisions of this Trust Agreement shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the City, the Corporation, the Owners and their agents and representatives duly authorized in writing. 31 4160-4945-2900.4
Section 8.07. Compensation and Indemnification. The City shall pay to the Trustee from time to time all reasonable compensation pursuant to a pre-approved fee letter for all services rendered under this Trust Agreement, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter and other disbursements pursuant to a preapproved fee letter and those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Trust Agreement. The City shall, to the extent permitted by law, indemnify and save the Trustee harmless against any costs, claims, expenses, including fees and expenses of its counsel, and liabilities that it may incur in the exercise and performance of its powers and duties hereunder, including the enforcement of any remedies and the defense of any suit, and that are not due to its negligence or its willful misconduct. The duty of the City to indemnify the Trustee shall survive the resignation or removal of the Trustee and the termination and discharge of this Trust Agreement.
32 4160-4945-2900.4
ARTICLE IX
AMENDMENT OF OR SUPPLEMENT TO TRUST AGREEMENT
Section 9.01. Amendment or Supplement. (a) This Trust Agreement and the rights and obligations of the City, the Corporation, if any, the Owners and the Trustee hereunder may be amended or supplemented at any time by an amendment hereof or supplement hereto, which shall become binding when the prior written consents of the Insurer (so long as the Insurer is not in default in its payment obligations under the Insurance Policy) and the Owners of a majority of the aggregate amount of principal evidenced by the Certificates then Outstanding, exclusive of Certificates disqualified as provided in Section 9.02 hereof, are filed with the Trustee. No such amendment or supplement shall (i) extend the stated Principal Payment Date of any Certificate or reduce the rate of interest applicable to the interest evidenced thereby or extend the time of payment of such interest or reduce the amount of principal evidenced thereby or reduce the amount of any Mandatory Sinking Account Payment or change the prepayment terms and provisions or the provisions regarding delivery of notice of prepayment without the prior written consent of the Owner of each Certificate so affected and the Insurer (so long as the Insurer is not in default in its payment obligations under the Insurance Policy), (ii) permit any pledge of, or the creation of any lien on, security interest in or charge or other encumbrance upon the assets pledged under this Trust Agreement prior to or on a parity with the pledge contained in, and the lien and security interest created by, this Trust Agreement or deprive the Owners of the pledge contained in, and the lien and security interest created by, this Trust Agreement, except as expressly provided in this Trust Agreement, without the consent of the Owners of all of the Certificates then Outstanding and the Insurer (so long as the Insurer is not in default in its payment obligations under the Insurance Policy), (iii) modify any of the rights or obligations of the Trustee without the prior written consent of the Trustee, or (iv) amend this Section without the prior written consent of the Owners of all Certificates then Outstanding and the Insurer (so long as the Insurer is not in default in its payment obligations under the Insurance Policy). (b) This Trust Agreement and the rights and obligations of the City, the Corporation, if any, the Owners and the Trustee hereunder may also be amended or supplemented at any time by an amendment hereof or supplement hereto, which shall become binding upon execution, with the prior written consent of the Insurer (so long as the Insurer is not in default in its payment obligations under the Insurance Policy), but without the written consents of any Owners and only for any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants and terms required by the City to be observed or performed herein other agreements, conditions, covenants and terms thereafter to be observed or performed by the City, or to surrender any right or power reserved herein to or conferred herein on the City;
(ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder that the City may deem desirable or necessary and not inconsistent herewith;
33 4160-4945-2900.4
(iii) to make such additions, deletions or modifications as may be necessary or appropriate to assure the exclusion from gross income for federal income tax purposes of interest evidenced by the Certificates; or
(iv) for any other reason, provided such amendment or supplement does not adversely affect the rights or interests of the Owners.
The Trustee is not obligated to enter into any amendment or supplement that adversely affects the rights or obligations of the Trustee.
The Insurer shall be provided with a full original transcript of all proceedings relating to the amendment of or supplement to this Trust Agreement pursuant to this Section. (c) Promptly after the execution by the Corporation, the City and the Trustee of any amendment of or supplement to this Trust Agreement, the Trustee shall mail a notice, by first class mail postage prepaid, setting forth in general terms the substance of such amendment or supplement, to the Owners at the respective addresses shown on the Registration Books. Any failure to give such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such amendment or supplement.
Section 9.02. Disqualified Certificates. Certificates owned or held by or for the account of the City, but excluding Certificates held in any pension or retirement fund of the City, shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding Certificates provided in this Article, and shall not be entitled to consent to or take any other action provided in this Article, and the Trustee may adopt appropriate regulations to require each Owner, before its consent provided for herein shall be deemed effective, to reveal if the Certificates as to which such consent is given are disqualified as provided in this Section.
Section 9.03. Endorsement or Replacement of Certificates After Amendment or Supplement. After the effective date of any action taken as hereinabove provided in this Article, the Trustee may determine that the Certificates may bear a notation by endorsement in form approved by the Trustee as to such action, and in that case upon demand of the Owner of any Outstanding Certificate and presentation of such Certificate for such purpose at the Principal Office of the Trustee a suitable notation as to such action shall be made on such Certificate. If the Trustee shall receive an Opinion of Counsel advising that new Certificates modified to conform to such action are necessary, modified Certificates shall be prepared, and in that case upon demand of the Owner of any Outstanding Certificates such new Certificates shall be exchanged at the Principal Office of the Trustee without cost to each Owner for Certificates then Outstanding upon surrender of such Outstanding Certificates.
Section 9.04. Amendment by Mutual Consent. Subject to the receipt of the prior written consent of the Insurer as provided in Section 9.01 hereof, the provisions of this Article shall not prevent any Owner from accepting any amendment as to the particular Certificates owned by such Owner, provided that due notation thereof is made on such Certificates. 34 4160-4945-2900.4
ARTICLE X
DEFEASANCE
Section 10.01. Discharge of Trust Agreement. (a) If there shall be paid (i) to the Owners of all Outstanding Certificates the principal, interest and premium, if any, evidenced thereby at the times and in the manner stipulated herein and therein, and (ii) all other amounts due hereunder and under the Lease Agreement, then the Owners shall cease to be entitled to the pledge of the assets provided for herein, and all agreements, covenants and other obligations of the Corporation and the City hereunder shall thereupon cease, terminate and become void and this Trust Agreement shall be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Corporation and the City all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the City all money or securities held by it pursuant hereto that are not required for the payment of the principal, interest and premium, if any, evidenced by the Certificates.
(b) Subject to the provisions of subsection (a) of this Section, when any Certificate shall have been paid and if, at the time of such payment, each of the Corporation and the City shall have kept, performed and observed all of the covenants and promises in this Trust Agreement and the Lease Agreement required or contemplated to be kept, performed and observed by it or on its part on or prior to that time, then this Trust Agreement shall be considered to have been discharged in respect of such Certificate and such Certificate shall cease to be entitled to the pledge of the assets provided herein, and all agreements, covenants and other obligations of the Corporation and the City hereunder shall cease, terminate, become void and be completely discharged and satisfied as to such Certificate.
(c) Notwithstanding the discharge and satisfaction of this Trust Agreement or the discharge and satisfaction of this Trust Agreement in respect of any Certificate, those provisions of this Trust Agreement relating to the payment of the principal, interest and premium, if any, evidenced by Certificates, exchange and transfer of Certificates, replacement of mutilated, destroyed, lost or stolen Certificates, the safekeeping and cancellation of Certificates, and the duties of the Trustee in connection with all of the foregoing, shall remain in effect and shall be binding upon the Trustee and the Owners of such Certificate, and the Trustee shall continue to be obligated to hold in trust any moneys or investments then held by the Trustee for the payment of the principal, interest and premium, if any, evidenced by such Certificate, and to pay to the Owner of such Certificate the funds so held by the Trustee as and when such payment becomes due.
Section 10.02. Certificates Deemed To Have Been Paid. (a) If moneys shall have been set aside and held by the Trustee for the payment or prepayment of the principal evidenced by any Certificate and the payment of the interest evidenced thereby to the stated Principal Payment Date or prepayment date thereof, such Certificate shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Certificate shall prior to its stated Principal Payment Date or the prepayment date thereof be deemed to have been paid within the meaning of and with the effect expressed in Section 10.01 hereof if (i) in case any of such Certificates is to be prepaid on any date prior to its stated Principal Payment Date, the City shall have given to the Trustee in form satisfactory to it irrevocable instructions to mail, on a date in accordance with the provisions of Section 4.03 hereof, notice of prepayment of such Certificate on 35 4160-4945-2900.4
said prepayment date, said notice to be given in accordance with Section 4.03 hereof, (ii) there shall have been deposited with the Trustee either (A) money in an amount that shall be sufficient, or (B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestment thereof, will provide moneys that shall be sufficient to pay when due the interest evidenced by such Certificate to become due on and prior to its stated Principal Payment Date or the prepayment date thereof, as the case may be, and the principal and premium, if any, evidenced by such Certificate, and (iii) in the event such Certificate is not by its terms subject to prepayment within the next succeeding 60 days, the City shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable, a notice to the Owner of such Certificate that the deposit required by clause (ii) above has been made with the Trustee and that such Certificate is deemed to have been paid in accordance with this Section and stating stated Principal Payment Date or prepayment date upon which money is to be available for the payment of the principal and premium, if any, evidenced by such Certificate. (b) No Certificate shall be deemed to have been paid pursuant to clause (ii) of subsection (a) of this Section unless (i) all amounts currently due to the Insurer under the Insurance Policy shall have been paid in full, and (ii) the City shall have caused to be delivered to the City and the Trustee (A) an executed copy of a Verification Report with respect to such deemed payment, addressed to the City, the Insurer and the Trustee, in form and in substance acceptable to the City and the Insurer, (B) a copy of the escrow agreement entered into in connection with the deposit pursuant to clause (ii)(B) of subsection (a) of this Section resulting in such deemed payment, which escrow agreement shall provide that no substitution of Defeasance Securities shall be permitted except with other Defeasance Securities and upon delivery of a new Verification Report and no reinvestment of Defeasance Securities shall be permitted except as contemplated by the original Verification Report or upon delivery of a new Verification Report, in form and substance acceptable to the Insurer, and (C) a copy of an Opinion of Counsel, dated the date of such deemed payment and addressed to the City, the Insurer and the Trustee, in form and in substance acceptable to the City and the Insurer, to the effect that such Certificate has been paid within the meaning and with the effect expressed in this Trust Agreement, this Trust Agreement has been discharged in respect of such Certificate and all agreements, covenants and other obligations of the City and the Corporation hereunder as to such Certificate have ceased, terminated, become void and been completely discharged and satisfied. In the event a forward purchase agreement is to be employed in connection with the Defeasance Securities purchased to defease Certificates, such agreement shall be subject to the approval of the Insurer and shall be accompanied by such opinions of counsel as may be required by the Insurer. The Insurer shall be provided with final drafts of the above-referenced documentation not less than three Business Days prior to the funding of the escrow.
Section 10.03. Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the principal, premium or interest evidenced by any of the Certificates that remain unclaimed for the earlier of (a) two years after the date when such principal, premium or interest has become payable, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after the date when such principal, premium or interest become payable, or (b) two months prior to the applicable statutory escheat period shall, at the Written Request of the City be repaid by the Trustee to the City as its absolute property free from trust, and the Trustee shall thereupon be released and 36 4160-4945-2900.4
discharged with respect thereto and the Owners shall look only to the City for the payment of the interest and principal evidenced by such Certificates.
37 4160-4945-2900.4
ARTICLE XI
INSURANCE POLICY PROVISIONS
Section 11.01. Insurer To Be Deemed Owner; Rights of the Insurer; Payments by the Insurer; Notices. (a) The provisions of this Article shall apply notwithstanding any other provision of this Trust Agreement to the contrary so long as the Insurer is not in default in its payment obligations under the Insurance Policy.
(b) The Insurer shall at all times be deemed the sole and exclusive Owner of the Outstanding Certificates for the purposes of all approvals, consents, waivers, institution of any action, and the direction of all remedies, including approval of or consent to any amendment of or supplement to this Trust Agreement that requires the consent or approval of the Owners of a majority of the aggregate principal evidenced by the Certificates then Outstanding; provided, however, that the Insurer shall not be deemed to be the sole and exclusive Owner of the Outstanding Certificates with respect to any amendment of or supplement to this Trust Agreement that seeks to amend or supplement this Trust Agreement for the purposes set forth in clauses (i), (ii) or (iv) of subsection (a) of Section 9.01 hereof, and, provided, further, that the Insurer shall not be deemed the sole and exclusive Owner of the Outstanding Certificates with respect to any amendment of or supplement to this Trust Agreement, and shall not have the right to direct or consent to City, Corporation, Trustee or Owner action as provided herein, if:
(i) the Insurer shall be in payment default under the Insurance Policy and such failure shall continue for three Business Days;
(ii) any material provision of the Insurance Policy shall be held to be invalid by a final, non-appealable order of a court of competent jurisdiction, or the validity or enforceability thereof shall be contested in writing by the Insurer; or (iii) a proceeding shall have been instituted in a court having jurisdiction in the premises seeking an order for relief, rehabilitation, reorganization, conservation, liquidation or dissolution in respect of the Insurer under Article 16 of the Insurance Law of the State of New York or any successor provision thereto and such proceeding is not terminated for a period of 90 consecutive days or such court enters an order granting the relief sought in such proceeding.
(c) To the extent that the Insurer makes payment of any interest or principal evidenced by a Certificate, it shall become the Owner of such portion of such Certificate and the right to receive payment of such interest or principal and shall be fully subrogated to all of the Owner’s rights thereunder in accordance with the terms of the Insurance Policy to the extent of such payment, including the Owner’s rights to payment thereof, which subrogation rights shall include the rights of any such Owner in connection with any Insolvency Proceeding. To evidence such subrogation (i) in the case of subrogation as to claims for past due interest, the Trustee shall note the Insurer’s rights as subrogee on the Registration Books upon receipt of proof from the Insurer as to payment of such interest to the Owner of the Certificate evidencing such interest, and (ii) in the case of subrogation as to claims for past due principal, the Trustee shall note the Insurer’s rights 38 4160-4945-2900.4
as subrogee on the Registration Books upon surrender of the Certificate evidencing such principal by the Owner thereof to the Trustee.
(d) In the event that the interest or principal evidenced by a Certificate shall be paid by the Insurer pursuant to the terms of the Insurance Policy, (i) such Certificate shall continue to be Outstanding under this Trust Agreement, (ii) the pledge of the amounts on deposit in the funds and accounts established hereunder and all covenants, agreements and other obligations of the City hereunder and under the Lease Agreement shall continue to exist, (iii) the Insurer shall be fully subrogated to all of the rights of such Owner in accordance with the terms and conditions of subsection (c) of this Section and the Insurance Policy, and (iv) neither this Trust Agreement nor the Lease Agreement shall be discharged unless and until all amounts due to the Insurer have been paid in full.
(e) If an Event of Default shall have occurred and be continuing, the Insurer may, regardless of whether a claim has been made under the Insurance Policy, at any time and at its sole option, pay to the Owners all or any portion of the interest or principal evidenced by the Certificates then due, prior to the stated Principal Payment Dates thereof; provided, however, that such payment by the Insurer shall not accelerate the City’s obligation to make Rental Payments under the Lease Agreement. The Trustee shall accept such payments on behalf of the Owners and the Insurer’s obligations under the Insurance Policy shall be discharged to the extent of such payments. (f) The Insurer shall be notified (i) by the City at least 30 days, or such lesser time as agreed by the Insurer, in advance of the execution of any amendment of or supplement to this Trust Agreement and of any amendment of the Lease Agreement or the Ground Lease in the event consent of the Owners is not required for such amendment or supplement, (ii) by the Trustee within two Insurance Business Days of the Trustee’s having knowledge of the occurrence of any Event of Default, and (iii) by the Trustee of any prepayment of Certificates, which notice shall include the principal evidenced by, and the CUSIP numbers of, such Certificates to be prepaid, at the same time that the Owners of the Certificates to be prepaid are notified. In addition, all notices, reports, certificates and opinions (i) to be delivered to or by the Trustee or to the Owners or available at the request of the Owners pursuant to this Trust Agreement, or (ii) to be delivered by the City pursuant to the Lease Agreement or the Assignment Agreement shall also be delivered to the Insurer.
(g) The Trustee shall also notify the Insurer immediately upon the resignation or removal of the Trustee or the appointment of a successor Trustee. (h) No contract shall be entered into or any action taken by which the rights of the Insurer or security for or sources of payment of the Certificates may be impaired or prejudiced in any material respect except upon obtaining the prior written consent of the Insurer. (i) Subject to and conditioned upon payment of any interest or principal evidenced by the Certificates by or on behalf of the Insurer, each Owner, by its purchase of Certificates, hereby assigns to the Insurer, but only to the extent of all payments made by the Insurer, all rights to the payment of interest or principal evidenced by the Certificates, including, without limitation, any amounts due to the Owners in respect of securities law violations arising from the offer and sale of the Certificates that are then due for payment. The Insurer may exercise any option, vote, right, 39 4160-4945-2900.4
power or the like with respect to Certificates to the extent it has made a payment of principal evidenced by Certificates pursuant to the Insurance Policy. The foregoing assignment is in addition to, and not in limitation of, rights of subrogation otherwise available to the Insurer in respect of such payments. The Trustee shall take such action and deliver such instruments as may be reasonably requested or required by the Insurer to effectuate the purpose or provisions of this subsection.
(j) The Insurer shall have the right to advance any payment required to be made by the City in order to prevent an Event of Default under this Trust Agreement and the Trustee shall be required to accept such advance. The City shall, upon demand, reimburse the Insurer for any such advance.
(k) The rights granted under this Trust Agreement, the Lease Agreement or the Ground Lease to the Insurer to request, consent to or direct any action are rights granted to the Insurer in consideration of its issuance of the Insurance Policy. Any exercise by the Insurer of such rights is merely an exercise of the Insurer’s contractual rights and shall not be construed or deemed to be taken for the benefit of or on behalf of the Owners, nor does such action evidence any position of the Insurer, positive or negative, as to whether Owner consent is required in addition to consent of the Insurer.
(l) The City hereby agrees, to the extent permitted by law, to pay or reimburse the Insurer any and all charges, fees, costs and expenses that the Insurer may reasonably pay or incur in connection with (i) the administration, enforcement, defense or preservation of any rights or security in this Trust Agreement, the Lease Agreement, the Ground Lease or the Assignment Agreement, (ii) the pursuit of any remedies under this Trust Agreement, the Lease Agreement, the Ground Lease or the Assignment Agreement, or otherwise afforded by law or equity, (iii) any amendment, waiver or other action with respect to, or related to, this Trust Agreement, the Lease Agreement, the Ground Lease or the Assignment Agreement, whether or not executed or completed, or (iv) any litigation or other dispute in connection with this Trust Agreement, the Lease Agreement, the Ground Lease or the Assignment Agreement, or the transactions contemplated hereby or thereby, other than costs resulting from the failure of the Insurer to honor its obligations under the Insurance Policy. The Insurer reserves the right to charge a reasonable fee as a condition to executing any amendment, waiver or consent proposed in respect of this Trust Agreement, the Lease Agreement, the Ground Lease or the Assignment Agreement. The failure of the City to pay such costs and expenses on a timely basis shall result in the accrual of interest on the unpaid amount at the Insurer Rate, compounded semi-annually, from the date that payment is first due to the Insurer until the date the Insurer is paid in full. (m) The Insurer shall be entitled to pay principal or interest evidenced by the Certificates that shall become Due for Payment but shall be unpaid by reason of Nonpayment by the City (as such terms are defined in the Insurance Policy) thereof in accordance with this Trust Agreement, whether or not the Insurer has received a Notice (as defined in the Insurance Policy) of Nonpayment or a claim upon the Insurance Policy.
(n) The Trustee shall promptly notify the Insurer or either of the following as to which it has actual knowledge: (i) the commencement of any proceeding by or against the City or the Corporation commenced under the United States Bankruptcy Code or any successor statute or any 40 4160-4945-2900.4
other applicable bankruptcy, insolvency, receivership, rehabilitation or similar law (an “Insolvency Proceeding”), and (ii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer (a “Preference Claim” of any payment of interest or principal evidenced by the Certificates. Each Owner, by its purchase of Certificates, and the Trustee hereby agrees that the Insurer may at any time during the continuation of an Insolvency Proceeding direct all matters relating to such Insolvency Proceeding, including, without limitation, (i) all matters relating to any Insolvency Proceeding or Preference Claim, (ii) the direction of any appeal of any order relating to any Insolvency Proceeding or Preference Claim, (iii) the posting of any surety, supersedes or performance bond pending any such appeal, and (iv) to accept or reject any plan of adjustment. In addition, the Trustee, solely with respect to the Certificates, and each Owner delegate and assign to the Insurer, to the fullest extent permitted by law, the rights of the Trustee and each Owner in the conduct of any Insolvency Proceeding, including, without limitation, any rights of any party to an adversary proceeding or action with respect to any court order issued in connection with any such Insolvency Proceedings. (o) In determining whether any amendment, consent, waiver or other action to be taken, or any failure to take action, under this Trust Agreement would adversely affect the security for the Certificates or the rights of the Owners, the Trustee shall consider the effect of any such amendment, consent, waiver, action or inaction as if there were no Insurance Policy. (p) Any reorganization or liquidation plan with respect to the City must be acceptable to the Insurer. In the event of any such reorganization or liquidation, the Insurer shall have the right to vote on behalf of all Owners (so long as the Insurer is not in default in its payment obligations under the Insurance Policy).
(q) The City shall permit the Insurer to discuss the affairs, finances and accounts of the City or any information the Insurer may reasonably request regarding the security for the Certificates with appropriate officers of the City and shall use commercially reasonable efforts to enable the Insurer to have access to the facilities, books and records of the City on any Business Day upon reasonable prior notice.
(r) The obligations set forth in subsections (l) and (n) of this Section shall survive discharge or termination of this Trust Agreement and the Lease Agreement.
Section 11.02. Deposits to Policy Payments Account; Payments Under the Insurance Policy. (a) So long as the Insurance Policy shall be in full force and effect, the City and the Trustee hereby agree to comply with the provisions of this Section. (b) If, on the third Insurance Business Day prior to a Principal Payment Date, Mandatory Sinking Account Payment Date or Interest Payment Date there is not on deposit with the Trustee, after making all transfers and deposits required under the Trust Agreement, moneys sufficient to pay the interest or principal evidenced by the Certificates due on such Principal Payment Date, Mandatory Sinking Account Payment Date or Interest Payment Date, the Trustee shall give notice to the Insurer and to the Insurer’s Fiscal Agent (if any) by telephone or telecopy of the amount of such deficiency by 12:00 noon, New York City time, on such Insurance Business Day. If, on the second Insurance Business Day prior to such Principal Payment Date, Mandatory Sinking Account Payment Date or Interest Payment Date, there continues to be a deficiency in the 41 4160-4945-2900.4
amount available to pay the interest or principal evidenced by the Certificates due on such Principal Payment Date, Mandatory Sinking Account Payment Date or Interest Payment Date, the Trustee shall make a claim under the Insurance Policy and give notice to the Insurer and the Insurer’s Fiscal Agent (if any) by telephone of the amount of such deficiency, and the allocation of such deficiency between the amount required to pay the interest evidenced by the Certificates and the amount required to pay principal evidenced by the Certificates, confirmed in writing to the Insurer and the Insurer’s Fiscal Agent (if any) by 12:00 noon, New York City time, on such second Insurance Business Day by filling in the form of Notice of Claim and Certificate delivered with the Insurance Policy.
(c) The Trustee shall designate any portion of principal evidenced by Certificates paid by the Insurer, whether by virtue of Mandatory Sinking Account Payment, the stated Principal Payment Date or the Insurer’s election to pay said amounts prior to the stated Principal Payment Date pursuant to subsection (e) of Section 11.01 hereof, on its books as a reduction in the principal evidenced by Certificates registered to the then current Owners, whether DTC or its nominee or otherwise, and shall issue a replacement Certificate to the Insurer, registered in the name of [INSURER], evidencing principal in an amount equal to the principal so paid (without regard to Authorized Denominations); provided that the Trustee’s failure to so designate any payment or issue any replacement Certificate shall have no effect on the amount of principal or interest evidenced by any Certificate payable by the City or the subrogation rights of the Insurer. (d) The Trustee shall keep a complete and accurate record of all funds deposited by the Insurer into the Policy Payments Account (defined below) and the allocation of such funds to payment of the interest and principal evidenced by any Certificate. The Insurer shall have the right to inspect such records at reasonable times upon reasonable notice to the Trustee.
Upon payment of a claim under the Insurance Policy, the Trustee shall establish a separate special purpose trust account for the benefit of Owners known as the “Policy Payments Account” and over which the Trustee shall have exclusive control and sole right of withdrawal. The Trustee shall receive any amount paid under the Insurance Policy in trust on behalf of Owners and shall deposit any such amount in the Policy Payments Account and distribute such amount only for purposes of making the payments for which a claim was made. Such amounts shall be disbursed by the Trustee to Owners in the same manner as payments of interest and principal evidenced by the Certificates are to be made with respect to the Certificates under the provisions hereof. It shall not be necessary for such payments to be made by checks or wire transfers separate from the check or wire transfer used to make payments of interest and principal with other funds available to make such payments.
If, as a result of the City’s non-payment, when due, of all or a portion of a Base Rental Payment (other than a non-payment caused by an abatement of Rental Payments pursuant to Section 3.06 of the Lease Agreement), the Insurer has paid interest or principal evidenced by the Certificates pursuant to the Insurance Policy (i) the first of Base Rental Payments thereafter received from the City under the Lease Agreement, and (ii) the interest payable with respect to such delinquent Base Rental Payments, calculated at the Insurer Rate as provided in Section 3.04 of the Lease Agreement, shall be paid to the Insurer, as the Owner of the Certificates (or portions thereof) evidencing such delinquent Base Rental Payment in repayment of such payment by the Insurer until such payment is paid in full. If, as a result of the City’s non-payment of all or a portion 42 4160-4945-2900.4
of a Base Rental Payment (which non-payment is caused by an abatement of Rental Payments pursuant to Section 3.06 of the Lease Agreement), the Insurer has paid interest or principal evidenced by the Certificates pursuant to the Insurance Policy, the Insurer, as the Owner of the Certificates (or portions thereof) representing such abated Base Rental Payment, shall be entitled to receive, during the extension of the term of the Lease Agreement provided for in Section 2.02 of the Lease Agreement, any amounts paid in respect of such abated and unpaid Base Rental Payment pursuant to subsection (b) of Section 3.01 and Section 3.04 of the Lease Agreement. Any such payment by the City pursuant to this Section shall be applied first to the interest component of such delinquent Base Rental Payment due the Insurer and second to the principal components of such delinquent Base Rental Payment due the Insurer. (e) Funds held in the Policy Payments Account shall not be invested by the Trustee and may not be applied to satisfy any costs, expenses or liabilities of the Trustee. Any funds remaining in the Policy Payments Account following a Principal Payment Date, Mandatory Sinking Account Payment Date or Interest Payment Date shall promptly be remitted to the Insurer.
Section 11.03. Reporting Requirements. (a) The City shall provide to the Insurer (i) within 210 days after the end of each fiscal year of the City, a Written Certificate of the City certifying that the City is not aware of any Lease Default Event or of any default hereunder or under the Lease Agreement, (ii) within 210 days after the end of each fiscal year of the City, audited financial statements for such fiscal year, (iii) within 30 days after the approval thereof, each annual budget of the City, and (iv) from time to time, such other information, data or reports as the Insurer may reasonably request.
(b) The Trustee shall provide the Insurer with notice of any Event of Default or any default hereunder or under the Lease Agreement within five Business Days of obtaining knowledge thereof. The City shall provide the Insurer with notice of any Lease Default Event or default hereunder or under the Lease Agreement within five Business Days of obtaining knowledge thereof.
(c) The City shall provide the Insurer with prior notice of the advance refunding or prepayment of any of the Certificates, including the principal amount, maturities and CUSIP numbers thereof.
(d) The City shall provide the Insurer with notice of the resignation or removal of the Trustee or the Depository, and the appointment of, and acceptance of duties by, any successor thereto.
(e) Each of the City and the Trustee agrees that it will, if it has actual knowledge thereof, promptly notify the Insurer of (i) the commencement of any Insolvency Proceeding by or against the City, and (ii) the making of any claim in connection with any Insolvency Proceeding seeking the avoidance as a preferential transfer of any payment of principal or interest evidenced by the Certificate.
(f) The Trustee shall, at the time any report, notice or correspondence is delivered to Owners of the Certificates pursuant to the provisions hereof, deliver a copy of such report, notice or correspondence to the Insurer.
43 4160-4945-2900.4
(g) The City shall provide the Insurer with all information furnished pursuant to the Continuing Disclosure Certificate simultaneously with the furnishing of such information. (h) The Trustee shall notify the Insurer of any failure of the City to provide notices, certificates and other information under this Trust Agreement or the Lease Agreement. 44 4160-4945-2900.4
ARTICLE XII
MISCELLANEOUS
Section 12.01. Benefits of Trust Agreement. Nothing contained herein, expressed or implied, is intended to give to any person other than the Trustee, the Corporation, the City, the Insurer and the Owners any claim, remedy or right under or pursuant hereto, and any agreement, condition, covenant or term required herein to be observed or performed by or on behalf of the City or the Corporation shall be for the sole and exclusive benefit of the Trustee, the Corporation, the City, the Insurer and the Owners.
Section 12.02. Successor Deemed Included in all References to Predecessor.
Whenever the Trustee, the Corporation or the City, or any officer thereof, is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Trustee, the Corporation or the City, or such officer, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Trustee, the Corporation or the City, or any officer thereof, shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
Section 12.03. Execution of Documents by Owners. (a) Any declaration, request or other instrument that is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or such Owner’s attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer, or by such other proof as the Trustee may accept that it may deem sufficient. (b) The ownership of any Certificates and the amount, payment date, number and date of owning the same may be proved by the Registration Books. (c) Any declaration, request or other instrument in writing of the Owner of any Certificate shall bind all future Owners of such Certificate with respect to anything done or suffered to be done by the City or the Trustee in good faith and in accordance therewith.
Section 12.04. Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the City shall be individually or personally liable for the payment of any moneys, including without limitation, the interest or principal evidenced by the Certificates, but nothing contained herein shall relieve any member, officer or employee of the City from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby.
Section 12.05. Acquisition of Certificates by City. All Certificates acquired by the City, whether by purchase or gift or otherwise, shall be surrendered to the Trustee for cancellation. 45 4160-4945-2900.4
Section 12.06. Content of Certificates. (a) Every Written Certificate of the City and every Written Certificate of the Corporation with respect to compliance with any agreement, condition, covenant or term contained herein shall include (i) a statement that the person making or giving such certificate has read such agreement, condition, covenant or term and the definitions herein relating thereto, (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements contained in such certificate are based, (iii) a statement that, in the opinion of the signer, the signer has made or caused to be made such examination or investigation as is necessary to enable the signer to express an informed opinion as to whether or not such agreement, condition, covenant or term has been complied with, and (iv) a statement as to whether, in the opinion of the signer, such agreement, condition, covenant or term has been complied with.
(b) Any Written Certificate of the City and any Written Certificate of the Corporation may be based, insofar as it relates to legal matters, upon an Opinion of Counsel, unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which each person’s certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters, upon information that is in the possession of the City or the Corporation upon a representation by an officer or officers of the City or the Corporation, as the case may be, unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which such counsel’s opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous.
Section 12.07. Funds and Accounts. (a) Any fund or account required to be established and maintained herein by the Trustee may be established and maintained in the accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund, but all such records with respect to all such funds and accounts shall at all times be maintained in accordance with sound accounting practice and with due regard for the protection of the security of the Certificates and the rights of the Owners. (b) The Trustee may commingle any of the moneys held by it hereunder for investment purposes only; provided, however, that the Trustee shall account separately for the moneys in each fund or account established pursuant to this Trust Agreement.
Section 12.08. Third-Party Beneficiary. The Insurer is a third-party beneficiary of this Trust Agreement.
Section 12.09. Partial Invalidity. If any agreement, condition, covenant or term required herein to be observed or performed by or on the part of the Corporation, the City or the Trustee is, to any extent, held to be invalid or unenforceable in any jurisdiction, but the extent of such invalidity or unenforceability does not destroy the basis of the bargain among the parties as contained herein, the remainder of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Corporation, the City or the Trustee, or the application of such agreements, conditions, covenants or terms to Persons or circumstances other than those as to which such agreement, condition, covenant or term is held invalid or 46 4160-4945-2900.4
unenforceable, shall not be affected by such invalidity or unenforceability, and each remaining agreement, condition, covenant and term required herein to be observed or performed by or on the part of the Corporation, the City and the Trustee shall be valid and shall be enforced to the fullest extent permitted by law.
Section 12.10. Notices. All written notices, statements, demands, consents, approvals, authorizations, offers, designations, requests or other communications hereunder shall be given to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other parties in writing from time to time, namely:
If to the City: City of Redlands
P.O. Box 3005
Redlands, California 92373
Attention: Director of Management Services/Finance
Department
If to the Corporation: Redlands Public Improvement Corporation 300 East State Street, Suite 690
Redlands, California 92373
Attention: Chief Financial Officer
If to the Trustee: U.S. Bank Trust Company, National Association 633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
If to the Insurer: [INSURER]
[___________]
[___________], [______] [______]
Attention: [___________]
Re: Insurance Policy No. [___________]
Telephone: [___________]
Email: [___________]
In each case in which the notice or other communication refers to an Event of Default or claim on the Insurance Policy, such notice or other communication shall be marked “URGENT MATERIAL ENCLOSED” and a copy shall also be sent to the attention of the General Counsel at the above address and at [_________].
Each such notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication hereunder shall be deemed delivered to the party to whom it is addressed (a) if given by courier or delivery service or if personally served or delivered, upon delivery, (b) if given by registered or certified mail, return receipt requested, deposited with the United States mail postage prepaid, 72 hours after such notice is deposited with the United States mail, (c) if given by electronic mail, on the date sent, but only if confirmation of the receipt of such electronic mail is received or if notice is concurrently sent by another means specified herein, and (d) if given by any other means, upon delivery at the address specified in this Section. 47 4160-4945-2900.4
Section 12.11. Electronic Signatures. Each of the parties hereto agrees that the transaction consisting of this Trust Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Trust Agreement using an electronic signature, it is signing, adopting, and accepting this Trust Agreement and that signing this Trust Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Trust Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Trust Agreement in a usable format.
Section 12.12. Governing Law. This Trust Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of California.
Section 12.13. Execution in Counterparts. This Trust Agreement may be simultaneously executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument. 4160-4945-2900.4
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above.
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, AS
TRUSTEE
By:_________________________________
Authorized Officer
REDLANDS PUBLIC IMPROVEMENT
CORPORATION
By:_________________________________
[________],
[________]
CITY OF REDLANDS
By:_________________________________
[________],
[________]
[Signature Page to Trust Agreement]
A-1
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EXHIBIT A
MASTER DEFINITIONS
B-1
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EXHIBIT B
FORM OF CERTIFICATE
No. R- ***$***
CITY OF REDLANDS
CERTIFICATE OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
PAYMENT DATE INTEREST RATE DATED DATE CUSIP NO.
May 1, 20__ ______% _______, 2026 _______
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: DOLLARS
THIS IS TO CERTIFY that the Registered Owner of this Certificate of Participation (the “Certificate”), as identified above, is the owner of a direct, fractional undivided interest in certain base rental payments (“Base Rental Payments”) payable under and pursuant to the Lease Agreement, dated as of [________] 1, 2026 (the “Lease Agreement”), by and between the City of Redlands (the “City”), a municipal corporation and general law city organized and existing under the laws of the State of California, as lessee, and the Redlands Public Improvement Corporation (the “Corporation”), a nonprofit public benefit corporation organized and existing the laws of the State of California, as lessor. Substantially all of the rights of the Corporation under the Lease Agreement, including the right to receive the Base Rental Payments, have been sold, assigned and transferred, irrevocably and absolutely, without recourse, by the Corporation to U.S. Bank Trust Company, National Association, a national banking association duly organized and existing under the laws of the United States of America, as trustee (the “Trustee”), under the Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among the Trustee, the Corporation and the City. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Trust Agreement.
This Certificate is one of the duly authorized City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”), evidencing principal in the aggregate amount of $[PAR AMOUNT], executed pursuant to the terms of the Trust Agreement. The Certificates evidence direct, fractional undivided interests in Base Rental Payments payable under the Lease Agreement. The Certificates are being executed and delivered to finance a portion of the costs of the construction, installation and acquisition of certain capital improvements constituting a city police facility and related improvements and a city fire station and related improvements.
Reference is hereby made to the Trust Agreement and to any and all amendments thereof and supplements thereto for a description of the agreements, conditions, covenants and terms with respect to the Certificates, for the nature, extent and manner of enforcement of such agreements, conditions, covenants and terms, for the rights, duties and immunities of the Trustee, for the rights B-2
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and remedies of the registered owners of the Certificates with respect thereto and for the other agreements, conditions, covenants and terms upon which the Certificates are executed and delivered thereunder, to all of which provisions the Registered Owner by acceptance hereof, assents and agrees, and the provisions of the Trust Agreement are hereby incorporated into this Certificate as though fully set forth herein.
The Registered Owner of this Certificate is entitled to receive, subject to the terms of the Trust Agreement and any right of prepayment as provided herein or therein, on the Payment Date set forth above, upon surrender of this Certificate at the Principal Office of the Trustee, the Principal Amount specified above, evidencing the Registered Owner’s interest in the Base Rental Payments designated as principal components coming due on the Payment Date, and to receive on May 1 and November 1 of each year, commencing on November 1, 2026 (the “Interest Payment Dates”), interest accrued thereon at the Interest Rate specified above, computed on the basis of a 360-day year consisting of twelve 30-day months, until said Principal Amount is paid in full, evidencing the Registered Owner’s interest in the Base Rental Payments designated as interest components coming due on each of said dates.
This Certificate shall evidence interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full, unless such date of execution shall be after the fifteenth day of the month next preceding an Interest Payment Date, whether or not such day is a business day (each such date, a “Record Date”), and on or prior to the following Interest Payment Date, in which case this Certificate shall evidence interest from such Interest Payment Date, or unless such date of execution shall be on or prior to October 15, 2026, in which case this Certificate shall evidence interest from the Dated Date specified above. Notwithstanding the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Certificates shall be in default, this Certificate shall evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for.
Except as otherwise provided in the Letter of Representations, payments of interest evidenced by the Certificates shall be made to the Owners thereof (as determined at the close of business on the Record Date next preceding the related Interest Payment Date) by check or draft of the Trustee mailed to the address of each such Owner as it appears on the Registration Books, or to such other address as may be furnished in writing to the Trustee by each such Owner. Except as otherwise provided in the Letter of Representations, payment of principal and prepayment premium, if any, evidenced by the Certificates, on their stated Principal Payment Dates or on prepayment in whole or in part prior thereto, shall be made only upon presentation and surrender of the Certificates at the Principal Office of the Trustee. All such amounts are payable in lawful money of the United States of America.
The Certificates are authorized to be executed and delivered in the form of fully registered certificates in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”).
This Certificate may be transferred or exchanged by the Registered Owner hereof, in person or by such Registered Owner’s attorney duly authorized in writing, at the Principal Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Trust Agreement.
B-3
4160-4945-2900.4
The Certificates evidence and represent a fractional undivided interest in Base Rental Payments and enjoy the benefits of a security interest in the moneys held in the funds and accounts established pursuant to the Trust Agreement, subject to the provisions of the Trust Agreement permitting the disbursement thereof for or to the purposes and on the conditions and terms set forth therein.
The Certificates are subject to prepayment on the dates, at the prepayment prices and pursuant to the terms set forth in the Trust Agreement. Notice of prepayment of any Certificate or any portion thereof shall be given as provided in the Trust Agreement.
The Trust Agreement, and the rights and obligations of the Corporation, the City, the Trustee and the Owners may be amended or supplemented in the manner, to the extent, and upon the terms provided in the Trust Agreement.
The Trust Agreement contains provisions permitting the City to make provision for the payment of the principal, interest and premium, if any, evidenced by any of the Certificates so that such Certificates shall no longer be deemed to be Outstanding under the terms of the Trust Agreement.
Unless this Certificate is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Certificate issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of The Depository Trust Company and any payment is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an interest herein.
The Corporation and the City have certified that all acts, conditions and things required by the statutes of the State of California and by the Trust Agreement to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Certificate do exist, have happened and have been performed in regular and due time, form and manner as required by law, and that the Trustee is duly authorized to execute and deliver this Certificate.
B-4
4160-4945-2900.4
IN WITNESS WHEREOF, this Certificate has been executed by the manual signature of an authorized signatory of the Trustee as of the date set forth below.
Date: __________, 2026
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
AS TRUSTEE
By:
Authorized Officer
B-5
4160-4945-2900.4
STATEMENT OF INSURANCE
[To be updated.]
B-6
4160-4945-2900.4
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto __________________________________, whose address and social security or other tax identifying number is ____________________, the within-mentioned Certificate and hereby irrevocably constitute(s) and appoint(s) ______________________________, attorney, to transfer the same on the registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature guarantee shall be made by a guarantor
institution participating in the Securities Transfer
Agents Medallion Program or in such other guarantee
program acceptable to the Trustee.
Note: The signature(s) on this Assignment must correspond with the name(s) as written on the face of the within
Certificate in every particular without alteration or
enlargement or any change whatsoever.
C-1
4160-4945-2900.4
EXHIBIT C
FORM OF WRITTEN REQUEST FOR DISBURSEMENTS
FROM THE ACQUISITION FUND
WRITTEN REQUEST NO. _____
FOR DISBURSEMENTS FROM THE ACQUISITION FUND
The City of Redlands, a municipal corporation and general law city organized and existing under the laws of the State of California (the “City”), hereby states and certifies:
(a) that the undersigned is the duly [appointed/elected], qualified and acting __________ of the City, and, as such, is a duly designated “Authorized City Representative” as such term is defined in the Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Redlands Public Improvement Corporation (the “Corporation”) and the City, and is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that the Trustee is hereby requested to disburse from the Acquisition Fund, established pursuant to Section 3.04 of the Trust Agreement, to the payees set forth on Schedule 1 attached hereto and by this reference incorporated herein, the amount set forth on Schedule 1 opposite each such payee, for payment of such costs identified on said Schedule 1; (c) that each item of cost identified on Schedule 1 has been properly incurred and the amounts to be disbursed from the Acquisition Fund pursuant to this Written Request are for Acquisition Costs properly chargeable to the Acquisition Fund by the City or the Corporation, as the case may be, and no amounts to be disbursed pursuant to this Written Request have been the subject of a previous Written Request for disbursement from the Acquisition Fund; and (d) that an invoice for each item of cost identified on Schedule 1 is attached hereto.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Trust Agreement.
Dated: _____________
CITY OF REDLANDS
By:
Name:
Title:
C-2
4160-4945-2900.4
SCHEDULE 1
ACQUISITION FUND DISBURSEMENTS
Payee Name and Address Purpose of Obligation Amount
D- 4160-4945-2900.4
EXHIBIT D
FORM OF WRITTEN CERTIFICATE OF THE CITY
REGARDING COMPLETION OF PROJECT
WRITTEN CERTIFICATE OF THE CITY
REGARDING COMPLETION OF PROJECT
The City of Redlands, a municipal corporation and general law city organized and existing under the laws of the State of California (the “City”), hereby states and certifies:
(a) that the undersigned is the duly [appointed/elected], qualified and acting __________ of the City, and, as such, is a duly designated “Authorized City Representative” as such term is defined in the Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Redlands Public Improvement Corporation (the “Corporation”) and the City, and is familiar with the facts herein certified and is authorized and qualified to certify the same; (b) that, pursuant to Section 3.04(c) of the Trust Agreement, the City hereby submits this Written Certificate to the Trustee; and
[(c) that the Project has been completed and all costs of the Project have been paid; and] [(c) that the Project has been substantially completed and that all remaining costs of the Project to be paid from the Acquisition Fund have been determined and that each item of cost identified on Schedule I has been retained; and]
(d) that the Trustee is directed, (i) if the amount remaining in the Acquisition Fund (less any such retention) is equal to or greater than $50,000, transfer the portion of such amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Prepayment Fund, to be applied to the prepayment of Certificates pursuant to Section 4.01(b) of the Trust Agreement, and (ii) after making the transfer, if any, required to be made pursuant to the preceding clause (i), transfer all of the amount remaining in the Acquisition Fund (less any such retention) to the Base Rental Payment Fund, to be applied to the payment of interest evidenced by the Certificates.
Capitalized undefined terms used herein have the meanings ascribed thereto in the Trust Agreement.
Dated: _____________
CITY OF REDLANDS
By:
Name:
Title:
D-2
4160-4945-2900.4
SCHEDULE 1
WRITTEN CERTIFICATE OF THE CITY REGARDING
COMPLETION OF PROJECT
Remaining Component of Project Retention Amount
Error! Unknown document property name.
$[_________]
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
PURCHASE AGREEMENT
[________], 2026
City of Redlands
35 Cajon Street, Suite 15B
Redlands, California 92374
Attention: Director of Management Services/Finance Department Redlands Public Improvement Corporation
35 Cajon Street, Suite 15B
Redlands, California 92373
Attention: Chief Financial Officer
Ladies and Gentlemen:
The undersigned, BofA Securities, Inc., as representative (the “Representative”), on behalf of itself and Stifel, Nicolaus & Company, Incorporated (collectively, the “Underwriters”), hereby offers to enter into this Purchase Agreement (the “Purchase Agreement”) with the Redlands Public Improvement Corporation (the “Corporation”) and the City of Redlands (the “City”) for the purchase by the Underwriters of $[______] aggregate principal amount of the City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”). Upon acceptance of this offer by the City and the Corporation, this Purchase Agreement will be binding upon the City, the Corporation and the Underwriters. The offer made hereby is subject to acceptance by the City and the Corporation (by delivery to the Representative of executed counterparts hereof by the City and the Corporation) at or before 11:59 p.m., California time, on the date hereof or at such later time and date as shall have been consented to by the Representative.
The City and the Corporation acknowledge and agree that: (i) the Underwriters are not acting as municipal advisors within the meaning of Section 15B of the Securities Exchange Act, as amended, (ii) the primary role of the Underwriters, as underwriters, is to purchase securities, for resale to investors, in an arm’s length commercial transaction between the City, the Corporation and the Underwriters and the Underwriters have financial and other interests that differ from those of the City and the Corporation; (iii) the Underwriters are acting solely as principals and are not acting as municipal advisors, financial advisors or fiduciaries to the City or the Corporation and have not assumed any advisory or fiduciary responsibility to the City or the Corporation with respect to the transaction contemplated hereby and the discussions, undertakings and procedures leading thereto (irrespective of whether the Underwriters have provided other services or are currently providing other services to the City or the Corporation on other matters); (iv) the only obligations the Underwriters have to the City and the Corporation with respect to the transaction 2 contemplated hereby expressly are set forth in this Purchase Agreement; and (v) the City and the Corporation have consulted their own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent they have deemed appropriate. The City also acknowledges that it previously received from the Underwriters letters regarding the Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 Disclosures, and that it has provided to the Underwriters an acknowledgement of such letters.
The Certificates are being executed and delivered pursuant to a Trust Agreement, dated as of [______] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Corporation and the City. Capitalized but undefined terms used herein shall have the meanings ascribed thereto in the Preliminary Official Statement (defined below).
The City and the Corporation will enter into a Ground Lease, dated as of [______] 1, 2026 (the “Ground Lease”), pursuant to which the City will lease to the Corporation certain real property located in the City and described in the Preliminary Official Statement and the Official Statement (defined below) (the “Leased Premises”).
The Certificates evidence and represent the direct, fractional undivided interests of the registered owners thereof in certain base rental payments (the “Lease Payments”) to be made by the City for the use of the Leased Premises to be leased from the Corporation pursuant to the Lease Agreement, dated as of [______] 1, 2026 (the “Lease Agreement”). Pursuant to the Assignment Agreement, dated as of [______] 1, 2026 (the “Assignment Agreement”), by and between the Corporation and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Corporation will assign to the Trustee, for the benefit of the owners, certain of its rights under the Lease Agreement, including all of its rights to receive the Lease Payments from the City under the Lease Agreement, and its right to exercise remedies under the Lease Agreement as may be necessary to enforce payment of the Lease Payments.
Section 1. Purchase and Purchase Price; Terms of Certificates. (a) Upon the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the City and the Corporation agree to cause the Trustee to execute and deliver to the Underwriters, and the Underwriters agree to purchase, all (but not less than all) of the Certificates at an aggregate purchase price of $[________] (representing the aggregate principal amount evidenced by the Certificates of $[________], [plus/less] [net] original issue [premium/discount] of $[__________], less an Underwriters’ discount of $[__________]).
(b) The Certificates shall be dated the date of their delivery. The Certificates shall have the principal payment dates, evidence interest at the rates per annum, and be subject to prepayment as provided in the Official Statement and as set forth in Exhibit C hereto. (c) The Certificates shall be substantially in the form described in, shall be executed and delivered under and pursuant to, and shall be payable and subject to prepayment as provided in, the Trust Agreement, substantially in the form previously submitted to the Underwriters, with only such changes therein as shall be mutually agreed upon by the Representative, the City and the Corporation.
3 (d) The proceeds of the Certificates will be used to (i) finance a portion of the costs of the construction, installation and acquisition of certain capital improvements constituting a city police facility and related improvements, a city fire station and related improvements, and capital equipment improvements at the City’s A. K. Smiley Public Library, (ii) fund capitalized interest evidenced by the Certificates, and (iii) pay the costs incurred in connection with the execution and delivery of the Certificates.
(e) The City and the Corporation hereby ratify, confirm and approve the use by the Underwriters, prior to the date hereof, of the Preliminary Official Statement, dated [______], 2026, relating to the Certificates (the “Preliminary Official Statement”), which Preliminary Official Statement the City deemed final and so certified 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 information permitted to be omitted therefrom by Rule 15c2-12. The City hereby agrees to deliver or cause to be delivered to the Underwriters, within seven business days after the date hereof and in any event not later than two business days prior to the Closing (defined herein), copies of the final Official Statement substantially in the form of the Preliminary Official Statement and with only such additions thereto, deletions therefrom and changes therein as the Representative shall approve (the “Official Statement”), (i) in “designated electronic format” (as defined in Rule G-32 of the Municipal Securities Rulemaking Board), and (ii) in printed form in such reasonable quantity as the Underwriters shall request. The City and the Corporation hereby approve of the use and distribution by the Underwriters of the Preliminary Official Statement and the Official Statement in connection with the offer and sale of the Certificates. The City will undertake, pursuant to the Trust Agreement and the Continuing Disclosure Certificate (defined herein), to provide certain annual financial information and notices of the occurrence of certain enumerated events. A description of such undertaking is set forth in the Official Statement. (f) The City and the Corporation hereby further authorize the Underwriters to use, in connection with the offer and sale of the Certificates, the Trust Agreement, the Lease Agreement, the Ground Lease, the Assignment Agreement and the Continuing Disclosure Certificate of the City, dated [______], 2026 (the “Continuing Disclosure Certificate” and, together with the Lease Agreement, the Ground Lease, the Assignment Agreement, the Trust Agreement, and the Certificates, the “Certificate Documents”), executed by the City.
Section 2. Public Offering of the Certificates. The Underwriters agree to make a bona fide initial public offering of all the Certificates at prices no higher than, or yields not lower than, those set forth on Exhibit C hereto. Subsequent to such initial public offering but subject to the provisions set forth in Section 3 below, the Underwriters reserve the right to lower such initial offering prices as the Underwriters deem necessary in connection with the marketing of the Certificates; provided, however, that the Underwriters shall not change the interest rates set forth in Exhibit C. Subject to the provisions set forth in Section 3 below, the Underwriters may offer and sell the Certificates to certain dealers (including dealers depositing the Certificates into investment trusts) and others at prices lower than the initial public offering price or prices set forth on Exhibit C hereto.
Section 3. Establishment of Issue Price. (a) The Representative, on behalf of the Underwriters, agrees to assist the City and the Corporation in establishing the issue price of the Certificates and shall execute and deliver to the City and the Corporation at Closing an “issue 4 price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit D, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Representative, the City and Special Counsel (as defined herein), to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Certificates. All actions to be taken by the City and the Corporation under this section to establish the issue price of the Certificates may be taken on behalf of the City by the City’s municipal advisor, KNN Public Finance, LLC (the “Municipal Advisor”), and any notice or report to be provided to the City may be provided to the City’s Municipal Advisor.
(b) Except for the maturities set forth in Schedule A to Exhibit D attached hereto, the City represents that it will treat the first price at which 10% of each maturity of the Certificates (the “10% Test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% Test). If, as of the date hereof, the 10% Test has not been satisfied as to any maturity of the Certificates for which the City has elected to utilize the 10% Test, the Representative agrees to promptly report to the City the prices at which Certificates of that maturity or maturities have been sold by the Underwriters to the public. That reporting obligation shall continue until the earlier of the date upon which the 10% Test has been satisfied as to the Certificates of that maturity or maturities or the Closing. For purposes of this Section, if Certificates 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 Certificates.
(c) The Representative confirms that the Underwriters have offered the Certificates 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 Schedule A to Exhibit D attached hereto, except as otherwise set forth therein. Schedule A to Exhibit D also sets forth, as of the date of this Purchase Agreement, the maturities, if any, of the Certificates for which the 10% Test has not been satisfied and for which the City, the Corporation and the Representative agree that the restrictions set forth in the next sentence shall apply (the “hold-the-offering-price rule”). So long as the hold-the-offering-price rule remains applicable to any maturity of the Certificates, the Underwriters will neither offer nor sell unsold Certificates of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following:
(1) the close of the fifth (5th) business day after the sale date; or (2) the date on which the underwriters have sold at least 10% of that maturity of the Certificates to the public at a price that is no higher than the initial offering price to the public.
(d) The Representative confirms that:
(1) any agreement among underwriters, any selling group agreement and each third-party distribution agreement (to which the Representative is a party) relating to the initial sale of the Certificates to the public, together with the related pricing wires, contains or will contain language obligating each underwriter, each dealer who is a member of the 5 selling group and each broker-dealer that is a party to such third-party distribution agreement, as applicable:
(i) (A) to report the prices at which it sells to the public the unsold Certificates of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Certificates of that maturity allocated to it have been sold or it is notified by the Representative that the 10% test has been satisfied as to the Certificates of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Representative, and (B) to comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Representative and as set forth in the related pricing,
(ii) to promptly notify the Representative of any sales of Certificates that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Certificates to the public (each such term being used as defined below), and
(iii) to acknowledge that, unless otherwise advised by the underwriter, dealer or broker-dealer, the Representative shall assume that each order submitted by the underwriter, dealer or broker-dealer is a sale to the public. (2) any agreement among underwriters or selling group agreement relating to the initial sale of the Certificates to the public, together with the related pricing wires, contains or will contain language obligating each underwriter or dealer that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Certificates 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 Certificates 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 Representative or such underwriter or dealer that the 10% test has been satisfied as to the Certificates of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Representative or such underwriter or dealer, and (B) comply with the hold-the-offering-price rule, if applicable, if and for so long as directed by the Representative or the underwriter or the dealer and as set forth in the related pricing wires.
(e) The City and the Corporation acknowledge that, in making the representations set forth in this Section, the Representative will rely on (i) the agreement of each underwriter to comply with the requirements for establishing the issue price of the Certificates, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Certificates, as set forth in an agreement among underwriters and the related pricing wires, (ii) in the event a selling group has been created in connection with the initial sale of the Certificates 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 Certificates, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Certificates, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an 6 underwriter or dealer who is a member of the selling group is a party to a third-party distribution agreement that was employed in connection with the initial sale of the Certificates to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the requirements for establishing the issue price of the Certificates, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Certificates, as set forth in the third-party distribution agreement and the related pricing wires. The City and the Corporation further acknowledge that each underwriter shall be solely liable for its failure to comply with its agreement to adhere to the requirements for establishing issue price of the Certificates, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Certificates, and that no underwriter shall be liable for the failure of any other underwriter, or 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 the issue price of the Certificates, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Certificates.
(f) The Underwriters acknowledge that sales of any Certificates to any person that is a related party to an underwriter participating in the initial sale of the Certificates 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:
(1) “public” means any person other than an underwriter or a related party to an underwriter;
(2) “underwriter” means (A) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Certificates 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 Certificates 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 Certificates to the public);
(3) a purchaser of any of the Certificates is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) 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), (ii) 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 (iii) 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 (4) “sale date” means the date of execution of this Purchase Agreement by all parties.
7 Section 4. Closing; Certificates. At [_]:00 a.m. California Time, on [______], 2026, or at such other time or on such other date as shall have been mutually agreed upon by the parties hereto (the “Closing”), the City and the Corporation will, subject to the terms and conditions hereof, deliver or cause the Certificates to be delivered through the facilities of The Depository Trust Company (“DTC”), duly executed by the Trustee in accordance with the provisions of the Trust Agreement. Subject to the terms and conditions hereof, upon receipt of proof of such delivery through DTC, the Underwriters will pay the purchase price of the Certificates as set forth in Section 1 hereof in federal or other immediately available funds. The Certificates shall be delivered as aforesaid through the facilities of DTC or at such other place as the Representative, the City and the Corporation mutually agree upon. On the date of Closing, the City and the Corporation will deliver or cause to be delivered the other documents mentioned herein at the offices of Orrick, Herrington & Sutcliffe LLP (“Special Counsel”) in Irvine, California, or at such other place as shall have been mutually agreed upon by the Representative, the City and the Corporation.
The Certificates (bearing CUSIP numbers) shall be in fully registered form, initially registered in the name of Cede & Co., as nominee of DTC, and shall be subject to a book-entry system of registration and transfer as described in the Official Statement. The Certificates shall be made available to the Representative for purposes of inspection for a reasonable period prior to the date of Closing in New York, New York, or at such other place as shall have been mutually agreed upon by the City, the Corporation and the Representative.
Section 5. Covenants, Representations and Warranties of the City. The City hereby covenants, represents and warrants to the Underwriters that:
(a) The City is a general law city duly organized and validly existing under the constitution and laws of the State of California (the “State”). The City has all necessary power and authority and has taken all official actions necessary for the City Council of the City (the “City Council”) to adopt the resolution authorizing the execution and delivery of the Certificate Documents to which the City is a party and other matters pertaining thereto (the “City Resolution”), execute and deliver the Official Statement and to execute, deliver and perform its duties under this Purchase Agreement and each of the Certificate Documents to which it is a party, and this Purchase Agreement and each of the Certificate Documents to which the City is a party has been duly authorized, has or will be executed and delivered by the City and, assuming the due authorization, execution and delivery by the other respective parties thereto, when executed and delivered by the City will constitute legally valid and binding obligations of the City enforceable against the City in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors’ rights generally or principles of equity involving judicial discretion. (b) The City is not in material breach of, or default under, any applicable constitutional provision, law or administrative rule or regulation of the State or the United States of America material to the conduct of its governmental or financial functions or any applicable judgment or decree or any loan agreement, indenture, bond, certificate, note, resolution or other agreement or instrument to which the City is a party or to which the City or any of its properties is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any of the foregoing; and the authorization, execution and delivery of this Purchase Agreement, the Certificate Documents 8 to which the City is a party and the Certificates, and compliance with the provisions hereof and thereof, will not conflict with or constitute a material breach of or default under any constitutional provision, law, administrative rule or regulation, or any judgment, decree, license, permit, loan agreement, indenture, bond, certificate, note, resolution, agreement or other instrument to which the City (or any of its officers in their respective capacities as such) is subject or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as may be provided by the Certificates or the Certificate Documents.
(c) To the best knowledge of the City, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory entity having jurisdiction over the City required for the execution and delivery of this Purchase Agreement or the Certificate Documents to which the City is a party, or the execution and sale of the Certificates or the consummation by the City of the transactions contemplated herein, in the Official Statement or in the Certificate Documents, which has not been duly obtained or made on or prior to the date hereof. (d) Except as disclosed in the Preliminary Official Statement and Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental or public entity pending or, to the best knowledge of the City, threatened against the City which affects or seeks to prohibit, restrain or enjoin the execution or delivery of the Certificates or the Certificate Documents, or contesting the validity of this Purchase Agreement, the Certificates or any of the Certificate Documents or the powers of the City to enter into or perform its obligations under this Purchase Agreement or the Certificate Documents to which it is a party or the existence or powers of the City, or which, if determined adversely to the City, would (i) materially impair the City’s ability to meet its obligations under the Lease Agreement or materially and adversely affect the City’s financial condition, or (ii) adversely affect the exclusion of the interest evidenced by the Certificates from gross income for federal income tax purposes and the exemption of interest evidenced by the Certificates from State personal income taxation.
(e) The information contained in the Preliminary Official Statement, as of its date and as of the date hereof, and in the Official Statement, as of its date and at all times after the date of the Official Statement up to and including the Closing, was, is and will be true, correct and complete in all material respects and did not and does not, and at the Closing such information will not, contain any untrue statement of a material fact or omit to state any material fact which is necessary to make such statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect (except this representation does not include information relating to DTC or its book-entry only system). If the information in the Official Statement is supplemented or amended, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended) at all times subsequent thereto up to and including the time of the Closing, the Official Statement as so supplemented or amended will be true and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preparation and 9 distribution of the Preliminary Official Statement and the Official Statement has been duly authorized by the City.
(f) The City agrees that, for a period of 25 days after the end of the “underwriting period” (as defined in Rule 15c2-12), if any event of which it has actual knowledge occurs as a result of which the information in the Official Statement as then in existence would include any untrue or misleading statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading, the City shall promptly prepare, or cooperate in the preparation of, an amendment or supplement to the Official Statement which will correct such statement or omission. The City shall advise the Representative promptly of any proposal to so amend or supplement the Official Statement and shall effect such amendment or supplement, at its expense, in a form and manner approved by the Representative, and furnish copies of such supplement or amendment to the Underwriters in such numbers as the Underwriters may reasonably request. The City shall promptly advise the Representative of the commencement of any action, suit, proceeding, inquiry or investigation seeking to prohibit, restrain or otherwise affect the use of the Official Statement in connection with the offering, sale or distribution of the Certificates. Unless the Representative otherwise advises the City that the end of the underwriting period shall be another specified date, the end of the underwriting period shall be the date of Closing.
(g) The proceeds from the sale to the Underwriters of the Certificates will be applied in the manner and for the purposes specified in the Trust Agreement. (h) Any certificate signed by any official of the City and delivered in connection with the transactions contemplated by the Official Statement and this Purchase Agreement shall be deemed to be a representation by the City to the Underwriters as to the statements made therein. (i) The City agrees to cooperate with the Underwriters in endeavoring to qualify the Certificates for offer and sale under the securities or Blue Sky laws of such jurisdictions of the United States as the Underwriters may reasonably request; provided, however, that the City will not be required to consent to service of process in any such jurisdiction or to qualify as a foreign corporation in connection with any such qualification in any jurisdiction and that the Underwriters shall be solely responsible for the cost of such qualification. (j) The City has complied with the Internal Revenue Code of 1986, as amended (the “Code”), with respect to the Certificates.
(k) The financial statements of, and other financial information regarding, the City contained in the Official Statement fairly present the financial position and results of the operations of the City as of the dates and for the periods therein set forth, and, to the best of the City’s knowledge, (i) the audited financial statements have been prepared in accordance with generally accepted accounting principles consistently applied, and (ii) the other financial information has been determined on a basis substantially consistent with that of the City’s audited financial statements included in the Official Statement.
10 (l) Since June 30, 2025, no material adverse change has occurred in the financial condition, assets, properties or results of operation of the City, which is not described in the Preliminary Official Statement.
(m) Based on a review of its prior undertakings with respect to Rule 15c2-12, except as described in the Official Statement, in the five preceding years, the City has never failed to comply with any continuing disclosure obligation entered into pursuant to Rule 15c2-12. (n) Between the date hereof and the time of the Closing, the City shall not, without the prior written consent of the Representative, offer or issue in any material amount any bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or contingent, except in the course of normal business operations of the City or except for such borrowings as may be described in or contemplated by the Official Statement. (o) The Leased Premises and the City’s use and enjoyment thereof is essential to City operations and the exceptions set forth in the title insurance policy for the Leased Premises insuring, subject only to Permitted Encumbrances, the fee interest of the City in the Leased Premises, the Corporation’s leasehold estate in the Leased Premises under the Ground Lease, and the City’s subleasehold estate in the Leased Premises under the Lease Agreement, do not materially impair the use of the Leased Premises, the existing facilities and the sites thereof for the purposes for which they are or may reasonably be expected to be held.
Section 6. Covenants, Representations and Warranties of the Corporation. The Corporation hereby covenants, represents and warrants to the Underwriters that:
(a) The Corporation is a nonprofit public benefit corporation duly organized and validly existing under the constitution and laws of the State. The Corporation has all necessary power and authority and has taken all official actions necessary for the Board of Trustees of the Corporation (the “Board of Trustees”) to adopt the resolution authorizing the execution and delivery of the Certificate Documents to which the Corporation is a party and other matters pertaining thereto (the “Corporation Resolution”), and to execute, deliver and perform its duties under this Purchase Agreement and each of the Certificate Documents to which it is a party, and this Purchase Agreement and each of the Certificate Documents to which the Corporation is a party has been duly authorized, has or will be executed and delivered by the Corporation and, assuming the due authorization, execution and delivery by the other respective parties thereto, when executed and delivered by the Corporation will constitute legally valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or limiting creditors’ rights generally or principles of equity involving judicial discretion.
(b) The Corporation is not in material breach of, or default under, any applicable constitutional provision, law or administrative rule or regulation of the State or the United States of America material to the conduct of its business or financial functions or any applicable judgment or decree or any loan agreement, indenture, bond, certificate, note, resolution or other agreement or instrument to which the Corporation is a party or to which the Corporation or any of its properties is otherwise subject, and no event has occurred and is continuing which, with the 11 passage of time or the giving of notice, or both, would constitute a default or an event of default under any of the foregoing; and the authorization, execution and delivery of this Purchase Agreement, the Certificate Documents to which the Corporation is a party and the Certificates, and compliance with the provisions hereof and thereof, will not conflict with or constitute a material breach of or default under any constitutional provision, law, administrative rule or regulation or under its articles of incorporation or bylaws, or any judgment, decree, license, permit, loan agreement, indenture, bond, certificate, note, resolution, agreement or other instrument to which the Corporation (or any of its officers in their respective capacities as such) is subject or by which it or any of its properties is bound, nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument except as may be provided by the Certificates or the Certificate Documents.
(c) To the best knowledge of the Corporation, there is no consent, approval, authorization or other order of, or filing with, or certification by, any regulatory entity having jurisdiction over the Corporation required for the execution and delivery of this Purchase Agreement or the Certificate Documents to which the Corporation is a party, or the execution and sale of the Certificates or the consummation by the Corporation of the transactions contemplated herein, in the Official Statement or in the Certificate Documents, which has not been duly obtained or made on or prior to the date hereof.
(d) Except as disclosed in the Preliminary Official Statement and Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental or public entity pending or, to the best knowledge of the Corporation, threatened against the Corporation which affects or seeks to prohibit, restrain or enjoin the execution or delivery of the Certificates or the Certificate Documents, or contesting the validity of this Purchase Agreement, the Certificates or any of the Certificate Documents or the powers of the Corporation to enter into or perform its obligations under this Purchase Agreement or the Certificate Documents to which it is a party or the existence or powers of the Corporation, or which, if determined adversely to the Corporation, would (i) materially impair the Corporation’s ability to meet its obligations under the Certificate Documents to which the Corporation is party or materially and adversely affect the Corporation’s financial condition, or (ii) adversely affect the exclusion of the interest evidenced by the Certificates from gross income for federal income tax purposes and the exemption of interest evidenced by the Certificates from State personal income taxation.
(e) The information concerning the Corporation contained in the Preliminary Official Statement, as of its date and as of the date hereof, and in the Official Statement, as of its date and at all times after the date of the Official Statement up to and including the Closing Date, relating to the Corporation, was, is and will be true, correct and complete in all material respects and did not and does not, and on the Closing Date such information concerning the Corporation will not, contain any untrue statement of a material fact or omit to state any material fact which is necessary to make such statements and information therein, in light of the circumstances under which they were made, not misleading in any material respect. If the information in the Official Statement is supplemented or amended, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended) at all times subsequent thereto up to and including 12 the time of the Closing, the information concerning the Corporation contained in the Official Statement as so supplemented or amended will be true and correct in all material respects and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. The preparation and distribution of the Preliminary Official Statement and the Official Statement has been duly authorized by the Corporation.
(f) Any certificate signed by any official of the Corporation and delivered in connection with the transactions contemplated by the Official Statement and this Purchase Agreement shall be deemed to be a representation by the Corporation to the Underwriters as to the statements made therein.
Section 7. Conditions to the Obligations of the Underwriters. (a) The obligation of the Underwriters to accept delivery of and pay for the Certificates on the date of Closing shall be subject, at the option of the Underwriters, to the accuracy in all material respects of the representations, warranties and agreements on the part of the City and the Corporation contained herein as of the date hereof and as of the date of Closing, to the accuracy in all material respects of the statements of the officers and other officials of the City, the Corporation and the Trustee made in any certificates or other documents furnished pursuant to the provisions hereof or the Certificate Documents, and to the performance by the City, the Corporation and the Trustee of their respective obligations to be performed hereunder and under the Certificate Documents at or prior to the date of Closing, and to the following additional conditions:
(1) At the date of Closing, the Certificates, the Certificate Documents and the Official Statement shall have been duly authorized, executed and delivered by the respective parties thereto, in substantially the forms heretofore submitted to the Underwriters with only such changes as shall have been agreed to by the Representative, and said documents shall not have been amended, modified or supplemented, except as may have been agreed to by the Representative, and there shall have been taken in connection therewith, with the execution and delivery of the Certificates and with the transactions contemplated thereby and by this Purchase Agreement, all such actions as Orrick Herrington & Sutcliffe LLP, Special Counsel, shall deem to be necessary and appropriate;
(2) The representations and warranties of the City and the Corporation contained in this Purchase Agreement shall be true, correct and complete in all material respects on the date hereof and on the date of Closing, as if made again on the date of Closing, and the Official Statement (as the same may be supplemented or amended with the written approval of the Representative) shall be true, correct and complete in all material respects and such information shall not contain any untrue statement of fact or omit to state any fact required to be stated therein or necessary to make the statements therein relating to the City, in the light of the circumstances under which such statements were made, not misleading;
(3) Between the date hereof and the Closing, the market price for the Certificates, or the market for or marketability or the ability of the Underwriters to enforce contracts for the sale of the Certificates at the initial offering prices set forth in the Official 13 Statement, shall not have been materially adversely affected, in the reasonable judgment of the Representative, by reason of any of the following:
(i) legislation enacted by the Congress of the United States, or by the legislature of the State, or introduced in the Congress or recommended for passage by the President of the United States (by press release, other form of notice or otherwise), or a decision rendered by a court of the United States or the State or by the United States Tax Court, or an order, ruling, regulation (final, temporary or proposed) or official statement issued or made:
(A) by or on behalf of the United States Treasury Department, or by or on behalf of the Internal Revenue Service or other federal or State authority, which would have the purpose or effect of changing, directly or indirectly, the federal income tax consequences of interest on obligations of the general character of the Certificates in the hands of the holders thereof or State tax consequences of interest on obligations of the general character of the Certificates in the hands of the holders thereof; or (B) by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, to the effect that the Certificates, or obligations of the general character of the Certificates, including any and all underlying arrangements, are not exempt from registration under the Securities Act of 1933, as amended, or that the Trust Agreement is not exempt from qualification under the Trust Indenture Act of 1939, as amended; (ii) there shall have occurred (i) any outbreak or escalation of hostilities affecting the United States, the declaration by the United States of a national emergency or war or engagement in or material escalation of major military hostilities by the United States or the occurrence of any other national or international emergency, or (ii) any other calamity, crisis or terrorism relating to the effective operation of the government or the financial community in the United States, or (iii) a downgrade of the sovereign debt rating of the United States by any major credit rating agency or payment default on United States Treasury obligations;
(iii) the declaration of a general banking moratorium by federal, New York or State authorities having jurisdiction, or the general suspension of trading on any national securities exchange or fixing of minimum or maximum prices for trading or maximum ranges for prices for securities on any national securities exchange, whether by virtue or a determination by that exchange or by order of the Securities and Exchange Commission or any other governmental authority having jurisdiction;
(iv) the imposition by the New York Stock Exchange, other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Certificates, or obligations of the general character 14 of the Certificates, or securities generally, or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or a change to the net capital requirements of, the Underwriters; (v) an order, decree or injunction of any court of competent jurisdiction, or order, filing, regulation or official statement by the Securities and Exchange Commission, or any other governmental agency having jurisdiction over the subject matter thereof, issued or made to the effect that the execution and delivery, offering or sale of obligations of the general character of the Certificates, or the execution and delivery, offering or sale of the Certificates, as contemplated hereby or by the Official Statement, is or would be in violation of the federal securities laws, as amended and then in effect;
(vi) the withdrawal or downgrading, or any notice of intended withdrawal or downgrading, of any underlying rating or credit watch status or outlook of the City’s outstanding indebtedness by a national rating agency or the occurrence of any adverse change of a material nature of the financial condition, results of operation or properties of the City;
(vii) any event occurring, or information becoming known which, in the reasonable judgment of the Representative, makes untrue in any material adverse respect any statement or information set forth in the Official Statement, or has the effect that the Official Statement contains any untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading and (a) the City or the Corporation refuse to permit the Official Statement to be supplemented or to supply such statement or information in a manner satisfactory to the Representative, or (b) the effect of the Official Statement, as so supplemented, in the judgment of the Representative, materially adversely affects the market price or marketability of the Certificates or the ability of the Underwriters to enforce contracts for the sale, at the contemplated offering prices, of the Certificates;
(viii) a material disruption in securities settlement, payment or clearance services or the marketability of the Certificates or the market price thereof, in the opinion of the Representative, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets; (ix) the purchase of and payment for the Certificates by the Underwriters, or the resale of the Certificates by the Underwriters, on the terms and conditions herein provided shall be prohibited by any applicable law, governmental authority, board, agency or commission; or
(x) any litigation shall be instituted or be pending on the date of Closing to restrain or enjoin the issuance, sale or delivery of the Certificates, or in any way contesting or affecting any authority for or the validity of the proceedings authorizing and approving the City Resolution, the Corporation Resolution, the 15 Certificates, the Certificate Documents or the existence or powers of the City or the Corporation with respect to their obligations under the Certificate Documents. (4) At or prior to the Closing, the Underwriters shall have received the following documents, in each case dated as of the date of Closing and satisfactory in form and substance to the Representative:
(i) the Official Statement and each Certificate Document, duly executed and delivered by the respective parties thereto, with such amendments, modifications or supplements as may have been agreed to by the Representative; (ii) the unqualified approving opinion of Special Counsel, substantially in the form attached as Appendix D to the Official Statement, relating to the Certificates, and addressed to the City, and a letter of Special Counsel, addressed to the Underwriters, to the effect that such opinion may be relied upon by the Underwriters to the same extent as if such opinion was addressed to them; (iii) the supplemental opinion of Special Counsel, addressed to the Underwriters, substantially to the effect that (A) the Certificates are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Trust Agreement is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended, (B) assuming due authorization, execution and delivery by all of the parties thereto other than the City, this Purchase Agreement and the Continuing Disclosure Certificate have each been duly executed and delivered by, and constitute valid and binding agreements of the City, except as enforcement thereof may be limited by bankruptcy, insolvency, reorganization, receivership, 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 governmental entities in the State (provided that no opinion need be rendered regarding the adequacy of the Continuing Disclosure Certificate for purposes of Rule 15c2-12), and (C) the statements contained in the Official Statement under the captions “THE CERTIFICATES” (excluding any and all information under the subheading “—Book-Entry Only System”), “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES,” and “TAX
MATTERS” and in APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS,” excluding any material that may be treated as included under such captions by cross-reference or reference to other documents or sources, insofar as such statements expressly summarize certain provisions of the Certificates, the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust Agreement or certain matters addressed in Special Counsel’s final approving opinion, are accurate in all material respects;
(iv) an opinion of the City Attorney, as counsel to the City, in substantially the form of Exhibit A attached hereto, addressed to the City, the Underwriters and the Trustee, in form and substance satisfactory to Special Counsel and the Representative;
16 (v) an opinion of the City Attorney, as counsel to the Corporation, in substantially the form of Exhibit B attached hereto, addressed to the Corporation, the City, the Underwriters and the Trustee, in form and substance satisfactory to Special Counsel and the Representative;
(vi) an opinion of counsel to the Trustee, in substantially the form of Exhibit E attached hereto, addressed to the City and the Underwriters, in form and substance satisfactory to Special Counsel and the Representative; (vii) the letter of Orrick, Herrington & Sutcliffe LLP, as disclosure counsel to the City (“Disclosure Counsel”), in the form attached hereto as Exhibit F;
(viii) a certificate of the Trustee, signed by a duly authorized officer of the Trustee, to the effect that (A) the Trustee is a national banking association organized and existing under and by virtue of the laws of the United States, having the full power and being qualified to enter into and perform its duties under the Trust Agreement and the Assignment Agreement and to execute and deliver the Certificates to the Underwriters pursuant to the Trust Agreement, (B) when delivered to and paid for by the Underwriters on the date of Closing, the Certificates will have been duly executed and delivered by the Trustee, (C) the execution and delivery of the Trust Agreement and the Assignment Agreement, and compliance with the provisions on the Trustee’s part contained therein, will not conflict in any material respect with or constitute a breach of or default under any law, administrative regulation, judgment, decree, material agreement, or other material instrument to which the Trustee is a party or is otherwise subject (except that no representation, warranty or agreement is made with respect to any federal or state securities or blue sky laws or regulations), nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the properties or assets held by the Trustee pursuant to the lien created by the Trust Agreement under the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument, except as provided by the Trust Agreement, and (D) there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, governmental or public entity pending or, to the best knowledge of the Trustee, threatened against the Trustee, affecting the existence of the Trustee, or the titles of its officers to their respective offices or seeking to prohibit, restrain or enjoin the execution and delivery of the Certificates, or in any way contesting or affecting the validity or enforceability of the Trust Agreement and the Assignment Agreement, or contesting the powers of the Trustee or its authority to enter into, adopt or perform its obligations under any of the foregoing to which it is a party, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity or enforceability of the Trust Agreement or the Assignment Agreement or the ability of the Trustee to perform its obligations thereunder; 17 (ix) a certificate of the City, signed by an authorized officer thereof, to the effect that the representations and warranties of the City contained in the Purchase Agreement and in the Certificate Documents to which it is a party are true and correct in all material respects as of the date of Closing as if made on the date of Closing and no event affecting the City has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date of Closing the statements or information (except for statements and information regarding DTC contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information (except for statements and information regarding DTC) therein not misleading in any material respect;
(x) a certificate of the Corporation, signed by an authorized officer thereof, to the effect that the representations and warranties of the Corporation contained in the Purchase Agreement and in the Certificate Documents to which it is a party are true and correct in all material respects as of the date of Closing as if made on the date of Closing and no event affecting the Corporation has occurred since the date of the Official Statement which either makes untrue or incorrect in any material respect as of the date of Closing the statements or information regarding the Corporation contained in the Official Statement or is not reflected in the Official Statement but should be reflected therein in order to make the statements and information therein regarding the Corporation not misleading in any material respect;
(xi) a tax certificate of the City relating to the Certificates in form and substance acceptable to Special Counsel;
(xii) a certified copy of the City Resolution authorizing the execution and delivery of the Certificate Documents to which the City is a party and other matters pertaining thereto;
(xiii) a certified copy of the Corporation Resolution authorizing the execution and delivery of the Certificate Documents to which the Corporation is a party and other matters pertaining thereto;
(xiv) a copy of the Certificate of Status issued by the Secretary of State of the State, a certified copy of the articles of incorporation of the Corporation, and a certified copy of the Bylaws of the Corporation, and a good standing entity status letter from the California Franchise Tax Board;
(xv) a certified copy of the general resolution of the Trustee authorizing the execution and delivery of the Certificate Documents to which the Trustee is a party;
(xvi) evidence that any ratings described in the Official Statement are in full force and effect as of the date of Closing;
18 (xvii) a copy of the Notices of Sale required to be delivered to the California Debt and Investment Advisory Commission pursuant to Section 8855 of the California Government Code;
(xviii) evidence of arrangements for the issuance of a binder for a CLTA or ALTA title insurance policy or policies (with western regional exceptions) providing the title insurance required by the Lease Agreement, in form and substance acceptable to the Representative;
(xix) evidence of the insurance policy or policies maintained by the City as required pursuant to Section 6.01 of the Lease Agreement; (xx) an opinion of Katten Muchin Rosenman LLP, as counsel to the Underwriters, addressed to the Underwriters in form reasonably satisfactory to the Underwriters; and
(xxi) such additional legal opinions, certificates, proceedings, instruments and other documents as the Representative or Special Counsel may reasonably request to evidence compliance by the Trustee, the Corporation and the City with legal requirements, the truth and accuracy, as of the Closing, of the representations of the Trustee, the Corporation and the City, and the due performance or satisfaction by the Trustee, the Corporation and the City at or prior to such time of all agreements then to be performed and all conditions then to be satisfied by the Trustee, the Corporation and the City.
(b) If the City or the Corporation shall be unable to satisfy the conditions to the Underwriters’ obligations contained in this Purchase Agreement or if the Underwriters’ obligations shall be terminated for any reason permitted herein, all obligations of the Underwriters hereunder may be terminated by the Representative at, or at any time prior to, the date of Closing by written notice to the City and the Corporation and the Underwriters shall have no further obligations hereunder.
Section 8. Fees and Expenses. Except as provided in the following paragraph, the City shall pay all costs and expenses incurred in connection with or relating to the execution and sale of the Certificates, including but not limited to (a) the fees and expenses of the City’s Municipal Advisor, (b) the fees and expenses of Orrick, Herrington & Sutcliffe LLP, for services rendered as Special Counsel and as Disclosure Counsel, (c) the fees and expenses of counsel to the City and the Corporation, (d) all expenses and costs of the City and the Corporation incident to the performance of their obligations hereunder and in connection with the authorization, execution and sale of the Certificates, (e) the costs of printing, distributing and delivering the Preliminary Official Statement and the Official Statement and any supplement or amendment thereto, (f) the fees and expenses of the Trustee and its counsel, (g) rating agency fees for rating the Certificates and (h) the fees and expenses relating to title insurance.
The Underwriters shall pay (which may be included as an expense component of the Underwriters’ discount): any advertising expenses incurred in connection with the public offering of the Certificates, the fees of the California Debt and Investment Advisory Commission, CUSIP 19 Service Bureau fees, fees of the Municipal Securities Rulemaking Board, the fees and expenses of counsel to the Underwriters and, except as provided in the preceding paragraph, all other expenses incurred by the Underwriters in connection with the public offering and sale of the Certificates, including the fees and disbursements of its counsel.
The City acknowledges that it has had an opportunity, with such advisors as it may deem appropriate, if any, to review the fees and expenses being incurred as part of the execution and delivery of the Certificates.
Section 9. Notices. All notices, certificates and other communications provided for hereunder shall be in writing and, if to the City, mailed, certified, return receipt requested, or delivered to it, addressed to it at:
City of Redlands
35 Cajon Street, Suite 15B
Redlands, California 92374
Attention: Director of Management Services/Finance Department and if to the Corporation, mailed, certified, return receipt requested, or delivered to it, addressed to it at:
Redlands Public Improvement Corporation
35 Cajon Street, Suite 15B
Redlands, California 92373
Attention: Chief Financial Officer
and if to the Underwriters, mailed, certified, return receipt requested, or delivered to each thereof, addressed to the Representative at:
BofA Securities, Inc.
333 S. Hope Street, Suite 3820
Los Angeles, California 90071
Attention: Craig Dussinger
or such other address as shall be designated by any such party in a written notice to each of the other parties.
Section 10. Survival of Representations, Warranties and Agreements. All representations, warranties and agreements of the City and the Corporation in this Purchase Agreement shall remain operative and in full force and effect regardless of any investigation made by or on behalf of the Underwriters and shall survive the delivery of the Certificates hereunder.
Section 11. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Purchase Agreement may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Purchase Agreement using an electronic signature, it is signing, adopting and accepting this Purchase Agreement and that signing this Purchase Agreement using an electronic signature is the legal equivalent of having placed the undersigned officer’s handwritten signature on this Purchase Agreement on paper. Each 20 party acknowledges that it is being provided with an electronic or paper copy of this Purchase Agreement in a usable format.
Section 12. Applicable Law. This Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State.
Section 13. Effectiveness. This Purchase Agreement shall become effective upon its execution by duly authorized officers of the Representative, the City and the Corporation and shall be valid and enforceable from and after the time of such execution. 21 Section 14. Counterparts. This Purchase Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.
BOFA SECURITIES, INC.
By:
Authorized Signatory
Approved and Agreed to: _______, 2026
CITY OF REDLANDS
By:
Name:
Title:
REDLANDS PUBLIC
IMPROVEMENT CORPORATION
By:
Name:
Title
A-1
EXHIBIT A
FORM OF OPINION
OF COUNSEL TO THE CITY
[________], 2026
City of Redlands
Redlands, California
U.S. Bank Trust Company, National Association
Los Angeles, California
BofA Securities, Inc.
as Representative of the Underwriters
Los Angeles, California
Re: City of Redlands
Certificates of Participation, Series 2026 (Police and Fire Facilities) Ladies and Gentlemen:
We have acted as counsel to the City of Redlands (the “City”), in connection with the delivery of $[_______] aggregate principal amount of City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”).
In connection with rendering this opinion, we have examined documents, obtained certificates and undertaken other actions as we have determined necessary to render this opinion.
We have examined the following documents: a Lease Agreement, dated as of [______] 1, 2026 (the “Lease Agreement”), by and between the City and the Redlands Public Improvement Corporation (the “Corporation”); a Ground Lease, dated as of [______] 1, 2026 (the “Ground Lease”), by and between the City and the Corporation; a Trust Agreement, dated as of [______] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Corporation and the City; a Continuing Disclosure Certificate, dated the date hereof (the “Continuing Disclosure Certificate”), executed by the City; a Purchase Agreement, dated [______], 2026 (the “Purchase Agreement”), by and among the City, the Corporation and BofA Securities, Inc., as representative (the “Representative”), on behalf of itself and Stifel, Nicolaus & Company, Incorporated (collectively, the “Underwriters”); a Resolution adopted by the City Council of the City on [________], 2026 (the “City Resolution”) relating to the Certificates; an Official Statement, dated [________], 2026 (the “Official Statement”), which describes, among other things, the Certificates and the City; the Certificates; and the certificates and certifications of the City, the Trustee, the Corporation and others as to certain factual matters and such other documents and matters to the extent we deemed necessary to render the opinions set forth herein. The Lease Agreement, Ground Lease, Trust Agreement, Continuing Disclosure Certificate, Purchase Agreement, and Official Statement are collectively referred to herein as the “Operative Documents.”
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With your permission we have assumed, without undertaking to verify the same by independent investigation, the following: (a) the authenticity of original documents and the genuineness of all signatures (other than the City); (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in these documents, certificates, records and papers we have reviewed; and (d) compliance with all covenants and agreements contained in such documents. Based on the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The City is a general law city validly existing under the Constitution and the laws of the State of California, with full legal right, power and authority to execute, deliver and perform the obligations under the Operative Documents to which it is a party and to participate in the transactions contemplated by the Official Statement;
2. The City Resolution was duly adopted at a meeting of the City Council, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting at the time of adoption, and the City Resolution is in full force, has not been modified, amended or rescinded;
3. To the best of our knowledge and upon reasonable investigation, there is no action, suit, proceeding or investigation at law or in equity before or by any court or governmental agency or body pending (in which service of process has been completed against the City) or threatened against the City, (a) in any way contesting or affecting the validity of the City Resolution, the Operative Documents or contesting the existence or powers of the City to enter into or perform its obligations under such agreements; (b) which would materially adversely affect the financial position of the City; (c) affecting, contesting or seeking to prohibit, restrain or enjoin the execution and delivery of any of the Certificates or the Operative Documents, or in any way contesting or affecting the validity of or security for the Certificates or the Operative Documents or the consummation of the transactions contemplated thereby or hereby; or (d) contesting the completeness or accuracy of the Official Statement, or a supplement or amendment thereto or asserting that the Official Statement contains any untrue statement of a material fact or omits to state any 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; and to the best of our knowledge there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in subparagraphs (a) through (d) of this Paragraph 3.
4. To the best of our knowledge and upon reasonable investigation, the execution, delivery and performance of Operative Documents do not and will not conflict with or constitute on the part of the City a breach of, or a default under any agreement, indenture, mortgage, lease or other instrument to which the City is subject or by which it is bound or court order or consent decree to which the City is subject;
5. The Operative Documents to which the City is a party have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other respective parties thereto, if any, such agreements constitute legal, valid and binding agreements of the City enforceable in accordance with the terms, except as the 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, and by the limitations on legal remedies imposed against governmental entities in the State; and A-3
6. To the best of our knowledge and upon reasonable investigation, the City is not in breach of or default under any applicable law or administrative regulation of the State or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is otherwise subject, which breach or default would materially adversely affect the City’s ability to enter into or perform its obligations under the Operative Documents and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute such a breach or default.
This letter is not to be used, circulated, quoted, or otherwise referred to for any purpose other than the offering of the Certificates and may not be relied upon other than by the addressees hereof without our express written permission.
The opinions set forth in this letter are limited only to those matters expressly set forth herein. This letter is not to be used, circulated, quote or otherwise referred to for any purpose other than the offering of the Certificate and may not be relied upon other than by the addressees hereof without our express written permission. This opinion letter speaks only as of the date set forth above. We disclaim any obligation to update this letter.
Respectfully submitted,
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EXHIBIT B
FORM OF OPINION
OF COUNSEL TO THE CORPORATION
[________], 2026
Redlands Public Improvement Corporation
Redlands, California
City of Redlands
Redlands, California
U.S. Bank Trust Company, National Association
Los Angeles, California
BofA Securities, Inc.
as Representative of the Underwriters
Los Angeles, California
Re: City of Redlands
Certificates of Participation, Series 2026 (Police and Fire Facilities) Ladies and Gentlemen:
We have acted as counsel to the Redlands Public Improvement Corporation (the “Corporation”) in connection with the delivery of $[_________] aggregate principal amount of City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”).
In connection with rendering this opinion, we have examined documents, obtained certificates and undertaken other actions as we have determined necessary to render this opinion.
We have examined the following documents: a Resolution of the Board of Trustees of the Corporation, adopted on [________], 2026 (the “Resolution”) relating to the Certificates; the Ground Lease, dated as of [______] 1, 2026 (the “Ground Lease”), by and between the City of Redlands (the “City”) and the Corporation; the Lease Agreement, dated as of [______] 1, 2026 (the “Lease Agreement”), by and between the City and the Corporation; the Assignment Agreement, dated as of [______] 1, 2026 (the “Assignment Agreement”), by and between the Corporation and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”); the Trust Agreement, dated as of [______] 1, 2026 (the “Trust Agreement”), by and among the City, the Corporation and Trustee; a Purchase Agreement, dated [______], 2026 (the “Purchase Agreement”), by and among the City, the Corporation and BofA Securities, Inc., as representative (the “Representative”), on behalf of itself and Stifel, Nicolaus & Company, Incorporated (collectively, the “Underwriters”); an Official Statement, dated [________], 2026 (the “Official Statement”), which describes, among other things, the Certificates and the Corporation; the Certificates; certificates and certifications of the City, the Trustee, the Corporation and others as B-2
to certain factual matters; and such other documents and matters to the extent we deemed necessary to render the opinions set forth herein.
With your permission we have assumed, without undertaking to verify the same by independent investigation, the following: (a) the authenticity of original documents and the genuineness of all signatures (other than the Corporation); (b) the conformity to the originals of all documents submitted to us as copies; (c) the truth, accuracy, and completeness of the information, representations, and warranties contained in these documents, certificates, records and papers we have reviewed; and (d) compliance with all covenants and agreements contained in such documents.
Based on the foregoing, we are of the opinion that:
1. The Corporation is a nonprofit public benefit corporation organized and existing under and by virtue of the laws and the Constitution of the State of California and has full legal power and lawful authority to execute and deliver and perform all obligations under the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust Agreement and the Purchase Agreement (the “Corporation Documents”) and to participate in the transactions contemplated by the Official Statement.
2. The Resolution has been duly adopted at a meeting of the governing body of the Corporation, which was called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the Resolution is in full force and effect and has not been modified, amended or rescinded.
3. The Corporation has duly authorized, executed and delivered the Corporation Documents and, assuming due authorization, execution and delivery by the parties thereto other than the Corporation, the Corporation Documents constitute the legally valid and binding obligations of the Corporation enforceable against the Corporation in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the enforcement of creditors’ rights generally and by the application of equitable principles, if equitable remedies are sought;
4. To the best of our knowledge and upon reasonable investigation, there is no action, suit, proceeding, inquiry or investigation at law or in equity, before or by any court, government agency, public board or body, pending or, to the best of our knowledge after reasonable investigation, threatened: (a) which would materially adversely affect the financial position of the Corporation; (b) affecting, contesting or seeking to prohibit, restrain or enjoin the execution and delivery of any of the Certificates or the Corporation Documents, or in any way contesting or affecting the validity of or security for the Certificates or the Corporation Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the powers of the Corporation or its authority to execute and deliver the Corporation Documents or perform its obligations thereunder; or (c) contesting the completeness or accuracy of the Official Statement, or a supplement or amendment thereto or asserting that the Official Statement contains any untrue statement of a material fact or omits to state any 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; and to the best of our knowledge there is no basis for any action, suit, B-3
proceeding, inquiry or investigation of the nature described in subparagraphs (a) through (c) of this Paragraph 4.
5. To the best of our knowledge and upon reasonable investigation, the Corporation is not in material breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or the United States of America or any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the Corporation is a party or to which the Corporation or any of its property or assets is otherwise subject, and no event has occurred or is continuing which with the passage of time or the giving of notice, or both, would constitute a default or an event of default under any such instrument; and the execution and delivery of the Corporation Documents and compliance with the provisions thereof by the Corporation, will not result in a violation of, a breach of, or a default under the articles of incorporation or bylaws of the Corporation or any statute, indenture, mortgage, deed of trust, note agreement, or other agreement or instrument to which the Corporation is a party or by which it or any of its property is bound, or any order, rule, law or regulation of any court or other governmental body having jurisdiction of the Corporation.
This letter is not to be used, circulated, quoted, or otherwise referred to for any purpose other than the offering of the Certificates and may not be relied upon other than by the addressees hereof without our express written permission.
The opinions set forth in this letter are limited only to those matters expressly set forth herein. This letter is not to be used, circulated, quote or otherwise referred to for any purpose other than the offering of the Certificate and may not be relied upon other than by the addressees hereof without our express written permission. This opinion letter speaks only as of the date set forth above. We disclaim any obligation to update this letter.
Respectfully submitted,
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EXHIBIT C
$[____________]
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
Maturity Date
(May 1,)
Principal
Amount
Interest
Rate Yield
$ % %
$__________ _____% Term Certificates due May 1, 20__ - Yield _____% $__________ _____% Term Certificates due May 1, 20__ - Yield _____% _____________________
C Yield to call at par on May 1, 20[__].
PREPAYMENT
Optional Prepayment. The Certificates maturing on or after May 1, 20__ are subject to optional prepayment prior to their respective stated Principal Payment Dates, on any date on or after May 1, 20__, in whole or in part, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement from any source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Certificates to be prepaid, plus unpaid accrued interest evidenced thereby to the date fixed for prepayment, without premium.
Extraordinary Prepayment. The Certificates are subject to extraordinary prepayment prior to their stated Principal Payment Dates, on any date, in whole or in part, in Authorized Denominations, from and to the extent of any insurance proceeds or condemnation award in excess C-2
of $50,000 paid with respect to any of the Property, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof received with respect to any of the Property, deposited by the Trustee in the Prepayment Fund pursuant to the Trust Agreement, at a prepayment price equal to the principal evidenced by the Certificates to be prepaid, plus unpaid accrued interest, if any, evidenced thereby to the date fixed for prepayment, without premium.
Mandatory Sinking Account Prepayment. The Certificates with a stated Principal Payment Date of May 1, 20__ are subject to prepayment prior to such stated Principal Payment Date, in part, from Mandatory Sinking Account Payments, on May 1 of the years and in the aggregate principal amounts as set forth in the table shown below, any such Mandatory Sinking Account Payments to be at a prepayment price equal to the principal evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium:
Prepayment Date
(May 1,)
Principal
To Be Prepaid
$
†
† Stated Principal Payment Date
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the extraordinary prepayment provisions as described above, the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the extraordinary prepayment provisions, such reduction to be allocated among prepayment dates in proportion to the amount by which the principal components of the Base Rental Payments evidenced by such Certificates payable on such prepayment dates are abated pursuant to the Lease Agreement as a result of the event that caused such Certificates to be prepaid pursuant to the extraordinary prepayment provisions, in amounts of Authorized Denominations.
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the optional prepayment provisions as described above, the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the optional prepayment provisions, such reduction to be allocated among prepayment dates in amounts of Authorized Denominations, as designated by the City.
The Certificates with a stated Principal Payment Date of May 1, 20__ are subject to prepayment prior to such stated Principal Payment Date, in part, from Mandatory Sinking Account Payments, on May 1 of the years and in the aggregate principal amounts as set forth in the table shown below, any such Mandatory Sinking Account Payments to be at a prepayment price equal C-3
to the principal evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium:
Prepayment Date
(May 1,)
Principal
To Be Prepaid
$
†
† Stated Principal Payment Date
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the extraordinary prepayment provisions as described above, the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the extraordinary prepayment provisions, such reduction to be allocated among prepayment dates in proportion to the amount by which the principal components of the Base Rental Payments evidenced by such Certificates payable on such prepayment dates are abated pursuant to the Lease Agreement as a result of the event that caused such Certificates to be prepaid pursuant to the extraordinary prepayment provisions, in amounts of Authorized Denominations.
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the optional prepayment provisions as described above, the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the optional prepayment provisions, such reduction to be allocated among prepayment dates in amounts of Authorized Denominations, as designated by the City.
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EXHIBIT D
CERTIFICATE OF THE REPRESENTATIVE
The undersigned, on behalf of BofA Securities, Inc. (the “Representative”), on behalf of itself and Stifel, Nicolaus & Company, Incorporated (together, the “Underwriters”), hereby certifies as set forth below with respect to the sale and issuance of the above-captioned certificates (the “Certificates”).
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) The Underwriters 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 Purchase Agreement, the Representative 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 requirements for establishing issue price for the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule. Pursuant to such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for that Maturity of the Bonds during the Holding Period.]
3. Defined Terms.
(a) City means the City of Redlands.
(b) Corporation means the Redlands Public Improvement Corporation. (c) [General Rule Maturities means those Maturities of the Certificates listed in Schedule A hereto as the “General Rule Maturities.”]
(d) [Hold-the-Offering-Price Maturities means those Maturities of the Certificates listed in Schedule A hereto as the “Hold-the-Offering-Price Maturities.”] (e) [Holding Period 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 ([______], 2026), or (ii) the date on which the Underwriters have 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-2
(f) Maturity means Certificates with the same credit and payment terms. Certificates with different maturity dates, or Certificates with the same maturity date but different stated interest rates, are treated as separate maturities.
(g) 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.
(h) Related Party means an entity that shares with another entity (1) 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), (2) 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 (3) 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).
(i) Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Certificates. The Sale Date of the Certificates is [______], 2026. (j) Underwriter means (1) any person that agrees pursuant to a written contract with the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Certificates to the Public, and (2) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (1) of this paragraph to participate in the initial sale of the Certificates 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 Certificates to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Representative’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 City 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 Certificates, and by Orrick, Herrington & Sutcliffe LLP in connection with rendering its opinion that the interest on the Certificates is excluded from gross income for federal income tax purposes, the preparation of Internal Revenue Service Form 8038-G, and other federal income tax advice it may give to the City from time to time relating to the Certificates. 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. With respect to Certificates allotted to Underwriters (other than the Representative), information furnished in this certificate with regard to sales of Certificates is based on information provided to the Representative by such other Underwriters, and has not been independently verified by us; however, we have no reason to believe such information is untrue in any material respect.
D-3
BOFA SECURITIES, INC.
By:
Name:
Title:
Dated: [________], 2026
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SCHEDULE A
SALE PRICES OF THE [GENERAL RULE MATURITIES AND
INITIAL OFFERING PRICES OF THE HOLD-THE-OFFERING-PRICE MATURITIES] $[____________]
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
Maturity Date
(May 1,)
Principal
Amount
Interest
Rate Yield
$ % %
$__________ _____% Term Certificates due May 1, 20__ - Yield _____% $__________ _____% Term Certificates due May 1, 20__ - Yield _____% _____________________
C Yield to call at par on May 1, 20[__]
[* 10% Test satisfied]
D-5
SCHEDULE B
PRICING WIRE OR EQUIVALENT COMMUNICATION
(Attached)
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EXHIBIT E
FORM OF OPINION OF COUNSEL TO THE TRUSTEE
[__________], 2026
City of Redlands
Redlands, California
BofA Securities, Inc.
as Representative of the Underwriters
Los Angeles, California
Re: City of Redlands
Certificates of Participation, Series 2026 (Police and Fire Facilities) Ladies and Gentlemen:
We have acted as counsel for U.S. Bank Trust Company, National Association, a national banking association (the “Trustee”), in connection with the Trust Agreement, dated as of [______] 1, 2026 (the “Trust Agreement”), by and among the Trustee, the Redlands Public Improvement Corporation and the City of Redlands, related to the above-referenced certificates of participation (the “Certificates”). We are generally familiar with the Articles of Association and the Bylaws of the Trustee and are also familiar with the corporate proceedings of the Trustee with regard to its authorization, execution and delivery of the Trust Agreement and the Assignment Agreement.
Capitalized terms used herein shall have the respective meanings ascribed to them in the Trust Agreement, except as otherwise defined herein. The Trust Agreement and the Assignment Agreement are referred to herein, together, as the “Trustee Documents.” We have examined such documents and have reviewed such questions of law as we have considered necessary and appropriate for purposes of this opinion. In such review, we have assumed the genuineness of all signatures, the authenticity of all documents submitted to us as originals, and the conformity with originals of all documents submitted to us as copies. Where our opinions expressed below are qualified as being limited “to our knowledge,” such words, as used herein, mean that prior to or during the course of this firm’s representation of the Trustee in connection with the specific transactions contemplated by the Trustee Documents, no contrary information came to the attention of the attorneys in our firm who have principally represented the Trustee in connection with the transactions contemplated by the Trustee Documents and the preparation of this opinion.
Where questions of fact material to our opinions expressed below were not established independently, we have relied upon statements of officers of the Trustee as contained in certificates of officers of the Trustee.
E-2
Based upon the foregoing, we are of the opinion that:
1. The Trustee is a national banking association duly organized, validly existing and in good standing under the laws of the United States of America and is authorized to exercise trust powers.
2. The Trustee has all requisite corporate power, authority and legal right to execute and deliver the Trustee Documents and the Certificates.
3. The Trustee has duly authorized, executed and delivered the Trustee Documents.
Assuming the due authorization, execution and delivery thereof by the other parties thereto, the Trustee Documents are the legal, valid and binding agreements of the Trustee, enforceable in accordance with their terms against the Trustee.
4. The Trustee has duly executed and delivered the Certificates in its capacity as trustee under the Trust Agreement.
5. To our knowledge, no authorization, approval, consent, or order of any governmental agency or regulatory authority having jurisdiction over the Trustee that has not been obtained by the Trustee is required for the authorization, execution, delivery and performance by the Trustee of the Trustee Documents and the Certificates.
6. The execution and delivery of the Trustee Documents and the Certificates by the Trustee and the performance of its duties as a trustee pursuant to the Trustee Documents and the Certificates will not violate or cause a breach of any statute of the United States or the State of California, or any rule or regulation of any governmental authority or regulatory body of the United States or the State of California.
The opinions set forth above are subject to the following qualifications and exceptions:
(a) the opinions are subject to the effect of any applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application affecting creditors’ rights; and
(b) the opinions are subject to the effect of general principles of equity, including (without limitation) concepts of materiality, reasonableness, good faith and fair dealing, and other similar doctrines affecting the enforceability of agreements generally (regardless of whether considered in a proceeding in equity or at law).
Our opinions expressed above are limited to the laws of the State of California and the federal laws of the United States of America.
The foregoing opinions are being furnished to you solely for your benefit and may not be relied upon by, nor may copies be delivered to, any other person without our prior written consent; provided, however, copies of this letter may be included in the transcript of documents compiled with respect to the execution and delivery of the Certificates.
Very truly yours,
F-1
EXHIBIT F
FORM OF OPINION
OF DISCLOSURE COUNSEL
OH&S 6/3/26 Draft
4134-2067-2868.2
CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (this “Disclosure Certificate”) is executed and delivered by the City of Redlands (the “City”) in connection with the execution and delivery of $[PAR AMOUNT] aggregate principal amount of the City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”). The Certificates are being executed and delivered pursuant to the Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Redlands Public Improvement Corporation and the City. The City covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the Certificates and in order to assist the Participating Underwriter in complying with Securities and Exchange Commission Rule 15c2-12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Trust Agreement, 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” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Certificates (including persons holding Certificates through nominees, depositories or other intermediaries). “Dissemination Agent” shall mean KNN Public Finance, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation.
“Financial Obligation” shall mean, for purposes of the Listed Events set out in Section 5(a)(10) and Section 5(b)(8), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the Rule) has been provided to the MSRB consistent with the Rule.
“Holder” shall mean the person in whose name any Certificate shall be registered. “Listed Events” shall mean any of the events listed in Section 5(a) or (b) of this Disclosure Certificate.
“MSRB” shall mean the Municipal Securities Rulemaking Board or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, 2 4134-2067-2868.2
filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org. “Official Statement” shall mean the Official Statement, dated [_________], 2026, relating to the Certificates.
“Participating Underwriter” shall mean the original underwriter(s) of the Certificates required to comply with the Rule in connection with execution and delivery of the Certificates. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
SECTION 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than nine months after the end of the City’s fiscal year (which shall be [April 1] of each year, so long as the City’s fiscal year ends June 30), commencing with the report for fiscal year 2025-26 (which is due not later than [April 1], 2027), 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, that the audited financial statements of the City 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 City’s fiscal year changes, it shall give notice of such change in a filing with the MSRB. The Annual Report shall be submitted on a standard form in use by industry participants or other appropriate form and shall identify the Certificates by name and CUSIP number.
(b) Not later than 15 business days prior to the date specified in subsection (a), the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If the City is unable to provide to the MSRB an Annual Report by the date required in subsection (a), the City shall, in a timely manner, send or cause to be sent to the MSRB a notice in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall (if the Dissemination Agent is other than the City) file a report with the City 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 City’s Annual Report shall contain or include by reference the following:
(a) Audited financial statements of the City for the preceding fiscal year, prepared in accordance with the laws of the State of California and including all statements and information prescribed for inclusion therein by the Controller of the State of California. If the City’s audited financial statements are not available by the time the Annual Report is required to be provided to the MSRB pursuant to Section 3(a) hereof, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and 3 4134-2067-2868.2
the audited financial statements shall be provided to the MSRB in the same manner as the Annual Report when they become available.
(b) To the extent not included in the audited financial statements of the City, the Annual Report shall also include the following:
(1) [City Principal Property Taxpayers;
(2) City Assessed Value of Taxable Property;
(3) City Property Levies and Collections;
(4) City Tax Revenues by Source;
(5) City General Fund Balance Sheet;
(6) City General Fund Statement of Revenues and Expenditures; (7) City Statement of Overlapping Debt;
(8) Funded Status of Retirement Systems;
(9) Information in the Official Statement under the caption “Other PostRetirement Benefits (OPEB).” 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 City or related public entities, which have been made available to the public on the MSRB’s website. The City shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates in a timely manner not later than ten business days after the occurrence of the event:
(1) Principal and interest payment delinquencies;
(2) Unscheduled draws on debt service reserves reflecting financial difficulties; (3) Unscheduled draws on credit enhancements reflecting financial difficulties; (4) Substitution of credit or liquidity providers, or their failure to perform; (5) Adverse tax opinions or issuance by the Internal Revenue Service of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701 TEB);
(6) Tender offers;
4 4134-2067-2868.2
(7) Defeasances;
(8) Rating changes;
(9) Bankruptcy, insolvency, receivership or similar event of the City; or (10) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the City, any of which reflect financial difficulties.
Note: for the purposes of the event identified in subparagraph (9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the City in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the City, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(b) The City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Certificates, if material, in a timely manner not later than ten business days after the occurrence of the event:
(1) Unless described in Section 5(a)(5), other material notices or determinations by the Internal Revenue Service with respect to the tax status of the Certificates or other material events affecting the tax status of the Certificates;
(2) Modifications to rights of holders of the Certificates; (3) Optional, unscheduled or contingent Certificate calls; (4) Release, substitution, or sale of property securing repayment of the Certificates;
(5) Non-payment related defaults;
(6) The consummation of a merger, consolidation, or acquisition involving the City or the sale of all or substantially all of the assets of the City, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms; (7) Appointment of a successor or additional trustee or the change of name of a trustee; or
5 4134-2067-2868.2
(8) Incurrence of a Financial Obligation of the City, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation of the City, any of which affect Certificate holders.
(c) Upon the occurrence of a Listed Event described in Section 5(a) of this Disclosure Certificate, or upon the occurrence of a Listed Event described in Section 5(b) of this Disclosure Certificate which the City determines would be material under applicable federal securities laws, the City shall within ten business days of occurrence file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of the Listed Event described in Section 5(b)(3) need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to Holders of affected Certificates pursuant to the Trust Agreement. (d) The City intends to comply with the Listed Events described in Section 5(a)(10) and Section 5(b)(8), and the definition of “Financial Obligation” in Section 2, with reference to the Rule, any other applicable federal securities laws and the guidance provided by the Securities and Exchange Commission in Release No. 34-83885 dated August 20, 2018 (the “2018 Release”), and any further amendments or written guidance provided by the Securities and Exchange Commission or its staff with respect to the amendments to the Rule effected by the 2018 Release.
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.
SECTION 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior prepayment or payment in full of all of the Certificates. If such termination occurs prior to the final principal payment date of the Certificates, the City shall give notice of such termination in a filing with the MSRB.
SECTION 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in 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 City pursuant to this Disclosure Certificate. The initial Dissemination Agent shall be KNN Public Finance.
SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) If the amendment or waiver relates to the provisions of Sections 3(a), 4, or 5(a) or (b) hereof, 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 the City with respect to the Certificates, 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 execution and delivery of the Certificates, after taking 6 4134-2067-2868.2
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 Certificates.
In the event of any amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such amendment or waiver 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 City. 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 City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any 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 City chooses to include any information in any Annual Report or notice in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure 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 City to comply with any provision of this Disclosure Certificate, any Holder or Beneficial Owner of the Certificates may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate; provided, that any such action may be instituted only in Superior Court of the State of California in and for San Bernardino County or in U.S. City Court in or nearest to San Bernardino County.
The sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 12. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure Certificate may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that by signing this Disclosure Certificate using an electronic signature, it is signing, adopting and accepting this Disclosure Certificate and that signing this Disclosure Certificate using an electronic signature is the legal equivalent of having placed the undersigned officer’s handwritten signature on this Disclosure Certificate on paper.
Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Certificate in a usable format.
7 4134-2067-2868.2
SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and Holders and Beneficial Owners from time to time of the Certificates, and shall create no rights in any other person or entity.
Date: [CLOSING], 2026
CITY OF REDLANDS
By:
[_________], [_________]
ACCEPTED AND AGREED TO:
KNN PUBLIC FINANCE, as
Dissemination Agent
By:
Authorized Signatory
A-1
4134-2067-2868.2
CONTINUING DISCLOSURE EXHIBIT A
FORM OF NOTICE TO THE MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: City of Redlands
Name of Issue: City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities)
Date of Delivery: [CLOSING], 2026
NOTICE IS HEREBY GIVEN that the City has not provided an Annual Report with respect to the above-named Certificates as required by Section 4 of the Continuing Disclosure Certificate of the City, dated the Date of Delivery. [The City anticipates that the Annual Report will be filed by _____________.]
Dated:_______________
CITY OF REDLANDS
OH&S 6/3/26 Draft
PRELIMINARY OFFICIAL STATEMENT DATED [_______], 2026 This Preliminary Official Statement and the information contained herein are subject to completion and amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of these securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful. 4134-1978-1989.7
NEW ISSUE RATING: S&P: “[___]”
FULL BOOK-ENTRY (See “RATING” herein)
In the opinion of Orrick, Herrington & Sutcliffe LLP, Special Counsel to the City, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the portion of each Base Rental Payment designated as and constituting interest paid by the City under the Lease Agreement and received by the Owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. In the further opinion of Special Counsel, interest evidenced by the Certificates is not a specific preference item for purposes of the federal individual alternative minimum tax. Special Counsel observes that interest evidenced by the Certificates included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Special Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of the Certificates, or the amount, accrual or receipt of the portion of each Base Rental Payment constituting interest. See “TAX MATTERS.” $[PAR AMOUNT]*
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
Dated: Date of Delivery Due: May 1, as described herein This cover page contains information for reference only. Investors must read the entire Official Statement to obtain information essential in making an informed investment decision. Capitalized terms used in this cover page shall have the meanings given such terms herein.
The City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”) in the aggregate principal amount of $[PAR AMOUNT] evidence direct, fractional undivided interests of the Owners thereof in certain Base Rental Payments (which include principal components and interest components) (collectively, the “Base Rental Payments”) to be made by the City of Redlands (the “City”) for the use of certain real property and the improvements thereon (the “Property”) pursuant to a Lease Agreement, dated as of [________] 1, 2026 (the “Lease Agreement”), by and between the City, as lessee, and the Redlands Public Improvement Corporation (the “Corporation”), as lessor. The Certificates will be executed and delivered pursuant to a Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Corporation and the City. The proceeds of the Certificates will be used to (i) finance a portion of the costs of the construction, installation and acquisition of certain capital improvements constituting a city police facility and related improvements, a city fire station and related improvements, and capital equipment improvements at the City’s A. K. Smiley Public Library (collectively, the “Project”), (ii) fund capitalized interest evidenced by the Certificates, and (iii) pay the costs incurred in connection with the execution and delivery of the Certificates. The Property leased will include the city police facility but not the fire station, as described herein.
The City has covenanted under the Lease Agreement to make all Base Rental Payments and Additional Rental Payments (collectively, the “Rental Payments”) provided for therein, to include all such Rental Payments as a separate line item in its annual budgets, and to make the necessary annual appropriations for all such Rental Payments. The City’s obligation to make Base Rental Payments is subject to abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property. See “RISK FACTORS – Abatement.” Interest evidenced by the Certificates is payable semiannually on May 1 and November 1 of each year, commencing on November 1, 2026.
See “THE CERTIFICATES” herein.
The Certificates will be initially delivered only in book-entry form and will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers of Certificates will not receive certificates representing their ownership interests in the Certificates purchased. The Certificates will be delivered in denominations of $5,000 or any integral multiple thereof. Principal and interest payments evidenced by the Certificates will be paid directly to DTC by the Trustee. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to DTC Participants for subsequent disbursement to the beneficial owners of the Certificates. See “THE CERTIFICATES – Book-Entry Only System” herein.
The Certificates are subject to prepayment prior to maturity as described herein. See “THE CERTIFICATES – Prepayment.” The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation.
See “RISK FACTORS” for a discussion of factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the Certificates.
__________________________________________
MATURITY SCHEDULE – See Inside Cover
__________________________________________
The Certificates will be offered when, as and if executed, delivered and received by the Underwriters, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Irvine, California, Special Counsel to the City. Certain legal matters will be passed upon for the City by Orrick, Herrington & Sutcliffe LLP, Irvine, California, as Disclosure Counsel to the City; for the Underwriters by Katten Muchin Rosenman LLP, New York, New York, as counsel to the Underwriters; and for the City and the Corporation by Yvette Abich Garcia, City Attorney for the City of Redlands, * Preliminary; subject to change.
4134-1978-1989.7
as counsel to the City and the Corporation. It is anticipated that the Certificates in book-entry form will be available for delivery through the facilities of DTC on or about [_________], 2026.
BofA Securities Stifel, Nicolaus & Company, Incorporated Dated: __________, 2026
4134-1978-1989.7
MATURITY SCHEDULE*
BASE CUSIP†: [_______]
$[PAR AMOUNT]*
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
Maturity Date
(May 1,)
Principal
Amount
Interest
Rate Yield
CUSIP†
Suffix
2029 $ % %
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
$__________ _____% Term Certificates due May 1, 2051 - Yield _____% - CUSIP† Suffix ___ $__________ _____% Term Certificates due May 1, 2056 - Yield _____% - CUSIP† Suffix ___ *
Preliminary; subject to change.
†
CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright© 2026 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CGS database. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database.
CUSIP® numbers are provided for convenience of reference only. None of the City, the Corporation, the Underwriters or their agents or counsel assume responsibility for the accuracy of such numbers. 4134-1978-1989.7
CITY OF REDLANDS
CITY COUNCIL
Mario Saucedo, Mayor
Marc Shaw, Mayor Pro Tem
Paul Barich, Councilmember
Eddie Tejeda, Councilmember
Denise Davis, Councilmember
BOARD OF TRUSTEES OF THE CORPORATION
Mario Saucedo, Chair
Marc Shaw, Trustee
Paul Barich, Trustee
Eddie Tejeda, Trustee
Denise Davis, Trustee
CITY/CORPORATION OFFICIALS
Charles M. Duggan, Jr., City Manager/President of Corporation Janice McConnell, Assistant City Manager
Phillip Doolittle, City Treasurer/ Treasurer of the Corporation Danielle Garcia, Director, Management Services/Finance
James Garland, Assistant Finance Director
Jeanne Donaldson, City Clerk/Secretary of Corporation
Yvette Abich Garcia, City Attorney/Corporation Counsel
PROFESSIONAL SERVICES
Municipal Advisor
KNN Public Finance, LLC
Los Angeles, California
Special Counsel and Disclosure Counsel
Orrick, Herrington & Sutcliffe LLP
Irvine, California
Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California
4134-1978-1989.7
This Official Statement does not constitute an offering of any security other than the original execution and delivery of the Certificates. No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations other than as contained in this Official Statement, and if given or made, such other information or representation not so authorized should not be relied upon as having been given or authorized by the City.
The Certificates are exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 3(a)(2) thereof. This Official Statement does not constitute an offer to sell or a solicitation of an offer to buy Certificates in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation.
The information set forth herein other than that furnished by the City, although obtained from sources which are believed by the City to be reliable, is not guaranteed as to accuracy or completeness, and is not to be construed as a representation by the City. The information and expressions of opinions herein are subject to change without notice and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the City since the date hereof. This Official Statement is submitted in connection with the execution and delivery of the Certificates referred to herein and may not be reproduced or used, in whole or in part, for any other purpose.
The Underwriters have provided the following sentence for inclusion in this Official Statement: The Underwriters have reviewed the information in this Official Statement in accordance with, and as a part of, their responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of such information.
Certain statements included or incorporated by reference in this Official Statement constitute “forwardlooking statements.” Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “budget,” “intend” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The City does not plan to issue any updates or revisions to those forward-looking statements if or when their expectations, or events, conditions or circumstances on which such statements are based, occur.
The City maintains a website. However, the information presented there is not part of this Official Statement and should not be relied upon in making an investment decision with respect to the Certificates.
The Underwriters may offer and sell the Certificates to certain securities dealers and dealer banks and banks acting as agent at prices lower than the public offering prices stated on the inside front cover page hereof and said public offering prices may be changed from time to time by the Underwriters.
TABLE OF CONTENTS
Page
i
4134-1978-1989.7
INTRODUCTION ....................................................................................................................................... 1 The City .......................................................................................................................................... 1 Security and Sources of Payment for the Certificates ..................................................................... 2 Purpose of the Certificates .............................................................................................................. 3 Description of the Certificates ........................................................................................................ 3 Offering and Delivery of the Certificates ....................................................................................... 4 Certificate Owners’ Risks ............................................................................................................... 4 Continuing Disclosure .................................................................................................................... 4 Forward-Looking Statements .......................................................................................................... 4 Other Information ........................................................................................................................... 4 THE CERTIFICATES ................................................................................................................................. 5 General ............................................................................................................................................ 5 Prepayment ..................................................................................................................................... 6 Book-Entry Only System ................................................................................................................ 9 SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES ........................................... 10 Nature of the Certificates .............................................................................................................. 10 Base Rental Payments ................................................................................................................... 10 Base Rental Payments Schedule ................................................................................................... 11 Additional Rental Payments ......................................................................................................... 11 Covenant to Appropriate Funds .................................................................................................... 12 Abatement ..................................................................................................................................... 12 No Reserve Fund .......................................................................................................................... 12 Insurance ....................................................................................................................................... 12 Action on Default .......................................................................................................................... 13 THE PROPERTY ...................................................................................................................................... 13 General .......................................................................................................................................... 13 Substitution or Release ................................................................................................................. 14 PLAN OF FINANCE ................................................................................................................................. 14 ESTIMATED SOURCES AND USES OF FUNDS ................................................................................. 17 RISK FACTORS ....................................................................................................................................... 17 General Considerations and Other Obligations ............................................................................ 17 Extraordinary Prepayment of Certificates..................................................................................... 18 Limited Recourse on Default ........................................................................................................ 18 No Acceleration Upon Default ..................................................................................................... 18 No Liability of Corporation to the Owners ................................................................................... 18 Bankruptcy .................................................................................................................................... 18 Loss of Tax Exemption ................................................................................................................. 20 Abatement ..................................................................................................................................... 20 Substitution or Release of Property .............................................................................................. 20 Natural Disasters, Seismic Activity, and Drought ........................................................................ 20 Climate Change and Sea Level Rise ............................................................................................. 23 Absence of Earthquake and Flood Insurance ................................................................................ 23 Hazardous Substances ................................................................................................................... 23 Economic Conditions in California .............................................................................................. 24
TABLE OF CONTENTS
(continued)
Page
ii
4134-1978-1989.7
Future Budgets and Budgetary Actions ........................................................................................ 25 Risks Related to Completion of Fire Station #265. ...................................................................... 26 Federal Funding Risks .................................................................................................................. 26 Cybersecurity ................................................................................................................................ 26 Military Actions in Iran and the Middle East ............................................................................... 27
CONSTITUTIONAL PROVISIONS AFFECTING CITY REVENUES AND
APPROPRIATIONS .................................................................................................................................. 27 Article XIIIB of the California Constitution – Limitations on Appropriations ............................ 27 Articles XIIIC and XIIID of the California Constitution – The Right to Vote on Taxes ............. 28 Proposition 26 ............................................................................................................................... 30 Proposition 1A of 2004 ................................................................................................................. 30 Proposition 22 ............................................................................................................................... 31 Future Initiatives ........................................................................................................................... 31 THE CORPORATION .............................................................................................................................. 31 RATING .................................................................................................................................................... 32 TAX MATTERS ........................................................................................................................................ 32 CERTAIN LEGAL MATTERS................................................................................................................. 34 MUNICIPAL ADVISOR ........................................................................................................................... 35 ABSENCE OF MATERIAL LITIGATION .............................................................................................. 35 FINANCIAL STATEMENTS ................................................................................................................... 35 UNDERWRITING .................................................................................................................................... 35 MISCELLANEOUS .................................................................................................................................. 36
APPENDIX A CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION ............................................................................................................ A-1
APPENDIX B FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2025 ................................................................................................. B-1 APPENDIX C SUMMARY OF PRINCIPAL LEGAL DOCUMENTS ................................................. C-1 APPENDIX D FORM OF SPECIAL COUNSEL OPINION .................................................................. D-1 APPENDIX E FORM OF CONTINUING DISCLOSURE CERTIFICATE .......................................... E-1 APPENDIX F CITY OF REDLANDS INVESTMENT POLICY ........................................................... F-1 APPENDIX G BOOK-ENTRY ONLY SYSTEM .................................................................................. G-1 4134-1978-1989.7
OFFICIAL STATEMENT
$[PAR AMOUNT]*
CITY OF REDLANDS
CERTIFICATES OF PARTICIPATION, SERIES 2026
(POLICE AND FIRE FACILITIES)
INTRODUCTION
This Official Statement, which includes the cover page, inside front cover page, and Appendices hereto (this “Official Statement”), provides certain information concerning the execution and delivery of City of Redlands Certificates of Participation, Series 2026 (Police and Fire Facilities) (the “Certificates”) in the aggregate principal amount of $[PAR AMOUNT]. The Certificates evidence direct, fractional undivided interests of the registered owners (the “Owners”) thereof in certain base rental payments (the “Base Rental Payments”) to be made by the City of Redlands (the “City”) for the use of certain real property and the improvements thereon (the “Property”), as more fully described under the caption “THE PROPERTY” herein. The Property will be leased by the City from the Redlands Public Improvement Corporation (the “Corporation”) pursuant to a Lease Agreement, dated as of [________] 1, 2026 (the “Lease Agreement”), by and between the City and the Corporation.
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page, inside front cover page, and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement. The execution and delivery of the Certificates to potential investors is made only by means of the entire Official Statement.
The City
The City, incorporated in 1888, is located 63 miles east of Los Angeles, 110 miles north of San Diego and 500 miles southeast of San Francisco. It lies within the San Bernardino Valley in the southwestern portion of San Bernardino County (the “County”), covering an area of 36 square miles, within the heart of the Inland Empire. It serves a population of 73,811.
The City was incorporated under the general laws of the State of California (the “State”) and enjoys all the rights and privileges applicable to a general law city. It is a municipal corporation governed by a five-member city council (the “City Council”) in which all policy-making and legislative authority is vested. The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring both the City Manager and City Attorney. The City Manager is the chief administrative officer of the City and as such is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing department heads.
The City Council is elected on a non-partisan basis. Adopted in 2017, Ordinance No. 2848, amended the Redlands Municipal Code to change the City’s electoral system for City Council Members from at-large to by-district elections. Council members serve four-year staggered terms, with elections occurring every two years. The City Council meets after each general municipal election and chooses one of its members as Mayor, and one of its members as Mayor Pro Tempore by way of council member nomination. The terms of office of the Mayor and Mayor Pro Tempore are for two (2) years. *
Preliminary; subject to change.
2 4134-1978-1989.7
The City provides a full range of services, including police and fire protection, animal control, emergency medical aid, building safety regulation and inspection, street lighting, landscaping, sewer and water utilities, solid waste collection and disposal, land use planning and zoning, recreation and community services, maintenance and improvement of streets and related structures, traffic safety maintenance and improvement, and a full range of recreational and cultural programs for citizen participation, as well as being the home of the historic A. K. Smiley Public Library.
For additional information about the City, see APPENDIX A ‒ “CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION” and APPENDIX B – “FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR ENDED JUNE 30, 2025.” Security and Sources of Payment for the Certificates
The Certificates will be executed and delivered pursuant to a Trust Agreement, dated as of [________] 1, 2026 (the “Trust Agreement”), by and among U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), the Corporation and the City. The Certificates evidence direct, fractional undivided interests in the Base Rental Payments to be made by the City under the Lease Agreement for the use of the Property. See “THE PROPERTY.” The City will enter into a Ground Lease, dated as of [________] 1, 2026 (the “Ground Lease”) pursuant to which the City will lease the Property to the Corporation. The Corporation will then sublease the Property back to the City pursuant to the Lease Agreement. The Lease Agreement will obligate the City to make Base Rental Payments and Additional Rental Payments, which include taxes and assessments affecting the Property, reasonable administrative costs of the Corporation relating to the Property, fees and expenses of the Trustee, insurance premiums and other amounts payable under the Lease Agreement and the Trust Agreement as further described herein. Base Rental Payments and Additional Rental Payments are collectively referred to as “Rental Payments.”
The Trustee and the Corporation will enter into an Assignment Agreement, dated as of [________] 1, 2026 (the “Assignment Agreement”), pursuant to which the Corporation will sell, assign and transfer to the Trustee for the benefit of the Owners substantially all of the Corporation’s right, title and interest in and to the Ground Lease and the Lease Agreement, including its right to receive the Base Rental Payments due under the Lease Agreement, provided that the Corporation will retain the right to indemnification and to payment of its reasonable costs and expenses under the Lease Agreement.
The City covenants under the Lease Agreement to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor.
Base Rental Payments are subject to complete or partial abatement during any period in which, by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property.
See “RISK FACTORS – Abatement.” Abatement of Base Rental Payments under the Lease Agreement, to the extent payment is not made from alternative sources as set forth below, could result in all Owners receiving less than the full amount of principal and interest evidenced by the Certificates. To the extent proceeds of insurance are available or there are amounts available in other funds established under the Trust Agreement (as described below), Base Rental Payments (or a portion thereof) may be made during periods of abatement.
THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OF CALIFORNIA (THE “STATE”) OR 3 4134-1978-1989.7
OF ANY POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF ANY
CONSTITUTIONAL OR STATUTORY DEBT LIMIT OR RESTRICTION, AND DOES NOT
CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR THE STATE IS OBLIGATED TO
LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
For more complete and detailed information, see “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES.” For a discussion of certain risks associated with the City’s ability to make Base Rental Payments for the Property, see “RISK FACTORS.” Purpose of the Certificates
The proceeds of the Certificates will be used to (i) finance a portion of the costs of the construction, installation and acquisition of certain capital improvements constituting a city police facility and related improvements and a city fire station and related improvements, and capital equipment improvements at the City’s A. K. Smiley Public Library (collectively, the “Project”), (ii) fund capitalized interest evidenced by the Certificates, and (iii) pay the costs incurred in connection with the execution and delivery of the Certificates. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS.” Description of the Certificates
The Certificates will be executed and delivered in book-entry form only and, when delivered, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), which will act as securities depository for the Certificates. Individual purchases of the Certificates will be made in book-entry form only. Purchasers of the Certificates will not receive certificates representing their ownership interests in the Certificates purchased. The Certificates will be delivered in denominations of $5,000 or any integral multiple thereof. Principal and interest payments evidenced by the Certificates are payable directly to DTC by the Trustee for the Certificates. Upon receipt of payments of principal and interest, DTC will in turn distribute such payments to DTC Participants for subsequent disbursement to the beneficial owners of the Certificates (the “Beneficial Owners”). See “THE CERTIFICATES – General” and APPENDIX G – “BOOK-ENTRY ONLY SYSTEM.” Interest evidenced by the Certificates is payable semiannually on May 1 and November 1 of each year, commencing on November 1, 2026. See “THE CERTIFICATES – General.” The Certificates are subject to prepayment prior to maturity as described herein. See “THE CERTIFICATES – Prepayment.”
For a more complete description of the Certificates and the basic documentation pursuant to which they are being sold and delivered, see “THE CERTIFICATES,” “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES” and APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.” The summaries and descriptions in this Official Statement of the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust Agreement and the Continuing Disclosure Certificate and other agreements relating to the Certificates are qualified in their entirety by the respective form thereof and the information with respect thereto included in such documents. All capitalized terms used in this Official Statement (unless otherwise defined herein) which are defined in the Trust Agreement or the Lease Agreement shall have the same meanings assigned to such terms as set forth therein. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – DEFINITIONS.”
4 4134-1978-1989.7
Offering and Delivery of the Certificates
The Certificates will be offered when, as and if executed, delivered and received by the Underwriters, subject to the approval of legality by Orrick, Herrington & Sutcliffe LLP, Special Counsel to the City, and the satisfaction of certain other conditions. It is anticipated that the Certificates will be available in book-entry form for delivery through the facilities of DTC on or about __________, 2026 (the “Delivery Date”).
Certificate Owners’ Risks
Certain events could affect the ability of the City to make the Base Rental Payments when due. See “RISK FACTORS” for a discussion of certain factors that should be considered, in addition to other matters set forth herein, in evaluating an investment in the Certificates.
Continuing Disclosure
The City will covenant under the Continuing Disclosure Certificate to provide, or to cause to be provided, to the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access system or such other electronic system designated by the Municipal Securities Rulemaking Board (the “EMMA System”) certain annual financial information and operating data relating to the City (the “Annual Report”) by not later than nine months after the end of the City’s fiscal year (which shall be April 1 of each year, so long as the City’s fiscal year ends June 30), commencing with the report for Fiscal Year 2025-26 (which is due not later than April 1, 2027) and notice of the occurrence of certain enumerated events (“Notice Events”) in a timely manner not in excess of ten business days after the occurrence of such a Notice Event. The specific nature of the information to be contained in the Annual Report and the notices of Notice Events is set forth in APPENDIX E − “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made for the benefit of the holders and Beneficial Owners of the Certificates in order to assist the Underwriters in complying with Rule 15c2-12(b)(5) of the Securities and Exchange Commission (the “Rule”).
[To be updated per Underwriter’s Continuing Disclosure Report.] KNN Public Finance, LLC has been engaged by the City as its dissemination agent in connection with the continuing disclosure undertaking pursuant to the Rule relating to the Certificates.
Forward-Looking Statements
Certain statements included or incorporated by reference in this Official Statement constitute “forward-looking statements.” Such statements are generally identifiable by the terminology used, such as “plan,” “expect,” “estimate,” “budget,” “intend” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The City does not plan to issue any updates or revisions to those forwardlooking statements if or when their expectations, or events, conditions or circumstances on which such statements are based, occur.
Other Information
This Official Statement is current only as of its date, and the information contained herein is subject to change. Copies of the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust 5 4134-1978-1989.7
Agreement and the Continuing Disclosure Certificate are available for inspection at the City at 300 East State Street, Suite 690, Redlands, California 92373, by request to City Manager, and, following delivery of the Certificates, will be on file at the offices of the Trustee in Los Angeles, California.
THE CERTIFICATES
General
The Certificates evidence and represent direct, fractional undivided interests of the Owners thereof in the principal and interest components of Base Rental Payments to be made by the City pursuant to the Lease Agreement.
The Certificates are dated the date of original delivery thereof and will be executed and delivered in denominations of $5,000 or any integral multiple thereof (“Authorized Denominations”). The interest components evidenced by the Certificates will be due and payable semiannually on May 1 and November 1 of each year, commencing November 1, 2026 (each an “Interest Payment Date”). The interest evidenced by the Certificates will be payable on each Interest Payment Date to and including their respective Principal Payment Dates or prepayment prior thereto, and will represent the sum of the portions of the Base Rental Payments evidenced thereby designated as interest components coming due on the Interest Payment Dates in each year.
The interest evidenced by the Certificates will be computed on the basis of a 360-day year consisting of twelve, 30-day months. Each Certificate evidences interest from the Interest Payment Date next preceding its date of execution to which interest has been paid in full, unless such date of execution is after the 15th day of the calendar month immediately preceding such Interest Payment Date, whether or not such day is a Business Day (a “Record Date”) and on or prior to the following Interest Payment Date, in which case such Certificate evidences interest from such Interest Payment Date, or unless such date of execution is on or prior to October 15, 2026, in which case such Certificate evidences interest from the Delivery Date. Notwithstanding the foregoing, if, as shown by the records of the Trustee, interest evidenced by the Certificates is in default, each Certificate will evidence interest from the last Interest Payment Date to which such interest has been paid in full or duly provided for.
The Base Rental Payments evidenced by the Certificates will be payable by the City and deposited with the Trustee no later than the 10th day next preceding each Interest Payment Date (each a “Base Rental Deposit Date”). The principal components of the Base Rental Payments will evidence interest components calculated at the rates per annum, all as set forth on the inside front cover page of this Official Statement.
The principal evidenced by the Certificates will be payable on their respective Principal Payment Dates and Mandatory Sinking Account Payment Dates in each year and shall represent the sum of the portions of the Base Rental Payments designated as principal components coming due on the Principal Payment Dates and Mandatory Sinking Account Payment Dates in each year.
The Certificates will be subject to the Book-Entry System of registration, transfer and payment, and each Certificate will initially be registered in the name of Cede & Co., as nominee of DTC. As part of such Book-Entry System, DTC has been appointed securities depository for the Certificates, and registered ownership may not thereafter be transferred except as provided in the Trust Agreement. The Certificates are being delivered in book-entry form only. Purchasers will not receive securities certificates representing their interests in the Certificates. Rather, in accordance with the Book-Entry System, purchasers of each Certificate will have beneficial ownership interests in the purchased Certificates through DTC Participants.
For more information concerning the Book-Entry System, see “THE CERTIFICATES – Book-Entry Only System.”
6 4134-1978-1989.7
While the Certificates are subject to the Book-Entry System, payments of principal and interest evidenced by the Certificates will be made by the Trustee directly to DTC. DTC in turn is obligated to remit such principal and interest to its DTC Participants for subsequent disbursement to Beneficial Owners of the Certificates as described herein. See “THE CERTIFICATES – Book-Entry Only System” and APPENDIX G – “BOOK-ENTRY ONLY SYSTEM.”
Prepayment
Optional Prepayment. The Certificates maturing on or after May 1, 20__ are subject to optional prepayment prior to their respective stated Principal Payment Dates, on any date on or after May 1, 20__, in whole or in part, in Authorized Denominations, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement from any source of available funds, any such prepayment to be at a price equal to the principal evidenced by the Certificates to be prepaid, plus unpaid accrued interest evidenced thereby to the date fixed for prepayment, without premium.
Extraordinary Prepayment. The Certificates are subject to extraordinary prepayment prior to their stated Principal Payment Dates, on any date, in whole or in part, in Authorized Denominations, from and to the extent of any insurance proceeds or condemnation award in excess of $50,000 paid with respect to any of the Property, remaining after payment therefrom of all reasonable expenses incurred in the collection thereof (the “Net Proceeds”) received with respect to any of the Property, deposited by the Trustee in the Prepayment Fund pursuant to the Trust Agreement, at a prepayment price equal to the principal evidenced by the Certificates to be prepaid, plus unpaid accrued interest, if any, evidenced thereby to the date fixed for prepayment, without premium.
Mandatory Sinking Account Prepayment. The Certificates with a stated Principal Payment Date of May 1, 20__ are subject to prepayment prior to such stated Principal Payment Date, in part, from Mandatory Sinking Account Payments, on May 1 of the years and in the aggregate principal amounts as set forth in the table shown below, any such Mandatory Sinking Account Payments to be at a prepayment price equal to the principal evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium:
Prepayment Date
(May 1,)
Principal
To Be Prepaid
$
†
† Stated Principal Payment Date
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the extraordinary prepayment provisions as described herein under the caption “– Extraordinary Prepayment,” the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the extraordinary prepayment provisions, such reduction to be allocated among prepayment dates in proportion to the amount by which the principal components of the Base Rental Payments evidenced by such Certificates payable on such prepayment dates are abated pursuant to the Lease Agreement as a result of the event that caused such Certificates to be prepaid pursuant to the extraordinary prepayment provisions, in amounts of Authorized Denominations.
7 4134-1978-1989.7
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the optional prepayment provisions as described herein under the caption “– Optional Prepayment,” the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the optional prepayment provisions, such reduction to be allocated among prepayment dates in amounts of Authorized Denominations, as designated by the City.
The Certificates with a stated Principal Payment Date of May 1, 20__ are subject to prepayment prior to such stated Principal Payment Date, in part, from Mandatory Sinking Account Payments, on May 1 of the years and in the aggregate principal amounts as set forth in the table shown below, any such Mandatory Sinking Account Payments to be at a prepayment price equal to the principal evidenced by the Certificates to be prepaid, plus accrued interest evidenced thereby to the date fixed for prepayment, without premium:
Prepayment Date
(May 1,)
Principal
To Be Prepaid
$
†
† Stated Principal Payment Date
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the extraordinary prepayment provisions as described herein under the caption “– Extraordinary Prepayment,” the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the extraordinary prepayment provisions, such reduction to be allocated among prepayment dates in proportion to the amount by which the principal components of the Base Rental Payments evidenced by such Certificates payable on such prepayment dates are abated pursuant to the Lease Agreement as a result of the event that caused such Certificates to be prepaid pursuant to the extraordinary prepayment provisions, in amounts of Authorized Denominations.
If some but not all of the principal evidenced by the Certificates with a stated Principal Payment Date of May 1, 20__ is prepaid pursuant to the optional prepayment provisions as described herein under the caption “– Optional Prepayment,” the principal evidenced by such Certificates to be prepaid pursuant to Mandatory Sinking Account Payments on any subsequent May 1 will be reduced by the aggregate principal evidenced by such Certificates so prepaid pursuant to the optional prepayment provisions, such reduction to be allocated among prepayment dates in amounts of Authorized Denominations, as designated by the City.
Prepayments of Certificates pursuant to extraordinary prepayment that were purchased at a price greater than the applicable prepayment price could reduce the otherwise expected yield on such Certificates.
See “RISK FACTORS – Extraordinary Prepayment of Certificates” herein.
Selection of Certificates for Prepayment. Whenever less than all the Outstanding Certificates are to be prepaid on any one date, the Trustee will select the Certificates to be prepaid (a) with respect to any prepayment as described above under the caption “– Extraordinary Prepayment,” among Certificates with 8 4134-1978-1989.7
different stated Principal Payment Dates in proportion to the amount by which the principal components of the Base Rental Payments evidenced by such Certificates are abated pursuant to the Lease Agreement, and (b) with respect to any optional prepayment described above under the caption “ – Optional Prepayment,” as directed in a Written Request of the City, and by lot among Certificates with the same stated Principal Payment Date in any manner that the Trustee deems fair and appropriate, which decision will be final and binding upon the City and the Owners. The Trustee will promptly notify the City in writing of the numbers of the Certificates so selected for prepayment on such date. For purposes of such selection, any Certificate may be prepaid in part in Authorized Denominations.
Notice of Prepayment. The Trustee will mail (by first class mail) notice of any prepayment to the respective Owners of any Certificates designated for prepayment at their respective addresses appearing on the records maintained by the Trustee for the registration of ownership and registration of transfer of the Certificates pursuant to the Trust Agreement, at least 30 but not more than 60 days prior to the date fixed for prepayment. Such notice will state the date of the notice, the prepayment date, the prepayment place and the prepayment price and will designate the CUSIP numbers, if any, the Certificate numbers and the stated Principal Payment Date or Principal Payment Dates of the Certificates to be prepaid (except in the event of prepayment of all of the Certificates in whole), and will require that such Certificates be then surrendered at the Principal Office of the Trustee for prepayment at the prepayment price, giving notice also that further interest evidenced by such Certificates will not accrue from and after the date fixed for prepayment. Neither the failure to receive any notice so mailed, nor any defect in such notice, will affect the validity of the proceedings for the prepayment of the Certificates or the cessation of accrual of interest evidenced thereby from and after the date fixed for prepayment.
With respect to any notice of any optional prepayment of Certificates, unless at the time such notice is given the Certificates to be prepaid will be deemed to have been paid within the meaning of the Trust Agreement, such notice will state that such prepayment is conditional upon receipt by the Trustee, on or prior to the date fixed for such prepayment, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the prepayment price of, and accrued interest evidenced by, the Certificates to be prepaid, and that if such moneys are not received said notice will be of no force and effect and such Certificates will not be required to be prepaid. In the event a notice of prepayment of Certificates contains such a condition and such moneys are not so received, the prepayment of Certificates as described in the conditional notice of prepayment will not be made and the Trustee will, within a reasonable time after the date on which such prepayment was to occur, give notice to the Persons and in the manner in which the notice of prepayment was given, that such moneys were not so received and that there will be no prepayment of Certificates pursuant to such notice of prepayment.
While the Certificates are subject to the Book-Entry System, the Trustee will not be required to give any notice of prepayment to any person or entity other than DTC. DTC and the DTC Participants will have sole responsibility for providing any such notice of prepayment to the Beneficial Owners of the Certificates to be prepaid. Any failure at DTC to notify any DTC Participant, or any failure of a DTC Participant to notify the Beneficial Owner of any Certificates to be prepaid, of a notice of prepayment or its content or effect will not affect the validity of the notice of prepayment, or alter the effect of prepayment described below under “Effect of Prepayment.”
Partial Prepayment of Certificates. Upon surrender of any Certificate prepaid in part only, the Trustee will execute and deliver to the Owner thereof a new Certificate or Certificates evidencing the unprepaid principal with respect to the Certificate surrendered.
Effect of Prepayment. When notice of prepayment has been duly given as provided in the Trust Agreement and moneys for the payment of the prepayment price of the Certificates to be prepaid are held by the Trustee, then on the prepayment date designated in such notice, the Certificates so called for 9 4134-1978-1989.7
prepayment will become payable at the prepayment price specified in such notice; and from and after the date so designated, interest evidenced by such Certificates will cease to accrue and such Certificates will cease to be entitled to any benefit or security under the Trust Agreement and the Owners of such Certificates will have no rights in respect thereof except to receive payment of the prepayment price thereof, and such moneys shall be pledged to such prepayment. The Trustee will, upon surrender for payment of any of such Certificates, pay such Certificates at the prepayment price thereof.
Book-Entry Only System
General. DTC will act as securities depository for the Certificates. The Certificates will be executed and delivered 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 Certificate will be issued for each stated Principal Payment Date of the Certificates, each in the aggregate amount of the principal evidenced by Certificates with such stated Principal Payment Date, and will be deposited with DTC. See APPENDIX G – “BOOK-ENTRY ONLY SYSTEM.” Discontinuance of DTC Service. In the event that (a) DTC determines not to continue to act as securities depository for the Certificates or (b) the City determines to remove DTC from its functions as a depository, DTC’s role as securities depository for the Certificates and use of the book-entry system will be discontinued. If the City fails to select a qualified securities depository to replace DTC, the City will cause the Trustee to execute and deliver new Certificates in fully registered form in such denominations numbered in the manner determined by the Trustee and registered in the names of such persons as are requested by the Beneficial Owners thereof. Upon such registration, such persons in whose names the Certificates are registered will become the registered Owners of the Certificates for all purposes.
The following provisions regarding the exchange and transfer of the Certificates apply only during any period in which the Certificates are not subject to DTC’s book-entry system. While the Certificates are subject to DTC’s book-entry system, their exchange and transfer will be effected through DTC and the Participants and will be subject to the procedures, rules and requirements established by DTC.
All Certificates are transferable by the Owner thereof, in person or by his or her attorney duly authorized in writing, at the Principal Office of the Trustee on the registration books maintained by the Trustee pursuant to the provisions of the Trust Agreement, upon surrender of such Certificates for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form approved by the Trustee. The Trustee may treat the Owner of any Certificate as the absolute owner of such Certificate for all purposes, whether or not the principal or interest evidenced by such Certificate is overdue, and the Trustee will not be affected by any knowledge or notice to the contrary; and payment of the principal and interest evidenced by such Certificate will be made only to such Owner, which payments will be valid and effectual to satisfy and discharge the liability evidenced by such Certificate to the extent of the sum or sums so paid.
Whenever any Certificate or Certificates will be surrendered for transfer, the Trustee will execute and deliver a new Certificate or Certificates evidencing principal in the same aggregate amount and having the same stated Principal Payment Date. The Trustee will require the payment by any Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer.
Certificates may be exchanged at the Principal Office of the Trustee for Certificates evidencing principal in a like aggregate amount having the same stated Principal Payment Date in such Authorized Denominations as the Owner may request. The Trustee will require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. 10 4134-1978-1989.7
The Trustee will not be required to transfer or exchange any Certificate during the period commencing five days before the date of selection of the Certificates for prepayment and ending on the date of mailing notice of such prepayment, nor will the Trustee be required to transfer or exchange any Certificate or portion thereof selected for prepayment from and after the date of mailing the notice of prepayment thereof.
SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES
Nature of the Certificates
Each Certificate evidences a direct, fractional undivided interest in the principal component of the Base Rental Payment due under the Lease Agreement on the payment date or prepayment date of such Certificate, and the interest component of all Base Rental Payments (based on the stated interest rate with respect to such Certificate) to accrue from the date of delivery to its payment date or prepayment date, as the case may be.
The Corporation, pursuant to the Assignment Agreement, will sell, assign and transfer to the Trustee for the benefit of the Owners substantially all of the Corporation’s right, title and interest in and to the Ground Lease and the Lease Agreement, including, its right to receive Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that the Corporation will retain the rights to indemnification and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Corporation.
See “– Base Rental Payments” below.
Base Rental Payments
For the use and possession of the Property, the Lease Agreement requires the City to make Base Rental Payments. The Base Rental Payments evidenced by the Certificates will be payable no later than the Base Rental Deposit Date. To secure the payment of the Base Rental Payments, the City is required to pay to the Trustee, for deposit into the Base Rental Payment Fund, on the Base Rental Deposit Date, an amount sufficient to pay the Base Rental Payment then due.
Pursuant to the Trust Agreement, the Trustee will on each Interest Payment Date, deposit in the Interest Fund that amount of moneys representing the portion of the Base Rental Payments designated as the interest component coming due on such Interest Payment Date. On each Interest Payment Date, the Trustee will withdraw from the Interest Fund, for payment to the Owners, the interest evidenced by the Certificates coming due on such Interest Payment Date.
Pursuant to the Trust Agreement, the Trustee will on each Principal Payment Date and Mandatory Sinking Account Payment Date, deposit in the Principal Fund that amount of moneys representing the portion of the Base Rental Payments designated as the principal component coming due on such Principal Payment Date or Mandatory Sinking Account Payment Date. On each Principal Payment Date and Mandatory Sinking Account Payment Date, the Trustee will withdraw from the Principal Fund, for payment to the Owners, the principal evidenced by the Certificates due and payable on such Principal Payment Date or Mandatory Sinking Account Payment Date.
THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS DOES NOT
CONSTITUTE A DEBT OF THE CITY OR OF THE STATE OR OF ANY POLITICAL SUBDIVISION
THEREOF WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMIT
OR RESTRICTION, AND DOES NOT CONSTITUTE AN OBLIGATION FOR WHICH THE CITY OR 11 4134-1978-1989.7
THE STATE IS OBLIGATED TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY OR THE STATE HAS LEVIED OR PLEDGED ANY FORM OF TAXATION.
Base Rental Payments Schedule
The Lease Agreement requires that Base Rental Payments be made on or before each Base Rental Deposit Date, assuming no early prepayment by the City, which is 10 days prior to each of the following Interest Payment Dates:
Interest
Payment Date
Principal
Component
Interest
Component
Total Base
Rental Payment
$ $ $
Total: $ $ $
__________
Source: KNN Public Finance, LLC
Additional Rental Payments
The Lease Agreement requires the City to pay, as Additional Rental Payments thereunder in addition to the Base Rental Payments, such amounts as required for the payment of all taxes and assessments of any type or nature charged to the Corporation or the City or affecting the Property or the respective interests or estates of the Corporation or the City in the Property; all reasonable administrative costs of the Corporation relating to the Property, the Certificates or the Trust Agreement, including without limitation all expenses, compensation and indemnification of the Trustee payable by the Corporation under the Trust Agreement, insurance premiums payable under the Lease Agreement, any amounts with respect to the Lease Agreement, the Trust Agreement or the Certificates required to be rebated to the federal government, and all other payments not constituting Base Rental Payments required to be paid by the City under the Lease Agreement or the Trust Agreement.
12 4134-1978-1989.7
Covenant to Appropriate Funds
The City covenants under the Lease Agreement to take such action as may be necessary to include all Base Rental Payments and Additional Rental Payments due under the Lease Agreement as a separate line item in its annual budgets and to make the necessary annual appropriations therefor.
Abatement
Base Rental Payments are paid by the City in each Rental Period for the City’s right to use and occupy the Property for such Rental Period. The term “Rental Period” means the period from the Delivery Date through April 30, 2027 and, thereafter, the twelve-month period commencing on May 1 of each year during the term of the Lease Agreement. The obligation of the City to pay Rental Payments will be abated during any period in which by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, there is substantial interference with the City’s right to use and occupy any portion of the Property. The Rental Payments will be abated proportionately. The City and the Corporation will, in a reasonable manner and in good faith, determine the amount of such abatement; provided, however, that the Rental Payments due for any Rental Period may not exceed the annual fair rental value of that portion of the Property available for use and occupancy by the City during such Rental Period. Such abatement will continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage or destruction of the Property, ending with the substantial completion of the work of repair or replacement of the Property, or the portion thereof so damaged or destroyed, and to the extent necessary to pay unpaid Rental Payments, the term of the Lease Agreement will be extended as provided in the Lease Agreement, except that the term will in no event be extended more than 10 years beyond the Scheduled Termination Date; provided, however, that during abatement, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Trust Agreement, Rental Payments will not be abated as provided above but, instead, will be payable by the City as a special obligation payable solely from said funds and accounts. For information regarding rental interruption insurance, see “– Insurance” below.
Abatement of Rental Payments is not an event of default under the Lease Agreement and does not permit the Trustee to take any action or avail itself of any remedy against the City. For a description of abatement resulting from condemnation of all or part of the Property, see APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – Rental Payments – Rental Abatement.”
No Reserve Fund
No reserve fund is established for the Certificates.
Insurance
The Lease Agreement requires the City to cause to be maintained reasonable and customary liability insurance and, throughout the term of the Lease Agreement, casualty insurance insuring the Property against fire, lightning, and all other risks covered by an extended coverage endorsement (excluding earthquake and flood), subject to a $100,000 loss deductible provision, in an amount equal to the full insurable value of the Property. Such casualty insurance may be maintained in the form of self-insurance by the City, in compliance with the terms of the Lease Agreement.
The Lease Agreement requires the City to cause to be maintained, throughout the term of the Lease Agreement, rental interruption insurance to cover the Corporation’s loss, total or partial, of Base Rental Payments caused by perils covered by the casualty insurance described above, in an amount equal to the 13 4134-1978-1989.7
amount sufficient at all times to pay an amount not less than the product of two times the maximum amount of Base Rental Payments scheduled to be paid during any Rental Period. The City may not self-insure for rental interruption insurance.
The City is also required to obtain certain public liability and property damage insurance coverage in protection of the Corporation and the City and worker’s compensation insurance as described under APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – Insurance – Property Casualty Insurance; Rental Interruption Insurance.” The City is required under the Lease Agreement to obtain title insurance on the Property, in the aggregate amount of not less than the initial aggregate amount of principal evidenced by the Certificates, subject only to Permitted Encumbrances, as defined in the Lease Agreement.
Action on Default
Should the City default under the Lease Agreement, the Trustee, as assignee of the Corporation under the Assignment Agreement, has the option to (subject to the restrictions described below) terminate the Lease Agreement. In the event of such termination, the City agrees to surrender immediately possession of the Property, without let or hindrance, and to pay to the Trustee, as assignee of the Corporation, all damages recoverable at law that the Corporation may incur by reason of default by the City, including, without limitation, any costs, loss or damage whatsoever arising out of, in connection with, or incident to any such re-entry upon the Property and removal and storage of such property by the Corporation or its duly authorized agents in accordance with the provisions contained in the Lease Agreement.
Without terminating the Lease Agreement, the Trustee will be permitted (a) to collect each installment of Base Rental Payments as the same become due and enforce any other terms or provisions of the Lease Agreement to be kept or performed by the City, regardless of whether or not the City has abandoned the Property, or (b) to exercise any and all rights of entry and re-entry upon the Property. In the event the Corporation does not elect to terminate the Lease Agreement in the manner provided for therein, the City remains liable and will keep or perform all covenants and conditions contained in the Lease Agreement to be kept or performed by the City and, if the Property is not re-let, will pay the full amount of the Rental Payments to the end of the term of the Lease Agreement or, if the Property is re-let, will pay any deficiency in Rental Payments that results therefrom; and will pay said Rental Payments and/or Rental Payment deficiency punctually at the same time and in the same manner as provided for the payment of Rental Payments under the Lease Agreement, notwithstanding the fact that the Corporation may have received in previous years or may receive thereafter in subsequent years Rental Payments in excess of the Rental Payments specified in the Lease Agreement, and notwithstanding any entry or re-entry by the Corporation or suit in unlawful detainer, or otherwise, brought by the Corporation for the purpose of effecting such re-entry or obtaining possession of the Property. See “RISK FACTORS.” For a description of the events of default and permitted remedies of the Trustee (as assignee of the Corporation) contained in the Lease Agreement and the Trust Agreement, see APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – Defaults and Remedies” and “– THE TRUST AGREEMENT – Default and Limitations of Liability – Action on Default.”
THE PROPERTY
General
The Property leased pursuant to the Lease Agreement consists of the property on which the City’s new Redlands Police Department Safety Hall facility (“Safety Hall”) will be constructed to completion and 14 4134-1978-1989.7
the improvements thereon (the Property referred to herein) on a City-owned site located at 1625 W.
Redlands Boulevard, Redlands, California 92373. As discussed herein, such improvements are expected to be completed for occupancy on or before [Summer] of 2028 and an amount sufficient to pay interest evidenced by the Certificates to November 1, 2028, is on deposit with the Trustee. Costs of construction of the Safety Hall are $78,500,000 as discussed below under “PLAN OF FINANCE,” and the annual fair rental value of the facility upon its completion to design standards, together with the value of the parcel upon which it will sit, is not less than the annual fair rental value of the Property. See “PLAN OF FINANCE” and “ESTIMATED SOURCES AND USES OF FUNDS” below.
Substitution or Release
The Lease Agreement provides that, with compliance with the conditions specified therein, the City may release from the Lease Agreement a portion of the Property or substitute alternate real property for any portion of the Property. Any such substitution or release of any portion of the Property will be subject to certain specific conditions set forth in the Lease Agreement, among which are that a qualified employee of the City or an independent certified real estate appraiser selected by the City will have found that the Property, as constituted after such substitution or release, has an annual fair rental value greater than or equal to 105% of the maximum amount of Base Rental Payments payable by the City in any Rental Period.
Thus, a portion of the property comprising the Property could be replaced with less valuable property, or could be released altogether, so long as, among other things, the Property, as constituted after such substitution or release, has an annual fair rental value greater than or equal to 105% of the maximum amount of Base Rental Payments payable by the City in any Rental Period. See “RISK FACTORS – Substitution or Release of Property” and APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – Amendments; Assignment and Subleasing; Substitution or Release – Substitution or Release of the Property.”
PLAN OF FINANCE
The Certificates are being issued to provide net proceeds to finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new police headquarters building (approximately $78.5 million) to be designated the Redlands Police Department’s Safety Hall, and the design, engineering, and construction of a new City fire station (approximately $15.0 million), to be designated Fire Station #265, and the acquisition and installation of certain heating, ventilation and air conditioning systems at the City’s A. K. Smiley Public Library located at 125 W. Vine St. in Redlands, a structure listed on the National Register of Historic Places. The remaining proceeds of the Certificates will be used to fund capitalized interest evidenced by the Certificates to November 1, 2028, and pay the costs incurred in connection with the execution and delivery of the Certificates. See “ESTIMATED SOURCES AND USES OF FUNDS” herein.
Safety Hall. The City’s current police facility locations were considered an “interim location plan” in January of 2009. Over the last 15 years, the functional areas of patrol, dispatch, the detainee processing center, and the public counter for police records have been located in one location; the office of the Chief, detectives bureau, administrative services, community services and the support services bureau in another location; property and evidence in a third location; and the remainder of police records in yet a fourth location. These conditions have complicated department operations and invariably caused inefficiencies in day-to-day process, as well as confusion to the public seeking police services. Additionally, the existing facilities have deteriorated over time and now present issues related to safety, health and equal access.
Lastly, there is a lack of space within these facilities to share with the public, and that has led to less than ideal conditions for providing service, especially given the sensitive nature of certain interactions. 15 4134-1978-1989.7
The commitment to build a new headquarters facility to serve as the City’s Police Department was made very clear as the City Council gave direction to staff over the years to dedicate funds and resources to studying the best course of action. Those efforts culminated with the purchase of 1625 West Redlands Boulevard in early 2022 to serve as the future home of Safety Hall. Since then, the City has started to plan the facility that will be designed to house all sworn, support, executive and volunteer personnel while accommodating future growth. The Safety Hall project will consist of the construction of a single-story, approximately 30-foot-high, approximately 61,028-square-foot building. The new facility is expected to house approximately 90 sworn officers and 59 support and volunteer personnel, with space to accommodate future department growth.
To date, the City has completed the planning, schematic design, entitlement process, design development, construction documents and plan check processes, with construction planned to commence on or about July 2026. The cost of the building is estimated at $78.5 million. The City intends to contribute [$20.6] million from reserves to this amount. The City expects the Safety Hall project to be completed for occupancy on or before [Summer] of 2028
Following the solicitation of proposals and a review and selection process, the City awarded the Safety Hall project design and construction management services to Holt Architects (the “Architect”) and awarded construction management to Tilden Coil Constructors (together, the “Construction Manager”).
The Safety Hall project is being delivered under a multiple-prime construction model, pursuant to which the City will enter into separate construction agreements with the selected trade contractors for the applicable bid packages. The total building project cost is currently estimated at approximately $78.5 million, inclusive of Phase I and Phase II construction agreements, the Construction Manager’s agreement, allowances, furniture, fixtures and equipment, and related project costs.
The Safety Hall project and its completion on budget and on time may be subject to unavoidable delays for a variety of reasons. Such unavoidable delays under the Construction Contract include any delay in the performance by any contractor, subcontractors, and/or the Builder of its respective obligations with respect to construction of the Safety Hall project caused by strikes or labor disputes, acts of God, unavoidable casualties, adverse weather conditions, acts of terrorists, delays by an agency having jurisdiction over the Safety Hall project (including, but not limited to, unanticipated delays in providing inspections or approvals by such agency), governmental embargo restrictions, site conditions not reasonably and previously identified, or other causes beyond the reasonable control of the contractor, subcontractors, and/or the Builder, which, after the exercise of due diligence to mitigate the effects thereof, delay construction of the Safety Hall project. Such unavoidable delays will entitle the contractor, subcontractors, and the Builder to an extension of the delivery date of the Safety Hall project, but is not expected to entitle the contractor and subcontractors to additional compensation.
Upon its substantial completion and occupancy, the Safety Hall including the parcel upon which it sits will constitute the Property imposing the obligation upon which to make Base Rental Payments under the Lease Agreement, subject to release thereof in accordance with the Lease Agreement. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – Amendments; Assignment and Subleasing; Substitution or Release – Substitution or Release of the Property.”
Fire Station Project. Similar to the City’s commitment to the Safety Hall, Fire Station #265 has been identified as one of the City's top fire facility priorities. The City completed the remodel of Fire Station #262 in August 2025, representing the most recently delivered fire facility project, and has completed certain preliminary design and planning work for Fire Station #264, pending further review. That preliminary work will service the Fire Station #265 project. Locations for Fire Station #265 pending 16 4134-1978-1989.7
confirmation include the corners of either Dearborn Street or Judson Street and Lugonia Avenue, where the City owns citrus groves.
This new fire station project is expected to consist of the construction of a single-story, approximately 10,000-square-foot fire station with 3 apparatus bays providing space for emergency response vehicles and equipment, front office and command space, and on-call residential areas for firefighters. The new facility is expected to house six emergency vehicles and approximately five firefighters per day to serve the northeast corner of the City, an area which has experienced significant growth and where service demands have increased. The station's placement is also intended to help provide coverage for any future expansion of the City east into and around the community of Mentone.
As of the date of this Official Statement, Fire Station #265 remains in the conceptual planning phase. No City Council action has been taken to formally designate a site, approve a project scope, enter into a design contract, or initiate environmental review under the California Environmental Quality Act (CEQA) for this project.
No cost estimate specific to Fire Station #265 has been publicly adopted by the City Council. The City has estimated that new fire station construction in California, subject to essential-facility classification requirements under the California Building Code (Risk Category IV), costs between $12 million and $15 million per station. This estimate is based on comparable essential-facility projects including recently completed Fire Station #264 design services. Land acquisition costs are expected to be minimal, as the City owns the citrus grove properties identified as candidate sites. Based on the $1.2 million allocated for Fire Station #264 design services, a similar order of magnitude may be assumed for Station #265 design.
The City is currently advancing the design process for the fire station. Subject to completion of the design, procurement, and approval processes, construction is currently anticipated to commence in or around ____ 2027 and is expected to require approximately 14 months to complete. The cost of the fire station is estimated at $15 million.
Fire Station No. 265 will not constitute any part of the Property as defined herein and will not be subject to lease under the Lease Agreement.
A. K. Smiley Public Library Equipment Modernization. The City has plans for capital improvements to the ventilation and air conditioning systems at the City’s A. K. Smiley Public Library, at a cost of approximately $________.
17 4134-1978-1989.7
ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Certificates and other available funds are set forth below.
SOURCES
Principal Amount of Certificates $
[Plus/Less] [Net] Original Issue [Premium/(Discount)]
Total Sources $
USES
Deposit to Acquisition Fund $
Deposit to Costs of Issuance Fund(1)
Deposit to Capitalized Interest Account (2)
Underwriters’ Discount
Total Uses $
(1) Includes legal fees, Municipal Advisor fees, rating agency fees, printing costs, and other fees and miscellaneous costs of issuance.
(2) To pay capitalized interest evidenced by the Certificates to November 1, 2028.
RISK FACTORS
The following factors, along with the other information in this Official Statement, should be considered by potential investors in evaluating the purchase of the Certificates. However, they do not purport to be an exhaustive listing of risks and other considerations which may be relevant to an investment in the Certificates. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.
General Considerations and Other Obligations
The obligation of the City to make the Base Rental Payments does not constitute a debt of the City or of the State or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State is obligated to levy or pledge any form of taxation or for which the City or the State has levied or pledged any form of taxation.
Although the Lease Agreement does not create a pledge, lien or encumbrance upon the funds of the City, the City is obligated under the Lease Agreement to pay the Base Rental Payments from any source of legally available funds and the City has covenanted in the Lease Agreement that it will take such action as may be necessary to include all Base Rental Payments in its annual budgets and to make necessary annual appropriations therefor.
The City is currently liable and may become liable on other obligations payable from its general fund, such as employee salaries and benefits, some of which may have a priority over Base Rental Payments. For a discussion of certain other obligations of the City, see APPENDIX A ‒ “CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION – City Debt Structure and Outstanding Obligations” herein. The City has the capacity to enter into other obligations, including agreements similar to the Lease Agreement, which may constitute additional charges against its revenues. To the extent that additional obligations are incurred by the City, the funds available to make Base Rental Payments may be decreased. In the event the City’s revenue sources are less than its total 18 4134-1978-1989.7
obligations, the City could choose to fund other activities before making Base Rental Payments and other payments due under the Lease Agreement.
Extraordinary Prepayment of Certificates
Extraordinary Prepayment of the Certificates could be made as provided in the Trust Agreement, and the resulting prepayment of Certificates that were purchased at a price greater than the applicable prepayment price could reduce the otherwise expected yield on such Certificates. See “THE CERTIFICATES – Prepayment.”
Limited Recourse on Default
If the City defaults on its obligations to make Base Rental Payments, the Trustee, as assignee of the Corporation, may (subject to the restrictions described below) retain the Lease Agreement and hold the City liable for all Base Rental Payments on an annual basis and will have the right to reenter and re-let the Property. In the event such re-letting occurs, the City would be liable for any resulting deficiency in Base Rental Payments. Alternatively, the Trustee may (subject to the restrictions described below) terminate the Lease Agreement with respect to the Property and proceed against the City to recover damages pursuant to the Lease Agreement.
Due to the specialized nature of the Property, no assurance can be given that the Trustee will be able to re-let any portion of the Property so as to provide rental income sufficient to make payments of principal and interest evidenced by the Certificates in a timely manner, and the Trustee is not empowered to sell the Property for the benefit of the Owners of the Certificates. In addition, due to the governmental function of the Property, it is not certain whether a court would permit the exercise of the remedies of repossession and re-letting with respect thereto. Any suit for money damages would be subject to limitations on legal remedies against cities in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest. Moreover, there can be no assurance that such reletting will not adversely affect the exclusion of any interest component of Base Rental Payments evidenced by the Certificates from federal or state income taxation.
No Acceleration Upon Default
In the event of a default, there is no available remedy of acceleration of the Base Rental Payments due over the term of the Lease Agreement. The City will only be liable for Base Rental Payments on an annual basis, and the Trustee would be required to seek a separate judgment in each fiscal year for that fiscal year’s Base Rental Payments.
No Liability of Corporation to the Owners
Except as expressly provided in the Trust Agreement, the Corporation will not have any obligation or liability to the Owners of the Certificates with respect to the payment when due of the Base Rental Payments by the City, or with respect to the performance by the City of other agreements and covenants required to be performed by it contained in the Lease Agreement, the Ground Lease, or the Trust Agreement, or with respect to the performance by the Trustee of any right or obligation required to be performed by it contained in the Trust Agreement.
Bankruptcy
In addition to the limitation on remedies contained in the Trust Agreement, the rights and remedies provided in the Trust Agreement and the Lease Agreement may be limited by and are subject to the 19 4134-1978-1989.7
provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. The City is a unit of State government and therefore is not subject to the involuntary procedures of the United States Bankruptcy Code (the “Bankruptcy Code”). However, pursuant to Chapter 9 of the Bankruptcy Code, the City may seek voluntary protection from its creditors for purposes of adjusting its debts. In the event the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have a priority of payment superior to that of Owners of Certificates; and (iv) the possibility of the adoption of a plan for the adjustment of the City’s debt (a “Plan”) without the consent of the Trustee or all of the Owners of Certificates, which Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.
In addition, the City could either reject the Lease Agreement or assume the Lease Agreement despite any provision of the Lease Agreement which makes the bankruptcy or insolvency of the City an event of default thereunder. In the event the City rejects the Lease Agreement, the Trustee, on behalf of the Owners of the Certificates, would have a pre-petition claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the objections of the Trustee or Owners of the Certificates.
Moreover, such rejection would terminate the Lease Agreement and the City’s obligations to make payments thereunder.
If the Corporation is in bankruptcy, the Corporation may be able to either reject the Ground Lease or the Lease Agreement or assume the Ground Lease or the Lease Agreement despite any provision of the Ground Lease or the Lease Agreement which makes the bankruptcy or insolvency of the Corporation an Event of Default thereunder. In the event the Corporation rejects the Ground Lease, the Trustee, on behalf of the Owners of the Certificates, would have a pre-petition unsecured claim that may be capped in amount or not be paid in its full face amount. Moreover, such rejection would terminate the Ground Lease and the Lease Agreement and the obligations of the City to make payments thereunder, although the City may be able to remain in possession of the Property. In the event the Corporation rejects the Lease Agreement, the Trustee, on behalf of the Owners of the Certificates, would have a pre-petition unsecured claim that may be substantially limited in amount. Moreover, such rejection may terminate the Lease Agreement and the City’s obligations to make payments thereunder, although the City may be able to remain in possession of the Property. The Corporation may also be permitted to assign the Ground Lease or the Lease Agreement to a third party, regardless of the terms of the transaction documents.
If the Corporation is a debtor in a bankruptcy, the lien of the Trust Agreement may not attach to any payments made by the City after the commencement of the bankruptcy case. The provisions of the transaction documents that require the City to make payments directly to the Trustee rather than to the Corporation may no longer be enforceable, and all payments may be required to be made to the Corporation.
There may be delays in payments on the Certificates while the court considers any of these issues.
There may be other possible effects of a bankruptcy of the City or the Corporation that could result in delays or reductions in payments on, or other losses with respect to, the Certificates. Regardless of any specific adverse determinations in a bankruptcy of the City or the Corporation, the fact of a bankruptcy of the City or the Corporation could have an adverse effect on the liquidity and value of the Certificates.
The various legal opinions to be delivered concurrently with the Certificates (including Special Counsel’s approving opinion) will be qualified as to the enforceability of the various agreements relating 20 4134-1978-1989.7
to the Certificates by limitations imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of creditors generally and by general principles of equity applied in the exercise of judicial discretion.
Regardless of any specific adverse determinations in a bankruptcy case of the Corporation, the fact of such a bankruptcy case could have an adverse effect on the liquidity and value of the Certificates.
Loss of Tax Exemption
As discussed under the heading “TAX MATTERS,” certain acts or omissions of the City in violation of its covenants in the Trust Agreement and the Lease Agreement, as well as certain other matters, could result in the interest evidenced by the Certificates being includable in gross income for purposes of federal income taxation retroactive to the date of delivery of the Certificates. Should such an event of taxability occur, the Certificates would not be subject to a special prepayment and would remain Outstanding until maturity or until prepaid under the provisions contained in the Trust Agreement.
Abatement
In the event of substantial interference with the City’s right to use and occupy any portion of the Property by reason of material damage to, or destruction or condemnation of, the Property, or any defect in title to the Property, Rental Payments will be subject to abatement. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Abatement.” The Rental Payments will be abated proportionately. In the event that such portion of the Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of time in which proceeds of the City’s rental interruption insurance will be available in lieu of Base Rental Payments, plus the period for which funds are available from funds and accounts established under the Trust Agreement, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such portion of the Property or prepayment of the Certificates, there could be insufficient funds to make payments to Owners in full.
However, during abatement, to the extent that moneys are available for the payment of Rental Payments in any of the funds and accounts established under the Trust Agreement, Rental Payments will not be abated as described above but, instead, will be payable by the City as a special obligation payable solely from said funds and accounts.
Substitution or Release of Property
The Lease Agreement provides that, upon satisfaction of the conditions specified therein, the City may release from the Lease Agreement a portion of the Property or substitute alternate real property for any portion of the Property. Thus, a portion of the property comprising the Property could be replaced with less valuable property, or could be released altogether. Such a replacement or release could have an adverse impact on the security for the Certificates, particularly if an event requiring abatement of Base Rental Payments were to occur subsequent to such substitution or release. See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT – No Consequential Damages; Use of the Property; Substitution or Release – Substitution or Release of the Property.” Natural Disasters, Seismic Activity, and Drought
Earthquakes. The City, like most regions in the State, and the Property are located in an area of seismic activity from movements along active fault zones and, therefore, could be subject to potentially destructive earthquakes. The notable earthquake faults include the San Andreas and San Jacinto faults. 21 4134-1978-1989.7
Although the public safety facility comprising the Property will be designed and constructed pursuant to current earthquake-resistant standards, damage from an earthquake could be substantial. The occurrence of severe seismic activity in the area of the Property could result in substantial damage and interference with the City’s right to use and occupy all or a portion of the Property, which could result in the Base Rental Payments being subject to abatement. See “– Abatement” above. The City is not required by the Lease Agreement or otherwise to obtain or maintain earthquake insurance for the Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Insurance.” Wildfires and Flooding. Property damage due to wildfire could result in significant damage to, destruction of, and significant decreases in the assessed value of taxable property within the boundaries of the City, as well as in damage to or destruction of City facilities and property, including the Property. In recent years, portions of the State, including San Bernardino County and adjacent counties, have experienced wildfires that have burned thousands of acres and destroyed thousands of homes and structures.
Notable incidents that have impacted San Bernardino County and adjacent counties in recent years include the Cranston Fire, Taboose Fire, Apple Fire, Lake Fire, El Dorado Fire, Blue Ridge Fire and Silverado Fire.
Within the boundaries of the City, no facilities or property was damaged or destroyed by said wildfires or other recent wildfires. The adjacent counties of Inyo, Kern, Los Angeles, Orange and Riverside have also been impacted by the wildfires mentioned above. The County of Los Angeles (“Los Angeles County”) has recently experienced several significant wildfires. The Palisades Fire, which started on January 7, 2025, burned approximately 23,448 acres of land in Los Angeles County and damaged or destroyed approximately 7,810 structures, and caused 12 civilian fatalities and four fire personnel and civilian injuries, according to the California Department of Forestry and Fire Protection (“CalFire”). The Palisades Fire was active for 24 days and was contained on January 31, 2025. To date, the Palisades Fire is deemed as the second most destructive wildfire in Los Angeles County’s history and the third most destructive wildfire in the State’s history. The Eaton Fire, which also started on January 7, 2025, burned approximately 14,021 acres of land in Los Angeles County and damaged or destroyed approximately 10,488 structures, and caused 17 civilian fatalities and nine fire personnel injuries, according to Cal Fire. The Eaton Fire was active for 24 days and was contained on January 31, 2025. The Eaton Fire is considered the most destructive single fire, in terms of structures lost, and the deadliest fire, in Los Angeles County’s history. The Eaton Fire is considered as the second most destructive wildfire in the State’s history. The City cannot predict the extent to which any future wildfires within the City, San Bernardino County, or any of the adjoining counties could cause reduced economic activity within the boundaries of the City or the extent to which wildfires may impact City facilities, including the Property, or the assessed value of taxable property within the City.
The Lease Agreement requires the City to cause to be maintained throughout the term of the Lease Agreement, casualty insurance insuring the Property against fire, lightning, and all other risks covered by an extended coverage endorsement (excluding earthquake and flood), subject to a $100,000 loss deductible provision, in an amount equal to the full insurable value of the Property. Such insurance may be maintained in the form of self-insurance by the City, in compliance with the terms of the Lease Agreement. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Insurance.” In addition, portions of the State, including San Bernardino County, have experienced flooding.
According to the U.S. Department of Homeland Security’s Federal Emergency Management Agency, which compiles flood history data, the Property is in an area designated Zone X, in an area of minimal flood hazard - outside both the 100‑year (1% annual chance) and 500‑year (0.2% annual chance) floodplains - and somewhat elevated. However, the occurrence of severe flooding in the area of the City could result in substantial damage and interference with the City’s right to use and occupy all or a portion of the Property, which could result in the Base Rental Payments being subject to abatement. See “– Abatement” above.
Property damage due to wildfire or flooding could result in a significant decrease in the assessed value of property in the City. See APPENDIX A ‒ “CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION.”
22 4134-1978-1989.7
Drought and Winter Storm Impacts. In recent years, the State has experienced severe drought conditions. In January 2014, the Governor declared a Statewide Drought State of Emergency due to the State facing serious water shortfalls due to the driest year in recorded history in the State and the resultant record low levels measured in State rivers and reservoirs. The California State Water Resources Control Board (the “State Water Board”) subsequently issued a Statewide notice of water shortages and potential future curtailment of water right diversions. In April 2017, the Governor of the State lifted the drought emergency declaration, while retaining a prohibition on wasteful practices and advancing conservation measures.
On March 5, 2021, the Secretary of the United States Department of Agriculture designated 50 of 58 counties in California, as primary natural disaster areas due to drought. On April 21, 2021, the Governor issued a drought emergency proclamation (the “April Drought Proclamation”) which applied to two counties within the State. On May 10, 2021, the Governor declared a State of Emergency due to the State facing serious water shortfalls, and ordered State and local agency implementation of certain provisions to adequately respond to drought conditions, significantly expanding the April Drought Proclamation to 41 counties within the State. On July 8, 2021, the Governor expanded the declaration further to include an additional nine counties in the State. On October 19, 2021, the Governor extended the declaration to include the remaining counties such that the drought state of emergency was then in effect Statewide. However, increased rainfall in late 2022 and early 2023 led to the rescission of certain of these restrictions, including in the County, as described in the following section “– 2022-23 Winter Storms.” It is not possible for the City to make any representation regarding the extent to which drought conditions could impact economic activity within the boundaries of the City or the extent to which drought conditions may impact City facilities or the assessed value of taxable property within the City. 2022-23 Winter Storms. The State experienced an unexpected increase in the amount of winter storms and increased rainfall and snowpack, leading to an unseasonably wet winter in late 2022 and early 2023, which impacted communities across the State (the “2022-23 Winter Storms”). The increased rainfall caused by the 2022-23 Winter Storms eased drought conditions across the State considerably. Accordingly, in March 2023, the Governor rescinded some of the State’s drought restrictions, including restrictions in the County. In addition, in January 2023, the Governor announced an extension of its tax filing deadline for residents and businesses in counties which were impacted by the 2022-23 Winter Storms and the resulting mudslides and flooding.
2023-24 Winter Storms. Portions of the State experienced an unexpected increase in the amount of winter storms and increased rainfall and snowpack, leading to an unseasonably wet winter in late 2023 and early 2024, which impacted communities within the State (the “2023-24 Winter Storms”). In particular, portions of the County experienced severe storms and snowfall.
It is not possible for the City to make any representation regarding the extent to which the 2022-23 Winter Storms, the 2023-24 Winter Storms or any future winter storms, or related increased rainfall, mudslides or flooding conditions, could cause reduced economic activity within the boundaries of the City or the extent to which such conditions may impact City facilities or the assessed value of taxable property within the City.
Events of Force Majeure. Operation of the Property may also be at risk from other events of force majeure, such as damaging storms, floods, fires and explosions, strikes, sabotage, riots and spills of hazardous substances, among other events. None of the facilities comprising the Property are located within a 100-year flood plain. The City cannot predict what force majeure events may occur in the future. For additional information regarding the required insurance coverages under the Lease Agreement, See APPENDIX C – “SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – THE LEASE AGREEMENT.” 23 4134-1978-1989.7
Climate Change and Sea Level Rise
The direct risks posed by climate change currently include or are expected to include more extreme heat events, rising sea levels, changes in precipitation levels, flooding and more intense storms. In order to address these risks, California law (the Global Warming Solutions Act) requires the State to significantly reduce its emissions of greenhouse gases (GHGs), which contribute to climate change.
Sources of GHG emissions in the City include cars and trucks, electricity and natural gas use in buildings, decomposition of solid waste, landscaping and construction equipment, and water and wastewater distribution, treatment, and use. On-road vehicle use represents the largest source of GHGs, followed by energy use in residential and nonresidential buildings. As a part of the State’s effort to reduce GHG emissions, the California Air Resources Board approved a regulation to rapidly scale down emissions from cars starting with the 2026 model year through the 2035 model year, at which time all new car sales in the State must be zero-emission vehicles. Going forward, the GHG emissions within the City will continue to change due to new policies, technological improvements, and population growth and new development.
Current science indicates that sea level rise is directly linked to climate change, and sea level is expected to increase over time. Sea level rise threatens even inland areas by exacerbating flooding from very high tides, and by contributing to flooding from extreme rainfall events. The various scientific studies that forecast the amount and timing of adverse impacts of climate change are based on assumptions contained in such studies, but actual events may vary materially. In addition, the scientific understanding of climate change and its effects continues to evolve. Accordingly, the City cannot predict the timing, extent, or severity of climate change, GHG emissions or sea level rise, and the impact on the City and the Property, and on the State and local economies.
Absence of Earthquake and Flood Insurance
The City is not required under the Lease Agreement to maintain earthquake or flood insurance on the Property. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES – Insurance.” Hazardous Substances
The existence or discovery of hazardous materials may limit the beneficial use of the Property. In general, the owners and lessees of the Property, including the City, may be required by law to remedy conditions of such parcel relating to release or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also similarly stringent. Under many of these laws, the owner or lessee is obligated to remedy a hazardous substance condition of the property whether or not the owner or lessee had anything to do with creating or handling the hazardous substance.
Further it is possible that the beneficial use of the Property may be limited in the future resulting from the current existence on the Property of a substance currently classified as hazardous but which has not been released or the release of which is not presently threatened, or may arise in the future resulting from the current existence on the Property of a substance not presently classified as hazardous but which may in the future be so classified. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method in which it is handled. All of these possibilities could significantly limit the beneficial use of the Property.
24 4134-1978-1989.7
The City is unaware of the existence of hazardous substances on the Property which would materially interfere with the beneficial use thereof.
Economic Conditions in California
General. State income tax and other receipts can fluctuate significantly from year to year, depending on economic conditions in the State and the nation and State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties. The City does not expect the State’s 2026-27 Budget to have a material impact on the City’s operations or revenues. For current information, see “‒ State Budget Acts” below.
Information about the State budget is regularly available at various State-maintained websites. Text of proposed and adopted budgets may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website, and neither the Corporation nor the City takes responsibility for the continued accuracy of these internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references.
State Budget Acts. The following information concerning the State of California’s budgets has been obtained from publicly available information which the City believes to be reliable; however, the City takes no responsibility as to the accuracy or completeness thereof and has not independently verified such information. Information about the State budget is regularly available at various State-maintained websites.
Text of the State budget may be found at the Department of Finance website, www.dof.ca.gov, under the heading “California Budget.” An impartial analysis of the State budget is posted by the Office of the Legislative Analyst (the “LAO”) at www.lao.ca.gov. In addition, various State official statements, many of which contain a summary of the current and past State budgets, may be found at the website of the State Treasurer, www.treasurer.ca.gov. The information referred to is prepared by the respective State agency maintaining each website and not by the Corporation, the City or the Underwriters, and the Corporation, the City and the Underwriters take no responsibility for the continued accuracy of the internet addresses or for the accuracy or timeliness of information posted there, and such information is not incorporated herein by these references.
The State’s fiscal year begins on July 1 and ends on June 30. The annual budget is proposed by the Governor by January 10 of each year for the next fiscal year (the “Governor’s Budget”). Under State law, the annual proposed Governor’s Budget cannot provide for projected expenditures in excess of projected revenues and balances available from prior fiscal years. Following the submission of the Governor’s Budget, the Legislature takes up the proposal.
Under the State Constitution, money may be drawn from the Treasury only through an appropriation made by law. The primary source of the annual expenditure authorizations is the Budget Act as approved by the Legislature and signed by the Governor. The Budget Act must be approved by a twothirds majority vote of each house of the Legislature. The Governor may reduce or eliminate specific line items in the Budget Act or any other appropriations bill without vetoing the entire bill. Such individual line-item vetoes are subject to override by a two-thirds majority vote of each house of the Legislature. 25 4134-1978-1989.7
Appropriations also may be included in legislation other than the Budget Act. Continuing appropriations, available without regard to fiscal year, may also be provided by statute or the State Constitution. Funds necessary to meet an appropriation need not be in the State treasury at the time such appropriation is enacted; revenues may be appropriated in anticipation of their receipt.
According to the State Constitution, the Governor must propose a budget to the State Legislature no later than January 10 of each year, and a final budget must be adopted no later than June 15. The budget requires a simple majority vote of each house of the State Legislature for passage. The budget becomes law upon the signature of the Governor, who may veto specific items of expenditure. A two–thirds vote of the State Legislature is required to override any veto by the Governor.
State budget decisions can have an impact on City finances. In the event of a material economic downturn in the State, there can be no assurance that any resulting revenue shortfalls to the State will not reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of the State’s efforts to address any such related State financial difficulties.
Currently, State revenues to local governments are not a significant source of funds to the City. The City does not expect the State’s 2026-27 Budget to have a material impact on the City’s operations or revenues.
Further information about the State budget is available from the Public Finance Division of the State Treasurer’s Office. In addition, information about the State budget is regularly available at various State-maintained websites, including www.dof.ca.gov (Department of Finance), www.lao.ca.gov (Office of the Legislative Analyst) and www.treasurer.ca.gov (State Treasurer). The above-mentioned websites are included herein for informational purposes only. The City makes no representations concerning, and does not take any responsibility for, the accuracy or timeliness of information posted on such websites or the continued maintenance of such websites by the respective entities.
Future Budgets and Budgetary Actions
The City cannot predict what future actions will be taken by the State Legislature and the Governor to address changing State revenues and expenditures or the impact such actions will have on State revenues available in the current or future years. Current and future State budgets will be significantly affected by economic conditions and other factors over which the City has no control. There can be no assurance that the State will not significantly reduce revenues to local governments (including the City) or shift financial responsibility for programs to local governments as part of its efforts to address State financial conditions.
Although the State is not a significant source of City revenues, there can be no assurance that State actions will not materially adversely affect the financial condition of the City.
The State budget will be affected by national and State economic conditions and other factors beyond the City’s ability to predict or control. Certain actions could result in a significant shortfall of revenue and cash, and could impair the State’s ability to fund local agencies in future fiscal years. Certain factors, like an economic recession, could result in State budget shortfalls in any fiscal year and could have a material adverse financial impact on the City. Future State budgets will be affected by national and State economic conditions and other factors over which the City has no control.
The City participates in various federal and state grant programs, including public safety, transportation, infrastructure, library, and homelessness-related initiatives. Many of these programs operate on a reimbursement basis and require the City to incur eligible expenditures before grant revenues may be claimed and recognized. As a result, grant revenues and expenditures may fluctuate significantly between fiscal years based on project schedules, construction timelines, procurement activities, and compliance requirements.
26 4134-1978-1989.7
For the fiscal year ended June 30, 2025, the City continued to administer a substantial portfolio of grant-funded programs through its Governmental Grants Fund, including federal American Rescue Plan Act (ARPA) funding, transportation safety grants, homelessness-related grants, and various capital improvement projects. Budgeted grant expenditures exceeded actual expenditures during the fiscal year primarily due to the timing of project implementation and reimbursement requests. Accordingly, certain grant revenues budgeted for fiscal year 2025 had not yet been earned or received as of June 30, 2025 and are expected to be recognized in future fiscal years as eligible expenditures are incurred. [The amount of expenditures which may be disallowed by the granting agencies, if any, cannot be determined at this time.] Risks Related to Completion of Fire Station #265.
California's classification of fire stations as essential facilities imposes heightened seismic and structural requirements that have historically increased construction costs, and inflationary pressures in the California construction market may cause actual costs to exceed current estimates. Any resulting funding gap may not be fully absorbed by existing Measure T reserves, which generate approximately $18 million to $20 million annually but support a broad range of competing expenditures, including public safety staffing, police vehicles, infrastructure maintenance, homelessness programs, parks improvements, and deferred maintenance across multiple facilities. The City is simultaneously pursuing a new police headquarters and has identified additional fire stations as long-term capital needs.
The Fire Station #265 project is subject to additional risks arising from permitting, design complexity, community opposition, and timeline uncertainty. The project will require environmental review, site preparation on park land, and compliance with California Building Code essential-facility standards, each of which may result in schedule delays or unanticipated costs. The City's recent experience with the Fire Station #262 remodel, which required the reallocation of approximately $600,000 from other budgeted station improvements to cover higher-than-anticipated costs, illustrates the potential for cost variances in fire station construction. Any public opposition could generate additional political or procedural challenges as the project advances through design and environmental review. No formal construction timeline has been established, and the City has not yet selected a design team or general contractor, which introduces uncertainty with respect to any financing that is time-sensitive or dependent upon phased disbursement of proceeds.
Federal Funding Risks
Federal policies on the federal debt ceiling, taxes, foreign trade and tariffs, immigration, climate change, clean energy, and other topics can shift dramatically from one administration to another. From time to time, such changes can result in dramatic shifts in the level of federal funding for various policy priorities, leading to unpredictability in near-term and future federal funding. The City can provide no certain assurances with respect to continued grant funding or other direct payments to the City in support of governmental services, whether previously made directly or by pass-through to the State.
Cybersecurity
The City is not aware of any major cyberattack or breach of its systems during the last five years.
The City maintains a cybersecurity program that includes employee training and awareness initiatives, incident response planning, access management protocols, and ongoing coordination with federal, state, and regional partners. The City conducts periodic assessments of its network security posture, including through resources made available by the U.S. Department of Homeland Security's Cybersecurity & Infrastructure Security Agency (“CISA”), and has implemented multi-factor authentication across its network systems. Staff are subject to annual cybersecurity training requirements and periodic exercises designed to promote adherence to security standards and preparedness in the event of a cyber incident. 27 4134-1978-1989.7
As of the date of this Official Statement, the City has not experienced a cybersecurity attack, ransomware incident, or ransom demand that has had a material adverse effect on its operations or financial condition. The City's cybersecurity risk score, as assessed by CISA, is significantly below the average for comparable public agencies.
No assurance can be given that the City's cybersecurity measures will be sufficient to prevent a future cybersecurity incident or that any such incident would not have a material adverse effect on the City's operations, financial condition, or the market value of the Certificates. The City cannot predict the extent to which its information technology systems may be targeted or compromised in the future by third parties, and any cybersecurity incident could result in operational disruption, loss of data, or financial loss. The City currently maintains cyber liability insurance through the Alliant Property Insurance Program. See APPENDIX A ‒“CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION –Risk Management.”
The City relies on other entities and service providers in the course of operating the City, including San Bernardino County with respect to the levy, collection and holding of ad valorem property taxes and its servers and systems relating thereto, as well as other trustees, fiscal agents, dissemination agents and project management firms. No assurance can be given that future cyber threats and attacks against third party entities or service providers will not directly or indirectly impact the City or the Owners of the Certificates, including the possibility of impacting the timely payments of the Base Rental Payments evidenced by the Certificates or timely filings pursuant to the City’s continuing disclosure undertakings.
Military Actions in Iran and the Middle East
As has been widely reported in the press, global stability is uncertain following the reported February 28, 2026 commencement of military strikes attributed to the United States and Israel, currently at an uncertain path toward resolution. As the conflict continues, it could further disrupt global shipping, affect trade routes and supply chains, and impact global economic output. The effects of continuing conflict in the Middle East on the United States economy are likely to depend on factors such as the degree of oil price increases and disruptions to global oil supplies. Rising energy prices could create upward pressure on inflation, pose risks to economic growth, and potentially lead to higher unemployment in the United States. Specifically, as it relates to security for the Certificates, these factors could increase uncertainty regarding property and sales tax collections used to pay Base Rental Payments. The City has no information upon which to predict the magnitude and specifics of these impacts and their effect on current and nearterm City operations and finances, including the final Project costs and construction schedule, the potential for increased inflation or economic recession.
CONSTITUTIONAL PROVISIONS AFFECTING
CITY REVENUES AND APPROPRIATIONS
Article XIIIB of the California Constitution – Limitations on Appropriations On November 6, 1979, State voters approved Proposition 4, the so-called Gann Initiative, which added Article XIIIB to the State Constitution (“Article XIIIB”). In June 1990, Article XIIIB was amended by the voters through their approval of Proposition 111. Article XIIIB limits the annual appropriations of the State and of 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 annually for changes in the cost of living, population and cost of services rendered by the governmental entity. The “base year” for establishing such appropriation limit is State fiscal year 1978-79 and the limit is to be adjusted annually to reflect changes in population and consumer prices. Adjustments in the appropriations limit of an entity may also be made if:
(i) the financial responsibility for a service is transferred to another public entity or to a private entity; (ii) 28 4134-1978-1989.7
the financial source for the provision of services is transferred from taxes to other revenues; or (iii) the voters of the entity approve a change in the limit for a period of time not to exceed four years.
Appropriations of an entity of local government that are subject to Article XIIIB include generally any authorization to expend during the fiscal year 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. Appropriations that are subject to limitation pursuant to Article XIIIB do not include debt service on indebtedness existing or legally authorized as of January 1, 1979 or on bonded indebtedness thereafter approved according to law by a vote of the electors of the issuing entity voting in an election for such purpose, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects and appropriations by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. “Proceeds of taxes” include, but are not limited to, all tax revenues and the proceeds to any entity of government from: (i) regulatory licenses, user charges, and user fees to the extent such proceeds exceed the cost of providing the service or regulation; (ii) the investment of tax revenues; and (iii) certain State subventions received by local governments. Article XIIIB includes a requirement that if an entity’s revenues in any year exceed the amount permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years.
Article XIIIB allows voters to approve a temporary waiver of a government’s Article XIIIB limit.
Such a waiver is often referred to as a “Gann limit waiver.” The length of any such waiver is limited to four years. The Gann limit waiver does not provide any additional revenues to a local government or allow a local government to finance additional services.
Base Rental Payments are subject to the Article XIIIB appropriations limitations. [The City reports that it has never made appropriations that exceeded the limitation on appropriations under Article XIIIB.
The impact of the appropriations limit on the financial needs of the City in the future is unknown.] For Fiscal Year 2025-26, permitted appropriations of “proceeds of taxes” are limited to $178 million, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2025-26 are expected to be within such limit ($101.6 million). The City has estimated that for Fiscal Year 2026-27, permitted appropriations of “proceeds of taxes” are limited to $187,037,005, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2026-27 Fiscal Year are expected to be well within such limit.
Articles XIIIC and XIIID of the California Constitution – The Right to Vote on Taxes On November 5, 1996, the voters of the State approved Proposition 218, entitled the “Right to Vote on Taxes Act” (“Proposition 218”). Proposition 218 added Article XIIIC (“Article XIIIC”) and Article XIIID (“Article XIIID”) to the State Constitution, which Articles contain a number of provisions affecting the ability of local governments to levy and collect both existing and future taxes, assessments, fees and charges. The interpretation and application of certain provisions of Proposition 218 will ultimately be determined by the courts with respect to some of the matters discussed below. It is not possible at this time to predict with certainty the future impact of such interpretations. The provisions of Proposition 218, as so interpreted and applied, may affect the ability of the City to meet certain obligations.
Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes require a majority vote and taxes for specific purposes (even if deposited in the city’s general fund) require a two-thirds vote. The voter approval requirements of Article XIIIC reduce the flexibility of local governments to deal with fiscal problems by raising revenue 29 4134-1978-1989.7
through new, extended, or increased taxes. No assurance can be given that the City will be able to raise taxes in the future to meet increased expenditure requirements.
Article XIIIC also expressly extends the initiative power to give voters the power to reduce or repeal local taxes, assessments, fees and charges, regardless of the date that such taxes, assessments, fees and charges were imposed. Article XIIIC expands the initiative power to include reducing or repealing assessments, fees and charges, which had previously been considered administrative rather than legislative matters and therefore beyond the initiative power. This extension of the initiative power is not limited by the terms of Article XIIIC to fees imposed after November 6, 1996, and absent other legal authority could result in the retroactive reduction in any existing taxes, assessments, fees, or charges. No assurance can be given that the voters within the jurisdiction of the City will not, in the future, approve initiatives that reduce, repeal or prohibit the future imposition or increase of local taxes, assessments, fees or charges that currently comprise a substantial part of the City’s general fund. The terms “local tax,” “assessments,” “fees” and “charges” are not defined in Article XIIIC, and it is unclear whether these terms are intended to have the same meanings for purposes of Article XIIIC as for Article XIIID described below. If not, the scope of the initiative power under Article XIIIC potentially could include any general fund local tax, assessment, or fee that is not received from or imposed by the federal or State government or derived from investment income. [The City does not believe that it currently levies any property related “fees” or “charges” that it considers to be subject to challenge under Article XIIIC.] The voter approval requirements of Proposition 218 reduce the flexibility of a local government to raise revenues for its general fund, and no assurance can be given that the City will be able to impose, extend, or increase taxes in the future to meet increased expenditure needs.
Article XIIID contains several provisions making it generally more difficult for local agencies, such as the City, to levy and maintain “assessments” for municipal services and programs. These provisions include, among other things: (i) a prohibition against assessments that exceed the reasonable cost of the proportional special benefit conferred on a parcel; (ii) a requirement that the assessment must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred; and (iii) a majority protest procedure that involves the mailing of a notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party. The term “Assessment” in Article XIIID is defined to mean any levy or charge upon real property for a special benefit conferred upon the real property and applies to landscape and maintenance assessments for open space areas, street medians, streetlights, and parks.
In addition, Article XIIID added several provisions affecting “fees” and “charges,” defined for purposes of Article XIIID to mean “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by [a local government] upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.” All new and existing property related fees and charges must conform to requirements prohibiting, among other things, fees and charges that: (i) generate revenues exceeding the funds required to provide the property related service; (ii) are used for any purpose other than those for which the fees and charges are imposed; (iii) are for a service not actually used by, or immediately available to, the owner of the property in question; or (iv) are used for general governmental services, including police, fire, ambulance or library services, where the service is available to the public at large in substantially the same manner as it is to property owners. Depending on the interpretation of what constitutes a “property related fee” under Article XIIID, there could be future restrictions on the ability of the City to charge its respective enterprise funds for various services provided.
Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase and, if written protests against the proposal are presented by a majority of the owners of the identified parcels, the City may not impose or increase the fee or charge. 30 4134-1978-1989.7
Except for fees or charges for sewer, water and refuse collection services (or fees for electrical and gas service, which are not treated as “property related” for purposes of Article XIIID), no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge, or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area.
Proposition 26
Proposition 26, a State ballot initiative aimed at restricting regulatory fees and charges, was approved by the California voters on November 2, 2010. Proposition 26 broadens the definition of “tax” in Article XIIIC of the California Constitution to include levies, charges and exactions imposed by local governments, except for charges imposed for benefits or privileges or for services or products granted to the payor (and not provided to those not charged) that do not exceed their reasonable cost; regulatory fees that do not exceed the cost of regulation; fees for the use of local governmental property; fines and penalties imposed for violations of law; real property development fees; and assessments and property-related fees imposed under Article XIIID of the California Constitution. California local taxes are subject to approval by two-thirds of the voters voting on the ballot measure for authorization. Proposition 26 applies to charges imposed or increased by local governments after the date of its approval.
Proposition 1A of 2004
City services are funded with money from local taxes, fees and user charges, State aid and other sources. Property tax, sales taxes, a transaction and use tax, a transient occupancy tax, and developmentrelated fees constitute the majority of City revenue sources. Note, the City does not impose any utility users tax (UUT) on electricity, gas, water, or telecommunications, or a real property transfer tax, but does impose a documentary transfer tax included as part of Property Tax, and has a regulatory business license program for which fees are assessed.
On November 3, 2004, the voters of the State approved Proposition 1A (“Proposition 1A of 2004”).
Proposition 1A of 2004 amended the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local governments’ property, sales, and vehicle license fee (VLF) revenues as of November 3, 2004. Pursuant to Proposition 1A of 2004, the State is able to borrow up to 8% of local property tax revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any amounts borrowed are required to be repaid within three years. Proposition 1A of 2004 also permits the State to borrow from local property tax revenues for no more than two fiscal years within a period of 10 fiscal years, and only if previous borrowings have been repaid. In addition, the State cannot reduce the local sales tax rate or restrict the authority of the local governments to impose or change the distribution of the Statewide local sales tax. Proposition 1A of 2004 generally prohibits the State from mandating activities on cities, counties, or special districts without providing the funding needed to comply with the mandates, and if the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties, or special districts to abide by the mandate is suspended. Proposition 1A of 2004 also expanded the definition of what constitutes a mandate to encompass State action that transfers to cities, counties, and special districts financial responsibility for a required program for which the State previously had partial or complete responsibility. The State mandate provisions of Proposition 1A of 2004 do not apply to schools or community colleges or to mandates relating to employee rights. 31 4134-1978-1989.7
Proposition 22
On November 2, 2010, California voters approved Proposition 22, a ballot initiative for a constitutional amendment to eliminate the State’s ability to borrow or shift local revenues and certain State revenues that fund transportation programs (“Proposition 22”). Proposition 22 restricts the State’s authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties, special districts and redevelopment agencies, VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State’s ability to use motor vehicle fuel tax revenues to pay debt service on voter-approved transportation bonds.
Proposition 22 supersedes certain provisions of Proposition 1A of 2004. See “– Proposition 1A of 2004” above. In addition, Proposition 22 generally eliminates the State’s authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase school and community college district’s share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass-through payments thereof, and prohibits the State from reallocating VLF revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted in order to change the amount of fuel excise tax revenues shared with cities and counties.
Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009.
Future Initiatives
Under the State Constitution, the voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. For example, Article XIIIA, Article XIIIB and Articles XIIIC and XIIID and Proposition 22 and Proposition 26 were adopted pursuant to the State’s constitutional initiative process.
From time to time, other initiative measures could be adopted or legislative measures could be approved by the Legislature, which may place limitations on the ability of the City to increase revenues or to increase appropriations. Such measures may further affect the City’s ability to collect taxes, assessments or fees and charges, which could have an effect on revenues. The City is unable to predict whether any such initiatives might be submitted to or approved by the voters, the nature of such initiatives or their potential impact on the City.
THE CORPORATION
The Corporation is a nonprofit public benefit corporation organized under the Nonprofit Public Benefit Corporation Law in the State for charitable purposes. The Corporation was incorporated at the request of the City on June 19, 1985. The specific purposes for which the Corporation is organized include benefitting the City and its residents by participating with the City in projects to improve the health, safety and welfare of the City and its residents, purchasing and leasing real and personal property in connection with such projects, and assisting the City in financing, acquiring and constructing such projects. The Corporation may do any and all things necessary to carry out such purposes but shall not engage in activities which do not further such purposes and shall not support or benefit any organization other than the City. 32 4134-1978-1989.7
The Corporation is governed by a five-member Board of Trustees which consists and will consist of then current members of the City Council. The Mayor of the City acts as Chair of the Board of Trustees of the Corporation and remaining City Council members act as Trustees of the Corporation. The City Manager acts as President of the Corporation. The City Treasurer acts as Treasurer of the Corporation. The City Clerk acts as Secretary of the Corporation.
The Corporation has no financial liability to the Owners of the Certificates with respect to the payment of Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants it is required to perform.
RATING
The Certificates were assigned a rating of “[___]” by S&P Global Ratings, a division of S&P Global Inc. (S&P). The rating agency may have obtained and considered information and material which has not been included in this Official Statement. Generally, rating agencies base their ratings on information and material so furnished and on investigations, studies and assumptions made by them (which may include information and material from the City which is not included in this Official Statement). The rating is not a recommendation to buy, sell or hold the Certificates. The rating reflects only the view of the rating agency and an explanation of the significance of its rating may be obtained from it. There is no assurance that a rating of a rating agency will be maintained for any given period of time or that such rating may not be revised downward or withdrawn entirely by the rating agency, if in its own judgment, circumstances warrant. Any such downward change in or withdrawal may have an adverse effect on the market price of the Certificates. Neither the Underwriters nor the City has undertaken any responsibility after the execution and delivery of the Certificates to assure the maintenance of the rating or to oppose any such revision or withdrawal.
TAX MATTERS
In the opinion of Orrick, Herrington & Sutcliffe LLP, special counsel to the City (“Special Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, the portion of each Base Rental Payment designated as and constituting interest paid by the City under the Lease Agreement and received by the Owners of the Certificates is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and is exempt from State of California personal income taxes. In the further opinion of Special Counsel, interest evidenced by the Certificates is not a specific preference item for purposes of the federal individual alternative minimum tax. Special Counsel observes that interest evidenced by the Certificates included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Special Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest evidenced by, the Certificates. A complete copy of the proposed form of opinion of Special Counsel is set forth in Appendix D hereto.
To the extent the issue price of any scheduled principal payment of the Certificates is less than the amount payable on the scheduled principal payment date of such Certificates (excluding amounts stated to be interest and payable at least annually over the term of such Certificates), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest evidenced by the Certificates which is excluded from gross income for federal income tax purposes and exempt from State of California personal income taxes. For this purpose, the issue price of a particular scheduled principal payment date of the Certificates is the first price at which a substantial amount of such scheduled principal payment date of the Certificates is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, 33 4134-1978-1989.7
placement agents or wholesalers). The original issue discount with respect to any scheduled principal payment date of the Certificates accrues daily over the term to the scheduled principal payment date of such Certificates on the basis of a constant interest rate compounded semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Certificates to determine taxable gain or loss upon disposition (including sale, redemption, or payment on scheduled principal date) of such Certificates. Beneficial Owners of the Certificates should consult their own tax advisors with respect to the tax consequences of ownership of Certificates with original issue discount, including the treatment of Beneficial Owners who do not purchase such Certificates in the original offering to the public at the first price at which a substantial amount of such Certificates is sold to the public.
Certificates purchased, whether at original execution and delivery thereof or otherwise, for an amount higher than their principal evidenced thereby payable on the scheduled principal payment date thereof (or, in some cases, at their earlier prepayment date) (“Premium Certificates”) will be treated as having amortizable premium. No deduction is allowable for the amortizable premium in the case of obligations, like those evidenced by the Premium Certificates, the interest with respect to which is excluded from gross income for federal income tax purposes. However, the amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Certificate, will be reduced by the amount of amortizable premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Certificates should consult their own tax advisors with respect to the proper treatment of amortizable bond premium in their particular circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest evidenced by obligations such as the Certificates.
The City has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest evidenced by the Certificates will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest evidenced by the Certificates being included in gross income for federal income tax purposes, possibly from the date of original execution and delivery of the Certificates. The opinion of Special Counsel assumes the accuracy of these representations and compliance with these covenants.
Special Counsel has not undertaken to determine (or to inform any person), whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Special Counsel’s attention after the date of execution and delivery of the Certificates may adversely affect the value of, or the tax status of interest evidenced by, the Certificates. Accordingly, the opinion of Special Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Special Counsel is of the opinion that interest evidenced by the Certificates is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest evidenced by, the Certificates may otherwise affect a Certificate holder’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Special Counsel expresses no opinion regarding any such other tax consequences.
Current and future federal or state legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest evidenced by the Certificates to be subject, directly or indirectly, in whole or in part, 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 or clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Certificates. Prospective purchasers of the Certificates should consult their own tax advisors regarding the 34 4134-1978-1989.7
potential impact of any pending or proposed federal or state tax legislation, regulations or litigation, as to which Special Counsel expresses no opinion.
The opinion of Special Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Special Counsel’s judgment as to the proper treatment of the Certificates for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Special Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Code.
Special Counsel’s engagement with respect to Certificates ends with the execution and delivery of the Certificates, and, unless separately engaged, Special Counsel is not obligated to defend the City or the Beneficial Owners regarding the tax-exempt status of the Certificates in the event of an audit examination by the IRS. Under current procedures, Beneficial Owners would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Certificates for audit, or the course or result of such audit, or an audit of obligations presenting similar tax issues may affect the market price for, or the marketability of, the Certificates, and may cause the City or the Beneficial Owners to incur significant expense.
Payments evidenced by the Certificates generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate Beneficial Owner of Certificates may be subject to backup withholding with respect to “reportable payments,” which include interest paid on the Certificates and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the Certificates. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against a Beneficial Owner’s federal income tax liability, if any, provided that the required information is timely furnished to the IRS. Certain Beneficial Owners (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. The failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.
CERTAIN LEGAL MATTERS
Orrick, Herrington & Sutcliffe LLP, Special Counsel to the City, will render its opinion with respect to the legality of the Lease Agreement and the Trust Agreement. The form of the legal opinion proposed to be delivered by Special Counsel is included as Appendix D to this Official Statement. Special Counsel, as such, undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.
Certain legal matters will be passed upon for the City by Orrick, Herrington & Sutcliffe LLP, as Disclosure Counsel to the City, for the Underwriters by Katten Muchin Rosenman LLP, New York, New York, as counsel to the Underwriters, and for the City and the Corporation by Yvette Abich Garcia, City Attorney for the City of Redlands, Redlands, California, as counsel to the City and the Corporation. From time to time, Orrick, Herrington & Sutcliffe LLP may represent the Underwriters on matters unrelated to the Certificates.
35 4134-1978-1989.7
MUNICIPAL ADVISOR
KNN Public Finance (the “Municipal Advisor”) has been engaged by the City to perform financial services in connection with the delivery of the Certificates and certain other financial matters. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities. The Municipal Advisor is not contractually obligated to undertake, and has not undertaken to make an independent verification or to assume responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
ABSENCE OF MATERIAL LITIGATION
At the time of delivery of and payment for the Certificates, the City will certify that there is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court or governmental or public entity pending or, to the best knowledge of the City, threatened against the City (i) which affects or seeks to prohibit, restrain or enjoin the execution or delivery of the Certificates, the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust Agreement, or the Continuing Disclosure Certificate; (ii) contesting the validity of the Ground Lease, the Lease Agreement, the Assignment Agreement, the Trust Agreement, or the Continuing Disclosure Certificate, the powers of the City to enter into or perform its obligations under the Ground Lease, the Lease Agreement, the Trust Agreement or the Continuing Disclosure Certificate, or the existence or powers of the City, or (iii) which, if determined adversely to the City, would materially impair the City’s ability to meet its obligations under the Lease Agreement or materially and adversely affect the City’s financial condition.
The City is occasionally subject to lawsuits and claims. In the opinion of the City, the aggregate amount of the uninsured liabilities of the City under these lawsuits and claims will not materially affect the financial position or operations of the City.
FINANCIAL STATEMENTS
The City’s audited financial statements for fiscal year ended June 30, 2025, are included in Appendix B. Such financial statements have been audited by The Pun Group, LLP, an independent firm of certified public accountants (“Pun Group”). The City has not requested nor has the City obtained the consent of Pun Group to the inclusion of its report in Appendix B. Pun Group has not been engaged to perform and has not performed, since the date of its report included herein, any procedures on the financial statements addressed in that report. Pun Group has not been requested to perform and has not performed any procedures relating to the Official Statement.
UNDERWRITING
The Certificates are to be purchased by BofA Securities, Inc. and Stifel, Nicolaus & Company, Incorporated (the “Underwriters”). The Underwriters have agreed, subject to certain terms and conditions set forth in the Certificate Purchase Agreement, dated ____________, 2026, by and between the Underwriters and the City, to purchase the Certificates at a purchase price of $____________ (representing the aggregate principal amount evidenced by the Certificates of $____________, [plus/less] [net] original issue premium/discount of $____________, less an Underwriters’ discount of $____________). The Underwriters will purchase all the Certificates if any are purchased. The Certificates may be offered and sold to certain dealers (including dealers depositing said Certificates into investment trusts) and others at prices lower than the initial public offering price, and the public offering price may be changed from time to time by the Underwriters.
36 4134-1978-1989.7
BofA Securities, Inc. has entered into a distribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc., may compensate MLPF&S as a dealer for their selling efforts with respect to the Certificates.
The Underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include sales and trading, commercial and investment banking, advisory, investment management, investment research, principal investment, hedging, market making, brokerage and other financial and non-financial activities and services. Under certain circumstances, the Underwriters and their respective affiliates may have certain creditor and/or other rights against the City and its affiliates in connection with such activities. In the course of their various business activities, the Underwriters, respectively, and their respective affiliates, officers, directors and employees may purchase, sell or hold a broad array of investments and actively traded securities, derivatives, loans, commodities, currencies, credit default swaps and other financial instruments for their own accounts and for the accounts of their customers, and such investment and trading activities may involve or relate to assets, securities and/or instruments of the City (directly, as collateral securing other obligations or otherwise) and/or persons and entities with relationships with the City. The Underwriters and their respective affiliates may also communicate independent investment recommendations, market color or trading ideas and/or publish or express independent research views in respect of such assets, securities or instruments and may at any time hold, or recommend to clients that they should acquire, long and/or short positions in such assets, securities and instruments.
MISCELLANEOUS
References are made herein to certain documents and reports which are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof.
Any statements in this Official Statement involving matters of opinion, whether or not expressly so stated, are intended as such and not as representations of fact. This Official Statement is not to be construed as a contract or agreement between the City and the purchasers or Owners of any of the Certificates.
The execution and delivery of this Official Statement has been duly authorized by the City.
CITY OF REDLANDS
By:
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APPENDIX A
CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION B-1
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APPENDIX B
FINANCIAL STATEMENTS OF THE CITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2025
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APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D
FORM OF SPECIAL COUNSEL OPINION
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
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APPENDIX F
CITY OF REDLANDS INVESTMENT POLICY
[Consider for inclusion.]
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APPENDIX G
BOOK-ENTRY ONLY SYSTEM
The information in this appendix has been provided by DTC for use in securities offering documents, and the City takes no responsibility for the accuracy or completeness thereof. The City cannot and does not give any assurances that DTC, DTC Participants or Indirect Participants will distribute the Beneficial Owners either (a) payments of interest, principal or premium, if any, with respect to the Certificates or (b) certificates representing ownership interest in or other confirmation of ownership interest in the Certificates, or that they will so do on a timely basis or that DTC, DTC Direct Participants or DTC Indirect Participants will act in the manner described in this Official Statement.
1. The Depository Trust Company (“DTC”), will act as securities depository for the Certificates. The Certificates will be executed and delivered 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 Certificate will be issued for each stated Principal Payment Date of the Certificates, each in the aggregate amount of the principal evidenced by Certificates with such stated Principal Payment Date, and will be deposited with DTC.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over
3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized 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. The information on such website is not incorporated into this Official Statement by reference or otherwise.
3. Purchases of Certificates under the DTC system must be made by or through Direct Participants, which will receive a credit for the Certificates on DTC’s records. The ownership interest of each actual purchaser of each Certificate (“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 Certificates are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership G-2
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interests in Certificates, except in the event that use of the book-entry system for the Certificates is discontinued.
4. To facilitate subsequent transfers, all Certificates 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 Certificates 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 Certificates; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Certificates are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Certificates may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Certificates, such as redemptions, tenders, defaults, and proposed amendments to the Certificate documents. For example, Beneficial Owners of Certificates may wish to ascertain that the nominee holding the Certificates for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Prepayment notices shall be sent to DTC. If less than all of the Certificates with a particular stated Principal Payment Date are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such Certificates to be prepaid.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Certificates unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures.
Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Certificates are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Payments of principal, premium, if any, interest and other payments evidenced by the Certificates 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 City or the Trustee, on the 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 City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payments of principal, premium, if any, interest and other payments evidenced by the Certificates to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the Certificates at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in the event that a successor depository is not obtained, Certificates are required to be printed and delivered.
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10. The City may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Certificates will be printed and delivered to DTC.
11. The information in this appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the accuracy thereof.
THE CITY, THE CORPORATION AND THE TRUSTEE CANNOT AND DO NOT GIVE ANY
ASSURANCES THAT DTC WILL DISTRIBUTE TO PARTICIPANTS, OR THAT PARTICIPANTS
OR OTHERS WILL DISTRIBUTE PAYMENTS OF PRINCIPAL, INTEREST OR ANY PREMIUM
EVIDENCED BY THE CERTIFICATES PAID TO DTC OR ITS NOMINEE AS THE REGISTERED
OWNER, OR ANY PREPAYMENT 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 CITY, THE CORPORATION AND THE
TRUSTEE ARE NOT RESPONSIBLE OR LIABLE FOR THE FAILURE OF DTC OR ANY
PARTICIPANTS TO MAKE ANY PAYMENT OR GIVE ANY NOTICE TO A BENEFICIAL OWNER WITH RESPECT TO THE CERTIFICATES OR ANY ERROR OR DELAY RELATING THERETO.
THE FOREGOING DESCRIPTION OF THE PROCEDURES AND RECORD KEEPING WITH
RESPECT TO BENEFICIAL OWNERSHIP INTERESTS IN THE CERTIFICATES, PAYMENT OF
PRINCIPAL, INTEREST AND OTHER PAYMENTS EVIDENCED BY THE CERTIFICATES TO
PARTICIPANTS OR BENEFICIAL OWNERS, CONFIRMATION AND TRANSFER OF BENEFICIAL
OWNERSHIP INTERESTS IN SUCH CERTIFICATES AND OTHER RELATED TRANSACTIONS BY
AND BETWEEN DTC, THE PARTICIPANTS AND THE BENEFICIAL OWNERS IS BASED ON INFORMATION PROVIDED BY DTC. ACCORDINGLY, THE CITY TAKES NO RESPONSIBILITY FOR THE ACCURACY THEREOF.
OH&S 6/3/26 Draft
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APPENDIX A
CITY OF REDLANDS ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION This Appendix A includes certain financial and demographic information with respect to the City as well as demographic information with respect to the County of San Bernardino and the State of California. The Certificates are payable solely from Base Rental Payments to be made by the City. The County of San Bernardino and the State of California have no obligation to make any payments with respect to the Certificates. See “SECURITY AND SOURCES OF PAYMENT FOR THE CERTIFICATES” herein for a description of the security for the Certificates and the City’s obligation to make Base Rental Payments and Additional Rental Payments as and when due under the Lease Agreement.
General
The City of Redlands (the “City”) covers an area of 36 square miles and lies within the San Bernardino Valley in the southwestern portion of San Bernardino County (the “County”). It is located approximately 63 miles east of Los Angeles, 110 miles north of San Diego and 500 miles southeast of San Francisco. Redlands comprises part of the San Bernardino-Riverside Metropolitan Area. The City serves a population of approximately 73,811 as of January 1, 2026.
Historically known as the center of a leading citrus growing area, Redlands has grown and diversified over the years, with more residential and commercial development. The City’s citrus and agricultural roots remain an important part of its identity and cultural history, together with its attractive and historic residential communities, and the approximately 160 acre main campus of the University of Redlands situated near downtown Redlands. In recent years, Redlands has increased its commercial, storage and logistical, and industrial bases.
The City of Redlands was incorporated in 1888 under the general laws of the State of California (the “State”). It is a general law city and municipal corporation operating under the council-manager form of government. Under this form of government, policy making and legislative authority is vested in the City’s fivemember city council (the “City Council”). The City Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring both the City Manager and City Attorney.
The City Manager is the chief administrative officer of the City and as such is responsible for carrying out the policies and ordinances of the City Council, for overseeing the day-to-day operations of the City, and for appointing department heads. In addition to the City Council, the City Clerk and City Treasurer are elected by direct ballot.
The City Council is elected on a non-partisan basis. The Redlands Municipal Code was amended in 2017 to change the City’s electoral system for City Council members from at-large to by-district elections. City Council members serve four-year staggered terms, with elections occurring every two years. The City Council meets after each general municipal election and chooses one of its members as Mayor, and one of its members as Mayor Pro Tempore by way of council member nomination. The terms of office of the Mayor and Mayor Pro Tempore are for two (2) years. The current members of the City Council and key administrative personnel of the City are listed below.
CITY COUNCIL MEMBERS
Name Office Term Expires
Mario Saucedo Mayor, Councilmember Dist. 3 November 2026 Marc Shaw Mayor Pro Tem, Councilmember Dist. 4 November 2028 Paul Barich Councilmember Dist. 5 November 2026
Eddie Tejeda Councilmember Dist. 2 November 2028
Denise Davis Councilmember Dist. 1 November 2026
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CITY STAFF MEMBERS
Member Position
Charles M. Duggan, Jr. City Manager
Janice McConnell Assistant City Manager
Yvette M. Abich Garcia City Attorney
Phillip Doolittle City Treasurer
Danielle Garcia Director, Management Services/Finance
The City provides a full range of services, including police and fire protection, animal control, emergency medical aid, building safety regulation and inspection, street lighting, landscaping, sewer and water utilities, solid waste collection and disposal, land use planning and zoning, housing and community services, maintenance and improvement of streets and related structures, traffic safety maintenance and improvement, and a full range of recreational and cultural programs for citizen participation, as well as being the home of the historic A. K. Smiley Public Library. A total of [636] full-time and permanent part-time City positions are authorized, including [160] Police Department (including its Community Services Division), and [70] Fire Department employees. [Pending June 16th update.]
The local economy is based largely in the service and trade sectors (health care, retail trade, logistics, technology, and education). The region has a varied manufacturing and industrial base that has added to the relative stability of the unemployment rate over the years. The City’s economic base is characterized by a balanced mix of industries, including higher education, software development, healthcare, light manufacturing, logistics and distribution, and financial and insurance services. Leading employers in Redlands and the surrounding area include the Redlands Unified School District, Esri (Environmental Systems Research Institute), Redlands Community Hospital, Amazon Fulfillment Center, Beaver Medical Group, the City of Redlands, the University of Redlands, the Burlington Coat Factory Distribution Center, and Loma Linda University Behavioral Medical Center, underscoring the region’s economic diversity and employment stability.
Population
Population information for the City, the County of San Bernardino and the State of California is set forth in Table A-1 and the City’s personal income and economic statistics is set forth in Table A-2.
TABLE A-1
CITY, COUNTY AND STATE OF CALIFORNIA POPULATION
(AS OF JANUARY 1)
Year City of Redlands County of San Bernardino State of California 2000 63,591 1,710,139 33,873,086
2005 68,471 1,921,423 35,869,173
2010 68,747 2,035,210 37,253,956
2016 71,415 2,124,990 39,036,749
2017 71,911 2,142,339 39,273,915
2018 72,157 2,153,258 39,429,439
2019 72,566 2,169,538 39,503,656
2020 73,049 2,181,654 39,538,223
2021 73,338 2,184,048 39,380,058
2022 72,713 2,182,080 39,159,480
2023 72,329 2,177,507 39,167,274
2024 73,738 2,201,878 39,446,835
2025 74,013 2,215,490 39,646,907
2026 73,811 2,216,685 39,592,978
_______________
Source: California Department of Finance Demographic Research Unit Report E-4.
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TABLE A-2
CITY OF REDLANDS DEMOGRAPHIC AND ECONOMIC STATISTICS
LAST TEN FISCAL YEARS
Calendar
Year(1)
Personal Income
(In Thousands)
Per Capita
Personal
Income(2)
Unemployment
Rate(3)
2015 $2,192,657 $32,226 3.0%
2016 2,195,442 31,721 3.3
2017 2,494,168 35,203 3.1
2018 2,790,914 39,066 3.2
2019 2,882,851 40,631 3.0
2020 2,607,936 36,652 7.7
2021 2,846,286 38,837 5.7
2022 3,086,832 42,719 3.3
2023 3,702,989 50,938 3.7
2024 3,483,331 47,400 4.1
2025 --
(4) --(4) 3.9(5)
_______________
Sources:
(1) Information presented on the calendar year basis, therefore the most current full year is included. (2) U.S. Department of Commerce Census Bureau
(3) State of California, Employment Development Department (4) 2025 annual information not available.
(5) Preliminary monthly data as of April 2026.
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Table A-3 summarizes the total personal income and per capita income for San Bernardino County, the State and the United States for the calendar years 2020 through 2024. The City is located within the County of San Bernardino.
TABLE A-3
SAN BERNARDINO COUNTY
STATE OF CALIFORNIA AND UNITED STATES
Year and Area Total Personal Income(1)
Per Capita Personal
Income(2)
2020
San Bernardino County $99,003,275 $45,341
State 2,770,488 70,100
United States 19,613,059 59,151
2021
San Bernardino County $109,157,423 $49,824
State 3,019,215 77,134
United States 21,484,168 64,692
2022
San Bernardino County $108,075,879 $49,214
State 3,021,645 77,196
United States 22,144,814 66,298
2023
San Bernardino County $111,575,931 $50,698
State 3,182,779 81,196
United States 23,577,208 70,002
2024
San Bernardino County $119,551,968 $53,991
State 3,400,237 86,232
United States 24,897,613 73,204
_______________
(1) Thousands of dollars for County; millions of dollars for State and United States. (2) Dollars.
Source: U.S. Department of Commerce, Bureau of Economic Analysis A-5
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Employment
Table A-4 compares the principal employers in the City of Redlands in the years 2016 and 2025.
TABLE A-4
CITY OF REDLANDS
PRINCIPAL EMPLOYERS
2016 AND 2025
2025 2016
Employer
Number of
Employees
Percent of
Total
Employment
Number of
Employees
Percent of
Total
Employment
Redlands Unified School District 2,433 6.58% 1,922 5.64% ESRI (Environmental Systems Research Inst.) 2,416 6.53 2,795 8.20 Redlands Community Hospital 1,847 4.99 1,535 4.50
Optum (Beaver Medical Group & Epic Mgmt.) 1,000 2.70 1,500 4.40 Amazon Fulfillment Center (Redlands) 526 1.42 1,300 3.81 City of Redlands 539 1.46 556 1.63
University of Redlands 471 1.27 550 1.61
Loma Linda University Behavioral Medicine
Ctr. 458 1.24 360 1.06
Madison Grove Post Acute (Terracina) 384 1.04 -- --
Kaiser Permanente Medical Offices 328 0.89 -- --
The Home Depot -- -- 700 2.05
La-Z-Boy, Inc. -- -- 385 1.13
Total 10,402 28.11% 11,603 34.03%
Total Employees in City(1) 37,000 34,100
_______________
(1) Total Employees in City provided by EDD Labor Force Data, represents the total employment of all employers located within City limits.
Sources: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025; MuniServices, LLC / Neumo.
An additional approximately 1,700 employees work within a portion of unincorporated San Bernardino County that is fully surrounded by City limits (referred to generally as the “Donut Hole”). This area includes Citrus Plaza and Mountain Grove Plaza, together comprising a large and popular shopping and entertainment district in the Inland Empire, and also a significant industrial area which is home to a number of distribution centers and logistics companies. Among these are the Burlington Coat Factory Distribution Center (approximately 742 employees), Amazon Fulfillment Center (approximately 500 employees including PT/FT, classified, certificated and administrative), Target Department Store (approximately 245 employees) and a A-6
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Lamps Plus Distribution Center and Retail Store (approximately 119 employees), and a Kohl’s Retail Store (approximately 87 employees).
Unemployment
Table A-5 shows employment rates for Riverside-San Bernardino-Ontario Metropolitan Statistical Area (an “MSA”) from 2020 to 2024.
TABLE A-5
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT,
UNEMPLOYMENT BY INDUSTRY
(ANNUAL AVERAGES)
2020 2021 2022 2023 2024
Civilian Labor Force(1) 2,073,400 2,108,400 2,140,500 2,180,300 2,209,100 Civilian Employment 1,868,300 1,951,600 2,049,900 2,078,100 2,093,800 Civilian Unemployment 205,100 156,700 90,700 102,300 115,300 Civilian Unemployment Rate 9.9% 7.4% 4.2% 4.7% 5.2%
Total, All Industries(2) 1,509,900 1,588,800 1,674,000 1,694,100 1,714,100 Total Farm 14,100 13,700 13,800 13,200 13,700
Total Non-Farm 1,495,800 1,575,100 1,660,200 1,681,000 1,700,400 Total Private 1,247,800 1,333,100 1,410,200 1,420,700 1,430,200 Goods Producing 202,200 207,700 216,300 215,300 212,900 Mining and Logging 1,300 1,400 1,500 1,500 1,600
Construction 104,900 110,100 114,700 115,400 116,200
Manufacturing 96,000 96,100 100,000 98,500 95,200
Service Providing 1,293,700 1,367,400 1,443,900 1,465,700 1,487,500 Trade, Transportation & Utilities 406,900 443,200 464,900 457,900 456,400 Information 12,400 12,500 13,000 13,300 13,000
Financial Activities 44,100 45,200 46,000 44,900 44,100 Professional & Business Services 152,100 166,600 173,900 164,400 161,800 Private Education & Health
Services 248,800 254,300 267,900 287,800 306,000
Leisure & Hospitality 141,300 160,200 180,900 187,600 185,300 Other Services 40,200 43,600 47,400 49,400 50,700
Government 248,000 242,000 250,000 260,200 270,200
_______________
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, and household domestic on strike.
Source: State of California Employment Development Department.
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Labor Force and Employment
Table A-6 below summarizes the employment and unemployment for the City, the County and the State for the period 2021 through 2025. Information for the United States is not available for 2024.
TABLE A-6
CITY OF REDLANDS, SAN BERNARDINO COUNTY
STATE OF CALIFORNIA AND UNITED STATES
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
2021 THROUGH 2025
Year and Area Labor Force Employment Unemployment
Unemployment
Rate
2021
City 35,400 33,400 2,000 5.7%
County 989,400 915,500 73,900 7.5
State 18,954,600 17,564,900 1,389,700 7.3
United States 167,116 152,581 8,623 5.3
2022
City 35,900 34,700 1,200 3.3%
County 1,000,100 958,100 42,000 4.2
State 19,218,300 18,393,900 824,400 4.3
United States 164,287 158,291 5,996 3.6
2023
City 36,200 34,900 1,300 3.7%
County 1,014,800 967,900 46,800 4.6
State 19,471,000 18,551,800 919,200 4.7
United States 167,116 161,037 6,080 3.6
2024
City 36,600 35,100 1,500 4.1%
County 1,027,800 975,200 52,600 5.1
State 19,644,100 18,600,900 1,043,100 5.3
United States 168,106 161,346 6,671 4.0
2025
City -
(2) -(2) -(2) -(2)
County 1,044,300 988,100 56,200 5.4%
State 19,823,800 18,738,500 1,085,300 5.5
United States(1) 170,807 163,493 7,314 4.3
_______________
(1) Numbers in thousands for labor force, employment and unemployment. (2) Annual information not available.
Source: For City, County and State: California Employment Development Department; and for United States: U.S. Bureau of Labor Statistics
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Assessed Values
Table A-7 shows a ten-year history of assessed valuations in the City.
TABLE A-7
CITY OF REDLANDS
ASSESSED VALUATIONS
Local Secured Utility Unsecured Total
2016-17 $ 7,901,854,260 $637,752,375 $299,663,545 $ 8,839,270,180 2017-18 8,381,376,337 633,273,204 316,860,749 9,331,510,290 2018-19 8,792,637,723 696,926,715 368,501,653 9,858,066,091 2019-20 9,427,078,039 686,468,677 339,802,060 10,453,348,776 2020-21 9,940,265,045 686,468,677 338,584,999 10,965,318,721 2021-22 10,421,183,153 654,449,175 342,259,485 11,417,891,813 2022-23 11,057,629,371 634,682,861 339,773,823 12,032,086,055 2023-24 12,090,194,939 626,016,354 410,488,353 13,126,699,646 2024-25 12,814,374,314 926,251,150 444,572,967 14,185,198,431 2025-26 13,415,201,999 591,024,383 451,310,913 14,457,537,295 _______________
Source: California Municipal Statistics, Inc.
Principal Property Taxpayers
Table A-8 compares the top ten property taxpayers in Redlands for the years 2025 and 2016.
TABLE A-8
CITY OF REDLANDS
PRINCIPAL PROPERTY TAX PAYERS
2025 AND 2016
2025 2016
Taxpayer
Taxable
Assessed
Value (000s)
Percentage
of Total City
Taxable
Assessed Value
Taxable
Assessed
Value (000s)
Percentage
of Total City
Taxable
Assessed Value
Southern California Edison Company(1) $ 924,119 6.50% $ 630,821 7.53% Prologis LP / Prologis CA II LP 217,519 1.53 84,633 1.01 Duke Realty LP(2) 208,438 1.47 42,009 0.50
Redlands Owner LP(2) 171,666 1.21 -- --
NYS New LLC(2) 151,294 1.06 83,082 0.99
PVT Apartments SPE LLC 142,830 1.00 -- --
Ashley Furniture Industries 117,013 0.82 -- --
BCI-OEF Redlands DC LP 114,516 0.81 -- --
Venue at Orange LLC(2) 104,612 0.74 -- --
AMB Institutional Alliance Fund III 98,476 0.69 83,576 1.00 Others -- -- 290,121 3.46
Top Ten Total 2,250,483 15.83 1,214,242 14.50
Total Net Taxable Assessed Value $14,215,130 $8,376,226 _______________
(1) [Description to come.].
(2) [Property owner appeals of assessed valuation pending as of April 13, 2026. See “Property Tax Revenues” below.
Sources: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025; San Bernardino County Assessor (via HdL, Coren & Cone).
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Taxable Retail Sales
Table A-9 shows taxable retail sales in the City of Redlands from 2021 to the fourth quarter of 2025.
TABLE A-9
CITY OF REDLANDS
TAXABLE RETAIL SALES DATA FOR CALENDAR YEARS 2021 TO 2025(1) ($ in 000s)
2021 2022 2023 2024 2025(1)
RETAIL AND FOOD SERVICES
Motor Vehicle and Parts Dealers $ 416,757 $ 381,906 $ 309,616 $ 308,178 $ 439,699 Home Furnishings and Appliance Stores 36,397 45,299 31,134 27,928 25,213 Bldg. Matrl. and Garden Equip. and
Supplies 160,430 157,227 149,633 140,794 144,440
Food and Beverage Stores 94,285 99,341 95,905 96,607 98,709 Gasoline Stations 81,188 92,926 85,742 79,638 65,287
Clothing and Clothing Accessories Stores 62,683 70,186 66,669 69,580 56,609 General Merchandise Stores 73,670 67,604 64,504 65,252 63,151 Food Services and Drinking Places 215,689 236,323 244,177 258,296 271,345 Other Retail Group 290,496 269,418 294,453 211,430 90,733 TOTAL RETAIL AND FOOD SERVICES 1,431,595 1,420,231 1,341,833 1,257,704 1,255,187 All Other Outlets 210,171 273,874 332,740 384,353 282,896 TOTALS ALL OUTLETS $1,641,766 $1,694,104 $1,674,573 $1,642,057 $1,538,082 _______________
(1) Information available through fourth quarter of 2025.
Source: State Board of Equalization.
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Secured Property Taxes
Table A-10 shows a history of the City’s secured tax levies and delinquencies.
TABLE A-10
CITY OF REDLANDS
PROPERTY TAX LEVIES AND COLLECTIONS
LAST TEN FISCAL YEARS
COLLECTED WITHIN THE
FISCAL YEAR OF LEVY
Fiscal Year of Levy Total Collections To Date
Fiscal Year
Ended
June 30
Taxes
Levied for
the Fiscal
Year Amount
Percent of
Levy
Collections
in
Subsequent
Years Amount
Percent
of Levy
2016 $31,245,233 $31,220,237 99.92% $593,784 $31,814,021 101.82% 2017 33,814,971 33,547,833 99.21 561,371 34,109,204 100.87 2018 35,648,742 35,417,025 99.35 585,973 36,002,998 100.99 2019 41,184,840 40,950,087 99.43 571,918 41,522,005 100.82 2020 42,472,462 42,173,456 99.30 524,343 42,697,799 100.53 2021 46,298,808 46,048,794 99.46 615,108 46,663,902 100.79 2022 49,347,531 49,204,423 99.71 691,484 49,895,907 101.11 2023 49,559,611 49,351,461 99.58 651,627 50,003,088 100.89 2024 54,132,817 53,937,939 99.64 977,801 54,935,740 101.48 2025 59,008,938 58,755,200 99.57 507,708 59,262,908 100.43 _______________
Notes: The amounts presented include only City property tax revenues. Subsequent years’ collections of prior-year levies may include delinquent tax payments from multiple prior fiscal years. While the San Bernardino County Auditor-Controller/Treasurer/Tax Collector system now allows identification of payment vintage by levy year, the schedule presented here aggregates all prior-year collections for simplicity and does not segregate them by specific prior years.
Sources: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025, City of Redlands, San Bernardino County Auditor-Controller/Treasurer/Tax Collector.
City Tax Base and Infrastructure
The primary tax base in Redlands is property tax, which is assessed on real estate and improvements within City boundaries. The total assessed value of property in the City has shown steady growth over recent years, reflecting both new development and increased property values. In addition to property taxes, Redlands collects revenue from sales tax, transient occupancy (hotel) taxes, and business license taxes. The City’s local businesses include a diverse mix of industries, including retail, healthcare, education, logistics, and professional services. The presence of the Esri, a globally recognized geographic information systems (GIS) company headquartered in Redlands, contributes to the City’s professional and technology business component through a concentration of high-skilled, higher-wage jobs, which support local spending, housing demand, and overall economic stability. Esri is effectively the dominant platform provider for geographic information systems (GIS) across U.S. local, regional, and state government. Its software is not just widely used by most jurisdictions as their system of record for spatial data, it is often embedded in core government operations. Other major institutional employers include Loma Linda University Health, Redlands Community Hospital, and the University of Redlands.
Redlands is predominantly a residential community with a mix of single-family homes, apartments, and senior housing. Substantial new home construction has occurred in recent years, including master-planned communities in the east and north portions of the City. Many neighborhoods are “built-out,” with little or no vacant land, especially in established residential areas; however, citywide, Redlands is not considered fully built- A-11
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out. There are a number of vacant or underutilized parcels within the City limits, particularly in older neighborhoods or along key corridors, that are identified for infill residential development. The City’s Housing Element and General Plan specifically encourages infill projects to meet state housing mandates and support a range of housing types. Some former agricultural or industrial sites within the existing City footprint are being targeted for redevelopment as housing. The City’s General Plan 2035 strongly supports infill as a growth strategy, aiming to preserve open space at the urban edge while accommodating growth within existing infrastructure.
There are several business parks and light industrial facilities in the southern and western parts of the City. Industrial and logistics-oriented development is concentrated near areas with immediate freeway access, including the I-10 freeway corridor. Office uses are clustered around downtown and key arterial corridors. Some undeveloped parcels remain on the City’s periphery, particularly toward the north and east. Agricultural uses persist in certain areas, especially citrus groves that are part of the City’s heritage.
The City maintains over 314 lane miles of streets and roadways, subject to ongoing resurfacing and repair projects, and several vehicular and pedestrian bridges, particularly over the Santa Ana River and local washes. City residents and visitors have the benefit of a multi-modal transportation network that includes regional rail service, transit connections, and an expanding system of trails and active transportation corridors.
The City has approximately 56,500 tree sites located within the City’s right-of-way and City owned properties. Of those sites, approximately 42,700 are home to trees that live within the easement area abutting City streets and have been coined the term “street trees.” The City holds its urban forest in high regard and in partnership with the Redlands Street Tree Committee is dedicated to the continued enhancement, maintenance, education and care of this living asset.
City-owned infrastructure includes integrated utility systems and capital facilities that support core municipal services. These include potable and non-potable water distribution systems, wastewater collection systems and a regional wastewater treatment facility (each serving residents in the Redlands and Mentone areas, as well as parts of Crafton Hills and San Timoteo Canyon areas), solid waste operations including the Cityowned California Street Landfill and related transfer and recovery infrastructure, and stormwater and flood control facilities. These systems are designed to provide capacity for existing development while accommodating future growth in accordance with the City’s General Plan.
Community and civic assets include 18 established public parks and recreational facilities, sports complexes, trails and open space areas, public gathering spaces such as the Redlands Community Center and Senior Center, public safety facilities including fire stations and police facilities, [__] City libraries, and administrative facilities including City Hall and the Civic Center complex scheduled to begin occupancy later this year. Together, these assets support a full range of municipal services and contribute to the City’s quality of life and long-term operational resilience.
In addition to the new City Hall and the Civic Center complex, ongoing public investment includes the development of the new Safety Hall as described herein, the design and construction of facilities to replace Fire Station #264 as described herein, the improvement and upgrading of Redlands Fire Station #262, located at 1690 Garden Street, the replacement of the A.K. Smiley Public Library HVAC cooling tower and preservation work at the library, continued park and community facility improvements, downtown parking and walkability enhancements, replacement of aging infrastructure, and implementation of housing and homelessness response initiatives.
These investments reflect the City’s emphasis on sustaining core service levels while addressing longdeferred capital and facility needs. They are part of a broader long-term strategy to improve public safety, preserve quality of life, modernize civic infrastructure, and support fiscally sustainable growth. Collectively, they position Redlands to accommodate future development, maintain community assets, and continue delivering municipal services in an efficient and resilient manner.
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Pending Commercial and Residential Development
Redlands has seen several recent infill developments, including new townhomes, mixed-use projects downtown, and higher-density apartments near transit corridors and the University of Redlands. Transit-oriented development is a focus around the new Arrow Rail stations.
The City’s Transit Villages Specific Plan further supports this development pattern by encouraging higher-density, mixed-use projects within approximately one-half mile of the Arrow rail stations, with an emphasis on walkability, integrated land uses, and reinvestment in underutilized areas of the City’s core. These transit-oriented districts are intended to facilitate private development activity, expand housing and commercial opportunities, and support long-term economic growth within Redlands.
One significant project in cooperation with the University of Redlands is University Village, a mixeduse development project adjacent to campus and designed to foster a vibrant, walkable community that integrates academic, residential, retail, and recreational spaces. The University of Redlands is a private, non-profit university established in 1907 with an undergraduate enrollment of approximately 2,000 students and a graduate enrollment of approximately 1,000 students at its Redlands campus. The project is envisioned as a new gateway to the University of Redlands, offering a blend of living, learning, and leisure spaces while enhancing connectivity with transit and fostering economic growth in the region, attracting visitors and investment.
The project combines student housing, faculty/staff residences, retail shops, restaurants, offices, and public spaces. Street-level shops and dining options are planned to serve both the campus and the broader community, together with plazas, green spaces, and pedestrian walkways for social, cultural, and recreational activities. The project is strategically positioned near the new Arrow rail station (part of the Redlands Passenger Rail Project), enabling transit-oriented development and improved connectivity to downtown Redlands and beyond. The project is expected to unfold in multiple phases over several years.
In addition to larger mixed-use planning efforts, the City continues to experience incremental residential infill activity, including smaller-scale condominium and multi-family developments on underutilized parcels, as well as policy changes intended to facilitate additional housing production, such as expanded accessory dwelling unit (ADU) standards.
Downtown Redlands remains an area of ongoing redevelopment interest. The former Redlands Mall site, previously entitled for a large-scale mixed-use project, has undergone recent ownership changes, and demolition activities have been initiated, with future redevelopment plans expected to advance over time. While timing and scope remain uncertain, the site represents a significant long-term opportunity for additional housing, retail, and public space in the downtown core.
More broadly, development activity in the City continues to reflect a pattern of infill and redevelopment, particularly in proximity to transit, employment centers, and established commercial corridors.
No assurance can be provided that any of the aforementioned projects will be completed, if ever.
Principal Sources of the City’s General Fund Tax Revenues The table below details the principal sources of the City’s General Fund tax revenues for the last five Fiscal Years. As described herein, effective April 1, 2021, the City began to receive tax revenues from a 1.00% transaction and use tax (TUT) approved by voters in November 2020. Measure T currently generates approximately $20 million annually, with the proceeds applied to preserve public safety, City services and local infrastructure. These are total revenues for each category shown. Currently, none of these general fund revenue sources are subject to restrictions on use.
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General Fund revenues in Fiscal Year 2024-25 remained highly concentrated in the City’s two primary tax sources, property tax and sales tax, which together accounted for approximately 73% of total revenues for the year, and actual General Fund revenues exceeded budget estimates by $8.2 million. This favorable variance was driven in part by stronger-than-anticipated growth in property tax revenues. Property tax has exhibited sustained growth over the past several years, supported by significant increases in the City’s total assessed valuation. These increases helped to offset underperformance in more economically sensitive revenue sources, including sales tax and franchise fees in recent years. General Fund revenues in Fiscal Year 2025-26 are estimated to be approximately $124 million. While assessed value growth has been robust over the last five years, the pace of growth is expected to moderate in future years as market conditions normalize.
TABLE A-11
CITY OF REDLANDS
GENERAL FUND TAX REVENUES BY SOURCE
LAST FIVE AND CURRENT FISCAL YEARS
Fiscal Years Ending
Source 2021 2022 2023 2024 2025 2026 (6)
Property Tax 33,894,044 35,544,452 38,326,753 41,700,404 44,984,981 45,923,786 Transient
Occupancy Tax (1)
1,834,855 2,055,969 2,311,290 2,023,049 1,979,925 1,766,533 Sales Tax (2) 21,924,279 27,566,693 28,216,967 27,435,339 26,750,777 27,279,138 Transaction and Use
Tax (3)
4,617,190 20,665,478 20,415,886 20,194,304 20,337,840 20,171,000 Franchise Fees (4) 2,379,571 2,625,852 4,487,821 4,471,469 2,685,573 2,269,752 Property Transfer
Tax
496,074 762,277 611,913 309,077 342,856 410,377
Mining Tax 362,020 343,319 371,644 357,792 281,228 267,458 Total 65,508,033 89,564,040 94,742,274 96,491,436 97,363,181 98,128,084 All Other Revenues
(5)
17,274,206 18,266,907 10,738,732 23,538,381 28,037,802 25,464,614 Total 82,782,239 107,830,947 105,481,006 120,029,817 125,400,983 123,592,698
(1)
___________________
(2) Over Fiscal Year 2023-24, sales tax decreased by $541,000, or 1.1%, reflecting the inherently elastic nature of this revenue source (3) The City’s Measure T 1.00% transaction and use tax which took effect on April 1, 2021. (4) As compared to Fiscal Year 2023-24, franchise fee revenue declined by approximately $1.8 million, or nearly 40%. The decrease reflects a return to more typical revenue levels following an unusually strong prior year driven by timing-related factors and higher utility revenues that did not recur in Fiscal Year 2024-25. Changes in billing timing and customer usage patterns also contributed to the reduction. (5) [Other revenues consist substantially of business license taxes, investment income, charges for services, and use, licensing and permit fees.] Note, the City does not impose any utility users tax (UUT) on electricity, gas, water, or telecommunications, or a real property transfer tax, but does impose a documentary transfer tax included as part of Property Tax, and has a regulatory business license program for which fees are assessed.
(6) Estimated, unaudited amounts.
Note: Numbers may not sum due to rounding.
Sources: City of Redlands Finance Department and City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025.
The information in the table above is summary information prepared by the City of Redlands Finance Department. For additional financial and operation information regarding the City, see APPENDIX B – “CITY
OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025” and the tables that follow in this Appendix A. See also “CONSTITUTIONAL PROVISIONS AFFECTING CITY REVENUES AND APPROPRIATIONS” in the Official Statement.
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Property Tax Revenues
Property tax collections currently constitute the City’s second largest revenue source in Fiscal Year 2024-25 and accounted for nearly 36% of the City’s general fund revenues for such fiscal year. The County assesses properties and it bills, collects, and distributes property taxes to all taxing entities, including the City.
In 1978 the voters of the State of California passed Proposition 13 (Article XIIIA, California State Constitution) which limited property taxes to a total maximum rate of 1.00% based upon the assessed value of the property being taxed plus additional taxes for repayment of existing or subsequent voter- approved indebtedness. Each year, the assessed value of property may be increased by an “inflation factor” (limited to a maximum increase of 2.00%). With few exceptions, property is only reassessed at the time that it is sold to a new owner. The City receives a portion of the one percent general tax levy which is shared by several other local governments including the county and the school district. The City's share is based on a formula prescribed in Section 26912(b) of the Government Code. The county apportions property taxes to the City on a scheduled basis which generally adheres to the actual tax collection periods. The tax lien date is January 1 of each year and covers the ensuing fiscal year's tax returns. The tax levy date is from July 1 to June 30 of each year. The first installment is due on November 1 with penalties and interest accruing after December 10. The second installment is due no later than April 10.
Property tax revenue experienced 8.00% growth in Fiscal Year 2024-25 compared to the prior fiscal year, with roughly 1.75% of this increase attributed to the annual adjustment for CPI. New residential and commercial construction contributed 1.00% to this growth, while prior-year property sales accounted for an additional 2.2%.
Assessed valuations are subject to a real property owners right to appeal the assessed value of their property subject to limitations on when to file. Appeals are handled by the Assessment Appeals Board, an independent body that reviews disputes regarding property valuations. An owner seeking adjustment is required submit an Application for Changed Assessment to the County Clerk of the Board. The application must include supporting documentation (such as comparable sales or appraisal reports). Upon review, the Assessor may review and possibly adjust the value informally. If not resolved, a formal hearing is scheduled before the Appeals Board and the Appeals Board will issue a decision that may result in the assessed value being lowered, upheld, or changed. If the value is reduced, property taxes may be refunded or adjusted accordingly. Approximately $1,242,302,265 of owner appeals of assessed valuation were pending as of [April 13, 2026]. [To update later this month.]
Sales Tax Revenues
Sales tax collections currently constitute the City’s largest revenue source in Fiscal Year 2024-25 and accounted for nearly 38% of the City’s general fund revenues for such fiscal year. Sales taxes consist of the
1.00% “Bradley Burns” sales and use tax (as determined by a Redlands place of sale and, with the implementation of AB 147, a share of sales tax from online retailers and marketplace facilitators when goods are delivered to addresses within the City), and the City’s recent implementation of a transaction and use tax.
Effective April 1, 2021, the City began to receive tax revenues from a 1.00% transaction and use tax (TUT) approved by voters in November 2020. That transaction and use tax, Measure T, currently generates approximately $20 million annually. See “Measure T Transaction and Use Tax Revenues” below.
Sales tax revenues (not including the Measure T transaction and use tax) declined somewhat in Fiscal Year 2024-25, with the General Fund receiving $26.75 million, a decrease of approximately 2.5% when compared to Fiscal Year 2023-24. The City’s 1.00% Bradley-Burns sales tax decline was driven largely by reduced consumer activity in general merchandise and discretionary goods, as well as a change in reporting practices by a major online retailer that shifted point-of-sale attribution away from the City despite the continued operation of its local facilities. By contrast, Measure T increased by 0.7%, demonstrating continued stability in the broader tax base and underscoring the resilience of local spending even amid softening economic conditions.
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Although both the Bradley-Burns sales tax and the City’s transaction and use tax apply to substantially the same taxable goods, they differ in the manner in which such taxes are allocated and imposed. Bradley-Burns sales tax revenues are generally attributed based on the retailer’s place of sale, while the City’s transaction and use tax is applied on a destination basis to the storage, use, or consumption of goods within the City and is subject to certain statutory exemptions, including for pre-existing contracts and out-of-district deliveries.
Given the softening economic conditions, the City’s sales tax base remains resilient, supported by a diverse mix of industries that helps mitigate volatility across individual sectors of the local economy. Sales tax revenue in Redlands (including as described for the Donut Hole below) primarily comes from the following business sectors: autos and transportation: car dealerships, auto parts stores, and related service providers; general consumer goods: department stores, clothing retailers, and general merchandise outlets; restaurants and hotels: food and beverage sales at restaurants, bars, and lodging facilities; building and construction: sales from hardware, lumber, and construction supply stores; fuel and service stations: gasoline stations contribute significantly to local sales tax; and food and drugs: grocery stores and pharmacies.
A table of the City’s sales tax revenues as described above for the last ten fiscal years, and estimated; unaudited amounts for Fiscal Year 2025-26, is set forth below.
TABLE A-12
CITY OF REDLANDS
SALES TAX REVENUES
FISCAL YEAR 2015-16 THROUGH FISCAL YEAR 2025-26
Fiscal Year
Ended
June 30,
City Sales Taxes
for the Fiscal
Year
Donut Hole Sales
Taxes for the
Fiscal Year Total Sales Tax
2016 $13,848,013 $3,384,737 $17,232,750
2017 $13,009,529 3,833,562 16,843,901
2018 12,999,106 4,178,386 17,177,492
2019 14,509,402 4,329,043 18,838,445
2020 13,618,108 3,892,166 17,510,274
2021 18,909,635 3,014,644 21,924,279
2022 20,861,561 6,705,132 27,566,693
2023 20,670,305 7,546,662 28,216,967
2024 22,033,445 5,401,894 27,435,339
2025 19,612,545 7,138,233 26,750,778
2026(1) 19,434,356 7,544,782 26,979,138
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(1) Estimated; unaudited.
Sources: City of Redlands Finance Department.
An unincorporated area of the County that is fully surrounded by City limits (referred to generally as the “Donut Hole”) is subject to significant sales activities. This area includes Citrus Plaza and Mountain Grove Plaza, together comprising a large and popular shopping and entertainment district in the Inland Empire. In 1998, the voters of California approved Proposition No. 11 which amended Article XIII, Section 29 of the California Constitution to allow cities and counties to enter into contracts to apportion sales and use tax revenue, by ordinance or resolution, and upon approval by a two-thirds vote of the legislative bodies of the parties to the contract. The City and the County are parties to such a contract pursuant to which the County and the City apportion the sales and use tax revenue generated by businesses located in the Donut Hole in exchange for the City’s provision of municipal services, generally on the basis of 90% of such sales and use tax revenue being provided to the City and 10% of such sales and use tax revenue being provided to the County. By Ordinance No. 2550 and majority vote of the qualified voters of the City, the initial termination date of this contract was extended beyond its initial December 31, 2003 termination date and will continue in effect until the later of (i) A-16
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thirty (30) years from its effective date (August 12, 2003), or (ii) such time as all parcels within the Donut Hole are annexed or otherwise incorporated. Accordingly, while the contract is commonly referenced as extending through 2033, it may remain in effect beyond that date if annexation has not occurred, and the sales and use tax apportionment provisions described above would remain operative absent amendment. The amounts in the table above represent the sales tax receipts received by the City from its share of 1.00% Bradley Burns sales and use tax (as described above), its share from the City-County sales tax sharing contract, and a cumulative total.
Measure T Transaction and Use Tax Revenues
A component of the City’s reported sales tax revenues is its Measure T transaction and use tax. Effective April 1, 2021, the City began to receive tax revenues from a 1.00% transaction and use tax approved by voters in November 2020. Measure T transaction and use tax collections accounted for nearly 16% of the City’s general fund revenues for Fiscal Year 2024-25, and increased by 0.7% compared to the prior fiscal year. A table of the revenue and rate of Measure T collections for the last five (and current) fiscal years is set forth below. The table above under the caption “Principal Sources of the City’s General Fund Tax Revenues” shows Measure T and Sales Tax Revenues as separate line items, unlike the financial statements elsewhere in this Official Statement which show combined sales tax revenues. The City’s budget actual Measure T revenues and estimated Fiscal Year 2025-26 Measure T revenues are set forth in the table below.
TABLE A-13
CITY OF REDLANDS
REVENUE AND RATE OF MEASURE T TRANSACTION AND USE TAX
FISCAL YEAR 2020-21 THROUGH FISCAL YEAR 2025-26
Fiscal Year
Ended
June 30,
Measure T
Transaction and
Use Taxes for the
Fiscal Year
2021(1) $ 4,617,190
2022 20,665,478
2023 20,415,886
2024 20,194,304
2025 20,337,840
2026(2) 20,171,000
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(1) The City’s Measure T 1.00% transaction and use tax which took effect on Apri 1, 2021. (2)
Estimated; unaudited.
Sources: City of Redlands Finance Department.
Since its passage in November 2020, the City has applied Measure T revenues to make significant investments in addressing deferred maintenance in the areas of its local urban forest, traffic signal infrastructure, community & senior center facilities, public safety facilities and public safety equipment replacement.
Measure T has also allowed for the addition of positions in the Police Department and Fire Department, as well as in other areas that provide enhanced service levels to the community. These investments have translated into improved public infrastructure, restored and expanded service delivery, and tangible enhancements to the safety, accessibility, and overall quality of life for residents.
The Proposed Biennial Budget continues to utilize Measure T revenues to support a wide range of community priorities, including public safety operations, infrastructure maintenance, capital reinvestment, homelessness response, and quality-of-life programs. Consistent with prior years, Measure T funding remains an important component of the City’s long-term operational and capital planning strategy. The City projects Fiscal Year 2026-27 and 2027-28 Measure T revenues, respectively, at $20,629,000 and $21,252,000. Uses are budgeted for the following categories.
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Portfolio of Service-Level Investments:
Public Safety Operations & Staffing
o Police and Fire personnel, equipment leases, IT systems, and operational support Infrastructure & Asset Maintenance
o Enhanced & ongoing maintenance of streets, trees, facilities, sidewalks, and ADA improvements
Community Services & Quality of Life
o Enhanced recreation programming, library services, homelessness response, and community events
Capital Investment & Equipment Replacement
o Vehicle and equipment lifecycle replacement, facility improvements, and capital planning Strategic Reserves & Major Facilities
o Set asides and funding toward long-term public safety facilities and infrastructure Homeless Solutions and Services
o Ongoing supportive services, housing assistance programs, and outreach efforts Examples of Planned Investments (Subject to Timing and Delivery) – • Fire Apparatus Replacement, Acquisition and Outfitting • Police Vehicle Lease Replacement Program
• Dispatch Radio Console Modernization
• Axon Body-Worn Camera Replacement Program
• Axon Taser Replacement Program
• Police Specialized IT Hardware and Software Upgrades
• Firefighter Ballistic Protective Equipment
• Traffic Signal Maintenance and Repairs
• Texonia Park Revitalization Project
• Sylvan Park Restroom Renovation
• Ford Park Restroom Replacement
• Citywide Playground Replacement Program
• Citywide Park Furnishing Replacement Program
• Martinez Park Bleacher Improvements
• Freeway Frontage Beautification Improvements
• Joslyn Senior Center HVAC Replacement
• Library Flooring Replacement Project
• Fire Station Bay Door Replacement and Painting
• Fire Station Restroom Tile Replacement
• Electrical Repairs and Infrastructure Improvements for City Parks • Community Gardens Landscaping and Irrigation Improvements • Recreation Field Lining and Infield Improvements
• Expanded Recreation and Senior Programming
• Community Special Events and Family Programming
• Streets Maintenance Vehicle Replacement
• Streets Backhoe Loader Replacement
• Public Safety & Facility Debt Service
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Other Tax Revenues
[Other taxes include the City’s transient occupancy tax (hotel tax), and the mining tax. Total revenues in this category constitute the City’s eighth-largest revenue source in Fiscal Year 2024-25 and accounted for nearly 2% of the City’s general fund revenues for such fiscal year. The aggregate of these revenues declined by approximately 3%, or $85,911, compared to the prior year. The decrease was driven primarily by a reduction of approximately $76,600 mining tax revenues, reflecting lower volume of extraction activity. Transient occupancy tax revenues remained relatively stable, decreasing by approximately $43,100, while property transfer tax revenues decreased by approximately $33,800, partially offsetting the increase in property transfer receipts.] Other Fees and Charges
[Other fees and charges include franchise fees, licenses and permits, fines and forfeitures, charges for services, and rents and leases. These categories are subject to consumer usage patterns; number and value of permits issued related to building, street encroachments, and code variances; and the ability of the City to attract use of City facilities accommodate event sizes generally.] City Budget Process
The City’s formal budget process is structured to support both operational control and long-range financial planning. The budget is developed at the operating program level, with programs organized within departments. Departmental budgets may span multiple funds, and fund-level budgets are composed of the aggregated departmental budgets. The City maintains budgetary control at the fund level.
The City operates under a biennial budget framework, under which the City Council adopts a two-year financial plan. Appropriations, however, are administered on an annual basis for all departments within the General Fund, special revenue funds, and capital project funds. This structure allows the City to combine multiyear planning with annual fiscal control.
The City formally transitioned to a biennial budget beginning with Fiscal Year 2023–24. This approach supports longer-term financial planning, aligns resource allocation with City Council priorities and the City’s Strategic Plan, and enhances evaluation of ongoing service levels, deferred maintenance, and capital investment needs. Departments develop budget requests over a two-year horizon, including both baseline operating needs and prioritized supplemental requests, which strengthens financial forecasting and facilitates earlier identification of structural imbalances or emerging cost pressures.
Every two years, the biennial budget development process begins in January with updates to long-range fiscal planning assumptions, which serve as the framework for the development of the General Fund budget. In March, departments prepare budget requests in two components: (i) a baseline operating budget reflecting the resources necessary to maintain existing service levels, and (ii) a prioritized list of supplemental requests for additional staffing, capital needs, equipment replacement, and service enhancements. In April, these requests are compiled and evaluated. In late April or early May, department heads present their budget requests to the City Manager, who, in coordination with the Management Team, evaluates departmental needs against established Council priorities, revenue forecasts, and long-term financial considerations. This process results in the development of the City Manager’s Recommended Biennial Budget.
The City Manager’s Recommended Budget is then presented to the City Council at public meetings, including a City Council Budget Workshop and subsequent regular meetings, where the budget is reviewed, discussed, and refined. The City Council may adopt the budget, propose modifications, or continue deliberations to a subsequent meeting. Following these presentations and deliberations, the biennial budget is formally adopted by the City Council at a regular meeting prior to the start of the new fiscal year. The proposed and adopted budgets are made available to the public, and public meetings provide opportunities for review and comment in accordance with applicable laws and City policies.
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Below is the calendar used for the City’s most recent Adopted Budget:
Finance meeting with departments and distribution of budget documents ................. March 2-3 Complete department budget packets due to Finance ................................................. April 3 - 8 Finance review of department submissions ............................................................... April 3 - 24 Departments to meet with City Manager ................................................................ April 27 - 28 Proposed budget distribution to City Council (no presentation, distribution only) ........ May 15 City Council Budget Workshop with Department Presentations .................................... May 18 Measure T Oversight Committee Presentation & Discussion ......................................... May 21 Regular City Council Meeting Budget Presentation, Discussion and possible Adoption . June 2 Regular City Council Meeting Budget Adoption (if needed) ......................................... June 18 Following adoption, the City monitors revenues and expenditures on an ongoing basis to ensure alignment with adopted appropriations and financial assumptions. Formal reviews are conducted at key points during the biennium.
The Mid-Year Budget Review is conducted during each fiscal year and is typically presented to the City Council in March. This review is based on approximately seven months of financial activity and provides a comparison of year-to-date revenues and expenditures to the adopted budget, updated projections for the remainder of the fiscal year, and identification of notable variances and trends. The Mid-Year Review is primarily a monitoring and reporting tool intended to inform the City Council and the public of current fiscal conditions.
While it may result in limited, targeted adjustments, it does not typically involve comprehensive revisions to the budget.
The Mid-Biennium Review is conducted near the end of the first fiscal year of the biennium and serves as the City’s primary opportunity to update the second-year budget. This review incorporates updated revenue projections, year-end estimates for the first fiscal year, and adjustments to appropriations based on changing conditions, project timing, and City Council priorities. The Mid-Biennium Review results in a formal update to the second-year budget and is presented to the City Council for approval.
Budgetary controls are maintained to ensure compliance with the appropriated budget. The level of budgetary control is established at the fund level, and expenditures may not legally exceed appropriations within any fund. The City maintains an encumbrance accounting system as a mechanism of budgetary control.
Encumbered amounts are carried forward into the subsequent fiscal year within a biennium in accordance with the adopted budget resolution.
Under the City’s biennial framework, appropriations adopted for the first year of the biennium that remain unexpended at fiscal year-end are re-budgeted into the second year of the biennium, including both encumbered amounts and continuing appropriations for projects in progress. Upon completion of the biennium, only outstanding encumbrances are automatically carried forward into the first year of the subsequent biennium.
Unencumbered appropriations lapse at the end of the biennium and must be re-appropriated by the City Council as part of the next biennial budget adoption. Grant-funded appropriations are not subject to annual lapse and remain available until the applicable grant is completed or expires.
The City Council retains authority to approve changes to budgeted revenues and expenditures, including any revisions that increase total appropriations within a fund or transfer resources between funds. The City Manager is authorized to adjust appropriations and transfer budgeted amounts within a fund, provided that total appropriations within the fund are not exceeded. During the fiscal year, the City Council may approve budget amendments as necessary, subject to the availability of resources and compliance with the constitutional appropriation limit set forth in Article XIIIB of the California Constitution.
The City’s biennially adopted budget includes the General Fund, special revenue funds, debt service funds, capital project funds, enterprise funds, and internal service funds, and constitutes the legally adopted A-20
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operating and capital budget of the City. Permanent funds are not budgeted. Budget-to-actual comparisons are presented for each governmental fund with an adopted budget, with additional detail provided for the General Fund and major special revenue funds as part of the required supplementary information in the City’s financial statements. Enterprise and internal service funds are budgeted and operated on a cost-recovery basis, with rates and charges intended to support the full cost of providing services. Each biennial budget will include a six year plan update for capital improvements.
Long-Term Financial Planning
The City incorporates long-term financial planning into its budget process in several ways. First, as described previously, the City operates on a biennial budget cycle to guide its financial planning and control.
Second, as part of the City’s strategic resource and budget planning framework, management prepares and presents a multi-year financial projection to the City Council. In accordance with the City Manager’s direction, a six-year financial outlook is developed during each budget cycle to support long-range planning and policy development. This forecast serves as a key tool for evaluating the City’s capacity to sustain proposed programs, meet ongoing operating and maintenance needs, and support capital investments, including the future operating impacts of planned capital improvement projects. The six-year projection provides a forward-looking view of anticipated fiscal conditions, enabling informed decisions regarding the allocation and management of financial resources. The purpose of this long-range fiscal planning is to identify emerging trends and potential challenges early, allowing the City to adjust course proactively and implement strategies that preserve long-term financial stability and solvency.
The City’s long-term fiscal planning guided the development of the capital projects and facilities discussed in this Official Statement allowing decisions to prioritize spending and accumulate resources for future capital needs. In Fiscal Year 2025-26, the City’s General Fund reserves dedicated to capital projects [net of expenditures and drawdowns] included approximately $3.1 million across parks, equipment, facilities, sidewalks, and building capital; and $10.5 million set aside for future municipal facilities.
City Financial Policies
The City has adopted and employs financial policies to provide guidance for all fiscal activities and resource allocation decisions. Some of the major financial policies the City has adopted are summarized below.
The City operates substantially in compliance with these policies.
Debt Management Policy. The City’s Debt Management Policy establishes guidelines for the use of various categories of debt; creates procedures and policies that minimize the City’s debt service and issuance costs; and provides for full and complete financial disclosure and reporting. The Debt Management Policy contains general guidelines and parameters for issuing and refunding debt, including guiding decisions related to future debt to ensure adequate financial resources are available to support the City’s long-term capital needs.
Two-Year (Biennial) Budget Planning. The City transitioned to a two-year (biennial) budget beginning with the Fiscal Year 2023–24 cycle, establishing a more strategic, long-range approach to resource planning. The biennial framework supports multi-year financial and operational planning, aligns budget development with the City’s Strategic Plan and community priorities.
General Fund Balance Policy. As recommended by the Government Finance Officers’ Association, the City will work to establish and maintain a General Fund Ending Unassigned Fund Balance of no less than 2 months (16.67%) of regular general fund operating expenditures. Fund balances will be categorized for annual financial statement reporting purposes as required by Government Accounting Standards Board (GASB) 54 into the following five categories: Nonspendable, Restricted, Committed, Assigned and Unassigned (terminology used in the Budget does not specify the categories used in reporting purposes, but uses the familiar “reserved” and “unreserved” fund balance).
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The General Fund Operating Reserve (Unassigned Fund Balance) and, the Fund Balance “Reserve for Contingency” (Committed Fund Balance), and other reserves (Assigned Fund Balance) are intended to be approximately twenty-eight percent (28%) of general fund operating expenditures and operating transfers out.
Within this amount, the Fund Balance “Reserve for Contingency” (Committed Fund Balance) is intended to be twelve percent (12%) of general fund operating expenditures and operating transfers out. “Reserves” (Committed and Assigned Fund Balance) for the General Fund will be funded at the minimum percentages established by the Fund Balance Policy. Additional funding of “reserves” may be made by the City Council in accordance with the Policy.
“Reserves” for encumbrances will be established at the end of every fiscal year to designate fund balance in the amount equal to the City’s unpaid obligations and unfinished projects at year-end. Funding levels of General Fund “reserves” will be reviewed during periods of economic stagnation to avoid reductions in operating service levels. Appropriations or use of funds from any “reserves” will require City Council action in accordance with the Fund Balance Policy.
Investment Policy. The City’s Investment Policy establishes guidelines, strategies, practices, and procedures to be used in the investment of public funds in accordance with California Government Code sections 53600-53610, which establish legally permitted investments for local governments statewide. The policy is reviewed, updated if needed, and adopted annually. Additionally, the City’s policy recently received certification by the California Municipal Treasurers Association.
Capital Improvement Plan (CIP) Policies. The City will develop a multi-year plan (currently six-year plan) for capital improvements, update it with each biennial budget and make capital improvements in accordance with the plan. The City will maintain its physical assets at a level adequate to protect the City’s capital investment and to minimize future maintenance and replacement costs and will budget funds for adequate maintenance and orderly replacement of capital assets from current revenues where possible. The capital budget process will work in conjunction with the regular operating budget process. CIP projects will be flagged as funded or unfunded depending on whether or not the forecasted operating budget can support or fund the project.
All funded CIP projects will be included in the operating budget for the current budget year.
The City Council has adopted additional operating Revenue Policies and Expenditure Policies to provide guidance, consistency, and inform its decision making including with respect to revenue collections, review for efficiencies, and corrective actions.
GFOA Financial Reporting Certificate of Achievement
The Government Finance Officers Association of the United States and Canada (“GFOA”) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its annual comprehensive financial report for the fiscal year ended June 30, 2024. This was the twenty second consecutive year that the government has achieved this prestigious award, and is the most recent awards announced. To be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report.
Budget Considerations and Projected Results for Fiscal Year 2025-26 Fiscal Year 2024-25 General Fund Budget. In its deliberations for the completion of the Fiscal Year 2024-25 General Fund Budget, the City noted that it had made significant strides to reinvest in community needs such as public safety, deferred maintenance of public infrastructure, and improvements to overall service levels.
To plan responsibly through shifting economic patterns and resulting impacts, the Fiscal Year 2024-25 and Fiscal Year 2025-26 biennial budget prioritizes sustainable investments that set us up for continued stability — from supporting the City’s workforce through innovative collective bargaining agreements, to multiple-year planning efforts to address long-deferred maintenance needs, to developing strategies to invest in large-scale expenditures for new Police and Fire facilities. The budget dedicates resources to address Police Department staffing levels, A-22
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create a full time position for Sustainability & Climate Action, augment existing Code Enforcement staffing levels, carry out improvements to various park facilities, invest in the replacement of aging infrastructure, build a new public safety facility, and address the need to plan for affordable housing stock.
During the Mid-Biennium Update in November 2023 and the Mid-Year Update in March 2024, the General Fund was thought to require the use of roughly $8 - 9 million in prior year surplus in order to meet its spending requirements. Before the 12-Month Estimates were prepared by staff, total financial resources for the General Fund were estimated at $139 million and total financial requirements at $147 million. However, as of May 2024, new revenue forecasts indicated an increase of roughly $3.6 million in revenues, transfers in, or the use of reserves. This, coupled with a decrease in estimated spending, results in a difference of $15.4 million between the bottom line in the General Fund from the Adjusted Budget to the 12-Month Estimate.
During fiscal year 2024-25, the economy continued to experience inflationary pressures not seen for several decades. Price pressures constrain the City’s purchasing power, increase its labor costs and increase the costs of borrowing, with inflation continuing and slower than anticipated in its decline. Even so, sales tax revenue estimates have been adjusted upwards by $400,000 and property tax by $400,000, and franchise fees and investment income have the largest increases among each revenue category at $1.9 million and $1.5 million, respectively.
For the expenditures side, as departments near the end of the first biennial budget for Fiscal Years 2022- 23 and 2023-24, large capital expenditures that have not yet been initiated were required to be re-budgeted into the new two-year budget. This fact, together with salary savings represented the most significant difference between the Adjusted Budget amounts for spending [and the 12-Month Estimate can be attributed to this process as well as a large amount of salary savings].
Measure T then represented a substantial contribution towards supporting core City services, including public safety & public infrastructure. Measure T has also allowed the City to restore and add positions in the Police Department and Fire Department, as well as in other areas that provide enhanced service levels to the community.
In terms of aging infrastructure and park improvements, the following are several key investments:
$425,000 towards traffic signal maintenance, $150,000 in traffic signal conduit boring, $170,000 in guard rail repairs, $125,000 in crosswalk restriping, $325,000 in traffic signal cabinet and senor equipment replacement, $650,000 in parking structure repairs, $400,000 for the construction of the Ford Park Lower Restrooms, $1.7 million in renovations for Texonia Park, $500,000 in City sidewalk and ADA Ramp replacements, and $105,000 to replace flooring in the Conservatory of the Library, among several other projects.
The Fiscal Year 2024-25 General Fund Budget includes noteworthy appropriations for expanding recreation programming and special events, restoring adult sports leagues and introductory youth sports programming, instructor-led emergency management training & exercises, the lease purchase of 27 police vehicles, the first payment for the purchase of 100 new tasers to replace outdated equipment for police, and contract code enforcement services to augment existing efforts to investigate public concerns regarding violations of the municipal code by existing commercial and residential properties.
While the Fiscal Year 2024-25 General Fund Budget incorporated the vast majority of City Council and Measure T priorities, choices still had to be made. As a result, certain identified needs were not able to be funded:
the design and engineering of a new fire station, the design and engineering of the expansion of the Animal Shelter facility, additional alley paving projects and additional sidewalk and ADA ramp replacement efforts.
Fiscal Year 2025-26 General Fund Budget. The Fiscal Year 2025-26 General Fund budget continues with the investments planned in Fiscal Year 2024-25. Funding for deferred maintenance, replacing aging infrastructure, contract code enforcement services, and expanding recreation programming continues, along with funding for the positions added during Fiscal Year 2024-25.
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To address aging infrastructure, the Proposed Fiscal Year 2025-26 General Fund Budget includes many of the maintenance and repair programs mentioned above in addition to a total of $170,000 towards the replacement of playground structures and park furnishings and $50,000 for downtown State Street renovations to beautify landscaping, planters and bollards.
Other items of note include the set aside of roughly $3.73 million in funds dedicated to servicing the debt on a new Police Department Safety Hall facility, the continuation of expanded recreation programs, sports, and events; the second payment for the purchase of new tasers for police; and contract code enforcement. The budget also includes the capital replacement of fire apparatus and equipment (a water tender to supply water in remote areas and a Type 3 Brush Engine for wildfire firefighting - both of which are 20 years old), the addition of the Meridian Gate System to add security to special events and aid in road closures, and the purchase of a heavy-duty dump truck for the Streets Division.
Fiscal Year 2025-26 is projected to close with improved General Fund results compared to the City’s adjusted budget assumptions. At the time of the Mid-Year Update in March 2026, the General Fund was projected to require the use of approximately $13.7 million in prior year surplus to meet current-year spending requirements. Based on the City’s 12-Month Estimate prepared in May 2026, the projected use of prior year surplus has been reduced to approximately $7.8 million. This improvement is primarily attributable to approximately $5.2 million in higher-than-anticipated revenues, including stronger investment earnings, cost recovery, and charges for services.
The City’s FY 2025-26 12-Month Estimate projects total available General Fund financial sources of approximately $165.5 million and total financial requirements of approximately $173.3 million. The increase in total financial requirements from the adjusted budget is primarily attributable to the timing and implementation of previously approved, reserve-funded capital projects, including the State Street City Hall project and the Safety Hall project. Projected use of reserves increased by approximately $14.5 million, and projected expenditures increased by approximately $13.7 million, largely due to the same Council-authorized capital activity. These increases reflect the carryover and implementation of previously approved projects rather than new operating commitments or project cost overruns.
During FY 2025-26, the City advanced several major Council priorities, including initiation of State Street City Hall construction improvements, completion of design and bidding of Phase II for Safety Hall, progress on Phase I Safety Hall site preparation activities, public safety technology modernization, improvements to Fire Station Nos. 262 and 263, and continued investments related to the Museum of Redlands.
The City also secured approximately $2 million in Proposition 47 grant funding for homelessness outreach and supportive services and reported an 8% reduction in the homeless population based on Point-in-Time Count data.
Although the City’s projected FY 2025-26 results reflect a stronger year-end position than previously estimated, the City continues to face ongoing budgetary pressures related to moderating revenue growth, inflation, personnel costs, capital project timing, claims and litigation exposure, construction cost escalation, and successor labor agreements with the City’s nine bargaining units. Accordingly, the City expects continued prioritization of expenditures, service levels, staffing needs, and capital project timing to remain necessary in future fiscal years.
Considerations For the City’s Biennial Budget Covering Fiscal Years 2026-27 and 2027-28 The City Manager’s Proposed Biennial Budget for Fiscal Years 2026-27 and 2027-28 was developed during a period of moderating revenue growth and increasing expenditure pressures. While General Fund revenues are projected to continue growing over the biennium, the rate of growth has slowed from the unusually strong post-pandemic recovery period, particularly in economically sensitive revenues such as sales tax. At the same time, the City continues to absorb rising costs associated with maintaining existing service levels, inflationary pressure on labor, construction, materials, utilities, insurance, and contracted services, and the ongoing implementation of prior City Council priorities. Accordingly, the budget reflects significant prioritization intended to preserve core services, maintain financial resiliency, and align ongoing expenditures with sustainable long-term revenue growth.
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The Proposed Biennial Budget continues to advance major public safety, infrastructure, facility, and quality-of-life investments. Key investments include continued funding for the new Safety Hall; architectural design and preconstruction activities for the relocation of Fire Station #264; [design and construction of Fire Station #265,] replacement of the A.K. Smiley Public Library HVAC cooling tower and preservation work at the library; continued public safety technology modernization; replacement of critical fire and emergency medical equipment; and selected park and facility improvements, including the Texonia Park Revitalization Project, Sylvan Park restroom improvements, and Joslyn Senior Center roof replacement. The budget also anticipates the Good Nite Inn transitional housing acquisition through a partnership substantially funded by State and County resources, with the intent of preserving continuity of homelessness response and supportive housing services.
Measure T revenues continue to support a portfolio of service-level investments, including public safety operations and staffing, infrastructure and asset maintenance, capital reinvestment, homelessness response, and quality-of-life programming.
Looking beyond the biennium, the City anticipates that continued prioritization and strategic realignment will be necessary to preserve long-term fiscal stability. The City’s long-range financial forecast assumes a steady economic scenario, a 2.5 percent annual increase in operating expenses, a seven percent vacancy factor, and estimated successor labor agreement cost assumptions. Beginning in the next budget cycle, staff anticipate a deeper review of departments, service levels, and priorities in conjunction with development of the City’s next Strategic Plan. This approach is intended to ensure that future budgets remain aligned with core service delivery, infrastructure needs, employee investment, and the City’s long-term financial capacity.
Although the Proposed Biennial Budget funds several major Council priorities, not all requested projects, positions, programs, or capital needs could be accommodated within available financial resources.
These decisions reflect the need to balance competing priorities within a more constrained fiscal environment, while preserving flexibility to respond to future economic conditions, labor cost outcomes, construction cost escalation, claims and litigation exposure, and other operational risks.
General Economic Outlook and Risks To The Budget
Balancing the Fiscal Year 2026-27 and Fiscal Year 2027-28 Budgets on recurring revenues required significant prioritization due to moderating revenue growth and increasing expenditure pressures. While General Fund revenues are projected to continue growing over the biennium, the rate of growth has slowed from the unusually strong post-pandemic recovery period, particularly in economically sensitive revenue categories such as sales tax. At the same time, the City continues to absorb higher costs associated with personnel, insurance, utilities, construction, materials, contracted services, infrastructure maintenance, and the operation of previously expanded services and facilities. Funding for supplemental requests and City Council priorities was therefore limited and required reductions, deferrals, and reprioritization within departmental budgets in order to preserve core services and maintain long-term fiscal resiliency.
The City’s financial position is projected to remain stable in the near term, supported by healthy reserves and continued General Fund revenue growth. However, the financial environment entering this biennium differs meaningfully from the conditions experienced during the immediate post-pandemic recovery period, when sales tax and property tax revenues grew at unusually strong rates. [Property tax growth has moderated to approximately 4 percent annually, while sales tax growth has flattened to approximately 1 to 2 percent, with modest growth projected over the near term.] As a result, the City is entering a period in which ongoing revenues are no longer growing at a pace sufficient to support continued expansion into new ongoing expenditure commitments without corresponding reductions, new revenues, or reprioritization elsewhere.
The broader economic outlook remains uncertain, although statewide and regional forecasts generally continue to project slower growth rather than an immediate recession. The City recognizes that future financial performance may be affected by factors largely outside of local control, including monetary policy decisions, inflation trends, interest rates, geopolitical instability, consumer and business confidence, labor market conditions, and housing and development activity. Elevated interest rates may continue to affect interest-sensitive A-25
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consumer spending, development activity, and housing markets, which could in turn impact economically sensitive City revenues. While the City is not budgeting for an immediate economic downturn, future budgets may require additional expenditure reductions, service deferrals, delayed capital implementation, or reprioritization of projects and operational enhancements if economic conditions weaken or expenditure growth continues to outpace recurring revenue growth.
Recent Financial Performance
The tables below summarize certain General Fund financial data of the City, and have been prepared from the City’s audited financial statements and General Fund budget information. Reference is made to APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
The following table is a summary of general fund and other governmental/proprietary fund balances as audited. The City expects general fund revenues only to be available to make Base Rental Payments. Other governmental funds are included for informational purposes only.
TABLE A-14
CITY OF REDLANDS
FUND BALANCES OF GOVERNMENTAL FUNDS
LAST FIVE FISCAL YEARS
Fiscal Years Ending
2021 2022 2023 2024 2025
General fund (1)
Nonspendable $ 8,327,781 $ 8,369,652 $ 8,214,591 $ 3,513,932 $ 982,016 Restricted 1,076,656 1,157,866 1,260,683 1,333,444 1,792,296 Committed 11,863,318 12,663,905 12,492,698 12,232,036 13,479,646 Assigned 4,188,185 31,734,961 35,700,799 33,591,308 34,705,113 Unassigned 29,877,227 39,513,840 53,289,070 60,505,969 63,374,540 Total general fund 55,333,167 93,440,224 110,957,841 111,176,689 114,333,611 All other governmental funds (2)
Nonspendable 30,200 43,400 574,827 293,319 253,569
Restricted 13,024,622 9,980,754 11,961,583 24,458,555 28,381,732 Committed 10,748,915 11,409,016 11,893,350 -- --
Assigned 2,742,004 2,560,682 2,325,558 2,764,922 2,257,421 Unassigned (deficit) (7,558,977) (6,610,754) (8,448,957) (240,244) (1,032,521) Total all other governmental funds 18,986,764 17,383,098 18,306,361 27,276,552 29,860,201 Total fund balances $ 74,319,931 $ 110,823,322 $ 129,264,202 $ 138,453,241 $ 144,193,812 _______________
(1) The City passed a one-cent Transaction and Use Tax (Measure T), approved in November 2020 and effective April 1, 2021. (2) The City expects general fund revenues only to be available to make Base Rental Payments. Other governmental funds are included for informational purposes only.
Note: Numbers may not sum due to rounding.
Sources: City of Redlands Finance Department and City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025.
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TABLE A-15
CITY OF REDLANDS
GENERAL FUND BALANCE SHEET
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Fiscal Year
2024-25
Assets
Cash and investments $ 43,118,114 $ 83,388,169 $ 99,045,971 $108,182,523 $ 113,513,844 Accounts receivable, net 510,636 961,957 936,682 1,399,943 1,887,709 Taxes receivable 10,422,562 9,700,055 9,730,965 10,091,348 9,205,115 Interest receivable -- -- -- 585,762 1,220,731
Lease receivable -- 5,751,198 4,334,753 2,610,174 2,812,825 Prepaid costs 209,601 721,317 524,050 501,110 430,838
Due from other governments 122,960 531,164 165,190 204,063 544,043 Due from other funds 7,221 13,766 641,625 9,164 420,168 Due from fiduciary funds -- -- 369,064 -- --
Loan receivable – interfund advance 8,118,180 7,648,335 7,690,541 3,012,822 551,178 Total assets 62,509,274 108,715,961 123,438,841 126,596,909 130,586,451 Liabilities
Accounts Payable 1,215,411 2,916,830 2,974,815 4,255,112 3,924,070 Accrued Payroll 1,890,232 2,107,701 2,358,480 3,140,038 3,524,077 Unearned Revenue 138,744 333,615 293,016 836,019 1,133,738 Deposits Payable 2,016,227 2,628,546 2,466,778 2,719,278 3,045,423 Total Liabilities 5,260,614 7,986,692 8,093,089 10,950,447 11,627,308 Deferred Inflows of Resources
Unavailable Revenue 1,915,493 1,667,473 238,036 2,023,454 2,002,591 Deferred Inflows Related to Leases -- 5,621,572 4,149,875 2,446,319 2,622,941 Total Deferred Inflows of
Resources 1,915,493 7,289,045 4,387,911 4,469,773 4,625,532 Fund Balances
Nonspendable 8,327,781 8,369,652 8,214,591 3,513,932 982,016 Restricted 1,076,656 1,157,866 1,260,683 1,333,444 1,792,296 Committed (1) 11,863,318 12,663,905 12,492,698 12,232,036 13,479,646 Assigned (2) 4,188,185 31,734,961 35,700,799 33,591,308 34,705,113 Unassigned 29,877,227 39,513,840 53,289,070 60,505,969 63,374,540 Total Fund Balance 55,333,167 93,440,224 110,957,841 111,176,689 114,333,611 Total Liabilities, Deferred Inflows
of Resources and Fund Balance (3) $ 62,509,274 $ 108,715,961 $ 123,438,841 $ 126,596,909 $ 130,586,451 _______________
(1) [Amounts that can only be used for a specific purpose because of a formal action by the City Council. Committed fund balance amounts differ from restricted balances in that the constraints on their use do not come from outside parties, constitutional provisions, or enabling legislation.] (2) [Amounts that the City intends to use for a specific purpose, but that do not meet the criteria to be classified as restricted or committed. Includes then encumbered program spending identified for carryover into the next Fiscal Year.] (3) [The significant variance between Fiscal Year 2020-21 and Fiscal Year 2021-22 can be attributed to several impactful events: a local sales tax measure added significant revenue to the General Fund budget, a large amount of carryovers from Fiscal Year 2020-21 were carried forward into Fiscal Year 2021-22, and the City implemented GASB 84 to recognize special deposits from another fund in the General Fund as committed fund balance in Fiscal Year 2021-22.] This statement is a summary statement only. The City’s Annual Comprehensive Financial Report, including the notes to the Audited Financial Statements, are an integral part of and necessary to a complete understanding of this summary table. See APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Source: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025.
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TABLE A-16
CITY OF REDLANDS
GENERAL FUND STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE
Fiscal Year
2020-21
Fiscal Year
2021-22
Fiscal Year
2022-23
Fiscal Year
2023-24
Fiscal Year
2024-25
Revenues:
Taxes $ -- $ -- $ -- $ -- $ --
Property taxes 33,894,044 35,999,098 38,511,905 41,713,771 44,844,805 Sales and use taxes 26,541,469 48,232,171 48,632,853 47,629,644 47,088,618 Other taxes 2,692,949 2,706,919 3,109,696 2,676,553 2,744,184 Franchise fees 2,379,571 2,625,852 4,487,821 4,471,469 2,685,573 Licenses and permits 7,231,168 8,121,859 8,862,824 9,238,592 9,780,390 Fines and forfeitures -- 191,571 241,830 62,969 71,312
Intergovernmental 498,035 1,239,804 453,475 780,165 1,246,109 Charges for services 7,813,214 7,821,186 7,420,190 7,101,106 7,657,756 Investment income (loss) -- (2,572,366) 327,573 5,647,723 5,736,405 Rents and leases -- 1,793,787 1,821,671 1,167,604 1,308,803 Use of money and property 182,684 -- -- -- --
Miscellaneous 1,553,150 1,474,949 2,391,443 2,111,512 2,291,210 Total Revenues 82,786,284 107,634,830 116,261,281 122,601,108 125,455,165 Expenditures:
Current
General government 15,001,347 18,849,505 21,713,295 23,972,409 25,885,323 Public safety 42,924,523 44,303,874 48,310,713 54,538,333 58,903,986 Culture and recreation 3,016,645 5,275,737 7,160,435 7,936,523 8,930,389 Highway streets 3,230,563 2,173,052 5,290,295 4,796,525 5,405,089 Library 2,426,448 2,601,164 3,125,090 3,580,553 3,410,455 Capital outlay (1) 1,418,095 21,461,706 5,650,480 14,505,154 7,893,014 Debt service
Principal 302,689 518,464 860,759 3,655,908 1,195,665
Interest and fiscal charges 39,583 209,090 386,241 387,035 537,662 Total expenditures 68,359,893 95,392,592 92,497,308 113,372,440 112,161,583 Excess of Revenues Over
(Under) Expenditures 14,426,391 12,242,238 23,763,973 9,228,668 13,293,582 Other Financing Sources (Uses):
Inception of purchase agreement(2)-- 3,275,547 -- 3,668,445 -- Inception of lease liability(3)-- 196,119 384,011 2,546,260 2,098,978 Transfers in(4) 3,178,716 45,779,314 2,307,193 2,850,162 2,760,231 Transfers out(5) (7,044,983) (23,386,161) (8,937,560) (18,074,687) (14,995,869) Proceeds from capital lease 362,413 -- -- -- --
Proceeds from sale of property 33,457 -- -- -- --
Total Other Financing Sources
(Uses) (3,470,397) 25,864,819 (6,246,356) (9,009,820) (10,136,660) Net Change in Fund Balances 10,955,994 38,107,057 17,517,617 218,848 3,156,922 Fund Balances:
Beginning of Year 40,716,504 55,333,167 93,440,224 110,957,841 111,176,689 Prior Period Adjustment(6) 3,660,669 -- -- -- --
Beginning of Year, as Restated 44,377,173 -- -- --
Fund Balances, End of Year $ 55,333,167 $ 93,440,224 $ 110,957,841 $ 111,176,689 $ 114,333,611 A-28
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_______________
(1) Capital outlay in Fiscal Year 2021-22 included the acquisition of a new City Hall facility located at 300 East State Street, with a cost to the General Fund of approximately $14 million.
(2)&(3) The City implemented GASB 87 effective July 1, 2021. GASB 87 requires that leases be reported in the financial statements. The following categories were added to the financial statements: leases receivable, leases payable, deferred inflow of resources related to leases, right-to-use leased assets and lease liabilities. (4) Transfers to the General Fund in Fiscal Year 2021-22 included land sale proceeds of roughly $43.4 million as a result of sale of parcels adjacent to the Landfill and Wastewater Treatment Plant.
(5) Transfers out of the General in Fiscal Year 2021-22 included the transfer of roughly $16 million from the land sale proceeds transferred in during the same fiscal year, for the purposes of funding the acquisition of property for the future construction of the Safety Hall. (6) In Fiscal Year 2020-21, a prior period adjustment was required to account for the implementation of GASB 84 to recognize special deposits from another fund in the General Fund as committed fund balance.
This statement is a summary statement only. The City’s Annual Comprehensive Financial Report, including the notes to the Audited Financial Statements, are an integral part of and necessary to a complete understanding of this summary table. See APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.” Source: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025.
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TABLE A-17
CITY OF REDLANDS
GENERAL FUND ADOPTED BUDGETS
Fiscal Year
2022-23
Fiscal Year
2023-24
Fiscal Year
2024-25
Fiscal Year
2025-26*
Fiscal Year
2026-27*
Revenues:
Property taxes $ 36,699,757 $ 37,668,615 $ 42,184,339 $ 44,025,917 $ 47,923,786 Sales and use taxes 46,099,791 46,747,502 48,338,803 49,747,386 48,403,438 Other taxes 2,165,473 2,247,940 2,566,345 2,953,500 3,319,766 Franchise fees 2,595,483 2,567,833 3,276,284 3,726,149 2,719,431 Licenses and permits 7,815,609 7,969,963 8,293,681 8,542,690 10,006,805 Fines and forfeitures 135,000 146,200 85,100 86,300 88,665 Intergovernmental 731,500 732,500 499,640 552,500 581,741 Charges for services 7,060,722 7,338,869 7,183,660 7,432,837 8,921,832 Investment income (loss) 200,000 200,000 250,000 250,000 1,505,000 Rents and leases 2,037,396 1,724,754 1,258,522 774,405 1,004,552 Miscellaneous 1,409,799 1,400,440 1,790,476 1,537,234 1,081,063 Total Revenues 106,950,530 108,744,616 115,726,850 119,628,919 125,551,079 Expenditures:
Current:
General Government
City Council 556,249 422,789 559,128 737,111 568,820
City Clerk 596,699 453,870 683,460 510,050 456,562
City Manager & Human Res. 7,282,038 7,637,449 7,520,532 7,975,681 9,478,200 Finance 2,752,726 2,845,654 3,427,215 3,565,391 3,717,257 City Attorney 775,452 809,834 816,397 825,347 1,022,617 Development Services 5,014,691 4,490,505 5,993,772 6,018,512 5,931,012 Facilities 5,142,453 5,215,900 8,041,298 8,332,087 7,223,699 Public Works Engineering 971,058 968,724 1,138,709 1,096,233 1,122,189 Public Safety
Police 34,371,836 34,777,691 39,134,460 41,431,416 42,431,816 Fire 17,750,868 19,991,058 21,397,850 22,445,848 22,797,720 Animal Services 797,656 842,379 1,329,188 1,377,950 1,448,254 Culture and Recreation
Community Services 1,976,583 2,184,048 2,469,010 2,530,700 2,866,795 Parks 5,057,641 4,981,708 7,038,129 7,220,822 6,002,309 Highways and Streets
Electrical and Streets 4,336,040 4,318,316 5,820,411 5,809,094 5,054,936 Library 2,913,709 2,999,592 3,596,220 3,513,576 4,068,976 Capital Outlay 6,258,113 4,023,310 4,579,484 2,145,000 1,820,250 Debt Service
Principal 353,590 484,180 154,364 138,801 115,512
Interest and Fiscal Charges 1,542,270 1,535,199 2,259,458 1,772,771 2,141,056 Total Expenditures 98,449,672 98,982,206 115,899,085 117,447,389 118,267,980 Excess of Revenues Over (Under)
Expenditures 8,500,858 9,762,410 (172,235) 2,181,530 7,283,099 Other Financing Sources (Uses):
Transfers in 2,636,093 2,450,517 2,506,621 2,611,093 2,647,868 Transfers out (8,280,758) (9,511,084) (11,642,556) (12,197,496) (11,933,149) Total Other Financing
Sources (Uses) (5,644,665) (7,060,567) (9,135,935) (9,586,403) (9,285,281) Excess (Deficiency) of Revenues and
Other Sources Over (Under)
Expenditures and Other Uses 2,856,193 2,701,843 (9,308,170) (7,404,873) (2,002,182) Fund Balances:
Beginning of Year(2) 93,440,224 110,957,841 111,176,689 114,333,611 106,928,738 End of Year(2) $ 110,957,841 $ 111,176,689 $ 114,333,611 106,928,738 104,926,556 A-30
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_______________
(1) Note: During the course of each Fiscal Year, the budget is amended and revised as necessary by the City Council. The adopted budget for each fiscal year shown above is the original adopted budget. Numbers may not sum due to rounding. (2) Beginning and end of year General Fund balances are actual, not as assumed for budget purposes.
Sources: City of Redlands Finance Department and City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025. 4148-8545-8788.7 A-31
For Fiscal Year 2025-26, permitted appropriations of “proceeds of taxes” are limited to $178 million, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2025-26 are expected to be within such limit ($101.6 million). The City has estimated that for Fiscal Year 2026-27, permitted appropriations of “proceeds of taxes” are limited to $187,037,005, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2026-27 Fiscal Year are expected to be well within such limit.
Risk Management
The City purchases commercial insurance coverage and self-insures for liabilities. The City maintains two internal service funds to account for liabilities: the General Liability Self-Insurance Fund - to account for the City’s self-insured general and automobile liability programs; and the Workers’ Compensation Self-Insurance Fund - to account for the City’s self-insured Workers’ Compensation and General Safety Programs. Each includes activities of and are provided to all City departments and funds.
All funds of the City participate in the worker’s compensation program and make payments to the Workers’ Compensation Internal Service Fund based on estimates of the amounts needed to pay prior and current year claims. The Liability Insurance Internal Service Fund receives an annual operating transfer from the General Fund to cover operating costs including payment of claims. The liability for unpaid claims for general liability and workers’ compensation is discounted to reflect anticipated future investment earnings, assuming a 5.00% interest rate. Settled claims have not exceeded the commercial coverage in the past three years.
As of June 30, 2025, a net deficit of $5,552,615 exists in the General Liability Self-Insurance Fund due to new and existing claims and a net deficit of $8,721,096 exists in the Workers’ Compensation Self-Insurance Fund due to new and existing claims. Management expects to continue to carefully monitor these balances and intends to alleviate net deficits through increased cost recovery charges, instituting cost containment measures.
During the year ended June 30, 2025, the City was self-insured for the first $500,000 per occurrence for general liability. The City maintains excess liability insurance through layered policies providing a total of approximately $30,000,000 in coverage. The City also purchased airport liability and aircraft liability insurance with a liability amount of $25,000,000 aggregate with a $0 deductible. For workers’ compensation, the City is self-insured for the first $1,000,000 per occurrence and maintains excess insurance coverage providing statutory limits for workers’ compensation benefits and $1,000,000 in employer’s liability coverage.
The City maintains property insurance coverage through a pooled program providing up to $350,000,000 in total insured value, subject to a $75,000 per occurrence deductible. Certain coverages, including flood, earthquake, cyber, and pollution, are subject to lower sublimits and higher deductibles.
For storage pollution liability, the City is insured for $2,000,000 with a $10,000 deductible. For crime insurance, the City is insured for $1,000,000 with a $2,500 deductible.
See Notes 13 and 14 in the Notes to the Basic Financial Statements appearing in APPENDIX B – “CITY
OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
The Lease Agreement requires the City to cause to be maintained reasonable and customary liability insurance and, throughout the term of the Lease Agreement, casualty insurance insuring the Property against fire, lightning, and all other risks covered by an extended coverage endorsement (excluding earthquake and flood), subject to a $100,000 loss deductible provision, in an amount equal to the full insurable value of the Property. The casualty insurance required by the Lease Agreement may be maintained in the form of selfinsurance by the City, in compliance with the terms of the Lease Agreement. The City is also required to obtain certain public liability and property damage insurance coverage in protection of the Corporation and the City and worker’s compensation insurance as described under APPENDIX C – “SUMMARY OF PRINCIPAL 4148-8545-8788.7 A-32
LEGAL DOCUMENTS – THE LEASE AGREEMENT – Insurance – Property Casualty Insurance; Rental Interruption Insurance.”
State Budget Process
[To come]
State Budget Process – 2026-27 State Budget
[To come]
State Budget Information
The City has limited direct operational and budget implications relating to the State Budget. Information about the State budget is regularly available at various State-maintained websites. The Fiscal Year 2025-26 State budget and the 2026-27 State budget may be found at the website of the Department of Finance, www.dof.ca.gov, under the heading “California Budget.” Additionally, an impartial analysis of the budget is posted by the Office of the Legislative Analyst at www.lao.ca.gov. The Office of the Legislative Analyst is located at 925 L Street, Suite 1000, Sacramento, CA 95814. To request publications call (916) 445-4656. The information referred to is prepared by the respective State agency maintaining each website and not by the City, and the City takes no responsibility for the continued accuracy of the internet addresses or for the accuracy, completeness or timeliness of information posted there, and such information is not incorporated herein by these references.
Changes in State Budget
Each year, the final State Budget, which requires approval by a two-thirds vote of each house of the State Legislature, may differ substantially from the Governor’s original budget proposal. The State Budget will be affected by State and national economic conditions and other factors over which the City will have no control.
The City cannot predict the impact that subsequent State budgets will have on its finances and operations.
Employees and Labor Relations
As of June 1, 2026, the City had approximately 598 full time equivalent employees authorized.
Substantially all of these employees are represented by one of 9 employee organizations. The City’s collective bargaining agreements for each of these bargaining units expire at the close of Fiscal Year 2025-26. In the event negotiations with any employee organization continue beyond the expiration of the current memoranda of understanding, the City expects operations to continue in accordance with applicable legal requirements while negotiations proceed. Depending on the status of negotiations, this may include continuing existing terms and conditions of employment or, where legally permissible, implementing terms following completion of the required bargaining process, while continuing to meet and confer in good faith with the affected employee organization. The City has never experienced a material work stoppage. 4148-8545-8788.7 A-33
TABLE A-18
CITY OF REDLANDS
Employee Bargaining Units
Bargaining Unit Members
Redlands Police Officers Association 91*
Redlands Professional Firefighters Association 54
Redlands Association of Management Employees 19
Redlands Association of Mid-Management Employees 77
Redlands Association of Fire Management Employees 5
Redlands Association of Safety Management Employees 6
Redlands Civilian Safety Employees Association 55
Redlands Association of Department Directors 9
Teamsters Local 1932 283
599
_______________
Source: City of Redlands Finance Department
There are also three (3) Full Time contract employees: City Manager, City Attorney, Library Director *May include a number of Police Recruits that technically belong to Civilian Safety Employees City Debt Structure and Outstanding Obligations
The City has adopted a set of financial policies based on best management practices and GFOA standards. These policies direct the administration of the budget, accounting practices, purchasing, debt, capital financing, investments, and capital assets. See “City Financial Policies” above.
In June 2018, the City Council adopted Resolution No. 7983 establishing the City’s Debt Management Policy. Among other things, this policy establishes guidelines for the use of various categories of debt and creates procedures and policies that minimize the City’s debt service and issuance costs. The Policy was developed to improve the quality of decision-making, provide justification for how debt issuance is structured, identify goals, and to assist the City’s strategic long-term financial planning.
The City formally transitioned to a two-year (biennial) budget beginning with the Fiscal Year 2023–24 cycle, establishing a more strategic, long-range approach to resource planning. The biennial framework supports multi-year financial and operational planning, aligns budget development with the City’s Strategic Plan and community priorities, and improves the City’s ability to evaluate ongoing service obligations, deferred maintenance needs, and major capital investments. By requiring departments to prepare both a minimal operating budget and prioritized supplemental requests across two fiscal years, the biennial process strengthens fiscal discipline, enhances long-term forecasting, and enables earlier identification of structural challenges. This multiyear approach also improves coordination of complex, multi-phase projects, such as public safety facilities, infrastructure rehabilitation, and sustainability initiatives, by ensuring that financial capacity is evaluated over a longer planning horizon.
The City’s outstanding obligations as of June 30, 2025 payable from General Fund revenues, like the Base Rental Payments, are shown in detail in the table below. See also, Note 7 in the Notes to the Basic Financial Statements appearing in APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
4148-8545-8788.7 A-34
TABLE A-19
CITY OF REDLANDS
SUMMARY OF OUTSTANDING GOVERNMENTAL INDEBTEDNESS
AS OF JUNE 30, 2024 AND 2025
Ending
Balance
June 30, 2024 Additions Deletions
Ending
Balance
June 30, 2025
Principal Due
Within
One Year
Compensated Absences $12,209,764 $ 617,463 -- $12,827,227 $6,413,615 Claims Payable 15,433,473 [6,871,705] [2,452,399] 19,852,779 [9,926,390] 0 Public borrowings: 0
Taxable Pension Bonds 4,585,000 -- $ (200,000) 4,685,000 215,000 less: accreted interest (115,060) -- -- (75,096) --
Total Taxable Pension Bonds 32,113,177 (160,036) 37,289,910 215,000 Direct borrowings:
Notes payable:
I-Bank Sports Park 1,087,564 -- (68,988) 1,018,576 71,162 Finance Purchase Agreements 3,701,646 -- (154,448) 3,547,198 139,806 Total notes payable 4,789,210 -- (223,436) 4,565,774 210,968 Lease liability 2,941,545 2,098,978 (1,055,940) 3,984,583 1,029,690 Subscription liability 55,044 121,829 (79,765) 97,108 22,125 Total Direct Borrowings $12,255,739 $2,220,807 $(1,519,177) $12,957,369 $1,477,783 Net Pension Liability 139,682,059 [] [] 137,481,905 []
Total OPEB Liability 89,577,526 [] [] 98,257,355 []
Total Net Pension OPEB 229,259,585 235,739,260 []
_______________
[Note: Effective July 1, 2025. GASB 101 requires the City to recognize a compensated absences liability and corresponding expense as employees earn leave benefits, based on the probability that those benefits will be used or paid. [There are currently no claims and judgments not expected to be covered in the ordinary course from self-insurance reserves]. See “ABSENCE OF MATERIAL LITIGATION” and the discussion above under the caption “Risk Management.”]
Note: [Although the City allocates the year-end net pension liability and total OPEB liability to governmental activities for purposes of the government-wide Statement of Net Position, the underlying GASB 68 and GASB 75 measurements are actuarially determined at the plan & pool level and do not produce additions and deletions by governmental fund in the same way as claims payable or compensated absences. Amounts due within one year are not presented for the net pension liability or total OPEB liability. The reported liabilities are actuarial measurements of the City’s long-term pension and OPEB obligations as of a measurement date and reflect the present value of projected benefit obligations. The City’s actual next-year funding obligation is determined through employer contribution requirements or benefit payments, which are accounted for separately and do not represent a one-year liquidation of the reported liability.
Source: City of Redlands Annual Comprehensive Financial Report for the Fiscal Year ended June 30, 2025.
For additional detail on these obligations, see Note 7 in the Notes to the Basic Financial Statements appearing in APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Compensated Absences. Compensated absences as a reported liability of government activities of the City (as opposed to business/enterprise activities of the City) was $12,827,227 as of June 30, 2025. The implementation of GASB 101 increased both the current and noncurrent compensated absences liabilities by $2.1 million each because the new standard requires the City to recognize a broader range of earned leave, particularly sick leave that is more likely than not to be used or settled, at employees’ current pay rates, including applicable salary-related benefits. This expanded recognition criteria resulted in higher measured obligations relative to the prior model. Additional compensated absences as a reported liability of business/enterprise activities of the City and obligation among certain enterprise funds was $2,415,206 as of June 30, 2025. See 4148-8545-8788.7 A-35
Notes 1 – M, 9 and 19 to the basic financial statements of the City included in APPENDIX B – “CITY OF
REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Claims Payable. [There are currently no claims and judgments not expected to be covered in the ordinary course from self-insurance reserves].
Solid Waste Landfill
Landfill closure and post-closure costs, including maintenance and monitoring functions at the California Street Landfill site referenced in the City’s financial statements, are business-type activities and not liabilities of the City’s General Fund. The City is required by state and federal laws and regulations to maintain adequate funds to provide financial assurance for closure and post closure costs of the site when it stops accepting waste through one of a combination of alternative mechanisms. At June 30, 2025, $12,897,799 is held for landfill closure. See Note 10 to the basic financial statements of the City included in APPENDIX B – “CITY OF
REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Prospective Additional Long Term Obligations
The City maintains a schedule of capital improvement needs and, from time to time, will consider entering into additional long term lease financings incident to new construction and refunding of existing obligations. Accordingly, it is possible that the City may in the future cause the issuance of lease revenue bonds or certificates of participation backed by General Fund lease payments. The City does not currently anticipate the need for any additional long term lease financings in the next three years.
Short Term Borrowings
The City has not in recent years issued short term debt for meeting its cash flow needs and does not currently anticipate the need for such short term debt.
Direct and Overlapping Debt
Contained within the City are overlapping local agencies providing public services which have issued general obligation bond and other types of indebtedness. Set forth below is a direct and overlapping debt report (the “Debt Report”) prepared by California Municipal Statistics, Inc. and dated as of May 1, 2026. The Debt Report is included for general information purposes only and excludes self-supporting revenue bonds, tax allocation bonds and non-bonded capital lease obligations, [and certificates of participation, unless provided by the City.] Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. The percentage of overlapping debt applicable is estimated by using taxable assessed values. Applicable percentages were estimated by determining the portion of another governmental unit’s taxable assessed value that is within the City’s boundaries and dividing it by each unit’s total taxable assessed value.
The Debt Report generally includes long term obligations sold in the public credit markets by public entities whose boundaries overlap the City’s service area. Such long term obligations are not payable from revenues of the City (except as indicated) nor are they necessarily secured by land within the City. In many cases, such obligations are payable from the general fund of the issuing agency. Neither the City nor the Corporation has reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith.
4148-8545-8788.7 A-36
TABLE A-20
CITY OF REDLANDS
STATEMENT OF DIRECT AND OVERLAPPING DEBT AS OF MAY 1, 2026 2025-26 Assessed Valuation: $14,457,537,295 %
Applicable(1)
City’s Share
of Debt (5/1/26)
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
San Bernardino Community College District 12.625% $126,653,340 Redlands Unified School District 55.942 76,460,693
San Bernardino City Unified School District 0.034 96,615 City of Redlands Community Facilities District No. 2003-1 100. 5,545,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $208,755,648
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
(1)
San Bernardino County General Fund Obligations 3.995% $ 2,726,388 San Bernardino County Flood Control District General Fund Obligations 3.995 1,489,935 San Bernardino City Unified School District Certificates of Participation 0.034 49,014 Redlands Unified School District Certificates of Participation 55.942 11,865,298 Yucaipa-Calimesa Joint Unified School District Certificates of Participation 0.689 288,357 City of Redlands Pension Obligation Bonds 100. 3,710,370 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $ 20,129,362 OVERLAPPING TAX INCREMENT DEBT (Successor Agency):
San Bernardino County Inland Valley Tax Allocation Bonds 4.574% $ 9,038,681 TOTAL OVERLAPPING TAX INCREMENT DEBT $ 9,038,681
COMBINED TOTAL DIRECT AND OVERLAPPING DEBT $237,923,691(2)
(1) Excludes issues to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2025-26 Assessed Valuation:
Total Overlapping Tax and Assessment Debt............................................................ 1.44% Total Direct Debt ($3,710,370) ............................................................................... 0.03% Combined Total Debt................................................................................................ 1.65% Ratio to Redevelopment Successor Agency Incremental Valuation ($588,920,410):
Total Overlapping Tax Increment Debt .................................................................... 1.53% _______________
Source: California Municipal Statistics, Inc.
Retirement Systems
The City participates in the California Public Employees Retirement System (“CalPERS”), a pension plan available to all qualified employees. CalPERS maintains six pension plans within CalPERS for its Miscellaneous and Safety employee groups, including both Classic and PEPRA tiers. For financial reporting purposes, these plans are presented as two distinct plan types: the Miscellaneous Plan, which is an agent multipleemployer defined benefit plan specific to the City, and the Safety Plans, which are part of CalPERS cost-sharing multiple-employer risk pools. Under the cost-sharing structure, the City’s Safety Plans share pooled assets, liabilities, and experience with other participating agencies, while the Miscellaneous Plan is accounted for separately based on the City’s own plan experience. As to each plan, a menu of benefit provisions as well as other requirements are established by State statutes within the Public Employees’ Retirement Law. The City selects optional benefit provisions from the benefit menu by contract with CalPERS and adopts those benefits through local ordinance. The defined pension benefit is payable monthly for life, in an amount that varies. The plans also provide death and disability benefits. These benefit provisions and all other requirements are established by State statute and City ordinance. See APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.” 4148-8545-8788.7 A-37
CalPERS provides service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. CalPERS is governed by a 13-member Board of Administration (the “Board”).
The Public Employees’ Pension Reform Act (“PEPRA”) of 2013 represented one of the most significant changes to the state and local financial landscape. New employees hired after December 31, 2012 are enrolled in a plan with substantially lower benefits. The legislation created mandatory benefits tiers for new employees who have not worked for another CalPERS agency hired beginning January 1, 2013 ranging from 1.1% at age 50 to a maximum of 2.4% at age 62 for miscellaneous employees. In addition, new employees are required to pay at least 50% of the pension costs. For this reason, each of the City’s original Classic CalPERS retirement plans has a related PEPRA component.
One of the objectives of PEPRA was to improve the ability of employers to manage the costs of retirement benefits for their members. While such changes can reduce future benefit costs in a meaningful way, the full impact on employer contributions will not occur until all active members are subject to the rules and provisions of PEPRA. PEPRA (i) increases the retirement age for new State, school, and city and local agency employees depending on job function, (ii) caps the annual CalPERS pension benefit payout, (iii) addresses numerous abuses of the system, and (iv) requires State, school, and certain city and local agency employees to pay at least half of the costs of their CalPERS pension benefits. PEPRA applies to all public employers except the University of California, charter cities and charter counties (except to the extent they contract with CalPERS).
Among other things, PEPRA also enacted pension spiking reform for new and existing employees, required three-year averaging of final compensation for new employees, and provided employers with new authority to negotiate cost-sharing agreements with current employees. PEPRA also contained limitations on the use of retired annuitants, requiring that an annuitant have a six-month break in service prior to returning to work.
Substantially all City Miscellaneous employees working the equivalent of 1,000 hours per fiscal year are eligible to participate in the Miscellaneous Plan. Substantially all City Safety employees working the equivalent of 1,000 hours per fiscal year are eligible to participate in the Safety Plan Cost-sharing multipleemployer defined benefit plan administered by CalPERS. Classic Miscellaneous CalPERS members become eligible for service retirement upon attainment of age 55 with at least 5 years of credited service. PEPRA Miscellaneous members become eligible for service retirement upon attainment of age 62 with at least 5 years of service. Classic Fire and Classic Police members become eligible for service retirement at age 50 and PEPRA Fire and Police members become eligible for service retirement at age 57.
The number of participants, benefit provisions for each plan including the service retirement benefit (a monthly allowance equal to the product of the benefit factor, years of service, and final compensation), and final compensation are set forth in Note 11 to the basic financial statements of the City included in APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Notwithstanding these intended improvements, the City, as with virtually all public agencies in California, still has an underfunded pension plan for existing employees. PEPRA did not and does not impact this unfunded liability.
CalPERS’ projected employer contribution rates for the City’s plans are provided by actuarial reports delivered to the City, which reports establish liability and funding requirements. The latest actuarial valuation of the plans occurred June 30, 2024 (the “2024 Valuation”), respectively, for each of the City’s plans, with reports delivered in July 2025. The reports reflect fund investment returns through June 30, 2024, as well as statutory changes, regulatory changes and Board actions through January 2025.
The assets, liabilities and funded status of the plans as described herein and in the City’s financial statements are measured as of the valuation date; June 30, 2024. The employer contribution rates determined by the valuation are for the fiscal year beginning two years after the valuation date; in this case the City’s Fiscal 4148-8545-8788.7 A-38
Year 2026-27. This two-year lag is necessary due to the amount of time needed to extract and test the membership and financial data, and due to the need to provide public agencies with their employer contribution rates well in advance of the start of the fiscal year.
Contributions to fund the plans are comprised of two components:
• Normal Cost, expressed as a percentage of total active payroll • Amortization of the Unfunded Accrued Liability (UAL), expressed as a dollar amount Actual and projected percentage of payroll and recent and current UAL are shown in tables with respect to the Miscellaneous Plans and Safety Plans in the tables below.
The Unfunded Liability is used to determine the employer contribution and therefore must be rolled forward two years from the valuation date to the first day of the fiscal year for which the contribution is being determined. The Unfunded Liability is rolled forward each year by subtracting the expected Payment on the Unfunded Liability for the fiscal year and adjusting for interest. The Expected Payment on the Unfunded Liability for a fiscal year is equal to the Expected Employer Contribution for the fiscal year minus the Expected Normal Cost for the year. The Employer Contribution Rate for the first fiscal year is determined by the actuarial valuation two years ago and the rate for the second year is from the actuarial valuation one year ago. The Normal Cost Rate for each of the two fiscal years is assumed to be the same as the rate determined by the current valuation. All expected dollar amounts are determined by multiplying the rate by the expected payroll for the applicable fiscal year, based on payroll as of the valuation date.
In prior years, the Amortization of UAL component was expressed as a percentage of total active payroll.
Starting with Fiscal Year 2017-18, the Amortization of UAL component is expressed as a dollar amount and invoiced on a monthly basis. There is an option to prepay this amount during July of each fiscal year. The Normal Cost component is expressed as a percentage of active payroll with employer and employee contributions payable as part of the regular payroll reporting process. The determination of both components requires complex actuarial calculations. The calculations are based on a set of actuarial assumptions which can be divided into two categories:
o Demographic assumptions (e.g., mortality rates, retirement rates, employment termination rates, disability rates)
o Economic assumptions (e.g., future investment earnings, inflation, salary growth rates) Actuarial Amortization Policy. CalPERS applies an Actuarial Amortization Policy which establishes the amortization methods to eliminate positive or negative unfunded liabilities in a manner that maintains benefit security for the members of the System while minimizing substantial variations in employer contribution rates.
This policy establishes amortization methods that are aimed at ensuring that contributions and assets will be sufficient for future benefits, considering funded status, volatility, and rate stability, with the following considerations:
o Impact on the preservation/advancement of funded status o Impact on the estimated volatility of the annual change in employer contribution rates o Impact on the estimated average employer contribution rate o Likelihood of high levels of employer contribution rates in any given year o Likelihood of large changes in employer contribution rates in any given year o Investment Gains/Losses: Amortized over 20 years using a ramp-up schedule:
As a result of this methodology, dramatic changes in the required employer contributions in any one year are less likely. Investment gains and losses are amortized using an initial 5-year ramp. This method phases in the impact of the change in UAL over a 5-year period in order to reduce employer cost volatility from year to 4148-8545-8788.7 A-39
year. However, required contributions can change gradually and significantly over the next five years. Actual investment gains/losses are amortized over 20 years using the following ramp-up schedule:
o Year 1: 20% of base payment
o Year 2: 40% of base payment
o Year 3: 60% of base payment
o Year 4: 80% of base payment
o Years 5–20: 100% of base payment
“Base payment” is the level dollar amount required to fully amortize over 20 years. In years when there is a large investment loss, the relatively small amortization payments during the ramp up period could result in contributions that are less than interest on the UAL (i.e. negative amortization) while the contribution impact of the increase in the UAL is phased in. Non-investment gains/losses are amortized over 20 years (level payments) including assumption/method changes and plan provision changes.
Certain aspects of the policy such as 1) layered amortization bases (positive and negative) with different remaining payoff periods, and 2) the phase-in of required payments toward investment gains and losses, can result in volatility in year-to-year projected UAL payments.
Funding Risk Mitigation Policy. The CalPERS Funding Risk Mitigation Policy aims to improve longterm pension sustainability by reducing funding risk, primarily through adjusting the discount rate and expected investment return when investment performance significantly exceeds expectations. This is part of the broader Asset Liability Management (ALM) framework, which integrates asset and liability considerations for the system’s funding health. On April 16, 2024, the Board took action to modify the Funding Risk Mitigation Policy to remove the automatic change to the discount rate when the investment return exceeds various thresholds.
Rather than an automatic change to the discount rate, a Board discussion would be placed on the calendar.
A “Funding Risk Mitigation Event” occurs if the time-weighted annual investment return (net of expenses) exceeds the discount rate by 2.00% or more in a fiscal year. When such an event happens, staff must report to the Board, which then discusses whether to adjust the discount rate, expected investment return, and strategic asset allocation targets. The amount by which the discount rate and expected return are reduced depends on how much the actual investment return exceeds the discount rate as set forth below. If the threshold reduction greater than 2% is met, Board direction is sought for potential adjustments. +2.00% excess → reduce each by 0.05%
+7.00% excess → reduce each by 0.10%
+10.00% excess → reduce each by 0.15%
+13.00% excess → reduce each by 0.20%
+17.00% excess → reduce each by 0.25%
Each of these policies are periodically reviewed and updated to reflect changes in economic conditions, system structure, and best practices. The Board retains authority over significant changes, with staff providing analysis and recommendations.
CalPERS completed its Asset Liability Management (ALM) review in late 2025, which included an evaluation of capital market assumptions and the CalPERS Total Fund Investment Policy to determine whether a change in the discount rate was warranted. Following this review, the CalPERS Board of Administration elected to maintain the discount rate at 6.8%. In addition, the Actuarial Office will be presenting the findings of its Experience Study which reviews economic assumptions other than the discount rate as well as all demographic assumptions and makes recommendations to modify actuarial assumptions where appropriate. Any changes in actuarial assumptions will be reflected in the June 30, 2025, actuarial valuations.
Recent and Projected Employer Contribution Rates. The tables below show CalPERS’ recent and projected employer contribution rates for the City’s Miscellaneous Plan and Safety Plans (before cost sharing) 4148-8545-8788.7 A-40
for Fiscal Year 2022-23 through Fiscal Year 2031-32. The projections (Fiscal Years 2027-28 to 2031-32) assume that all CalPERS actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment return is assumed to be
6.80% per year, net of investment and administrative expenses.
The tables below shows the required and projected employer contributions. The projections assume that all CalPERS actuarial assumptions will be realized and that no further changes to assumptions, contributions, benefits, or funding will occur during the projection period. In particular, the investment return beginning with Fiscal Year 2024-25 is assumed to be 6.80% per year, net of investment and administrative expenses. Future contribution requirements may differ significantly from those shown below. The actual long-term costs of the plans will depend on the actual benefits and expenses paid and the actual investment experience of the fund.
As reported by CalPERS, with respect to the City’s Miscellaneous Plans, the projected normal cost is expected to continue to decline over time as new employees are hired into lower cost benefit tiers. With respect to the City’s Safety Plans, the normal cost rates for each rate plan are assumed to remain constant. In each case, the employer contribution amounts will vary due to changes in payroll and future contribution requirements may differ significantly from those shown below. The actual long-term cost of the respective plan will depend on the actual benefits and expenses paid and the actual investment experience of the related fund.
CITY OF REDLANDS MISCELLANEOUS PLANS
RECENT AND PROJECTED FUTURE PENSION CONTRIBUTION RATES
FISCAL YEARS 2022-23 THROUGH 2031-32
Fiscal Year
Ended
(June 30)
Normal Cost
Contribution
Rate
UAL
Payment
2023 9.09% $4,540,885
2024 10.06 4,267,763
2025 9.95 4,881,465
2026 9.54 4,781,369
2027 9.43 5,459,961
2028 9.30 5,685,000
2029 9.20 6,298,000
2030 9.20 6,361,000
2031 9.10 6,400,000
2032 9.00 6,127,000
_______________
Note: Fiscal Years 2027-28 to 2031-32 are projected.
Source: 2024 Valuation and City of Redlands Finance Department. 4148-8545-8788.7 A-41
CITY OF REDLANDS POLICE SAFETY RISK POOL PLANS
RECENT AND PROJECTED FUTURE PENSION CONTRIBUTION RATES
FISCAL YEARS 2022-23 THROUGH 2031-32
Fiscal Year
Ended
(June 30)
Classic
Normal Cost
Contribution
Rate
PEPRA
Normal Cost
Contribution
Rate UAL Payment
2023 25.64% 13.66% $4,144,598
2024 29.09 14.50 4,079,078
2025 29.30 14.72 4,843,956
2026 29.35 14.96 5,493,484
2027 29.38 14.86 6,012,765
2028 29.40 14.9 6,237,000
2029 29.40 14.9 6,799,000
2030 29.40 14.9 6,866,000
2031 29.40 14.9 6,917,000
2032 29.40 14.9 7,030,000
_______________
Note: Fiscal Years 2027-28 to 2031-32 are projected assuming an annual covered payroll of approximately $6.9 million for Classic and $3.6 million for PEPRA.
Source: 2024 Valuation and City of Redlands Finance Department.
CITY OF REDLANDS FIRE SAFETY RISK POOL PLANS
RECENT AND PROJECTED FUTURE PENSION CONTRIBUTION RATES
FISCAL YEARS 2022-23 THROUGH 2031-32
Fiscal Year
Ended
(June 30)
Classic
Normal Cost
Contribution
Rate
PEPRA
Normal Cost
Contribution
Rate UAL Payment
2023 25.64% 13.66% $3,350,132
2024 29.09 14.50 3,317,527
2025 29.30 14.72 3,897,576
2026 29.35 14.96 4,389,212
2027 29.38 14.86 4,786,175
2028 29.40 14.9 4,964,000
2029 29.40 14.9 5,381,000
2030 29.40 14.9 5,441,000
2031 29.40 14.9 5,489,000
2032 29.40 14.9 5,551,000
_______________
Note: Fiscal Years 2027-28 to 2031-32 are projected assuming an annual covered payroll of approximately $6 million for Classic and $2 million for PEPRA.
Source: 2024 Valuation and City of Redlands Finance Department. 4148-8545-8788.7 A-42
Actuarial Funded Status. As reported in the 2024 Valuation, the funding history below shows the recent history of the actuarial accrued liability, the market value of assets, the funded ratio and the annual covered payroll for each of these employee plans.
These tables provide information on the current funded status of the plan under the funding policy. The funded status for this purpose is based on the market value of assets relative to the funding target produced by the entry age actuarial cost method and actuarial assumptions adopted by the Board. The actuarial cost method allocates the total expected cost of a member's projected benefit to individual years of service. The value of the projected benefit that is not allocated to future service is referred to as the Accrued Liability and is the plan's funding target on the valuation date. The Unfunded Accrued Liability (UAL) equals the funding target minus the assets. The UAL is an absolute measure of funded status and can be viewed as employer debt. The Funded Ratio equals the assets divided by the funding target. The funded ratio is a relative measure of the funded status and allows for comparisons between plans of different sizes.
CITY OF REDLANDS MISCELLANEOUS PLAN
FUNDED STATUS
FISCAL YEARS 2020 THROUGH 2024
CalPERS
Valuation
Fiscal Year
Ended
(June 30)
Accrued
Liability
Market Value
of Assets
(MVA)
Unfunded
Accrued
Liability
Funded
Ratio
Applicable
Annual
Covered
Payroll
2020 $181,968,790 $129,870,399 $52,098,391 71.4% $22,148,286 2021 191,705,657 157,061,394 34,644,263 81.9 22,049,445 2022 199,702,001 142,670,550 57,031,451 71.4 22,877,689 2023 207,060,718 148,418,187 58,642,531 71.7 24,993,760 2024 217,465,742 159,881,015 57,584,727 73.5 28,821,727 _______________
Source: 2024 Valuation and City of Redlands Finance Department.
CITY OF REDLANDS POLICE SAFETY RISK POOL PLANS
FUNDED STATUS
FISCAL YEARS 2020 THROUGH 2024
CalPERS
Valuation
Fiscal Year
Ended
(June 30)
Accrued
Liability
Share of
Pool’s
Market Value
of Assets
(MVA)
Unfunded
Accrued
Liability
Funded
Ratio
Applicable
Annual
Covered
Payroll
2020 $169,010,199 $116,717,891 $52,292,308 69.1% $10,358,097 2021 182,223,245 143,301,231 38,922,014 78.6 10,153,866 2022 189,970,935 128,684,488 61,286,447 67.7 9,601,366
2023 195,795,333 130,925,725 64,869,608 66.9 9,074,534
2024 206,320,625 142,591,074 63,729,551 69.1 10,482,694 _______________
Source: 2024 Valuation and City of Redlands Finance Department. 4148-8545-8788.7 A-43
CITY OF REDLANDS FIRE SAFETY RISK POOL PLANS
FUNDED STATUS
FISCAL YEARS 2020 THROUGH 2024
CalPERS
Valuation
Fiscal Year
Ended
(June 30)
Accrued
Liability
Share of
Pool’s
Market Value
of Assets
(MVA)
Unfunded
Accrued
Liability
Funded
Ratio
Applicable
Annual
Covered
Payroll
2020 $127,585,550 $ 85,581,032 $42,004,518 67.1% $6,519,926 2021 134,497,943 101,901,891 32,596,052 75.8 6,576,761
2022 141,538,228 92,795,405 48,742,823 65.6 6,836,711
2023 145,900,514 94,594,609 51,305,905 64.8 7,170,966
2024 154,578,278 104,146,268 50,432,010 67.4 8,130,432
_______________
Source: 2024 Valuation and City of Redlands Finance Department.
The standard actuarial practice at CalPERS is to recognize mandated legislative benefit changes in the first annual valuation following the effective date of the legislation. Voluntary benefit changes by plan amendment are generally included in the first valuation that is prepared after the amendment becomes effective, even if the valuation date is prior to the effective date of the amendment.
See Note 11 to the basic financial statements of the City included in APPENDIX B – “CITY OF
REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
Reporting obligations under Governmental Accounting Standards Board Statement No. 68 (including as amended by Statement No. 71, “GASB 68”) require the employer (the City) to report the net pension liability, pension expense and deferred outflows/deferred inflows of resources related to pensions in its financial statements as part of its financial position. See APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025” including Note 11 to the basic financial statements and the Schedule of Changes in the Net Pension Liability and Related Ratios, the Schedule of the City’s Proportionate Share of the Net Pension Liability and Related Ratios, and the Schedules of Contributions – Pension, included as schedules within the Required Supplementary Information therein.
Other Post-Retirement Benefits (OPEB)
The City provides postemployment medical insurance benefits to eligible retirees and their spouses in accordance with applicable memoranda of understanding and the California Government Code to all employees who retire from the City. At June 30, 2024, the most recent valuation date, 906 current and former employees (373 retired employees and their beneficiaries and 533 active employees) were covered by the benefit terms under the OPEB Plan. These numbers may be considered approximate for current coverage and this active participants number may include employees who currently have no health care coverage. For the fiscal year ended June 30, 2025, the City recognized OPEB expense of $8,410,634 for The contributions made on a pay-asyou go basis (i.e., as medical insurance premiums become due).
The OPEB Plan is an agent single-employer defined benefit OPEB plan administered by the City and is governed by the City Council. The contribution requirements of plan members and the City are established, and may be amended, by City Council. Tiered benefits are offered depending upon date of hire, years of City service, type of work or safety work, and labor agreement requirements. Summary information including monthly health insurance premiums contributed by the City are shown in Note 12 to the basic financial statements of the City included in APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025.”
4148-8545-8788.7 A-44
The City’s total OPEB liability was measured as of June 30, 2024. The total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of June 30, 2024. The total OPEB liability at June 30, 2025 was $140,960,625. The discount rate used to Measure the total OPEB liability 4.21%.
The City’s funding policy affects the calculation of liabilities by impacting the discount rate that is used to develop the plan liability and expense. See Note 12 to the basic financial statements of the City included in APPENDIX B – “CITY OF REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025” including the Schedule of Changes in Total OPEB Liability and Related Ratios included as schedules within the Required Supplementary Information therein.
Investment of Funds; City’s Pooled Operating Investment Fund The Treasurer of the City is responsible for investing the unexpended cash in the Treasurer’s pooled operating investment fund (the “City Pool”).
[Policy summary to come]
California CLASS. California CLASS is a pooled investment option that was created via a joint exercise of powers agreement by and among California public agencies. California CLASS provides California public agencies with a convenient method for investing in high-liquid, short to medium term securities. Deposits and withdrawals to and from California CLASS are transferred on the basis of $1 and not fair value. Accordingly, under the fair value hierarchy, California CLASS is valued based on inputs not categorized as level 1, level 2 or level 3. As of June 30, 2025, the City had $5,002,977 invested in the California CLASS.
Investment in State Investment Pool. The City is a participant in LAIF which is regulated by California Government Code section 16429 under the oversight of the Treasurer of the State of California. As of June 30, 2025, the City had $41,849,590 invested in LAIF. LAIF determines fair value on its investment portfolio based on market quotations for those securities where market quotations are readily available and based on amortized cost or best estimate for those securities where market value is not readily available. LAIF is reported at amortized cost, which approximates fair value.
California Asset Management Program. The City is a voluntary participant in the California Asset Management Program (CAMP). CAMP is an investment pool offered by the California Asset Management Trust (the Trust). The Trust is a joint powers authority and public agency created by the Declaration of Trust and established under the provisions of the California Joint Exercise of Powers Act for the purpose of exercising the common power of its Participants to invest funds. The investments are limited to investments permitted by California Government Code. The total amount invested by all public agencies in CAMP at June 30, 2025 was $22.3 billion, respectively. A board of five trustees who are officials or employees of public agencies has oversight responsibility for CAMP. The value of the pool shares in CAMP, which may be withdrawn at any time, is determined on an amortized cost basis, which is different from the fair value of the City’s position in the pool.
At June 30, 2025, the amortized cost approximates the City’s cost.
See Note 2 in the Notes to the Basic Financial Statements appearing in APPENDIX B – “CITY OF
REDLANDS ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2025” and APPENDIX F – “CITY OF REDLANDS INVESTMENT POLICY.” Utilities
Natural gas is provided to ratepayers within the City by Southern California Gas Company and electricity is provided by Southern California Edison Company. Several telecommunication providers serve the City with telephone, cable television, and internet service.
For more than 90 years, the City has been in charge of providing high quality drinking water to the Redlands and Mentone areas. More than 75,000 residents in Redlands, Mentone, parts of Crafton Hills and San 4148-8545-8788.7 A-45
Timoteo Canyon, and a small part of San Bernardino depend on Redlands Municipal Utilities & Engineering Department to provide water service to their homes and businesses. By supplying a blend of local groundwater, local surface water, and imported water from the State Water Project, Redlands Municipal Utilities & Engineering Department is able to meet the daily demands of these customers. The City has ownership in a variety of private and mutual water companies to supply water to the City’s Tate and Hinckley surface water treatment plants. For decades, the City has increased its ownership in these companies in an effort to increase its access to reliable, local sources of water.
Redlands’ average daily water consumption is 27 million gallons per day (mgd) with a maximum daily of 50 mgd in the summer. The Municipal Utilities & Engineering Department operates and maintains a water distribution system with nearly 400 miles of pipeline and 7 different pressure zones. The system has a 54.5- million-gallon maximum storage capacity.
With respect to wastewater services, the City owns and operates a Publicly Owned Treatment Works, which includes a wastewater collection system that consists of approximately 250 miles of gravity pipelines.
Dischargers into the wastewater collection system include residential, commercial, and industrial sources thorough approximately 20,000 private lateral connections. The City’s Wastewater Treatment Facility is located on approximately 50 acres. The facility has a rated treatment capacity of 9.5 million gallons per day annual dry weather flow. The City also operates a certified environmental laboratory for monitoring its drinking water supply and wastewater effluent. The laboratory is certified by the State Water Resources Control Board under Environmental Laboratory Accreditation Program (ELAP).
The City operates a solid waste enterprise and landfill services to its residents through its Facilities & Community Services Department. The Solid Waste Division operates automated refuse, recycling, and green waste collection for approximately 19,000 single-family residential units, commercial bin service from one to six days per week to 900 businesses, and commercial recycling service to approximately 300 businesses. Rates are established in the Municipal Code.
Transportation
Redlands’ proximity to major highways, commuter rail service, airports, and local transit makes it highly accessible for residents, commuters, and businesses alike. Interstate 10 (I-10) runs east-west through Redlands, providing direct access to the Inland Empire, Los Angeles, and Palm Springs. State Route 210 (SR-210) connects Redlands to other San Bernardino County cities and the greater Los Angeles area.
Train and bus services are provided by the Redlands Passenger Rail Project (Arrow Line) connecting Redlands to San Bernardino and the broader Southern California Metrolink network, and the Omnitrans Bus Service which provides local and regional bus routes throughout Redlands and neighboring communities. The Redlands Passenger Rail Project (Arrow Line) is a new commuter rail line connecting Redlands to San Bernardino and the regional rail network. This line was recently constructed (opened 2022) and serves five train stations in the area with trains running frequently throughout the day. Metrolink, the regional rail network, offers commuter rail services with three stations in Redlands, allowing residents to travel to various destinations in Southern California, including Los Angeles and San Diego. Omnitrans is the primary public transit agency serving the San Bernardino Valley, including Redlands. It operates local and express bus routes, as well as sbX bus rapid transit service, and OmniGo on-demand shuttle service for shorter trips. The buses connect Redlands to nearby cities along the I-10 freeway, making it easy to travel to places like Yucaipa, Chino, and Upland.
Redlands also features a variety of bike lanes, trails, and pedestrian-friendly areas, supporting alternative modes of transportation.
Redlands is also served by the Redlands Municipal Airport (City-owned and operated), a public-use general aviation facility located within the City that supports private, business, and recreational aviation activity. 4148-8545-8788.7 A-46
The airport includes a single runway and accommodates a range of aircraft operations, providing convenient local air access for businesses and residents and supporting regional economic activity.
Ontario International Airport (ONT) is located approximately 25 miles west and offers domestic and international flights. San Bernardino International Airport (SBD) is located in nearby San Bernardino and offers very limited passenger services at this time, some charter services, and extensive cargo services to the region, including Amazon Air, UPS Airlines, FedEx Express, and DHL.
Activities and Tourism
Redlands is located approximately 60 miles northeast of Los Angeles, and 45 miles west of Palm Springs which makes it an easy drive to reach mountains, beaches, and deserts. The City is known for its Victorian and historical architecture, downtown’s Morning Market street faire and farmers’ market, orange groves, Lincoln Memorial Shrine, and the Redlands Bowl, built in 1930 and home of the oldest continuously free outdoor concert series in California. In addition, Redlands serves as a gateway to outdoor recreation in the San Bernardino Mountains and surrounding foothills, with convenient access to hiking, cycling, and regional trail systems that attract both residents and visitors year-round.
There are five museums located in Redlands with one more one the way. The Lincoln Memorial Shrine is the only museum and archives dedicated to the study of Abraham Lincoln and the American Civil War west of the Mississippi River. Its extensive collection of manuscripts, diaries, images and artifacts is maintained by the Special Collections Division of Smiley Library. The San Bernardino County Museum is a regional museum with exhibits and collections in cultural and natural history. Special exhibits, extensive research collections, and public programs for adults, families, students, and children are all part of the museum experience. The Kimberly Crest House was built in 1897 and is a well-preserved example of Victorian Chateau architecture. In 1969, as part of an effort to save neighboring Prospect Park, Kimberly Crest was offered to the “people of Redlands” by the owner, Mary Kimberly Shirk. The house and gardens are now open to the public for tours as well as weddings and private events. Redlands Glass Museum is the only museum west of the Mississippi River limited to displaying glassware made by American glass makers and artists. The Historical Glass Museum exhibits 6,000 examples of glass pieces housed in a 1903 Victorian styled home. Some of these pieces date back to the 19th century while other are more modern and contemporary. The Museum of Redlands is an additional museum, having completed a retrofitting and is pending the curation and installation of City artifacts. The museum is located in the re-imagined Redlands Daily Facts building, the mid-century former home of the City’s daily newspaper.
Throughout the year, Redlands hosts a variety of community events, seasonal festivals, and cultural programming that draw visitors from across the Inland Empire and Southern California, contributing to local economic activity and downtown vitality. The presence of the University of Redlands further contributes to local activity levels, with collegiate athletics, including football, and campus events generating recurring visitation and supporting local businesses. The City’s historic downtown functions as a walkable commercial and cultural hub, featuring a mix of locally owned retail, restaurants, and entertainment venues, as well as public art and placemaking features such as Umbrella Alley, which contribute to the City’s pedestrian-oriented environment and visitor experience. Redlands’ historical identity as a citrus-producing region continues to inform its cultural and tourism profile, with heritage programming and events that reflect the City’s agricultural roots. Visitor services, including curated itineraries and self-guided historical tours, further support organized tourism activity and enhance access to the City’s cultural and historic assets.
City
Council
AGENDA ITEM NO. K4.
DATE: June 16, 2026
TO: Honorable Mayor and City Council Members
SUBJECT:
Consideration of the adoption of the Parks Master Plan, Resolution No. 8726 and determination that adoption of the plan is exempt from the California Environmental Quality Act pursuant to Section 15061(b)(3) of the CEQA Guidelines (Facilities and Community Services Department Director Crocker)
MOTION(S):
If the City Council determines that staff's recommendation is appropriate, the following motion is provided:
"I move to approve Resolution No. 8726, adopting the Parks Master Plan and determine that adoption of the Parks Master Plan is exempt from the California Environmental Quality Act pursuant to Section 15061(b)(3) of the CEQA Guidelines."
RECOMMENDATION:
Staff recommends that the City Council determine that adoption of the Parks Master Plan is exempt from environmental review pursuant to Section 15061(b)(3) of the State Guidelines implementing the California Environmental Quality Act and approve Resolution No. 8726 adopting the Parks Master Plan. Further, on September 11, 2025, the Parks and Recreation Advisory Commission recommended that the City Council adopt the Parks Master Plan.
DISCUSSION:
The Fiscal Years 2022–2024 Budget included funding to support key community priorities, including Public Safety, Parks and Recreation, Library Services, Street Repairs and Paving, and Storm Drain Improvements. To effectively utilize the funds allocated to Parks and Recreation, the development of a comprehensive Parks Master Plan was identified as a critical priority.
The Parks Master Plan provides a strategic framework to guide the renovation, improvement, expansion, and development of parks and recreational facilities throughout the City over the next decade. The City currently maintains approximately 253.4 acres of parkland, encompassing 18 established parks that were analyzed and assessed as part of this planning process.
In May 2023, the City issued a Request for Proposal (RFP) to solicit qualified consultants for the preparation of the Master Plan. Three proposals were received, reviewed, and evaluated by a selection committee in accordance with the City's procurement policy. RHA Landscape Architects-Planners, Inc. was selected as the most highly qualified firm based on its professional qualifications, experience, and approach to community-based planning.
Since the consultant’s selection, a robust public engagement process has been undertaken to ensure that the Master Plan reflects community values and priorities. Over 1,200 community members participated through multiple engagement methods, including:
414 statistically valid surveys with a 95 percent level of confidence; 755 online community surveys;
Over 20 key stakeholder interviews and focus groups; and Two public input meetings.
The community's input helped shape the plan’s recommendations and priority investments. A Priority Investment Rating was developed based on survey results and public feedback, highlighting the amenities and facilities the community considers most important.
The top high-priority items (rating of 130+) include:
Multi-use hiking, biking, and walking trails;
Walking paths in parks;
Splash pads;
Swimming pools;
Restrooms;
Small neighborhood parks; and
Bicycle and pedestrian access to parks.
Medium and lower priorities were also identified to guide future planning and funding allocation in a balanced and responsive manner. The final Parks Master Plan serves as a ten-year road map for decision-making and capital investment, helping the City create equitable, sustainable, and high-quality park and recreation opportunities for all residents.
ALTERNATIVES:
The City Council may choose not to approve Resolution No. 8726 adopting the Parks Master Plan and direct staff accordingly.
STRATEGIC PLAN:
Priority A - Quality of Life
SUBMITTED BY:
Tabitha Crocker, Facilities & Community Services Director RECOMMENDED BY:
Charles M. Duggan Jr., City Manager
REVIEWED BY:
Yvette M. Abich Garcia, City Attorney
Janice McConnell, Assistant City Manager
James Garland, Interim Management Services/Finance Director PREPARED BY:
Chandra Thomas, Sr. Manager, FCS
FISCAL IMPACT
Fiscal Year: 2025-2026
Revenue Generating:
Amount:
Budgeted Y/N:
Account No.:
Additional Appropriation Required: No
Discussion:
Adoption of the Parks Master Plan will have no direct impact on the City's budget.
Attachments
A_Resolution_No8726.pdf
B_Exhibit_A_-_Redlands_Parks_Master_Plan_Report_FINAL.pdf 1 I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx RESOLUTION NO. 8726
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDLANDS
APPROVING THE ADOPTION OF THE PARKS MASTER PLAN
WHEREAS, the City has not adopted a parks master plan; and WHEREAS, the City Council wishes to adopt a plan so that City parks can have a guiding document for their maintenance and capital investments; and WHEREAS, the City owns and operates numerous public parks and recreation facilities to satisfy the recreational needs of residents and visitors of the City of Redlands; and WHEREAS, the Parks and Recreation Advisory Commission, at their September 11, 2025, meeting, recommended City Council adopt the proposed Parks Master Plan; and WHEREAS, the Parks and Recreation Advisory Commission wholeheartedly supports this resolution; and
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF REDLANDS AS FOLLOWS:
Section 1. That the Parks Master Plan as presented in Exhibit “A,” be adopted by the City of Redlands.
ADOPTED, SIGNED AND APPROVED this 16th day of June, 2026. ________________________
Mario Saucedo, Mayor
ATTEST:
____________________________
Jeanne Donaldson, City Clerk
2 I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx I, Jeanne Donaldson, City Clerk of the City of Redlands, hereby certify that the foregoing resolution was duly adopted by the City Council at a regular meeting thereof held on the 16th day of June, 2026, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Jeanne Donaldson, City Clerk
3 I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx I:\cmo\Resolutions\A. Resolution No.8726.bm.06.01.2026.docx EXHIBIT “A”
See attached Parks Master Plan document
1 PARKS MASTER PLAN
Cover Page
2 PARKS MASTER PLAN
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3 PARKS MASTER PLAN
ACKNOWLEDGEMENTS
ADOPTED BY THE CITY COUNCIL ON______ 2026
THANK YOU TO THE ENTIRE REDLANDS COMMUNITY FOR YOUR INPUT THROUGHOUT THE
DEVELOPMENT OF THIS PLAN
REDLANDS CITY COUNCIL
Mr. Mario Saucedo, Mayor
Ms. Marc Shaw, Mayor Pro Tem
Mr. Paul Barich, Councilmember
Mr. Eddie Tejada, Councilmember
Mr. Denise Davis, Councilmember
REDLANDS FACILITIES & COMMUNITY SERVICES STAFF (PROJECT TEAM) Ms. Tabitha Crocker, Director
Ms. Chandra Thomas, Senior Manager
CONSULTING TEAM
Doug Grove, President, RHA Landscape Architects-Planners Arielle Talley, GIS Technician, RHA Landscape Architects-Planners Neelay Bhatt, Founder & CEO, Next Practice Partners
Jason Ellisalde, Vice President, Next Practive Partners 4 PARKS MASTER PLAN
CHAPTER ONE EXECUTIVE SUMMARY.................................................................................... 6
1.1 INTRODUCTION .........................................................................................................................................................................................................6
1.2 VALUES, VISION, MISSION & BIG MOVES ...........................................................................................................................................................7
1.3 COMMUNITY PROFILE ............................................................................................................................................................................................8
1.4 PUBLIC INPUT SUMMARY....................................................................................................................................................................................10
1.5 RECREATION PROGRAM ASSESSMENT ..............................................................................................................................................................13
1.6 PARK AND FACILITY EVALUATIONS...................................................................................................................................................................16
1.7 EQUITY MAPS.........................................................................................................................................................................................................18
1.8 RECOMMENDED PARKS IMPROVEMENTS PLAN.............................................................................................................................................19
1.9 CONCLUSION..........................................................................................................................................................................................................22 CHAPTER TWO COMMUNITY PROFILE.................................................................................23
2.1 OVERVIEW..............................................................................................................................................................................................................23
2.2 LIVABILITY AND ACCESS .....................................................................................................................................................................................23
2.3 DEMOGRAPHICS .................................................................................................................................................................................................. 26
2.4 LOCAL RECREATIONAL TRENDS........................................................................................................................................................................35
2.5 KEY TAKEAWAYS..................................................................................................................................................................................................52 CHAPTER THREE PUBLIC INPUT SUMMARY........................................................................54
3.1 KEY LEADER INTERVIEWS & FOCUS GROUPS .................................................................................................................................................55
3.2 PUBLIC WORKSHOPS..........................................................................................................................................................................................57
3.3 STATISTICALLY VALID SURVEY...........................................................................................................................................................................61
3.4 SURVEY COMPARISON ANALYSIS ....................................................................................................................................................................66 CHAPTER FOUR RESOURCE ANALYSIS..................................................................................80
4.1 RECREATION PROGRAM ASSESSMENT............................................................................................................................................................80
4.2 PARK AND FACILITY EVALUATIONS.................................................................................................................................................................96
4.3 INVENTORY, ASSESSMENT, AND LEVELS OF SERVICE.................................................................................................................................107
4.4 EQUITY MAPPING ..............................................................................................................................................................................................109
4.5 RECOMMENDED PARKS IMPROVEMENTS PLAN..........................................................................................................................................129 CHAPTER FIVE VISIONING AND KEY RECOMMENDATIONS .......................................134
5.1 MISSION ................................................................................................................................................................................................................134
5.2 VISION STATEMENT............................................................................................................................................................................................134
5.3 VALUES.................................................................................................................................................................................................................135
5.4 BIG MOVES..........................................................................................................................................................................................................136 CHAPTER SIX CONCLUSION....................................................................................................137 CHAPTER SEVEN APPENDICES...............................................................................................138 APPENDIX A - STATISTICALLY VALID SURVEY CHARTS & GRAPHS ................................................................................................................139 APPENDIX B - ONLINE COMMUNITY SURVEY CHARTS & GRAPHS .................................................................................................................166 APPENDIX C - PROGRAM INVENTORY ..................................................................................................................................................................185 APPENDIX D - SIMILAR PROVIDERS......................................................................................................................................................................187 APPENDIX E - PARK & FACILITY EVALUTATIONS...............................................................................................................................................188 APPENDIX G - NATIONAL TRENDS IN RECREATION..........................................................................................................................................262 APPENDIX H – PARK & RECREATION COMMISSION PRIORITY PROJECT LIST ...........................................................................274 5 PARKS MASTER PLAN
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6 PARKS MASTER PLAN
CHAPTER ONE EXECUTIVE SUMMARY
1.1 INTRODUCTION
The City of Redlands Parks, Recreation, and Community Services Plan presents a collective vision shaped by the voices, values, and aspirations of our community. It responds to changing needs and outlines a forward-looking approach to providing programs and places that are welcoming, innovative, and inclusive for all residents.
With the guiding vision “To be the go-to place,” the city is committed to Preserving history, celebrating community, and delivering exceptional service. This vision drives the department’s efforts to create dynamic public spaces, offer experiences that inspire, and strengthen the connections that bring people together.
This Plan demonstrates Redlands’ ongoing dedication to health and wellness, environmental responsibility, and a strong sense of belonging. It sets the stage for lasting benefits—today, tomorrow, and for generations that will call Redlands home.
1.1.1 OUTCOMES
The Plan is guided by the following key goals:
• Listen and Connect: Engage Redlands residents through meaningful outreach to better understand their needs, priorities, and aspirations.
• Foster Creativity and Innovation: Explore new ideas, practices, and trends to elevate Redlands’ parks, recreation, and community services.
• Advance Fairness and Inclusion: Provide opportunities for all community members to enjoy equitable access to facilities, programs, and open spaces. • Invest in Sustainability: Strengthen financial and organizational capacity by cultivating partnerships and securing resources that support long-term success. • Create a Unified Path Forward: Work side by side with the community to shape a vision that reflects shared values of inclusion, belonging, and connection.
1.1.2 ABOUT THE CITY
The City of Redlands is a historic and vibrant community in San Bernardino County, celebrated for its citrus heritage, tree-lined neighborhoods, and strong sense of place. Known as the “Jewel of the Inland Empire,” Redlands blends its rich past with a forward-looking spirit, offering residents and visitors alike a high quality of life through diverse parks, recreational opportunities, and cultural experiences.
Redlands’ parks and recreation system is central to community life—providing spaces that encourage active living, wellness, and social connection. From iconic landmarks like the Redlands Bowl and historic Prospect Park, to neighborhood playgrounds, sports complexes, trails, and open spaces, the city ensures accessible places for recreation, culture, and gathering. These amenities nurture community pride and contribute to Redlands’ unique identity. 7 PARKS MASTER PLAN
Looking ahead, Redlands is committed to honoring its history while preparing for the future.
Through thoughtful planning, investment in facilities and programs, and an emphasis on inclusion and equity, the city will expand opportunities for recreation, foster environmental stewardship, and strengthen partnerships. This commitment ensures that Redlands continues to be a welcoming, connected, and thriving community for generations to come.
1.2 VALUES, VISION, MISSION & BIG MOVES
1.2.1 VALUES
The values of Teamwork, Integrity, Enjoyment and Safety are paramount in the day-to-day operations and how to plan for the future.
1.2.2 VISION
The updated vision statement is
To be the go-to-place
1.2.3 MISSION
The updated mission statement is
Preserve history, celebrate community, and deliver exceptional service
1.2.4 BIG MOVES
• Secure and Expand Dedicated Funding Sources
• Enhance Safety, Security, and Accessibility
• Address Deferred Maintenance and Facility Upgrades
• Develop a Comprehensive Marketing Plan
• Optimize Staffing and Operations
A full summary of the visioning process can be found in CHAPTER FIVE 8 PARKS MASTER PLAN
1.3 COMMUNITY PROFILE
The Community Profile establishes baseline conditions to guide the Plan. It integrates livability and access indicators (cost of living, 10-minute park access, tree equity), City demographics and projections (Census 2020; ESRI July 2023 with forecasts to 2038), local recreation market potential (ESRI Market Potential Index, MPI), and national recreation participation trends (SFIA 2023). Results are presented with state and national comparisons where applicable.
1.3.1 KEY FINDINGS
LIVABILITY & ACCESS
• Cost of Living (index; U.S. baseline = 100): Redlands 118.6 vs California 149.9 vs U.S. 100.
o Housing: 173.2 (vs CA 234.8).
o Utilities: 108.3 (vs CA 102.4).
o Groceries, health, transportation, and miscellaneous costs are lower than California averages.
• Park Proximity (TPL 10-Minute Walk): 50% of residents live within a 10-minute walk of a park (vs U.S. median 55%).
• Tree Equity: Citywide Tree Equity Score 81 across 51 block groups—10 ≥90, 21 = 80–89, 20 <80. Lower scores generally occur in neighborhoods with higher proportions of residents of color.
DEMOGRAPHICS (CENSUS/ESRI)
• Population trajectory: 73,168 (2020) → 73,999 (2023 est.) → 75,444 (2028) → 76,863 (2033) → 78,288 (2038); steady growth with gradual deceleration. • Age structure: Median age 38.0 (2020) → 39.3 (2028). The 75+ cohort rises to 11% by 2038; shares of 0–17 and 18–34 decline modestly; 35–54 and 55–74 stabilize near ~26% and ~22% by 2038.
• Race: White Alone 53% (2020) → 42% (2038); Some Other Race 14%→20%; Two or More Races 16%→21%. Black Alone 5% and Asian 10% stable; American Indian 1%→2%; Pacific Islander ~0%.
• Ethnicity: Hispanic/Latino (of any race) grows from 35% (2020) to 45% (2038) (37% in 2023; 40% in 2028; 42% in 2033).
INCOME & AT-RISK INDICATORS (CURRENT/2023)
• Per Capita Income: Redlands $46,548 vs California $45,201 vs U.S. $40,363. • Median Household Income: Redlands $91,254 vs California $89,455 vs U.S. $72,414. • Foreign-born: 14.2% (vs CA 26.5%, U.S. 13.6%).
• Language other than English at home: 27.8% (vs CA 43.9%, U.S. 21.7%). • Owner-occupied housing: 58.6% (vs CA 55.5%, U.S. 64.6%). • Disability: 8.5% (vs CA 6.8%, U.S. 8.7%).
• Uninsured: 5.8% (vs CA 7.5%, U.S. 9.3%).
• Poverty: 8.7% (vs CA 12.2%, U.S. 11.5%).
9 PARKS MASTER PLAN
LOCAL RECREATION MARKET POTENTIAL (ESRI MPI; U.S. AVERAGE = 100) • General sports: Above average—Tennis 113, Golf 113, Soccer 102; near/below average— Volleyball 99, Basketball 96, Football 95, Softball 93, Baseball 89. • Fitness: Elevated demand—Yoga 112, Pilates 110, Zumba 109, Aerobics 109, Walking 106, Swimming 105, Weightlifting 104, Jogging/Running 103. • Outdoor: Above average—Road Cycling 111, Mountain Biking 108, Backpacking 107, Hiking 106; below—Freshwater Fishing 85 (and slightly below for Canoe/Kayak 98, Rock Climbing 96, Horseback Riding 93, Archery 93).
• Commercial/Cultural: Above average—Art Galleries 116, Book Clubs 113, Live Theater 111, Adult Education 107, Museums 107; below—Indoor Water Parks 89, Portable Video Games 92.
NATIONAL PARTICIPATION CONTEXT (SFIA 2023)
• Physically active Americans (2022): 77.6%; inactive 22.4% (<70M). • Racquet sports: Pickleball +85.7% YoY; +158.6% (3-yr); Tennis +4.3% YoY; +33.4% (3-yr). • Team sports: Rebounding toward 2019; Basketball +13% (3-yr). • Fitness & Outdoor: Walking, free weights largest; multi-year gains in hiking, camping, fishing, bicycling; some machine-based health-club formats remain below 2019 levels.
1.3.2 KEY TAKEAWAYS
• Redlands is comparatively affordable within California (overall 118.6 vs CA 149.9; U.S. 100 baseline) but faces elevated housing (173.2) and slightly higher utilities (108.3 vs CA 102.4), reinforcing the value of close-to-home, low-cost recreation. • Park access is moderate (50% within a 10-minute walk vs U.S. 55%), and tree canopy benefits are uneven (Tree Equity 81, with 20 block groups <80), highlighting geographic equity gaps.
• The City is growing steadily to 78,288 by 2038, aging gradually (median age to 39.3; 75+ to 11%), and diversifying (White Alone down to 42%; Hispanic/Latino up to 45%; multiracial identification rising).
• Income levels exceed state and national benchmarks (Per Capita $46,548; Median HH $91,254), while poverty (8.7%) and uninsured (5.8%) are lower than California and U.S. rates—supporting a mix of premium and affordable offerings. • Market potential is strongest for fitness, cycling/hiking, and court sports (notably tennis and golf), and high for cultural/educational activities—aligning with national participation gains in racquet sports and outdoor pursuits.
• Planning implications: prioritize access and shade in underserved areas; align amenities and programs with aging and culturally diverse households; and emphasize activities with demonstrated local interest while maintaining equitable affordability.
Full community profile can be found in CHAPTER TWO
10 PARKS MASTER PLAN
1.4 PUBLIC INPUT SUMMARY
Public input for the City of Redlands Parks and Recreation Master Plan was gathered through a multi-channel, inclusive process: 20+ key leader interviews and focus groups; two public workshops (in-person and virtual with live polling); a statistically valid survey by ETC Institute (n=414; ±4.8% at 95% confidence); and an online community survey (n=755). Together, these tools captured day-to-day experiences, priorities for facilities and programs, barriers to use, investment preferences, and willingness to fund improvements.
1.4.1 KEY FINDINGS
KEY LEADER INTERVIEWS & FOCUS GROUPS
• Strengths: breadth of parks and programs for all ages; signature places (Redlands Bowl, Emerald Necklace, trail system); engaged leadership and responsive maintenance; growing sports offerings (e.g., pickleball); strong community support. • Opportunities: upgrade basics (restrooms, lighting, shade/splash pads, ADA access); add facilities (pickleball/playground upgrades); safety and universal accessibility; diversify programming (arts, culturally relevant events, tech-enabled centers); improve communication and partnerships; bolster maintenance/staffing. • Top Priorities: modernize and make parks accessible/safe; add community and youth/family amenities (e.g., aquatics, sand volleyball, teen space); tell the story of each park; plan proactively and secure land for future needs.
PUBLIC WORKSHOPS (LIVE POLLING)
• Use & Access: 82% use parks/trails/facilities weekly (another 11% monthly); 67% live within a 10-minute walk of a park/trail. Travel modes: car 55%, walk 31%, bike 10%. • Most used amenities: Trails 57%, Open space/grass 43%, Sports fields 36%, Playgrounds 29%.
• Most desired additions/improvements: Adventure/destination playgrounds 45%; Splash pads 36%; Outdoor pools 36%; Walking paths/trails 33%; Shade structures 21%; Indoor rec centers 18%.
• Program interests: Arts & culture 47%; Special/cultural events 43%; Youth sports 37%; Fitness & wellness 33%; Aquatics 27%; Outdoor recreation 23%. • Top 10-year improvements: All-ability playgrounds 55%; Upgraded restrooms 55%; More shade 48%; Expanded/new community centers 38%; Outdoor fitness/obstacle courses 38%; Splash pads 34%; Outdoor pools 34%; Safety/security 28%; Upgraded sports fields 28%.
• Barriers: Amenities lacking 46%; Feel unsafe 34%; Lack of restrooms 34%; Awareness gaps and parking/signage also noted.
• Perception & communication: Satisfaction—45% satisfied, 34% neutral, 17% somewhat dissatisfied; quality rated mostly Good (48%). Preferred channels: social 61%, email 42%, text 42%, website 36%.
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STATISTICALLY VALID SURVEY (ETC, N=414)
• Facility use: 87% visited parks/facilities in past year. Condition ratings: Excellent 10%, Good 52%, Fair 30%, Poor 8%.
• Program use: 36% participated in programs/events; quality Excellent 23%, Good 57%, Fair 15%, Poor 5%.
• Top barriers to visiting: Fear of criminal activity 39%; Don’t feel safe 35%; Lack of shade 31%; Lack of restrooms 20%; Maintenance 20%.
• Top barriers to programs: Don’t know what’s offered 51%; Too busy 20%; Times not convenient 18%.
• How residents hear now: Word of mouth 63%; Social media 44%; Banners 33%. Top three preferred going forward: Social media 53%, emails/eNewsletter 42%, City website 30%.
• Perceived benefits (agreement): Access to gathering & open spaces 87%; Makes Redlands more desirable 84%; Preserves open space/protects environment 81%. • Willingness to pay monthly: $9+ 23%, $7–8 9%, $5–6 20%, $3–4 21%, Nothing 26% (i.e., 74% willing to pay at least $3).
• Facilities needs (highest unmet): Walking paths in parks; Open grass areas; Small neighborhood parks.
• Facilities importance (top): Multi-use hiking/biking/walking trails; Walking paths in parks; Small neighborhood parks; Restrooms.
• Facilities Priority Investment Ratings (top): Trails 177; Walking paths 166; Splash pads 162; Swimming pool 153; Restrooms 148; Small neighborhood parks 141; Bike/ped access to parks 137; Large community parks 130; Community gardens 129; Environmental/nature education 127.
• Program needs (highest unmet): Community special events; Cultural enrichment; Adult fitness & wellness.
• Program importance (top): Community special events; Adult fitness & wellness; Outdoor environmental education/nature camps; Recreation swim.
• Program Priority Investment Ratings (top): Adult fitness & wellness 189; Community special events 184; Recreation swim 149; Outdoor environmental education/nature camps 143; Cultural enrichment 138.
SURVEY COMPARISON HIGHLIGHTS (ETC VS ONLINE)
• Engagement: Online respondents reported higher visitation (96%) and more frequent use; both surveys show broad use of the system.
• Quality/condition: Nearly identical—majority “Good,” few “Excellent,” signaling room to elevate to exemplary.
• Barriers: Consistent themes of safety, shade, restrooms, and awareness; online respondents also cited fees and outdated facilities more often. • Investment preferences: Both prioritized maintaining/improving existing parks and acquiring open space; online showed slightly higher support for new sports fields. • Funding appetite: Majority in both are willing to pay more; online 31% would pay $9+. 12 PARKS MASTER PLAN
KEY TAKEAWAYS
• Take care of the basics first. Community consensus centers on restrooms, shade, lighting, safety, and maintenance—raising the entire system from “good” to consistent excellence. • Build a walkable, connected network. Trails and walking paths are the top facility priorities (highest PIR), along with bike/ped connections to parks and more small neighborhood parks close to home.
• Invest in water and play. Strong demand for splash pads, an outdoor pool, and adventure/all-ability playgrounds supports family-friendly, heat-resilient recreation. • Program what people will use. Emphasize adult fitness & wellness, community special events, recreation swim, and outdoor/nature education, while sustaining popular youth sports and culturally relevant offerings.
• Design for inclusion and comfort. Universal access, all-abilities play, shaded seating, and safe routes reflect values voiced by families, older adults, and people with disabilities. • Strengthen communication. Close the “I don’t know what’s offered” gap (51%) with a coordinated campaign prioritizing social media, email/eNews, and the City website, complemented by banners and targeted outreach.
• Advance safety visibly. Address top barriers (fear of crime, not feeling safe) through lighting, activation, sightlines, partnerships, and presence—paired with community programming that draws positive use.
• Plan and partner for growth. There is broad support to maintain what we have and acquire open space; a majority are willing to contribute at least $3/month, indicating potential for strategic funding mechanisms and partnerships. • Tell the story. Residents want parks that reflect Redlands’ identity—use interpretation, arts, and events to celebrate culture, sustainability, and the Emerald Necklace, building pride and participation.
These inputs provide a clear mandate: elevate fundamentals, connect the system, deliver cooling and inclusive play, program for wellness and community, communicate clearly, and invest strategically—so Redlands’ parks and recreation serve everyone, every day.
Full Public Input Summary can be found in CHAPTER THREE 13 PARKS MASTER PLAN
1.5 RECREATION PROGRAM ASSESSMENT
The Recreation Program Assessment examines how Redlands’ current offerings align with community needs, market trends, and operational realities. It blends local demographics, participation interests (MPI), statistically valid survey results (ETC, n=414; ±4.8%), portfolio mix and cost recovery profiles, lifecycle balance, delivery methods, proficiency levels, and marketing effectiveness. The goal is to identify where to sustain, refine, and grow programs to maximize public benefit, equity, and fiscal health.
1.5.1 KEY FINDINGS
COMMUNITY PROFILE SIGNALS FOR PROGRAMMING
• Steady growth, broad age mix: Growth to 2038 and an even age distribution (21% ≤17; 25% 18–34; 24% 35–54; 23% 55–74; 8% 75+) support multi-generational offerings— from youth/family play and swim to adult fitness and active-aging. • Cultural diversity: Hispanic/Latino (37%), Asian (10%), and multiracial (16.8%) communities point to demand for culturally relevant programs, multilingual outreach, and inclusive events.
• Economic context: Median household income $91,254 and per-capita $46,548 enable a blend of premium and affordable options; 8.7% poverty underscores need for low-cost and free access.
• Access needs: 14.2% foreign-born; 27.8% speak a language other than English at home;
8.5% have a disability—making ADA access, fee relief, and language access essential.
PARTICIPATION INTERESTS (MPI)
• High-interest sports & fitness: Tennis 113, golf 113, yoga 112, Pilates 110—support courts, drop-in fitness, and instructional series.
• Outdoor demand: Road biking 111, backpacking 107, hiking 106—reinforce trails, walking loops, and nature programming.
• Culture & learning: Art galleries 116, book clubs 113, live theater 111, adult education 107, photography 105—validate cultural enrichment and lifelong learning.
COMMUNITY PROGRAMMING PRIORITIES (ETC SURVEY)
• Highest unmet needs (programs): Community special events; cultural enrichment; adult fitness & wellness.
• Most important programs: Community special events; adult fitness & wellness; outdoor environmental education/nature camps; recreation swim.
• Priority Investment Ratings (programs): Adult fitness & wellness 189; community special events 184; recreation swim 149; outdoor nature/education 143; cultural enrichment 138.
PORTFOLIO STRUCTURE AND ALIGNMENT
• Service classification (share of offerings):
o Community Benefit 18% (national 26%) → room to grow free/low-cost, broadbenefit services. o Community–Individual Blend 56% (national 32%) → strong mid-tier mix meeting wide needs.
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o Individual Benefit 26% (national 41%) → fewer niche/fee-based programs than typical.
• Cost recovery profile:
o Fully Subsidized 49% (national 32%) → strong access; watch fiscal balance. o Somewhat Subsidized 4% (national 23%) → opportunity to expand moderate-fee options.
o Self-Sufficient 0% (national 17%) → gap for cost-neutral offerings. o Revenue Generating 47% (national 28%) → well above peers; supports reinvestment.
• Lifecycle balance: Launch 11% + Rising 7% = 19% (national 34%) → increase innovation/new pilots. Stable/Maxed 78% (national 61%) → strong participation but risk of stagnation; Declining 4% (≈ national).
• Program direction (delivery type): Self-Directed 20% (national 22%); Staff-Directed 58% (national 51%) → instruction-forward; Facilitated 2% (national 6%) → partner-enabled offerings can grow; Cooperative 20% (national 21%).
• Proficiency mix: All-abilities 77% (national 81%); Beginner 10% (national 10%); Intermediate 10% (national 10%); Advanced 4% (national 3%) → inclusive baseline with room to scaffold skills.
FACILITIES & ACTIVITY COMPLEMENTS (FROM ETC FACILITY PRIORITIES) • Top facility PIRs backing program delivery: Trails 177; walking paths 166; splash pads 162; swimming pool 153; restrooms 148; small neighborhood parks 141; bike/ped access 137—infrastructure that supports daily activity, heat resilience, and family use.
MARKETING & COMMUNICATIONS
• Current channels: Website; print guides/newsletters; social (Facebook/Instagram; City on X); email, direct mail, SMS; in-facility signage; paid ads; QR codes. • Not used (opportunities): Online program guides, PSAs/radio, YouTube, blogs/vlogs, webinars, podcasts, TikTok, an app, road-sign marquees. • Observed performance: Family/seasonal event posts and interactive prompts perform best; routine notices underperform. Posting cadence is strong, but visuals, timing, and cross-promotion can lift engagement.
1.5.2 KEY TAKEAWAYS
Community Profile Insights
• Population Growth: Steady population and household growth, coupled with a balanced mix of family-oriented and individual living arrangements, provides opportunities to sustain long-term engagement.
• Diversity: Redlands’s cultural richness requires inclusive and culturally relevant recreation services to celebrate the city’s heritage and diversity. • Economic Stability: A relatively affluent community supports a blend of premium and affordable offerings, ensuring access across income levels. 15 PARKS MASTER PLAN
Programming Priorities and Trends
• Community Needs and Importance: Community special events, cultural enrichment, and adult fitness/wellness programs were identified as high-priority needs. Outdoor environmental education and recreational swimming also ranked highly in importance. • Activity Preferences: The Market Potential Index revealed strong interest in activities like tennis, yoga, hiking, and cultural experiences such as visiting art galleries and live theater.
This underscores the demand for diverse recreational options, including outdoor and cultural programs.
• Program Lifecycle: Most offerings are in the Stable or Maxed stages, reflecting consistent participation, with opportunities to introduce more innovative and dynamic programming.
Program Services and Cost Recovery
• Service Balance: Redlands emphasizes Community-Individual Blend programs (56%), exceeding the national average, showcasing a balanced approach to addressing both public and individual benefits.
• Cost Recovery: The city excels in providing fully subsidized programs (49%), ensuring broad accessibility. However, there is potential to expand somewhat subsidized and selfsufficient programs to diversify funding models and align with national benchmarks.
Inclusive Programming
• Age and Skill Proficiency: Programs cater to all age groups and skill levels, with a focus on inclusivity. However, there is room to expand offerings targeting specific skill development for beginners and intermediates.
• Core Program Areas: Identified areas such as Athletics, Cultural Enrichment, and Health & Fitness serve diverse interests while fostering multi-generational engagement.
Marketing and Communications
• Utilized Channels: Effective use of print media, social media platforms (Facebook, Instagram, Twitter), and direct outreach methods promotes engagement. • Opportunities for Growth: Expanding into underutilized platforms like YouTube, TikTok, and blogs/vlogs, as well as leveraging visual and interactive content, can enhance reach and community connection.
Full Program Assessment can be found in SECTION 4.1
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1.6 PARK AND FACILITY EVALUATIONS
The evaluation of park assets within the City of Redlands is a cornerstone of our strategic planning and maintenance scheduling efforts. Each park and its amenities are carefully assessed through thorough field observations by our dedicated staff, resulting in a comprehensive grading based on current conditions. This systematic process ensures that we understand the performance of individual assets, rather than evaluating the park system as a whole.
Our evaluation process uses a qualitative grading scale, complemented by numerical scores, to reflect both the quantity and quality of recreational opportunities available. This approach facilitates transparent prioritization for repairs, upgrades, and future enhancements. Each park is rated consistently and comparatively against similar facilities across the system.
Amenity Rating Scale
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Park Evaluation Categories
Full Park and Facility Evaluations can be found in SECTION 4.2 18 PARKS MASTER PLAN
1.7 EQUITY MAPS
Service area maps and standards allow the City of Redlands to assess how parks and recreation amenities are distributed across the community and whether they align with population density and neighborhood needs. These maps are based on recommended levels of service for each park and amenity type and help identify areas that may be underserved or oversupplied.
By comparing geographic access to population-based standards, the City can pinpoint gaps in service and make informed decisions about future investments. This ensures that capital improvement efforts not only address system-wide needs but also promote equitable access to parks and facilities for all residents. The different service area rings highlight the reach of various providers, reflecting the broader network of resources available to the Redlands community.
Full Equity Maps can be found in SECTION 4.4
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1.8 RECOMMENDED PARKS IMPROVEMENTS PLAN
The Facilities and Community Services Recommended Parks Improvements Plan (RPIP) for Redlands provides a strategic roadmap for prioritizing, funding, and delivering essential infrastructure and facility projects that support the city’s livability, sustainability, and long-term growth. The plan emphasizes targeted investments in parks, recreational amenities, community centers, and public spaces to address the evolving needs of Redlands diverse and expanding community.
A central element of the RPIP is aligning financial resources with improvement projects.
Redlands leverages multiple funding sources—including the General Fund, Development Impact Fees (DIF), and a range of grant opportunities—to make these initiatives possible. By strategically applying these resources, the City maintains responsible fiscal management while advancing projects that foster environmental stewardship, community wellness, and economic vitality.
As Redlands continues to grow and thrive, this Recommended Improvements Plan offers a clear and actionable framework for creating vibrant public spaces and strengthening community infrastructure—both today and for generations to come.
To provide greater clarity and transparency, the RPIP is organized into three distinct categories:
1. Projects that are planned and have secured funding
2. Projects that are planned but not yet funded
3. Projects that have been completed in the last several years 20 PARKS MASTER PLAN
The following improvements are recommended:
• Ford Park – Phase 1 (FY 25/26)
Renovation of the existing restroom facility at Ford Park to improve accessibility, functionality, and user experience; project completed in summer 2025. • Orange Blossom Trail – Phase 1 (FY 25/26)
Phase 3 improvements to approximately 5 miles of the Orange Blossom Trail, including upgrades to enhance safety, functionality, and overall user experience as part of the City’s priority trail investment program.
• Coyazo Park – Phase 1 (FY 25/26)
Construction of a new equipment building at Coyazo Park to support park operations, storage needs, and ongoing maintenance activities.
• Sylvan Park -Phase 2 (FY 26/27)
Renovation of the existing restroom facility at Sylvan Park to improve accessibility, functionality, and user experience and add a BMX Pump Track. • Texonia Park – Phase 2 (FY 26/27)
Renovation of Texonia Park with construction of a parking lot, installation of an inclusive playground, splash pad, ADA walking paths, bathroom renovation and sports fields, dog park, renovation of basketball courts, and shade structures. • Smiley Park – Phase 3 (FY 28 & Beyond)
Install Family friendly amenities such as playground, ADA walking paths, restroom, etc. to improve accessibility, functionality, and user experience. • Brookside Park – Phase 3 (FY 28 & Beyond)
Development of new recreational amenities at Brookside Park, including replacement of playground equipment, a splash pad, and a 10,000-square-foot skatepark to expand active recreation opportunities and serve a wide range of age groups. • Heritage Park – Phase 3 (FY 28 & Beyond)
Construction of a new restroom facility at Heritage Park to address visitor needs and support increased park usage and programming.
• Crafton Park – Phase 3 (FY 28 & Beyond)
Installation and replacement of a playground, all-inclusive play and creating a destination for the community by enhancing family friendly amenities. 21 PARKS MASTER PLAN
• Redlands Sports Park – Phase 3 (FY 28 & Beyond)
Installation of a playground, dog park, all-inclusive play and creating a destination for the community by enhancing family friendly amenities.
• Jennie Davis – Phase 3 (FY 28 & Beyond)
Renovation of the existing restroom facility at Jeannie Davis Park to improve accessibility, functionality, and user experience and add pickleball courts. • Ed Hales Park – Phase 3 (FY 28 & Beyond)
Development of a new playground, or interactive play at Ed Hales Park to improve recreational offerings for children and families within the downtown area. Fostering family-friendly environments and art and cultural amenities (e.g. sensory and adaptive equipment, accessible surfaces with cultural integration such as murals or artwork). • New Trails – Phase 3 (FY 28 & Beyond)
Construction of approximately 2.60 miles of new trails to meet projected community needs through 2034, expanding the City’s trail network and improving connectivity for walking, biking, and other non-motorized recreation.
• Joe R. Gonzales Community Center and
Eddie and Gloria Flores Senior Center – Phase 3 (FY 28 & Beyond) The Joe R. Gonzales Community Center and Eddie and Gloria Flores Senior Center is a city-owned and maintained facility that serves as a major community resource. While most building systems remain functional, many are aging and several components are rated Fair (C) or Poor (D). Multiple features, including ramps, service counters, and electrical outlets, are non-compliant with ADA standards. An estimated $3 million investment is required to address deficiencies and bring the facility into compliance with modern accessibility, safety, and service standards.
• Joslyn Senior Center – Phase 3 (FY 28 & Beyond)
The Joslyn Senior Center is a smaller, city-owned facility located in the downtown area.
The building is in mixed condition, with many elements rated Fair (C) to Poor (D), and several features identified as non-compliant with ADA requirements. Key building systems, including HVAC, lighting, and service counters, require upgrades, and adequate storage is lacking. Approximately $1.5 million is needed to correct deficiencies and maintain safe, accessible operations.
• Carriage House at Prospect Park – Phase 3 (FY 28 & Beyond) The Carriage House at Prospect Park is a historic facility constructed in 1896 and holds significant cultural and community value despite its smaller size. The building is in mixed condition, with many systems rated Fair (C) and some failing (F). The absence of a fire sprinkler system and limited ADA compliance present major safety and accessibility concerns. An estimated $1.25 million is required for rehabilitation and modernization, with improvements designed to respect historic preservation requirements.
These recommendations are incorporated into the Recommended Park Improvement Plan cost projections located in Section 4.5
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1.9 CONCLUSION
The Redlands Parks Master Plan is a forward-thinking guide to strengthen the city’s proud legacy of parks, recreation, and community life. Shaped by Redlands’ historic charm and enriched by robust community input, the Plan reflects the aspirations of residents, city staff, and partners who are committed to honoring the past while creating opportunities for the future.
This process was a chance for Redlands to reconnect with its roots and chart a bold direction forward. From the timeless beauty of Prospect Park and the community traditions of the Redlands Bowl Summer Music Festival, to the open spaces, sports fields, and historic orange groves that define the city’s character, Redlands’ identity is inseparable from its parks and cultural resources. With this in mind, the city embraced a revitalized Vision: To Be the Go-To Place, supported by a mission that centers on Preserve history, celebrate community, and deliver exceptional service. These commitments reflect a promise to build welcoming, inspiring, and inclusive spaces for all.
The Master Plan also identifies five “Big Moves” that respond to both current needs and future opportunities:
• Expand and enhance Redlands’ recreation spaces and facilities • Strengthen staffing and professional development to serve a growing community • Deepen cultural programming and community engagement, building on traditions like the Redlands Bowl
• Invest in infrastructure, safety, and the long-term care of parks, trails, and open spaces • Secure sustainable funding and cultivate partnerships that extend Redlands’ impact These priorities are grounded in the voices of residents who shared their perspectives through surveys, workshops, and community forums. From families seeking more youth programs, to older adults desiring expanded recreation opportunities, to neighbors calling for better connections between trails and open spaces, the community’s message was clear: Redlands is ready to grow while staying true to its values of equity, connection, and belonging.
As Redlands plans for the future, this Master Plan offers a clear and actionable roadmap— balancing bold aspirations with practical solutions. With strong leadership, collaborative partnerships, and continued investment, Redlands will remain a community defined by its parks, cultural traditions, and gathering places—a true “go-to place” for residents and visitors alike, today and for generations to come.
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CHAPTER TWO COMMUNITY PROFILE
2.1 OVERVIEW
A key component of the Parks and Recreation Master Plan (“Plan”) is a Community Profile. The purpose of this analysis is to provide the Parks and Recreation Department (“Department”) with insight into the community it serves. It also helps quantify the market in and around the City of Redlands (“City”) and assists in providing a better understanding of the types of parks, facilities, programs, and services that are most appropriate to equitably address the residents’ needs.
2.2 LIVABILITY AND ACCESS
The community profile report prioritizes a thorough evaluation of the city's livability and accessibility. This involves analyzing the cost of living, assessing how close residents live to parks, and determining tree equity in the city. By examining these factors, we gain valuable insights into the city's overall quality of life. These findings also serve as a guide for future strategic planning and development aimed at improving accessibility and enriching the living conditions for all residents.
2.2.1 COST OF LIVING
The cost-of-living index is a measure of how expensive it is to live in a particular area or city compared to another area or city. The index is typically calculated by comparing the prices of a basket of goods and services, such as housing, transportation, food, healthcare, and utilities in different locations. You can see the detailed information at https://www.bestplaces.net/cost_of_living/city/california/redlands The national cost-of-living index in the United
States (US) is set at 100, and the cost-of-living
index for a specific city or region is typically
reported as a percentage of the national
average.
In Redlands, the overall cost of living index
stands at 118.6, which is significantly lower
than the state average of 149.9. This is
reflected in most categories, with grocery,
health, transportation, and miscellaneous expenses all being lower in Redlands compared to the state averages. However, housing costs in Redlands, while lower than the California average, are still high at 173.2 compared to the state's 234.8. Additionally, utilities are slightly more expensive in Redlands (108.3) than the state average (102.4), indicating a mixed but generally more affordable cost of living in Redlands compared to California as a whole.
Figure 1: Cost of Living Index
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2.2.2 10-MINUTE WALK
The Trust for Public Land, with Urban Land
Institute and the National Recreation and
Park Association launched the "10-Minute
Walk Program" to ensure every person
residing in U.S. cities should have access to
a high-quality park that is located within a
10-minute walking distance from their
home. The Trust for Public Land has
conducted research, which has revealed
that parks that cater to predominantly
people of color are, on average, only half
the size of parks that primarily serve white
populations. Despite their smaller size,
these parks serve nearly five times as many
people. Additionally, parks that primarily
serve low-income households are, on
average, four times smaller than parks that
serve high-income households.
The current statistics indicate that 50% of
the residents of Redlands have a park within a 10-minute walk from their homes. This percentage is moderately lower than the national median of 55%. Additional information about the “10-Minute Walk Program” can be found at: https://www.tpl.org.
2.2.3 TREE EQUITY
Tree equity measures whether all
residents have fair access to tree
canopy coverage and the
environmental, health, and comfort
benefits that trees provide. Urban
trees reduce extreme heat, improve air
quality, manage stormwater, enhance
walkability, and make parks and
neighborhoods more usable yearround.
The nationally recognized Tree Equity
Score evaluates canopy coverage relative to neighborhood need, using data on climate, population density, income, race, age, and health indicators at the Census Block Group level.
Scores range from 0 to 100, with higher scores indicating that canopy coverage more fully meets community need.
Figure 2: 10-minute walk
Figure 3: Tree equity score map
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The City of Redlands currently has a Tree Equity Score of 81. Of the City’s 51 block groups:
• 10 score above 90
• 21 score between 80–89
• 20 score below 80
Areas with lower scores often correspond
to neighborhoods experiencing greater
heat exposure and fewer environmental
resources
Neighborhoods in Redlands with a higher
proportion of residents of color typically
exhibit lower tree equity scores,
indicating they have less tree canopy
coverage. (Figure 4)
Relevance to the Parks Master Plan
Tree equity is directly connected to park access, usability, and climate resilience. Shade influences whether parks are comfortable, safe, and accessible during periods of extreme heat.
Tree canopy data helps guide:
• Prioritization of park improvements and tree planting • Investment in shade enhancements and cooling strategies • Greenway and corridor planning
• Long-term capital planning decisions
By incorporating tree equity into the Master Plan, the City can ensure that future park and open space investments support environmental sustainability, public health, and equitable access to outdoor recreation for all residents.
Additional information regarding tree equity can be found at https://www.treeequityscore.org/
5.2%
1.2%
0.3%
-2.8%
-4.6%
9-31% 31-47% 47-57% 57-76% 76-95%
Tree Canopy
% of People of Color
Tree canopy vs. People of color
Tree Canopy average
Figure 4: Tree equity by % of people of color
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2.3 DEMOGRAPHICS
The Demographic Analysis is a report that examines the characteristics of the population in the City including age segments, race , ethnicity, and income levels. It covers the entire population of the City and uses historical patterns to make future projections. It is possible that unforeseen circumstances during or after the time of the analysis could impact the validity of these projections.
Figure 5: Demographic Overview
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2.3.1 METHODOLOGY
The analysis used demographic data from two sources: the U.S. Census Bureau and Environmental Systems Research Institute, Inc. (ESRI), a research and development organization specializing in Geographical Information Systems and population projections. The data was obtained in July 2023 and reflects the actual numbers reported in the 2020 Census and information available as of July 2023.
ESRI used this data to estimate the current population in 2023, as well as a 5-year projection for 2028. The consulting team used straight-line linear regression to forecast demographic characteristics for 10 and 15-year projections in 2033 and 2038.
DEMOGRAPHIC ANALYSIS BOUNDARY
The City boundaries shown below were used for the demographic analysis.
Figure 6: Redlands site map
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2.3.2 CITY POPULACE
POPULATION
There is a steady growth in the population from 73,168 in the 2020 Census to an estimated 73,999 in 2023. Future projections suggest a gradual increase, reaching 75,444 in 2028, 76,863 in 2033, and 78,288 by 2038. The annual growth rate is forecasted to slightly decrease over time, starting at 0.57% in the period following 2023 and gradually declining to 0.37% by 2038.
Similarly, the population growth rate percentage shows a decreasing trend: starting at 1.14% post-2020, it increases to 1.95% in the 2023-2028 period, then slightly decreases to 1.88% and
1.85% in subsequent five-year periods. This data indicates a consistent but slowly decelerating population growth in the area over the next two decades. 73,168
73,999
75,444
76,863
78,288
0.57%
0.39% 0.38% 0.37% -1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
70,000
71,000
72,000
73,000
74,000
75,000
76,000
77,000
78,000
79,000
2020
Census
2023
Estimate
2028
Projection
2033
Projection
2038
Projection
POPULATION
Total Population Population Annual Growth Rate
Figure 7: Population growth
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2.3.3 AGE SEGMENT
The age segment distribution highlights a gradual aging trend in the community. In the 2020 Census, the age groups were fairly balanced, with each of the middle segments (0-17, 18-34, 35- 54, and 55-74) representing about 22-24% of the population, and those aged 75 and over accounting for 8%. The median age at this time was 38.0 years.
By the 2023 estimate, minor shifts become apparent. The percentage of the youngest age group (0-17) decreases to 21%, while the 18-34 segment increases to 25%, and the 55-74 age group goes up to 23%. The median age slightly rises to 38.5 years.
Looking ahead to 2028, the projections show the 0-17 age group further decreasing to 20%, the 18-34 group reducing to 23%, and the 35-54 age group increasing to 25%. The median age is expected to rise to 39.3 years, reflecting the aging trend.
By 2033 and 2038, this aging pattern continues, with the 0-17 and 18-34 age groups projected to decrease to 19% and 22%, respectively. Meanwhile, the 35-54 and 55-74 groups remain steady at about 26% and 22%. The population aged 75 and over shows a gradual increase, expected to reach 11% by 2038.
Overall, these figures indicate a slow but consistent aging of the population, with a gradual increase in the median age and a steady rise in the proportion of older age groups, coupled with a slight decrease in the younger segments.
Figure 8: Population by age segments
22% 21% 20% 19% 19%
24% 25% 23% 23% 22%
24% 24% 25% 26% 26%
22% 23% 22% 22% 22%
8% 8% 9% 10% 11%
2020 Census 2023
Estimate
2028
Projection
2033
Projection
2038
Projection
POPULATION BY AGE SEGMENTS
0-17 18-34 35-54 55-74 75+
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RACE AND ETHNICITY DEFINITIONS
The minimum categories for data on race and ethnicity for Federal statistics, program administrative reporting, and civil rights compliance reporting are defined below. The Census 2020 data on race are not directly comparable with data from the 2010 Census and earlier censuses; therefore, caution must be used when interpreting changes in the racial composition of the US population over time. The latest (Census 2020) definitions and nomenclature are used within this analysis.
• American Indian – This includes a person having origins in any of the original peoples of North and South America (including Central America), and who maintains tribal affiliation or community attachment
• Asian – This includes a person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam • Black or African American – This includes a person having origins in any of the black racial groups of Africa
• Native Hawaiian or Other Pacific Islander – This includes a person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands • White – This includes a person having origins in any of the original peoples of Europe, the Middle East, or North Africa
• Hispanic or Latino – This is an ethnic distinction, a subset of a race as defined by the Federal Government; this includes a person of Mexican, Puerto Rican, Cuban, South or Central American, or other Spanish culture or origin, regardless of race Census states that the race and ethnicity categories generally reflect social definitions in the U.S. and are not an attempt to define race and ethnicity biologically, anthropologically, or genetically.
We recognize that the race and ethnicity categories include racial, ethnic, and national origins and sociocultural groups.”
Please Note: The Census Bureau defines Race as a person’s self-identification with one or more of the following social groups: White, Black, or African American, Asian, American Indian and Alaska Native, Native Hawaiian and Other Pacific Islander, some other race, or a combination of these. While Ethnicity is defined as whether a person is of Hispanic / Latino origin or not. For this reason, the Hispanic / Latino ethnicity is viewed separate from race throughout this demographic analysis. 31 PARKS MASTER PLAN
2.3.4 RACE
The race demographic data from 2020 to 2038 indicates significant shifts in the racial composition of the population. The proportion of individuals identifying as White Alone is on a steady decline, dropping from 53% in the 2020 Census to a projected 42% by 2038. In contrast, the populations identified as Some Other Race and Two or More Races are gradually increasing, from 14% to 20% and 16% to 21%, respectively, over the same period.
The Black Alone and Asian categories remain stable at 5% and 10%, respectively, throughout the years. A slight increase is observed in the American Indian group, which is expected to rise from 1% to 2% by 2038, while the Pacific Islander category consistently remains at 0%. These trends highlight a diversifying racial landscape, with a decrease in the White Alone population and increases in the diversity of other racial groups.
53% 51% 48% 45% 42%
5% 5% 5% 5% 5%
10% 10% 10% 10% 10%
14% 15% 17% 18% 20%
16% 17% 18% 20% 21%
2020
Census
2023
Estimate
2028
Projection
2033
Projection
2038
Projection
RACE
White Alone Black Alone American Indian Asian
Pacific Islander Some Other Race Two or More Races
Figure 9: Population by race
32 PARKS MASTER PLAN
2.3.5 ETHNICITY
The City’s population was also evaluated
based on Hispanic/Latino ethnicity,
which the Census Bureau views as
separate from race. It is worth noting
that individuals who identify as
Hispanic/Latino may also belong to any
of the racial categories mentioned
earlier.
The data on Hispanic/Latino origin,
spanning from the 2020 Census to the
2038 projections, reveals a significant
increase in this demographic's
representation. In 2020, 35% of the
population identified as Hispanic or
Latino of any race.
This figure is expected to grow to 37%
by 2023, and further projections suggest
a continued rise to 40% by 2028, 42% by
2033, and reaching 45% by 2038. This trend highlights a substantial and ongoing demographic shift, underscoring the growing presence of the Hispanic/Latino population over this 18-year period.
35% 37% 40% 45%
65% 63% 60% 55%
2020
Census
2023
Estimate
2028
Projection
2038
Projection
HISPANIC POPULATION
Hispanic / Latino Origin (any race) All Others
Figure 10: Hispanic population
33 PARKS MASTER PLAN
2.3.6 INCOME
The financial data comparing Redlands with California and the United States shows that Redlands has higher income levels by both per capita and median household measures. Per capita income in Redlands is $46,548, exceeding California’s $45,201 and the national average of $40,363, indicating that individuals in Redlands, on average, earn more than those compared to state and national contexts.
Similarly, the median household income in Redlands, at $91,254, is higher than both California’s median of $89,455 and the national median of $72,414. This suggests that the typical household in Redlands enjoys a higher standard of living compared to the rest of the state and country.