Agenda packet, first session — Santa Barbara City Council, September 10, 2024 (part 5 of 6)

I. OVERVIEW
Background
The California Department of Housing and Community Development (“HCD”), through its Local Housing Trust Fund (“LHTF”) Program, announced the release of a Notice of Funding Availability (“NOFA”) for approximately $53 million in funds for the LHTF Program. This funding is authorized by Health and Safety Code (“HSC”) Section 50843.5 and provides dollar-for-dollar Matching Grants to Local Housing Trust Funds established by cities and counties, Native American Tribes and incorporated 501(c)(3) nonprofit organizations.

Program Funds awarded under this NOFA shall be used to provide construction loans and/or permanent financing loans at simple interest rates of no higher than 3 percent per annum, for payment of predevelopment costs, acquisition, construction, or rehabilitation of Affordable rental housing projects, Emergency Shelters, Permanent Supportive Housing, Transitional Housing, or Affordable homebuyer/homeowner projects, including assistance to income-eligible households to purchase for-sale units. Funds may also be used to construct, convert, reconstruct, rehabilitate, and/or repair Accessory Dwelling Units (ADUs) or Junior Accessory Dwelling Units (JADUs).

In January 2024, the City Council of the City of Santa Barbara established a Local Housing Trust Fund (“SBLHTF”) by adopting an ordinance, which amended the Santa Barbara Municipal Code by adding Chapter 26.80. This action was taken to provide a local funding source to increase the stock of permanently affordable housing units in their jurisdiction. It also provided an opportunity to apply annually to the State LHTF Program for Matching Funds to further the financial feasibility of affordable housing projects.

The State LHTF Program has reserved fifteen percent of the funds made available by their NOFA for Local or Regional Housing Trust Funds meeting the definition of New Local Housing Trust Fund. The City’s new SBLHTF meets this criterion this year and will be eligible for consideration of these additional reserved funds.

Program Information
Proposal Applicants should read and understand the State LHTF Program, Final 2020 Guidelines (“LHTF Guidelines”), which can be accessed at the following website:
https://www.hcd.ca.gov/grants-funding/active-funding/lhtf/docs/2020-FinalGuidelines.pdf Further State LHTF Program information may be accessed at HCD’s website:
https://www.hcd.ca.gov/grants-and-funding/programs-active/local-housing-trust-fund Terminology
Capitalized terms not defined herein have the meaning given to them in the LHTF Guidelines.

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City Applicant – means the City of Santa Barbara, a local government which has created a Local Housing Trust Fund to receive specific revenue to address local housing needs (“City”).

City website – Additional information may be found on the City’s website at:
https://santabarbaraca.gov/services/housing-human-services/affordable-housing Eligible Project – means any of the following:
(1) Rental housing projects including Permanent Supportive Housing. The affordability of all units assisted by Program Funds shall be income and rent restricted for not less than 90 years according to the City of Santa Barbara’s Affordable Housing Policies and Procedures manual.
(2) Emergency Shelters and Transitional Housing, with a required minimum term of 15 years;
(3) Homeownership Projects of Units Within a Homeownership Project, consisting of homebuyer assistance and rehabilitation of homes owned by income-eligible owner-occupants. Homebuyer and owner-occupied rehabilitation activities may include construction, conversion, or rehabilitation of ADUs or JADUs. (4) Construction, conversion, or rehabilitation of ADUs or JADUs without an Eligible Homeownership Project, consisting of a loan to a homeowner to build, convert, or rehabilitate an ADU or JADU.

Matching Funds – means eligible funding according to LHTF Guidelines, Section 104 available in the SBLHTF that will be utilized to match on a dollar-for-dollar basis with LHTF Program funds.

Program Administrative Costs – means pursuant to LHTF Guidelines, Section 105(b), if an application is awarded, not more than 5 percent of the Program Funds and not more than 5 percent of the Matching Funds may be used for administrative costs.

Program Funds – means funds provided by HCD on a dollar-by-dollar match with the City’s Matching Funds for awarded project(s).

Proposal Applicant – means a private or tax-exempt 501(c)(3) non-profit organization incorporated or organized in the State of California or another state of the United States, or local units of government, who demonstrate the required experience, commitment, and capacity to carry out one or more of the eligible project criteria defined in this RFP in accordance with federal and state regulations and is submitting a proposal in response to this RFP.

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Program Objective
The objective of the LHTF Program is to expand sources of funding for housing, and to expand the supply of Affordable housing through the creations of new Local Housing Trust Funds, and to support the on-going operation of existing Local Housing Trust Funds.

The objective of the SBLHTF is to provide a local funding source to increase the stock of permanently affordable housing units in the City of Santa Barbara. It also provides an opportunity to apply annually to the State LHTF Program for Matching Funds to further the financial feasibility of affordable housing projects.

Program Funding
The City of Santa Barbara (City) currently has $2.9 million eligible for application to the LHTF Program for Matching Funds. The City is accepting proposals for eligible projects and will determine the amount of funding for application to the LHTF Program according to the project’s feasibility and financial needs, as well as the amount of available Matching Funds. Program Administrative Costs will apply to each awarded project. The City may apply for up to $2.9 million in Matching Funds, which may be utilized in combination with other sources of funding. Projects applying for LHTF Program Funds may apply for or receive other funds from the City. Funds from sources other than the City may also be used by projects as long as the requirements of the other funding source(s) are not in conflict with the requirements of the LHTF Program. The City reserves the right to allocate funding and amend the level of funding available.

Form of Program Funding
The City will provide LHTF Program and Matching Funds to successful Proposal Applicant(s) in the form of loan(s) at simple interest rate(s) of 3 percent per annum.

II. FUNDING RESTRICTIONS & ELIGIBILITY
Funding Request Restrictions
The LHTF Program has specific funding specifications:
• The minimum application amount that will be awarded is $500,000 and the maximum is $5 million.
• Projects must be located in the City of Santa Barbara’s jurisdiction. • Administrative expenses may not exceed 5 percent of Program Funds and Matching Funds
III. PROJECT REQUIREMENTS
Project Income Limit Restrictions
LHTF Program funds shall be allocated to Eligible Projects in compliance with all of the following:
• A minimum of 30 percent of Program Funds and Matching Funds, after deducting administrative expense, shall be expended on assistance to Extremely LowIncome Households. To comply with this requirement, dwelling units or shelter City of Santa Barbara – HCD LHTF Program Request for Proposals

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beds must be Affordable to and restricted for Extremely Low-Income Households with household income of no more than 30 percent of Area Median Income (AMI). • No more than 20 percent of the Program Funds and Matching Funds, after deducting administrative expense, shall be expended on assistance to ModerateIncome Households. To comply with this requirement, dwelling units must be Affordable to and restricted for Moderate-Income Households with household income of no more than 120 percent of AMI.
• The remaining Program Funds and Matching Funds shall be expended on assistance to Lower-Income Households. To comply with this requirement, dwelling units must be Affordable to and restricted for Lower-Income Households with household income of no more than 80 percent AMI.

IV. PROPOSAL PROCESS
Proposal Criteria
Proposal Applicants (including affiliates) cited for non-compliance in federal or state housing programs or in a development/program administered by the City shall not receive an approval for application for LHTF Program funds unless or until such non-compliance is cleared to the satisfaction of the City in its sole discretion.

Timeline
The proposal dates/milestones are as follows:

Date Event
July 9, 2024 HCD LHTF Program NOFA released
August 2, 2024 SBLHTF RFP released
August 23, 2024 RFP Proposals due to the City by 4:00 p.m.

August 30, 2024 Notification to Proposal Applicant(s) of award recommendations to Council.

September 10, 2024 Finance Committee and City Council project approvals September 17, 2024 HCD LHTF Program NOFA application deadline December 2024 HCD LHTF Program award announcements
Proposal Materials
Complete and submit a proposal and required attachments:
• Project Type and Activity
• Project Contact Information
• Name of Project
• Detailed Project Description
• Explanation of Site Control
• Description of Land Use Approvals Obtained or Required • Site Map, Plans and Development Renderings
• Total Number of Units and mix of number of bedrooms and bathrooms City of Santa Barbara – HCD LHTF Program Request for Proposals

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• Total Number of Restricted Units with Income-level restrictions identified with size of units and number of bedrooms and bathrooms
• Partnership Agreement (if applicable)
• Qualifications of Development Team (e.g., resumes)
• Developer’s Experience
• Developer/Partnership Financial Statements
• Developer’s Corporate Status
• Project Timeline/Schedule
• Map demonstrating the development is not in a High Fire Zone (if the project is not subject to WUI building codes)
• Documentation explaining where the project is in the City’s planning/building division’s processes
• Market Assessment or Study
• Affirmative Marketing Plan
• Tenant Selection Plan
• Supportive Services Plan (if applicable)
• Status of CEQA and NEPA environmental reviews
• Total Development Cost Line-Item Budget and Sources and Uses Statement • Listing of all Funding Sources Identified or Committed (and any letters of commitment obtained)
• 20-Year Operating Proforma
• Required debt coverage ratio
• Minimum projected operating expenses
• Required replacement reserve
• Required capitalized operating reserve
• Requirements for positive cash flow
• Required projected vacancy rate
• Requirements for construction contingency if construction financing is being provided with LHTF funds
• Requirements for senior lender loan types and junior lender loan types • Leasehold security requirements
The full proposal with the Proposal Applicant’s cover letter signed by the Proposal Applicant’s authorized representative and attachments must be saved in a single zipped folder and submitted via email to:

[email protected].

The subject line shall include the following text:

LHTF PROGRAM Proposal – Proposal Applicant’s Name.

No other formats of submission will be accepted unless approved in advance by the City. Hard copies will not be required but should be kept in your files for auditing purposes.

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The complete PDF of the proposal and attachments as instructed above must arrive by the deadline below:
* * PROPOSAL DEADLINE: Friday, August 23, 2024, by 4:00 p.m. * * V. REVIEW PROCESS AND SCORING
The City’s selection process will include the following reviews: eligibility review, assessment of long-term project viability, verification of financial feasibility and cost reasonableness, project timeliness and schedule, and Proposal Applicant’s capacity.

Award Process
Method of Award – Complete proposals received on or before the deadline will compete against each other for recommendation of funding. Recommendations for application to the LHTF Program will be made by the City Council for one or more of the complete proposal(s). The number and funding amount of recommendations will be subject to the availability of requested funding.

Point System
Points will be awarded according to the Rating Criteria described in Section VI of this RFP.

Review Process
Proposals will be reviewed by a committee comprised of Community Development Department staff who will review and score all proposals based on the requirements and Rating Criteria described herein.

1. Communication with Contact Person. The City will communicate only with the contact person(s) listed in the proposal. Information received from persons other than the contact person(s) will be disregarded by the City.

2. Completeness. The review process will begin with a review for completeness.

Proposals that are incomplete may be rejected without further review or opportunity to complete the proposal.

3. Potential City Requests for Clarification. The City may, but shall not be obligated to, follow up with a proposal’s contact person during the proposal review process in a telephone conversation or in writing in order to obtain clarification should the City determine it to be advisable or necessary. Proposals should endeavor to provide thorough and complete proposals as they may not have an opportunity for subsequent communications about submitted proposals.

4. Order of Award. During the competitive proposal period, complete proposals without deficiencies (including proposals that cure deficiencies within the allowed response period), and that are determined to meet threshold requirements and comply with the requirements hereof, will be recommended as projects to the City Council in descending order of point score (subject to availability of SBLHTF City of Santa Barbara – HCD LHTF Program Request for Proposals

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funding). The City reserves the right to reduce requested awards and number of LHTF Program-assisted units at its sole discretion.

Underwriting Review
Underwriting requirements, as shown in Appendix B of this RFP, will be used to assess project proposals.

Duplication of Benefits
The City will review proposal materials to ensure that there is no duplication of benefits.

Successfully funded projects will also be reviewed for duplication of benefits by the City at the time the loan documents are executed and at project close-out.

VI. RATING CRITERIA
HCD’s Rating Criteria for City’s Application to HCD
LHTF Program applications shall be scored competitively based upon the following criteria:

Rating Criteria Max
Pts.

Non-Residential Matching Funds:

Extent to which the City Applicant provides Matching Funds from sources other than residential Local Impact Fees or In Lieu Fees (Guidelines Section, 106(f)(1))
• 0% – 25% from other sources ~ 5 points
• 26% - 50% from other sources ~ 10 points
• 51% or more from other sources ~ 15 points
15 Deeper Income Targeting:

Extent to which the City Applicant commits to expend less than 20 percent of Program Funds and Matching Funds to serve Moderate-Income Households (Guidelines, Section 106(f)(2)
• 11% - 18% funding for Moderate-Income Household ~ 5 points • 6% - 10% funding for Moderate-Income Household ~ 10 points • 1% - 5% funding for Moderate-Income Household ~ 15 points • 100% funding for Lower-Income Household ~ 20 points
20 City of Santa Barbara – HCD LHTF Program Request for Proposals

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Readiness:

Extent to which the City Applicant has completed a first phase funding process for multifamily rental projects and announced on its website the status of each project, including those projects that were approved to submit a final application upon award of Program Funds by the Department (Guidelines, Section 106(f)(3)).
• Website posting of pipeline projects with status ~ 5 points, PLUS EITHER of the next two (2) factors:
• Projects included posting of pipeline projects with first phase funding completed representing two (2) times the application request (e.g., if requesting $5 million, pipeline projects must total at least $10 million) ~ 5 points OR
15 Increasing the Supply of Lower-Income Rental Housing:

Extent to which the City Applicant commits to use Program Funds and Matching Funds for the new construction of rental housing developments affordable and restricted to households with average incomes of no more than 60 percent of AMI (Guidelines, Section 106(f)(4))
• ≤50% funding for 60% AMI or less ~ 0 points
• 51% - 74% funding for 60% AMI or less ~ 10 points
• 75% - 99% funding for 60% AMI or less ~ 15 points
• 100% funding for 60% AMI or less ~ 20 points
20 Community Need:

Percentage of Lower-Income Households paying more than 50 percent of their household income for rent or owner expenses, in jurisdictions to be served by the application, in comparison with jurisdictions to be served by other applications (Guidelines, Section 106(f)(5)) • 0% - 25% ~ 5 points
• 26% - 44% ~ 10 points
• 45% or higher ~ 15 points
Note: This section will be scored by HCD using CHAS data (Comprehensive Housing Affordability Strategy):
https://www.huduser.gov/portal/datasets/cp.html#2006-2016- datacollapse. 15 • Projects included public posting of pipeline projects with first phase funding completed representing three (3) times the application request (e.g., if requesting $5 million, pipeline projects must total at least $15 million) ~ 10 points
Note: applications requesting funds solely for single family activities will receive zero points in the category.

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Performance:

Extent to which City Applicants exceed the minimum 40 percent commitment threshold stated in Guidelines, Section 102(d) OR
New City Applicants (no previous LHTF award) who have committed 40 percent or more of local Matching Funds.
10 Total maximum points possible: 100
Tie Breaker
In the event of tied point scores, HCD shall rank tied applications based on the extent to which the application identifies specific multifamily rental projects for which the SBLHTF has issued Letters of Intent to developers for construction or permanent financing.

City’s Rating Criteria for Proposals to this RFP
Proposals submitted to the City in response to this RFP shall be scored competitively based upon the following criteria:

A. Site Control – 25 points
Points will be allocated as follows:
• Already have site control – 25 points
• Have purchase agreement for site – 15 points
• Negotiating purchase of site (Letter of Intent or Option to Purchase the Site) – 5 points
B. Project Readiness – 35 points
(1) Proposal is Complete with all Required Attachments and Adheres to the State’s Notice of Funding Availability Guidelines Necessary to Complete the Project (20 points).
(2) Compliance with the City’s General Plan, Zoning and Permit Readiness (15 points). Points will be awarded as follows:
• 10 points for demonstrated compliance with General Plan and Zoning of the existing site
• 5 points for demonstration of permits pulled or permit-ready projects.

C. Increasing the Supply of Lower-Income Rental Housing – 20 points max.

Points will be awarded to projects prioritizing housing for households with incomes ≤ 60% AMI.
• ≤50% funding for 60% AMI or less ~ 0 points
• 51% - 74% funding for 60% AMI or less ~ 10 points
• 75% - 99% funding for 60% AMI or less ~ 15 points
• 100% funding for 60% AMI or less ~ 20 points
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D. Other – 20 points max.

Past Performance (20 points). All proposals start with full points. Points will be deducted if a Proposal Applicant has negative findings on past awards with the City or with other state or federal agencies. For Proposal Applicants without previous experience with the City, demonstration of successful state/federal funding contracts, including references, will be required. The number of points deducted will be based upon the number and severity of negative findings, at the City’s discretion.

VII. LOCAL APPEAL PROCESS
For an appeal to be considered, the appeal must be made in writing, signed by the Proposal Applicant or the Proposal Applicant’s authorized representative, scanned, and submitted via email to the Housing and Human Services Division of the Community Development Department, at [email protected]. The City of Santa Barbara reserves the right to refuse to consider appeals that do not follow these procedures.

Appeals must be received by the Community Development Department no later than five (5) calendar days after the Proposal Applicant is notified of the City’s award recommendations.

Appeal Content – All appeals must include the following information:
• Name, address, and telephone number of the party appealing the decision. • Signature of the authorized representative of the appealing party. • Detailed and specific statement of the legal and/or factual grounds for the appeal. The Proposal Applicant must provide a detailed reference to the area or areas of the proposal that provide clarification and substantiation for the basis of the appeal. No new or additional information will be considered if this information would result in a competitive advantage to a Proposal Applicant. • Description of the form of relief requested.

No Proposal Applicant shall have the right to appeal a decision relating to another Proposal Applicant’s proposal (e.g., eligibility, award).

The Housing and Human Services Division will review the appeal and provide a response within 5 calendar days of receipt. If the response is accepted, there is no further action required. If the Proposal Applicant is still not satisfied, the issue will be referred to the Director of the Community Development Department who will make a determination on the issue. This determination shall be final.

VIII. HCD APPROVAL
A. After review and selection of proposal(s) by the City Council, successful proposal(s) will be submitted in the City’s application to HCD for review and approval.

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Proposals selected by the City are not deemed fully approved until HCD approval is received.

B. Should HCD reject an application, the City may, at its discretion, appeal the decision, in accordance with section III.D of the NOFA.

C. After award of funds by HCD, HCD will enter into a Standard Agreement with the City. The Standard Agreement contains all the relevant state and federal requirements, as well as specific information about the award and the work to be performed.

A condition of an award will be that a Standard Agreement must be executed by the awardee within 30 days (contracting period) of the awardee’s receipt of the Standard Agreement(s). Failure to execute the Standard Agreement(s) within the Contracting Period may result in award cancellation. The Awardee(s) shall remain a party to the Standard Agreement for the entire term of the Standard Agreement; removal of the Awardee(s) shall be prohibited.

IX. STATE AND FEDERAL REQUIREMENTS
Climate Adaptation - Executive Order B-30-15 addressed the need for climate adaptation and ordered that:

1. All state agencies with jurisdiction over sources of greenhouse gas emissions shall implement measures, pursuant to statutory authority, to achieve reductions of greenhouse gas emissions to meet the 2030 and 2050 greenhouse gas emissions reductions targets.

2. State agencies shall take climate change into account in their planning and investment decisions and employ full life-cycle cost accounting to evaluate and compare infrastructure investments and alternatives.

3. State agencies planning and investments shall be guided by the following principles:
• Priority should be given to actions that both build climate preparedness and reduce greenhouse gas emissions;
• Where possible, flexible and adaptive approaches should be taken to prepare for uncertain climate impacts;
• Actions should protect the state's most vulnerable populations; and • Natural infrastructure solutions should be prioritized.

In response to the Governor’s Executive Order, the Department strongly encourages Awardees to implement the LHTF-funded project in a manner that reduces greenhouse gas emissions and adapts to climate change. In addition, Awardees must obtain specific information from local governments indicating the progress made in planning to adapt to climate change.

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X. OTHER STATE REQUIREMENTS
A. Parking
Recipients of Program funding shall examine the feasibility of shared parking agreements to replace new parking construction or limit the number of new parking spaces that will be constructed. These requirements do not apply to proposals located on land owned or leased by the state (Gov. Code, § 65863.1, subd. (j)). An examination of the feasibility of shared parking shall include, at a minimum, identification of parking facilities on contiguous properties or nearby properties that would not require users to cross a street and then consideration of the apparent availability of those facilities for shared parking (Gov. Code, § 65863.1, subd. (i)(3)). The examination of the feasibility of shared parking shall be submitted to the Department prior to the execution and approval of the Standard Agreement.

Tribal Entities are not required to examine the feasibility of shared parking for Projects located in Indian Country where an Indian tribe exercises jurisdiction.

B. Housing First practices
Housing First is an evidence-based model designed to permanently house an individual and make available optional supportive services to help them remain stably housed. Housing First means that housing is made available with very low barriers to entry and applicants are not rejected due to poor credit, financial history, lack of rental history, criminal convictions unrelated to tenancy, or behaviors that indicate a lack of housing readiness. Supportive services providers shall also utilize Housing First principles and offer services as needed and/or requested on a voluntary basis. Housing shall not be contingent upon participation in services.

Proposal Applicants will certify and document adherence to Housing First practices in the application, property management plan, and supportive services plan.

Adherence to Housing First practices shall be subject to periodic compliance monitoring.

C. Pet Friendly Housing Act of 2017
Housing funded through the LHTF Program is subject to the Pet Friendly Housing Act of 2017 (HSC Section 50466). Each Awardee is required to submit a signed and dated certification that residents of the LHTF Program-funded housing development will be authorized to own or otherwise maintain one or more common household pets.

D. Prevailing wage law requirements
LHTF Program Funds awarded under this NOFA are subject to state prevailing wage law, as set forth in Labor Code Section 1720 et seq., and require the payment of prevailing wages unless the project meets one of the exceptions of Labor Code, City of Santa Barbara – HCD LHTF Program Request for Proposals

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Section 1720 (c), as determined by the Department of Industrial Relations (DIR).

The DIR can be contacted via its website at:
https://www.dir.ca.gov/oprl/DPreWageDetermination.htm. Proposal Applicants are urged to seek professional advice as to how to comply with state prevailing wage law.

E. Accessibility and Non-discrimination
All projects or programs shall adhere to the accessibility requirements set forth in California Building Code, Chapter 11A and 11B and the Americans with Disabilities Act, Title II. In addition, projects or programs shall adhere to either the Uniform Federal Accessibility Standards, 24 Code of Federal Regulations (CFR) Part 8, or U.S. Department of Housing and Urban Development’s (HUD) modified version of the 2010 American Disabilities Act Standards for Accessible Design (Alternative 2010 ADAS), HUD-2014-0042-0001, 79 F.R. 29671 (5/27/14) (commonly referred to as "the Alternative Standards" or "HUD Deeming Memo"). Accessible units shall, to the maximum extent feasible and subject to reasonable health and safety requirements, be distributed throughout the project and be available in a sufficient range of sizes and amenities consistent with 24 CFR, Section 8.26.

Recipients shall adopt a written non-discrimination policy requiring that no person shall, on the grounds of race, color, religion, sex, gender, gender identity, gender expression, sexual orientation, marital status, national origin, ancestry, familial status, source of income, disability, age, medical condition, genetic information, citizenship, primary language, immigration status (except where explicitly prohibited by federal law), arbitrary characteristics, and all other classes of individuals protected from discrimination under federal or state fair housing laws, individuals perceived to be a member of any of the preceding classes, or any individual or person associated with any of the preceding classes be excluded from participation in, be denied the benefits of, or be subjected to discrimination under, any program or activity funded in whole or in part with Program funds made available pursuant to this NOFA.

Recipients shall comply with the requirements contained in the Americans with Disabilities Act, the Fair Housing Amendments Act, the California Fair Employment and Housing Act, the Unruh Act, Government Code Section 11135, Section 504 of the Rehabilitation Act, and regulations promulgated pursuant to those statutes, including 24 CFR Part 100, 24 CFR Part 8, and 28 CFR Part 35, in all of the Sponsor's activities.

F. Disclosure of proposal and application
Information provided in the proposal and application will become a public record available for review by the public, pursuant to the California Public Records Act (Chapter 1473, Statutes of 1968). As such, any materials provided will be City of Santa Barbara – HCD LHTF Program Request for Proposals

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disclosable to any person making a request under this Act. The City and HCD cautions Proposal Applicants to use discretion in providing information not specifically requested, including, but not limited to, bank account numbers, personal phone numbers, and home addresses. By providing this information to the City and HCD, the Proposal Applicant is waiving any claim of confidentiality and consents to the disclosure of submitted material upon request.

XI. INSURANCE REQUIREMENTS
All recipients of City of Santa Barbara SBLHTF funds will be required to purchase and maintain at their sole cost and expense the following minimum coverage:

A. Commercial General Liability (CGL): Insurance Services Office Form CG 00 01 covering CGL on an “occurrence” basis, including products and completed operations, property damage, bodily injury, and personal & advertising injury with limits of no less than One Million Dollars ($1,000,000) per occurrence. If a general aggregate limit applies, either the aggregate limit shall apply separately to this project or location (ISO CG 25 03 or 25 04) or the general aggregate limit shall be twice the required occurrence limit.

B. Property insurance: Insurance coverage against loss of or damage to the Property or equipment and fixtures thereon resulting from fire, lightning, vandalism, malicious mischief, or those risks ordinarily defined as 'all risk coverage', at full replacement cost with no coinsurance penalty provision.

The policy shall include business interruption coverage, with adequate limits to cover the term of this agreement.

In addition thereto, the insurance policy shall provide coverage for loss or damage resulting from flood, surface water, waves, tidal water, or tidal waves, overflow of streams or other bodies of water, or spray from any of the foregoing, all whether driven by wind or not and including, but not limited to, water which backs up through sewers or drains or water below the ground which exerts pressure on or flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors or through doors, windows or any other openings in such sidewalks, driveways, foundations, walls or floors. Borrower's obligation to obtain flood, wave, tidal wave and earthquake casualty coverage shall be conditioned upon such coverage being readily available at commercially reasonable rates for commercially reasonable amounts of coverage.

Such insurance shall be in amount equal to 100% of the full replacement cost of Improvements on the Property, other related equipment and fixtures. The insurance coverage shall be placed and maintained with one insurance company or companies which is or are acceptable to City. Such insurance shall be modified periodically to ensure that, at all times, the limits of said policies are large enough to provide coverage for one hundred percent (100%) of the replacement costs of all structures, equipment, and improvements on the Property.

City may require that Borrower submit to it at the commencement of each third calendar year during the term hereof, an appraisal of the replacement value of the City of Santa Barbara – HCD LHTF Program Request for Proposals

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Improvements on the Property so that City can determine whether the insurance coverage is sufficient. Certificates of insurance evidencing such insurance coverage as modified shall be promptly filed with City. All such insurance policies, along with their endorsements, shall name City and Borrower as named insured, and Loss Payee.

If the Borrower maintains higher coverage limits than the amounts shown above, then the City requires and shall be entitled to the broader coverage and/or the higher limits maintained by the Borrower. Any available insurance proceeds in excess of the specified minimum limits of insurance and coverage shall be available to the City.

Self-Insured Retentions
Self-insured retentions (SIRs) must be declared to and approved by the City. The City may require the Contractor to purchase coverage with a lower retention or provide proof of ability to pay losses and related investigations, claim administration, and defense expenses within the retention. The policy language shall provide, or be endorsed to provide, that the SIR may be satisfied by either the named insured or City. Any and all deductibles and SIRs shall be the sole responsibility of Contractor or subcontractor who procured such insurance and shall not apply to the Indemnified Additional Insured Parties.

The City may deduct from any amounts otherwise due Contractor to fund the SIR/deductible. Policies shall NOT contain any SIR provision that limits the satisfaction of the SIR to the Named. The policy must also provide that Defense costs, including the Allocated Loss Adjustment Expenses, will satisfy the SIR or deductible. City reserves the right to obtain a copy of any policies and endorsements for verification.

OTHER INSURANCE PROVISIONS
Each insurance policy shall contain, or be endorsed to contain, the following provisions:

Additional Insured Status
The City of Santa Barbara, its officers, officials, employees, volunteers, and agents, shall be covered as additional insureds on the Commercial General Liability policy with respect to liability arising out of work or operations performed by or on behalf of the Borrower including materials, parts, or equipment furnished in connection with such work or operations. Additional Insured coverage shall be provided in the form of an endorsement to the Lessee’s insurance (at least as broad as Insurance Services Office Form CG 20 10 11 85 or both CG 20 10, CG 20 26, CG 20 33, or CG 20 38; and CG 20 37 forms if later edition is used). A copy of the endorsement evidencing that the City of Santa Barbara has been added as an additional insured on the policy, must be attached to the certificate of insurance.

Primary Coverage
For any claims related to this contract, the Lessee’s insurance coverage shall be primary and non-contributory at least as broad as Insurance Services Office Form CG 20 01 04 13 as respects the City, its officers, officials, employees, and volunteers. Any insurance City of Santa Barbara – HCD LHTF Program Request for Proposals

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or self-insurance maintained by the City, its officers, officials, employees, or volunteers shall be in excess of the Lessee’s insurance and shall not contribute with it. This requirement shall also apply to any Excess or Umbrella liability policies.

Legal Liability Coverage
The property insurance is to be endorsed to include Legal Liability Coverage (ISO Form CP 00 40 04 02 or equivalent) with a limit equal to the replacement cost of the leased property.

Notice of Cancellation
Each insurance policy required above shall provide that coverage shall not be cancelled or subject to reduction without written notice provided to the City Clerk, addressed to P.O.

Box 1990, Santa Barbara, California 93102-1990.

Waiver of Subrogation
Borrower hereby grants to the City a waiver of any right to subrogation which any insurer of Borrower may acquire against the City by virtue of the payment of any loss under such insurance. Borrower agrees to obtain any endorsement that may be necessary to affect this waiver of subrogation, but this provision applies regardless of whether or not the City has received a waiver of subrogation endorsement from the insurer.

The Workers’ Compensation policy shall be endorsed with a waiver of subrogation in favor of the City for all work performed by the Lessee, its employees, agents, and subcontractors.

Umbrella or Excess Policy
The Borrower may use Umbrella or Excess Policies to provide the liability limits as required in this agreement. This form of insurance will be acceptable provided that all of the Primary and Umbrella or Excess Policies shall provide all of the insurance coverages herein required, including, but not limited to, primary and non-contributory, additional insured, Self-Insured Retentions (SIRs), indemnity, and defense requirements. The Umbrella or Excess policies shall be provided on a true “following form” or broader coverage basis, with coverage at least as broad as provided on the underlying Commercial General Liability insurance. No insurance policies maintained by the Additional Insureds, whether primary or excess, and which also apply to a loss covered hereunder, shall be called upon to contribute to a loss until the Lessee’s primary and excess liability policies are exhausted.

Acceptability of Insurers
All insurance coverage shall be placed with insurers authorized to conduct business in the State of California with a current AM Best’s rating of no less than A: VII. All other insurers require prior approval of the City.

City of Santa Barbara – HCD LHTF Program Request for Proposals

Page 17 of 18 ends

Verification of Coverage
Borrower shall furnish the City with original Certificates of Insurance including all required amendatory endorsements (or copies of the applicable policy language effecting coverage required by this clause) and a copy of the Declarations and Endorsement Page of the CGL policy listing all policy endorsements to City before work begins. However, failure to obtain the required documents prior to the work beginning shall not waive the Lessee’s obligation to provide them. The City reserves the right to require complete, certified copies of all required insurance policies, including endorsements required by these specifications, at any time. The City reserves the right to modify these requirements, including limits, based on the nature of the risk, prior experience, insurer, coverage, or other special circumstances.

Subcontractors
Borrower shall require and verify that all subcontractors maintain insurance meeting all the requirements stated herein, and Borrower shall ensure that the City is an additional insured on insurance required from subcontractors.

Coverage Limits Specifications
Approval of the insurance by City or acceptance of the certificate of insurance by City shall not relieve or decrease the extent to which the Borrower may be held responsible for payment of damages resulting from Lessee's services or operation pursuant to this Agreement, nor shall it be deemed a waiver of City's rights to insurance coverage hereunder.

If, for any reason, Borrower fails to maintain insurance coverage which is required pursuant to this Agreement, the same shall be deemed a material breach of contract.

City, at its sole option, may terminate this Agreement and obtain damages from the Borrower resulting from said breach. Alternately, City may purchase such required insurance coverage, and without further notice to Lessee, City may deduct from sums due to Borrower any premium costs advanced by City for such insurance.

Use of Insurance Proceeds
Upon the occurrence of any loss, the proceeds of any insurance shall be paid to a financial institution or trust company with an office in Santa Barbara County designated by Borrower and approved by City (the 'Insurance Trustee'). In the event of such loss, to the extent of available insurance proceeds received by Borrower, Borrower shall be obligated to rebuild or replace the destroyed or damaged Improvements, equipment or fixtures in the same or better condition as they existed prior to such loss. All sums deposited with the Insurance Trustee shall be held in trust by the Insurance Trustee with the following powers and duties:
1) The Insurance Trustee shall pay the contractor retained by Borrower for the restoration in installments as the construction progresses. A retention fund of ten percent (10%) of the total contract price shall be established. The contractor shall be City of Santa Barbara – HCD LHTF Program Request for Proposals

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paid the retained amount upon the completion of the restoration, acceptance of the work by the Borrower and City, payment of all costs, expiration of all applicable lien periods and proof that the Premises is free of all mechanics' liens and lienable claims. 2) Payments to the contractor shall be made on presentation of certificates or vouchers from the architect or engineer retained by Borrower showing the amount due. If the Insurance Trustee, in the Insurance Trustee's reasonable discretion, determines that the certificates or vouchers are being improperly approved by the architect or engineer retained by Borrower, the Insurance Trustee shall have the right to appoint an architect or engineer to supervise the construction and to make payments to the contractor on certificates or vouchers approved by the architect or engineer retained by the Insurance Trustee. The reasonable expenses and charges of the architect or engineer retained by the Insurance Trustee shall be paid by the Insurance Trustee out of the trust fund.
3) If the sums held by the Insurance Trustee are insufficient to pay the actual cost of the repair, restoration or replacement, Borrower shall have the right but not the obligation to deposit the amount of the deficiency with the Insurance Trustee within thirty (30) days after request by the Insurance Trustee indicating the amount of the deficiency. 4) Any undistributed funds following compliance with the provisions of this section shall be delivered to Borrower.
5) All actual costs of the Insurance Trustee shall first be paid from the insurance proceeds, then by Borrower. If the Insurance Trustee resigns or for any reason is unable or unwilling to act or continue to act in accordance with these provisions, Borrower shall substitute a new trustee for the designated trustee. The new trustee must be a financial institution or trust company with an office in Santa Barbara County approved by City.
6) Both Parties shall promptly execute all documents and perform all acts reasonably required by the Insurance Trustee in order for the Insurance Trustee to perform its obligations under this section.

XII. RESERVATION OF RIGHTS
The City of Santa Barbara reserves the right, at its sole discretion, to award all, a portion, or none of the available SBLHTF funding, and may reject any and all proposals based on the quality and/or merits of the proposals, or when it is determined to be in the public interest to do so. Furthermore, the City may extend deadlines and timeframes, as needed.

The City of Santa Barbara reserves the right to substantiate any Proposal Applicant’s qualifications, financial information, capability to perform, availability, and past development performance.

STATE OF CALIFORNIA - BUSINESS, CONSUMER SERVICES AND HOUSING AGENCY GAVIN NEWSOM, Governor

DEPARTMENT OF HOUSING AND COMMUNITY DEVELOPMENT

DIVISION OF STATE FINANCIAL ASSISTANCE
651 Bannon Street
Sacramento, CA 95811
(916) 263-2771
www.hcd.ca.gov
7/9/2024
MEMORANDUM FOR: ALL POTENTIAL APPLICANTS
FROM: Jennifer Seeger, Deputy Director
Division of State Financial Assistance
SUBJECT: 2024 Local Housing Trust Fund Program
Notice of Funding Availability
The California Department of Housing and Community Development (HCD) is pleased to announce the release of this Notice of Funding Availability (NOFA) for approximately $53 million in funds for the Local Housing Trust Fund (LHTF) Program. This funding provides Matching Grants to Local Housing Trust Funds established by cities and counties, Native American Tribes and incorporated 501(c)(3) nonprofit organizations.

Fifteen percent of the funds made available by this NOFA shall be reserved for Local or Regional Housing Trust Funds meeting the definition of New Local Housing Trust Fund.

In the event that there are insufficient applications from New Local Housing Trust Funds that pass threshold, the funds shall be used for applications from Existing Local Housing Trust Funds.

Application materials must be submitted electronically through the Department’s website. Requirements for uploading the Application Workbook and required supporting documentation, including naming conventions, are described in the application instructions available at https://www.hcd.ca.gov/grants-and-funding/programsactive/local-housing-trust-fund. The Department no longer requires a hardcopy submittal of the Application Workbooks or supplemental documentation.

The application portal is open beginning on August 20, 2024 through September 17, 2024. The portal will close at 4 p.m. on September 17, 2024. Please note that the on-line support and technical assistance closes at 3:30 p.m. Pacific Standard Time on September 17, 2024.

To receive information on workshops and other updates, please subscribe to the LHTF Program listserv. If you have any further questions, please contact [email protected].

Attachment
Attachment 6
Local Housing Trust Fund Program
2024 Notice of Funding Availability
Gavin Newsom, Governor
State of California
Tomiquia Moss, Secretary
Business, Consumer Services and Housing Agency
Gustavo Velasquez, Director
California Department of Housing and Community Development 651 Bannon Street, Sacramento, CA 95811
Telephone: (916) 263-2771
Website: http://www.hcd.ca.gov
LHTF email: [email protected]
7/9/2024
Table of Contents
I. Overview ................................................................................................................2 A. Notice of Funding Availability ................................................................................... 2 B. Timeline.................................................................................................................... 2 C. Authorizing Legislation and Regulations (Regulatory Authority)............................... 2 II. Program requirements..........................................................................................3 A. Eligible Applicants .................................................................................................... 3 B. Eligible activities....................................................................................................... 3 C. Funding Limits.......................................................................................................... 4 D. Matching funds requirements ................................................................................... 4 E. Ongoing Revenues .................................................................................................. 5 G. Underwriting, administration, and reporting requirements........................................ 5 H. Application requirements.......................................................................................... 6 I. State and federal requirements .............................................................................. 10 III. Application, submission, workshops, and appeals..........................................10 A. Application forms.................................................................................................... 10 B. Application submission process ............................................................................. 11 C. Application workshops............................................................................................ 11 D. Disclosure of application ........................................................................................ 12 IV. Award announcements and contracts...............................................................13 A. Award Announcements .......................................................................................... 13 B. Contracts................................................................................................................ 13 V. Other state requirements....................................................................................13 A. Housing First practices........................................................................................... 13 B. Pet Friendly Housing Act of 2017........................................................................... 14 C. Prevailing wage law requirements.......................................................................... 14 D. Accessibility and Non-discrimination ...................................................................... 14 VI. Other terms and conditions................................................................................15 A. Right to modify or suspend..................................................................................... 15 B. Conflicts ................................................................................................................. 15 California Department of Housing and Community Development Page 2 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability I. Overview
A. Notice of Funding Availability
The California Department of Housing and Community Development (Department) is announcing the availability of approximately $53 million in funding for the Local Housing Trust Fund (LHTF) Program. Funding for this Notice of Funding Availability (NOFA) is provided by the Veterans and Affordable Housing Bond Act of 2018 (Proposition 1), adopted by voters on November 6, 2018.

Program Funds awarded under this NOFA shall be used to provide construction loans and/or permanent financing loans to pay for construction or rehabilitation of Affordable rental housing projects, Emergency Shelters, Permanent Supportive Housing, Transitional Housing and Affordable homebuyer/homeowner projects.

Program Funds may also be used to assist income-eligible first-time homebuyers to purchase homes and to rehabilitate houses owned by income-eligible occupants, as well as to construct, convert, reconstruct, rehabilitate and/or repair Accessory Dwelling Units (ADUs) or Junior Accessory Dwelling Units (JADUs).

B. Timeline
NOFA Release July 09, 2024
Application Due Date September 17, 2024
Award Announcements December 2024
C. Authorizing Legislation and Regulations (Regulatory Authority) Health and Safety Code (HSC) Section 50842.2 established the LHTF Matching Grant Program.

HSC Section 50843.5(a) authorized the Department to provide matching funds to Local Housing Trust Funds established by cities and counties, Native American Tribes, and/or incorporated 501(c)(3) nonprofit organizations.

Senate Bill 3 (SB 3) (Chapter 365, Statutes of 2017) authorized the Veterans and Affordable Housing Bond Act of 2018 and authorized the issuance of bonds in the amount of $4 billion under the State General Obligation Bond Law. Specifically, SB 3 allows for the allocation of $300 million of the Bond proceeds for the LHTF Program.

SB 3 also allowed the Department to adopt Guidelines instead of regulations for the LHTF Program, establishing requirements for administration of the Program. The Department adopted Guidelines in April 2020.

Applications submitted under this NOFA are subject to the Guidelines, all applicable statutory requirements, and this NOFA. All section references in this NOFA refer to the Guidelines unless otherwise noted. The Guidelines and NOFA are available on the Department’s website.

California Department of Housing and Community Development Page 3 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability Capitalized terms not otherwise defined in this NOFA shall have the meanings set forth in Guidelines Section 101.

II. Program requirements
The following is provided as a summary for the allocation of the LHTF Program funds to Local Housing Trust Funds. This is not to be considered a complete representation of the eligibility, threshold, or other requirements, terms, and conditions.

A. Eligible Applicants
An applicant must be:

1. A city, county, or city and county that has created, funded, and operated an Existing Local Housing Trust Fund or that has created and funded a New Local Housing Trust Fund in compliance with Guidelines Sections 102(a)(1), 102(a)(2), and 102(a)(3).

A Local Housing Trust Fund or Regional Housing Trust Fund that was created, funded, and operated by a combination of two or more cities or counties must agree in its application to utilize Program funds only for Eligible Projects located in cities or counties that at the time of application have met the requirements outlined in Guidelines Section 102(a)(4).

2. A charitable nonprofit organization described in Section 501(c)(3) of the Internal Revenue Code that is an Existing Local Housing Trust Fund or a New Local Housing Trust Fund and which complies with Guidelines Section 102(b)(1), 102(b)(2) and 102(b)(3).

3. A Native American Tribe, or sect of Tribes, that has created, funded, and operated an Existing Local Housing Trust Fund, or that has created and funded a new Local Housing Trust Fund in compliance with Guidelines Section 102(c)(1), 102(c)(2), and 102(c)(3).

B. Eligible activities
PLEASE NOTE: LHTF is not a reimbursement Program.

Pursuant to Guidelines, Section 105, the LHTF funds shall be allocated in compliance with all of the following:

1. To provide construction loans and/or permanent financing loans at simple interest rates of no higher than 3 percent per annum for payment of predevelopment costs, acquisition, construction, or rehabilitation associated with Affordable rental housing projects, Emergency Shelters, Transitional Housing, Permanent Supportive Housing, homebuyer/homeowner projects to purchase for-sale housing units or to rehabilitate an owner-occupied dwelling. Funds may also be used for the construction, conversion, repair, and rehabilitation of Accessory Dwelling Units or Junior Accessory Dwelling Units.

California Department of Housing and Community Development Page 4 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability

2. Administrative expenses may not exceed 5 percent of Program Funds and Matching Funds.

3. A minimum of 30 percent of Program Funds and Matching Funds, after deducting administrative expense, shall be expended on assistance to Extremely LowIncome Households. To comply with this requirement, dwelling units or shelter beds must be Affordable to and restricted for Extremely Low-Income Households with household income of no more than 30 percent of Area Median Income (AMI).

4. No more than 20 percent of the Program Funds and Matching Funds, after deducting administrative expense, shall be expended on assistance to ModerateIncome Households. To comply with this requirement, dwelling units must be Affordable to and restricted for Moderate-Income Households with household income of no more than 120 percent of AMI.

5. The remaining Program Funds and Matching Funds shall be expended on assistance to Lower-Income Households. To comply with this requirement, dwelling units must be Affordable to and restricted for Lower-Income Households with household income of no more than 80 percent AMI.

C. Funding Limits
Pursuant to Guidelines, Section 103, the funding minimums and maximums apply as detailed below.

The minimum application request by an Applicant that is an Existing Local Housing Trust Fund shall be $1 million.

The minimum application request by an Applicant that is a New Local Housing Trust Fund, but which is not a Regional Housing Trust Fund, shall be $500,000.

The minimum application request by an Applicant that is a New Local Housing Trust Fund, which is also a Regional Housing Trust Fund, and which is utilizing Permanent Local Housing Allocation Funds as Matching Funds, shall be $750,000.

The maximum application request for all Applicants shall be $5 million.

Fifteen percent of the funds made available by this NOFA shall be reserved for Local or Regional Housing Trust Funds meeting the definition of “new Local Housing Trust Fund.” In the event there are insufficient applications from new Local Housing Trust Funds that pass threshold, the funds shall be used for applications from existing Local Housing Trust Funds.

D. Matching funds requirements

1. All Program Funds provided pursuant to this section shall be matched on a dollarfor-dollar basis with dedicated sources of funding, such as taxes, fees, or loan repayments, or public or private contributions by the Applicant. Lines of credit and loans received by the Local Housing Trust Fund are not eligible sources of Matching Funds.

California Department of Housing and Community Development Page 5 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability

2. An application for Program Funds shall not be considered unless the application contains required documentation of the deposit in the Local Housing Trust Fund account of the local Matching Funds, and the identity of the source of Matching Funds, or evidence of a Legally Binding Commitment to deposit the required Matching Funds, and the identity of the source of Matching Funds.

3. Funds restricted for housing use by state or federal law (such as funds from the Home Investment Partnerships Program, the Community Development Block Grant Program, redevelopment agency low- and moderate-income housing fund set-aside funds, or state housing programs administered by the Department) shall not be considered Matching Funds. However, Permanent Local Housing Allocation program funds may be considered Matching Funds for Regional Housing Trust Funds.

4. Matching Funds shall be On Deposit prior to disbursement of Program Funds.

5. Program Funds must be utilized on a dollar-for-dollar basis for the same Eligible Project for which local Matching Funds are used, as required by HSC Section 50843.5(c).

E. Ongoing Revenues

1. For an Existing Housing Trust Fund, a public or private source, or sources, of Ongoing Revenues totaling at least an average of $100,000 per year for three years after the date of the Program award is required.

2. For a New Housing Trust Fund, public or private sources of Ongoing Revenues sufficient to pay for the Trust Fund’s operating costs for a minimum of five years after the date of the Program award is required.

3. Ongoing Revenues are required to be derived from dedicated sources of consistent funding, such as taxes, fees, repayments of loans made by the Trust Fund, or regular annual public or private contributions. Ongoing Revenues may not include one-time donations, such as land donations or large bequests, and may not include loans or lines of credit.

F. Program administrative costs
Pursuant to Guidelines, Section 105(b), a Local Housing Trust Fund that receives an award under this NOFA shall not use more than 5 percent of the allocation and not more than 5 percent of Matching Funds for administrative costs related to the execution of eligible activities.

G. Underwriting, administration, and reporting requirements California Department of Housing and Community Development Page 6 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability A grantee of the LHTF Program must comply with the underwriting and loan requirements of Guidelines, Section 107, the administrative requirements of Sections 108 and 109 (b), and the reporting requirements of Section 112.

H. Application requirements

1. Threshold
Only complete applications on forms made available by the Department submitted on or before the application deadline stated in this NOFA shall be considered for funding. Applications must meet the requirements set forth in Guidelines, Sections 106(d) and 106(e).

An application must have all of the information requested and provide adequate documentation and information for the Department to determine the Local Housing Trust Fund's eligibility for funding pursuant to HSC, Section 50843.5(b), and the Guidelines, and the eligibility of the Project pursuant to HSC, Section 50843.5(d), and the Guidelines.

HSC, Section 50843.5(b) requires that Housing Trusts eligible for funding shall have the following characteristics:
a. Utilization of a public or joint public and private fund established by legislation, ordinance, resolution, or a public-private partnership to receive specific revenue to address local housing needs.
b. Receipt of ongoing revenues from dedicated sources of funding such as taxes, fees, loan repayments, or public or private contributions.

Previously awarded applicants must have committed at least 40 percent of the previous award(s) to be eligible to submit an application for this NOFA.

Previously awarded applicants must have submitted the most recently required LHTF Annual Report in order to be eligible to submit an application for this NOFA.

In addition, the following requirements must be met and demonstrated in each application:
a. City or County Applicants must have a housing element that was adopted by the Applicant’s governing body and subsequently determined by the Department to be in compliance with state Housing Element Law by the time awards are announced. If an applicant is determined to be out of compliance at the time awards are announced, it will be ineligible to receive funding and the next highest scoring eligible application may be funded in its place. b. City or County Applicants must have submitted to the Department the Annual Progress Report on the housing element for the 2023 Calendar Year by the application deadline date.

California Department of Housing and Community Development Page 7 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability c. Nonprofit Charitable Organization Applicants shall in their application agree to utilize Program Funds only for Eligible Projects located in cities or counties that have, at the time of award, an adopted housing element determined by the Department to be in compliance with state Housing Element Law, and which have submitted to the Department the Annual Progress Report on the housing element for the 2023 Calendar Year by the application deadline date. d. A Native American Tribe or Tribes shall, in their application, agree to utilize Program Funds only for Eligible Projects either (A) located on Native American Lands or (B) in cities and counties that have, at the time of award, an adopted housing element determined by the Department to be in compliance with state Housing Element Law and which shall have submitted to the Department the Annual Progress Report on the housing element for the 2023 Calendar Year by the application deadline date.
e. Only applications containing the required documentation of the deposit in the Local Housing Trust Fund of the local Matching Funds, and that identify the source(s) of Matching Funds or provide evidence of a Legally Binding Commitment to deposit the required Matching Funds, and the identity of the source(s) of Matching Funds, shall be considered eligible. f. Only applications including the required application resolution shall be considered eligible. This includes “Attachment 1” to be completed as part of the resolution prior to approval by the governing body. The resolution and “Attachment 1” can be found on the LHTF website.
g. The Applicant shall submit documentation of its loan guidelines and underwriting standards and procedures for review by the Department as part of its Program application. Below are the factors that must be addressed in underwriting standards that Applicants must submit to ensure project feasibility:
• Required debt coverage ratio
• Minimum projected operating expenses
• Required replacement reserve
• Required capitalized operating reserve
• Requirements for positive cash flow
• Required projected vacancy rate
• Requirements for construction contingency if construction financing is being provided with LHTF funds
• Requirements for senior lender loan types and junior lender loan types • Simple interest rate no higher than 3 percent per annum • Leasehold security requirements

2. Rating and Ranking
California Department of Housing and Community Development Page 8 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability In the event that the amount of funding requested in complete and eligible applications exceeds the funds available, applications shall be evaluated and funded using the criteria outlined below.
a. The Department’s Negative Points Policy (Administrative Notice Number 2022- 01) dated March 30, 2022 and published on the Department’s website, is hereby incorporated by this reference to this LHTF NOFA as if set forth in full herein, and shall apply with equal force as all other provisions set forth herein.

If the Applicant is subject to a negative points assessment based on the criteria outlined in the Department’s Negative Points Policy, or is determined to be ineligible for funding, the Department shall notify the Applicant in writing in the initial point score letter.

Rating Criteria
Max
Pts.

Non-Residential Matching Funds:

Extent to which the Applicant provides Matching Funds from sources other than residential Local Impact Fees or In Lieu Fees (Guidelines Section, 106(f)(1)) • 0% – 25% from other sources ~ 5 points
• 26% - 50% from other sources ~ 10 points
• 51% or more from other sources ~ 15 points
15 Deeper Income Targeting:

Extent to which the Applicant commits to expend less than 20 percent of Program Funds and Matching Funds to serve Moderate-Income Households (Guidelines, Section 106(f)(2)
• 11% - 18% funding for Moderate-Income Household ~ 5 points • 6% - 10% funding for Moderate-Income Household ~ 10 points • 1% - 5% funding for Moderate-Income Household ~ 15 points • 100% funding for Lower-Income Household ~ 20 points
20 Readiness:

Extent to which the Applicant has completed a first phase funding process for multifamily rental projects and announced on its website the status of each project, including those projects that were approved to submit a final application upon award of Program Funds by the Department (Guidelines, Section 106(f)(3)).
• Website posting of pipeline projects with status ~ 5 points, PLUS EITHER of the next two (2) factors:
 Projects included posting of pipeline projects with first phase funding completed representing two (2) times the application request (e.g., if requesting $5 million, pipeline projects must total at least $10 million) ~ 5 points OR
15 California Department of Housing and Community Development Page 9 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability  Projects included public posting of pipeline projects with first phase funding completed representing three (3) times the application request (e.g., if requesting $5 million, pipeline projects must total at least $15 million) ~ 10 points
Note: applications requesting funds solely for single family activities will receive zero points in the category.

Increasing the Supply of Lower-Income Rental Housing:

Extent to which the Applicant commits to use Program Funds and Matching Funds for the new construction of rental housing developments affordable and restricted to households with average incomes of no more than 60 percent of AMI (Guidelines, Section 106(f)(4)) • ≤50% funding for 60% AMI or less ~ 0 points
• 51% - 74% funding for 60% AMI or less ~ 10 points
• 75% - 99% funding for 60% AMI or less ~ 15 points
• 100% funding for 60% AMI or less ~ 20 points
20 Community Need:

Applicants which are a Regional Housing Trust Fund meeting the description herein get all points in this category. A Regional Housing Trust Fund, for the purposes of these points, is one that includes six jurisdictions (in counties with total populations of 250,000 or less), or eight jurisdictions (in counties with more than 250,000), or that meet the minimum threshold (two jurisdictions with more than one million people, three jurisdictions in counties with total populations of 250,000 or less, or four jurisdictions in counties with more than 250,000, and include more than 66 percent of the population of the county or counties (Guidelines, Section 106(f)(6)). 5 California Department of Housing and Community Development Page 10 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability Performance:

Extent to which Applicants exceed the minimum 40 percent commitment threshold stated in Guidelines, Section 102(d) OR
New Applicants (no previous LHTF award) who have committed 40 percent or more of local Matching Funds.
10 Total maximum points possible: 100

3. Tie Breaker
In the event of tied point scores, the Department shall rank tied applications based on the extent to which the application identifies specific multifamily rental projects for which the Trust Fund has issued Letters of Intent to developers for construction or permanent financing.

I. State and federal requirements
Climate Adaptation - Executive Order B-30-15 addressed the need for climate adaptation and ordered that:

III. Application, submission, workshops, and appeals
A. Application forms
Applications must be on the Department’s forms and cannot be altered or modified by the Applicant. Excel forms must be in Excel format, not a PDF document.

Applications that do not meet the Program requirements outlined in this NOFA will not California Department of Housing and Community Development Page 11 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability be eligible for funding. Application forms are available for download on the LHTF webpage.

B. Application submission process
Application materials must be submitted electronically to the Department’s website. Requirements for uploading the Application Workbook and required supporting documentation, including naming conventions, are described in the application instructions available at https://www.hcd.ca.gov/grants-andfunding/programs-active/local-housing-trust-fund. The application instructions and submittal portal will be available beginning August 20, 2024. The Department no longer requires a hardcopy submittal of the Application Workbooks or supplemental documentation.

Applicants must upload all application materials to the Department’s website.

The application portal is open beginning on August 20, 2024, through 4:00 p.m. Pacific Standard Time on September 17, 2024. Please note that the on-line support and technical assistance closes at 3:30 p.m. Pacific Standard Time on September 17, 2024.

Personal deliveries will not be accepted. No facsimiles, incomplete applications, application revisions, or walk-in application packages will be accepted. Applications that do not meet the filing deadline requirements will not be eligible for funding.

C. Application workshops
The Department will conduct application webinars for the LHTF Program application submittal process. Applicants are strongly encouraged to attend an application workshop to gain information critical for preparing the application. LHTF Program workshop details and related Program information will be posted on the LHTF webpage.

D. Appeals

1. Basis of Appeals
a. Applicants may appeal HCD’s written determination that an application is incomplete, has failed threshold review, or has otherwise been determined to provide an insufficient basis for an award (including point scoring and tie breaker).
b. At the sole discretion of the Department, the Department’s written determination may include a request for clarifying and/or corrective information. For purposes of this section, “clarifying information” includes information and/or documentation that resolves ambiguities in any application materials that will inform the Department’s threshold, scoring and feasibility determinations.
c. No Applicant shall have the right to appeal a decision of HCD relating to another Applicant’s application (e.g., eligibility, award).

California Department of Housing and Community Development Page 12 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability d. Any request to appeal HCD’s decision regarding an application shall be reviewed for compliance with the Guidelines and this NOFA. All decisions rendered shall be made by the Program Manager or his/her designee. The decision shall be final, binding, and conclusive, and shall constitute the final action of HCD.
e. The appeal process provided herein applies solely to decisions of HCD made pursuant to this NOFA.

2. Appeal Process and Deadlines
a. Process: To file an appeal, Applicants must submit to HCD, by the deadline set forth below, a written appeal which states all relevant facts, arguments, and evidence upon which the appeal is based. Furthermore, the Applicant must provide a detailed reference to the area or areas of the application that provide clarification and substantiation for the basis of the appeal. No new or additional information will be considered if this information would result in a competitive advantage to an Applicant. Once the written appeal is submitted to HCD, no further information or materials will be accepted or considered thereafter. Appeals are to be submitted to HCD at [email protected] according to the deadline set forth in HCD review letters.
b. Filing Deadline: Appeals must be received by HCD no later than five (5) business days from the date of HCD’s threshold review, or initial score letters, as applicable, representing HCD’s decision made in response to the application.

D. Disclosure of application
Information provided in the application will become a public record available for review by the public, pursuant to the California Public Records Act (Chapter 1473, Statutes of 1968). As such, any materials provided will be disclosable to any person making a request under this Act. The Department cautions applicants to use discretion in providing information not specifically requested, including, but not limited to, bank account numbers, personal phone numbers, and home addresses. By providing this information to the Department, the applicant is waiving any claim of confidentiality and consents to the disclosure of submitted material upon request.

California Department of Housing and Community Development Page 13 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability IV. Award announcements and contracts
A. Award Announcements
Awards will be announced in August 2024. Awards will be posted on the LHTF Program website.

B. Contracts
Successful Applicants (Awardee(s)) will enter into a Standard Agreement with the Department. The Standard Agreement contains all the relevant state and federal requirements, as well as specific information about the award and the work to be performed.

V. Other state requirements
A. Parking
Recipients of Program funding shall examine the feasibility of shared parking agreements to replace new parking construction or limit the number of new parking spaces that will be constructed. These requirements do not apply to proposals located on land owned or leased by the state (Gov. Code, § 65863.1, subd. (j)). An examination of the feasibility of shared parking shall include, at a minimum, identification of parking facilities on contiguous properties or nearby properties that would not require users to cross a street and then consideration of the apparent availability of those facilities for shared parking (Gov. Code, § 65863.1, subd. (i)(3)).

The examination of the feasibility of shared parking shall be submitted to the Department prior to the execution and approval of the Standard Agreement. Tribal Entities are not required to examine the feasibility of shared parking for Projects located in Indian Country where an Indian tribe exercises jurisdiction.

Housing shall not be contingent upon participation in services. Applicants will certify and document adherence to Housing First practices in the application, property management plan, and supportive services plan. Adherence to Housing First practices shall be subject to periodic compliance monitoring.

California Department of Housing and Community Development Page 14 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability C. Pet Friendly Housing Act of 2017
Housing funded through the LHTF Program is subject to the Pet Friendly Housing Act of 2017 (HSC Section 50466). Each Awardee is required to submit a signed and dated certification that residents of the LHTF Program-funded housing development will be authorized to own or otherwise maintain one or more common household pets.

D. Prevailing wage law requirements
LHTF Program Funds awarded under this NOFA are subject to state prevailing wage law, as set forth in Labor Code Section 1720 et seq., and require the payment of prevailing wages unless the project meets one of the exceptions of Labor Code, Section 1720 (c), as determined by the Department of Industrial Relations (DIR).

The DIR can be contacted via its website at
https://www.dir.ca.gov/oprl/DPreWageDetermination.htm. Applicants are urged to seek professional advice as to how to comply with state prevailing wage law.

California Department of Housing and Community Development Page 15 of 15 Local Housing Trust Fund Program - 2024 Notice of Funding Availability VI. Other terms and conditions
A. Right to modify or suspend
The Department reserves the right, at its sole discretion, to suspend, amend, or modify the provisions of this NOFA at any time, including without limitation, the amount of funds available hereunder. If such an action occurs, the Department will notify all interested parties and will post the revisions to the Department’s website.

You may subscribe to the Department’s email list.

B. Conflicts
In the event of any conflict between the terms of this NOFA and either applicable state or federal law or regulation, the terms of the applicable state or federal law or regulation shall control. Applicants are deemed to have fully read and understand all applicable state and federal laws, regulations, and guidelines pertaining to the LHTF Program, and understand and agree that the Department shall not be responsible for any errors or omissions in the preparation of this NOFA. 1 ______________________
_________________________________________________

AUTHORIZING RESOLUTION
_____________________________________of the ___________________________________ of _________________________________________________________(“Applicant”) hereby consents to, adopts and ratifies the following resolution:

A. WHEREAS, the Department is authorized to provide up to $53 million under the Local Housing Trust Fund (“LHTF”) Program from the Veterans and Affordable Housing Bond Act of 2018 (Proposition 1) (as described in Health and Safety Code section 50842.2 et seq. (Chapter 365, Statutes of 2017 (SB 3)) (“Program”).

B. WHEREAS the State of California (the “State”), Department of Housing and Community Development (“Department”) issued a Notice of Funding Availability (“NOFA”) dated 7/9/2024 under the LHTF Program;
C. WHEREAS Applicant is an eligible Local or Regional Housing Trust Fund applying to the Program to administer one or more eligible activities using Program Funds.

D. WHEREAS the Department may approve funding allocations for the LHTF Program, subject to the terms and conditions of H&S Code Section 50842.2, the LHTF Program Guidelines, NOFA, Program requirements, the Standard Agreement and other related contracts between the Department and LHTF award recipients;
NOW THEREFORE BE IT RESOLVED THAT:

1. If Applicant receives an award of LHTF funds from the Department pursuant to the above referenced LHTF NOFA, it represents and certifies that it will use all such funds on Eligible Projects in a manner consistent and in compliance with all applicable state and federal statutes, rules, regulations, and laws, including, without limitation, all rules and laws regarding the LHTF Program, as well as any and all contracts Applicant may have with the Department (“Eligible Project”).
2 2. NOW, THEREFORE, IT IS RESOLVED: That the ____________________________________ is hereby authorized to act as the ______________ in connection with the Department's funds to Eligible Projects pursuant to the above described Notice of Funding Availability in an amount not to exceed $ (the "LHTF Award"). NOTE: Dollar amount must include amount used for administrative costs, pursuant to Section 105(b) of the Guidelines.

3. Applicant hereby agrees to match on a dollar for dollar basis the LHTF Award pursuant to Guidelines Section 104. Applicant hereby agrees to utilize matching finds on a dollar-for-dollar basis for the same Eligible Project for which Program Funds are used, as required by HSC Section 50843.5(c).

INSTRUCTION: Provide a short summary on how you commit to use the Program Funds and Matching Funds. The summary, which shall be labeled Attachment 1 shall include: (1) identification of the percent of the total funds requested that will be used for each activity/project, including Area Median Income (AMI) level; and (2) a list of the jurisdictions where the activities/projects will be delivered, in the case of any HTF that serves more than one jurisdiction. Attachment 1 MUST be incorporated into your Resolution as an attachment before it is adopted.

4. Pursuant to Attachment 1 and the Applicant’s certification in this resolution, the LHTF funds will be expended only for Eligible Projects and consistent with all program requirements.

5. Nonprofit Housing Trust Funds and Native American Tribe Housing Trust Funds agree to use Program Funds only for Eligible Projects located in cities and counties that submitted an adopted Housing Element that was found by the Department to be in compliance and that have submitted their Housing Element Annual Progress Report (APR) for the current year or prior year by the application due date.

6. Applicant shall be subject to the terms and conditions as specified in the Standard Agreement, H&S Section 50842.2 and LHTF Program Guidelines

7. _______________________________ is/are authorized to execute the LHTF Program Application, the LHTF Standard Agreement and any subsequent amendments or modifications thereto, as well as any other documents which are related to the Program or the LHTF Award to Applicant, as the Department may deem appropriate.
3 PASSED AND ADOPTED at a regular meeting of
the _________________________________________________________ this _____ day of ____________, _________ by the following vote:

AYES: _____ ABSTENTIONS: _____ NOES: ____ ABSENT: _____ Approving Officer: _______________________
Signature of Approving Officer
__________________________________________
INSTRUCTION: The attesting officer cannot be the person identified in the resolution as the authorized signor

CERTIFICATE OF THE ATTESTING OFFICER
The undersigned, Officer of _________________________ does hereby attest and certify that the ________________ Resolution is a true, full and correct copy of a resolution duly adopted at a meeting of the _____________________________________________________________, which was duly convened and held on the date stated thereon, and that said document has not been amended, modified, repealed or rescinded since its date of adoption and is in full force and effect as of the date hereof.

ATTEST: ____________________
Signature of Attesting Officer
________________________________________
Resolution No. ________
Attachment 1 for Resolution
The City of Santa Barbara Local Housing Trust Fund will commit funding to two projects within the City of Santa Barbara’s jurisdiction as follows:
1) Agency: The Housing Authority of the City of Santa Barbara Project Name: 15 South Hope
Total Funding to Project:
50% Program Funds minus 5% Administration $1,377,500
50% Matching Funds minus 5% Administration $1,377,500
Total Funding to Project: $2,755,000 toward construction costs Project Description:

The proposed project consists of a new construction multifamily rental housing development totaling 46 units, to be built on a 53,910 sq. ft. vacant parcel, located at 15 South Hope Street. The project will encompass one building containing 17 studios, 13 one-bedrooms, and 16 two-bedroom apartments with one 2-bedroom apartment set aside as unrestricted for an onsite manager. The development will have four stories, and all floors will be serviced by a central elevator. The project will set aside 50 percent of the units (23) as special needs serving individuals living with developmental or mental health disabilities. The remaining 22 units will be non-special needs. The 45 affordability restricted units will be reserved for households with incomes at or below 60% AMI, with 18 being for households with incomes at or below 30% AMI (Extremely Low-Income), 14 at or below 50% AMI (Very Low-Income) and 13 at or below 60% AMI (Low-Income). 2) Agency: People’s Self-Help Housing
Project Name: Carrillo Street Apartments
Total Funding to Project:
50% Program Funds minus 5% Administration $1,377,500
50% Matching Funds minus 5% Administration $1,377,500
Total Funding to Project: $2,755,000 toward acquisition costs Project Description:

The proposed project is to develop and construct 65 permanently affordable newly constructed apartment homes on 0.71 acres located in downtown Santa Barbara. The site is comprised of four separate parcels: 1) 312 W. Carrillo St., 2) 316 W. Carrillo St., 3) 1018 Placida Place (aka 1018 Placido Avenue), and 4) 318 W. Carrillo St. The 312 W. Carrillo St. and 316 W. Carrillo St. properties are currently vacant land. 318 W. Carrillo St. is improved with an apartment building.

The 1018 Placida Place property is currently being used as a parking lot for the residents of the apartment building located at 318 W. Carrillo St. Development will involve demolition of existing structures and new construction of 20 studios, 42 one bedrooms and 3 two-bedroom units (1 unrestricted for a manager’s unit). All 64 affordability restricted units will be for households with incomes at or below 60% AMI, with 50 percent (33 units) for incomes at or below 30% AMI (Extremely Low-Income), 20 units at or below 50% AMI (Very Low-Income), and 11 units at or below 60% AMI (Low-Income). The project will also set aside units to serve special needs populations and will provide supportive services. Under California housing element law, special needs populations can include persons who are elderly or disabled, female headed households, large families, farmworkers, and people experiencing homelessness.

In the event that one of the projects listed above is unable to move forward, then 100 percent of both the Program Funds and Matching Funds minus five percent of Program Funds and five percent of Matching Funds for allowable administration costs, for a total of $5,510,000, will be provided to the other project.

RESOLUTION NO.

A RESOLUTION OF THE COUNCIL OF THE CITY OF

SANTA BARBARA, AUTHORIZED TO ACT AS MANAGER

OF THE CITY OF SANTA BARBARA LOCAL HOUSING
TRUST FUND, AMENDING RESOLUTION NO. 23-076,
ADOPTING THE BUDGET FOR FISCAL YEAR 2024, TO
APPROVE AN INCREASE IN FISCAL YEAR 2024

EXPENDITURE APPROPRIATIONS IN THE COMMUNITY

DEVELOPMENT GENERAL FUND IN THE AMOUNT OF
$500,000 AND APPROVE AN INCREASE IN FISCAL YEAR
2024 REVENUE APPROPRIATIONS IN THE LOCAL
HOUSING TRUST FUND IN THE AMOUNT OF $500,000

FUNDED BY INCLUSIONARY HOUSING IN-LIEU FEES TO

PROVIDE THE LOCAL HOUSING TRUST FUND WITH

ONGOING REVENUES SUFFICIENT TO PAY FOR THE
TRUST FUND’S OPERATING COSTS FOR A MINIMUM OF
FIVE YEARS AFTER THE DATE OF A PROGRAM AWARD.

WHEREAS, in accordance with the City Charter, the City Administrator filed with the Council a proposed budget for the fiscal year beginning July 1, 2023; and WHEREAS, the City Council is required to adopt a budget before the beginning of the fiscal year on July 1, 2023; and
WHEREAS, the City Charter provides that at any public meeting after the adoption of the budget, the City Council may amend or supplement the budget by motion adopted by the affirmative votes of at least a majority of the total members of the City Council; and WHEREAS, as authorized by Resolution No. 23-076, this Resolution approves the amendment to the budget as provided herein.

NOW THEREFORE, be it resolved by the Council of the City of Santa Barbara that in accordance with the provisions of Section 1205 of the City Charter, the budget for the fiscal year 2024, as adopted [or amended] by Resolution No. 23-076, is hereby amended as follows:

1. City Council approves of appropriating available General Fund Inclusionary Housing In-Lieu fee reserve funds in Fiscal Year 2024 in the amount of $500,000 in order to fund a transfer to the Local Housing Trust Fund to provide ongoing revenues sufficient to pay for the trust fund’s operating costs for a minimum of five years after the date of a program award.

RESOLUTION NO.

A RESOLUTION OF THE COUNCIL OF THE CITY OF

SANTA BARBARA, AUTHORIZED TO ACT AS MANAGER

OF THE CITY OF SANTA BARBARA LOCAL HOUSING
TRUST FUND, ADOPTING THE 2017 CALIFORNIA CODE
OF REGULATIONS TITLE 25, DIVISION 1, CHAPTER 7,
SUBCHAPTER 19, COMMENCING WITH SECTION 8300

UNIFORM MULTIFAMILY REGULATIONS AS THE

UNDERWRITING GUIDELINES FOR THE SANTA
BARBARA LOCAL HOUSING TRUST FUND.

WHEREAS, the City Council has authorized an application to be submitted to the California Department of Housing and Community Development Local Housing Trust Fund (LHTF) Program for consideration of award of Matching Funds with the Santa Barbara Local Housing Trust Fund (SBLHTF) in the amount of $2.9 million; and WHEREAS, the City Council hereby adopts the 2017 California Code of Regulations Title 25, Division 1, Chapter 7, Subchapter 19, Commencing with Section 8300 Uniform Multifamily Regulations as the underwriting guidelines for the Santa Barbara Local Housing Trust Fund; and
NOW THEREFORE, be it resolved by the Council of the City of Santa Barbara, authorized to act as the manager of the City of Santa Barbara Local Housing Trust Fund, that in accordance with the provisions of Section 1205 of the City Charter, the SBLHTF project underwriting guidelines are hereby adopted as follows:

1. City Council approves of the adoption of the 2017 California Code of Regulations Title 25, Division 1, Chapter 7, Subchapter 19, Commencing with Section 8300 Uniform Multifamily Regulations as the underwriting guidelines for the SBLHTF.(Exhibit A attached hereto and incorporated herein by reference.)

California Code of Regulations
Title 25, Division 1
Chapter 7
Subchapter 19
Commencing with Section 8300
Effective date: November 15, 2017
Section 8300. Purpose and Scope........................................................................2 Section 8301. Definitions . .....................................................................................2 Section 8302. Restrictions on Demolition. ............................................................6 Section 8303. Site Control Requirements and Scattered Site Projects.................7 Section 8304. Unit Standards. ..............................................................................8 Section 8305. Tenant Selection. ...........................................................................9 Section 8306. Tenant Recertification. .................................................................12 Section 8307. Rental Agreement and Grievance Procedure. .............................12 Section 8308. Operating Reserves. ....................................................................14 Section 8309. Replacement Reserves................................................................16 Section 8310. Underwriting Standards................................................................18 Section 8311. Limits on Development Costs. .....................................................21 Section 8312. Developer Fee. ............................................................................22 Section 8313. Program Compatibility.................................................................24 Section 8313.1 Funding Source Surpluses........................................................24 Section 8313.2 Special Purpose Entity(ies). .......................................................25 Section 8314. Use of Operating Cash Flow. ......................................................26 Section 8315. Subordination Policy. ...................................................................29 Section 8316. Leasehold Security.......................................................................32 Section 8317. Restructuring Transaction Fees. ..................................................34 Section 8318. Federal Loan Extensions. ............................................................35 Uniform Multifamily Regulations 11/15/2017 Page 1 of 35 Exhibit A

Section 8300. Purpose and Scope.
(a) These regulations provide uniform standards and program rules for multifamily rental housing developments assisted by the Department of Housing and Community Development.
(b) When expressly incorporated by reference, some or all of the provisions of this Chapter shall apply to: the Joe Serna, Jr.

Farmworker Housing Grant (JSJFWHG) Program (Chapter 7,
subchapter 3, commencing with Section 7200); the Multifamily Housing Program (MHP) (Chapter 7, subchapter 4, commencing with Section 7300); and the HOME Investment Partnerships (HOME) Program (Chapter 7, subchapter 17, commencing with Section 8200). These regulations interpret and make specific the following statutes applicable to these programs: Health and Safety Code Division 31, Part 3.2, Chapter 2 (commencing with Section 50517.5), Chapter 6.7 (commencing with Section 50675), and Chapter 16 (commencing with Section 50896).
(c) The 2017 adoptions and amendments to subchapter 19 shall be effective on November 15, 2017 and shall apply prospectively to all standard agreements between the Department and Sponsors that are executed or amended on or after the foregoing effective date and are governed by the authorities set forth in subsection (b).

These agreements are subject to the standard contract format referenced in the California State Contracting Manual.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(2), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5, 50675, 50896, 50896.1 and 50896.3, Health and Safety Code; and 24 CFR part 92.

Section 8301. Definitions.

The following definitions govern this subchapter.
(a) "Assisted Unit" means a Unit that is subject to the Program’s rent and/or occupancy restrictions as a result of the financial assistance provided by the Program, as specified in the Regulatory Agreement.
(b) “CalHFA” means the California Housing Finance Agency. (c) “Commercial Space” means any nonresidential space located in or on the property of a Rental Housing Development that is, or is Uniform Multifamily Regulations 11/15/2017 Page 2 of 35

proposed to be, rented or leased by the owner of the Project, the income from which shall be included in Operating Income. (d) “CPI” means the Consumer Price Index for All Urban Consumers, West Region, All Items, as published by the Bureau of Labor Statistics, United States Department of Labor.
(e) “Debt Service Coverage Ratio" means the ratio of (1) Operating Income less the sum of Operating Expenses and required reserves to (2) debt service payments, excluding voluntary prepayments and non-mandatory debt service. In calculating Debt Service Coverage Ratio, the Department may include all Operating Income, and may exclude Operating Income that cannot be reasonably underwritten by lenders making amortized loans or that is approved by the Department to be deposited into a reserve account to defray projected operating deficits.
(f) "Department" means the Department of Housing and Community Development.
(g) “Developer Fee” means the same as the definition of that term in California Code of Regulations, Title 4, Section 10302. (h) "Distributions" means the amount of cash or other benefits received from the operation of a Rental Housing Development and available to be distributed pursuant to Section 8314 to the Sponsor or any party having a beneficial interest in the Sponsor or the Project, after payment of all due and outstanding obligations incurred in connection with the Rental Housing Development. Distributions do not include payments for: deferred Developer Fee up to the limit set forth in Section 8312, approved partnership and asset management fees, mandatory debt service, approved reserve accounts established to prevent tenant displacement resulting from the termination of rent subsidies, operations, maintenance, payments to approved reserve accounts, land lease payments to parties that do not have a beneficial interest in the Sponsor entity, or payments for property management or other services as set forth in the Regulatory Agreement for the Rental Housing Development.

Distributions include releases to the Sponsor or any other party of reserve funds, where the use of these funds have not been approved by the Department for Project costs.
(i) “Eligible Households” for MHP means “eligible household” as defined in Section 7301, for HOME this term means the same as “low income families” as defined in 24 CFR 92.2, and for JSJFWHG Uniform Multifamily Regulations 11/15/2017 Page 3 of 35

this term means the same as “agricultural household” as defined in Section 7202.
(j) “Native American Lands” means real property located within the geographic boundary of the State of California that meets both the following criteria: it is trust land for which the United States holds title to the tract or interest in trust for the benefit of one or more Indian tribes or individual Indians, or is restricted Indian land for which one or more tribes or individual Indians holds fee title to the tract or interest but can alienate or encumber it only with the approval of the United States; and the land may be leased for housing development and residential purposes under federal law. (k) "Operating Expenses" means the amount approved by the Department that is necessary to pay for the recurring expenses of the Project, such as utilities, maintenance, management, taxes, licenses, and Supportive Services Costs, but not including debt service or required reserve account deposits.
(l) "Operating Income" means all income generated in connection with operation of the Rental Housing Development including rental income for Assisted Units and non-Assisted Units, rental income for Commercial Space or commercial use, laundry and equipment rental fees, rental subsidy payments, and interest on any accounts, other than approved reserve accounts, related to the Rental Housing Development. "Operating Income" does not include security and equipment deposits, payments to the Sponsor for Supportive Services not included in the Department-approved operating budget, cash contributed by the Sponsor, or tax benefits received by the Sponsor.
(m) "Program" means the Department funding program or programs providing assistance to the Project.
(n) "Project" means a Rental Housing Development, and includes the development, the construction or rehabilitation, and the operation thereof, and the financing structure and all agreements and documentation approved in connection therewith.
(o) “Regulatory Agreement” means the written agreement between the Department and the Sponsor that will be recorded as a lien on the Rental Housing Development to control the use and maintenance of the Project, including restricting the rent and occupancy of the Assisted Units.

Uniform Multifamily Regulations 11/15/2017 Page 4 of 35

(p) "Rental Housing Development" means a structure or set of structures which collectively contains 5 or more Units (except that HOME projects may contain fewer than 5 Units.). “Rental Housing Development” does not include any “health facility” as defined by Section 1250 of the Health and Safety Code or any “alcoholism or drug abuse recovery or treatment facility” as defined by Section 11834.02 of the Health and Safety Code.
(q) “Restricted Unit” means any Assisted Unit and any Unit that is subject to Rent and occupancy restrictions that are comparable to those applicable to Assisted Units. Restricted Units include Units subject to a TCAC regulatory agreement, and all Units subject to similar long-term, low-income or occupancy restrictions imposed by other public agencies.
(r) "Rural Area" means the same as defined in Section 50199.21 of the Health and Safety Code.
(s) “Sponsor” means the legal entity or combination of legal entities with continuing control of the Rental Housing Development. Where the borrowing entity is or will be organized as a limited partnership, Sponsor includes the general partner or general partners who have effective control over the operation of the partnership, or, if the general partner is controlled by another entity, the controlling entity.

Sponsor does not include the seller of the property to be developed as the Project, unless the seller will retain control of the Project for the period of time necessary to ensure Project feasibility as determined by the Department.
(t) “Supportive Services” means social, health, educational, income support and employment services and benefits, coordination of community building and educational activities, individualized needs assessment, and individualized assistance with obtaining services and benefits.
(u) “Supportive Services Costs” means the costs of providing tenants service coordination, case management, and direct resident and Supportive Services. It includes:
(1) the cost of providing tenants with information on and referral to social, health, educational, income support and employment services and benefits, coordination of community building and educational activities, individualized needs assessment, and individualized assistance with obtaining services and benefits; Uniform Multifamily Regulations 11/15/2017 Page 5 of 35

(2) salaries, benefits, contracted services, telecommunication expenses, travel costs, supplies, office expenses, staff training, maintenance of on-site equipment used in services programs, such as computer labs, incidental costs related to resident events, and other similar costs approved by the Department. (v) “TCAC" means the California Tax Credit Allocation Committee. (w) "Transitional Housing" means a Rental Housing Development operating under programmatic constraints that require the termination of assistance after a specified time or event, in no case less than 6 months after initial occupancy, and the re-renting of the Assisted Unit to another eligible participant.
(x) “Unit” means a residential Unit that is used as a primary residence by its occupants, including efficiency Units, residential hotel units, and units used as Transitional Housing.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5, 50675, 50675.1(c), 50675.2 and 50896.1(a), Health and Safety Code; and 24 CFR part 92.

Section 8302. Restrictions on Demolition.
(a) Proposed projects involving new construction and requiring the demolition of existing residential Units are eligible only if the number of bedrooms in the new Project is at least equal to the total number of bedrooms in the demolished structures. The new Units may exist on separate parcels provided all parcels are part of the same Rental Housing Development meeting the requirements of Section 8303(b).
(b) The Department may approve exceptions to subsection (a) where it determines that such exceptions will substantially improve the livability of the remaining units, or serve some other compelling public policy objective. For example, it may approve a reduction in the number of single room occupancy (SRO) units where
necessary to add private cooking and bathing facilities, or a reduction in the number of bedrooms in public housing necessary to meet federal requirements.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50675.4, 50675.7 and 50896.1(a), Health and Safety Code; and 24 CFR Section 92.353(a).

Uniform Multifamily Regulations 11/15/2017 Page 6 of 35

Section 8303. Site Control Requirements and Scattered Site Projects. (a) At the time of application, a Sponsor must have site control of the of the proposed Project property, in the name of the Sponsor or an entity controlled by the Sponsor, by one of the following means:
(1) fee title, which, for tribal trust land, may be evidenced by a title status report or an attorney’s opinion regarding chain of title and current title status;
(2) a leasehold interest on the Project property with provisions that enable the lessee to make improvements on and
encumber the property provided that the terms and
conditions of any proposed lease shall permit, prior to loan closing, compliance with all Program requirements, including compliance with Section 8316;
(3) an enforceable option to purchase or lease which shall extend through the anticipated date of the Program award as specified in the Notice of Funding Availability (NOFA); (4) a disposition and development agreement with a public agency;
(5) an agreement with a public agency that gives the Sponsor exclusive rights to negotiate with that agency for acquisition of the site, provided that the major terms of the acquisition have been agreed to by both parties; or
(6) a land sales contract, or other enforceable agreement for the acquisition of the property.
(b) If the Project has multiple contiguous or non-contiguous sites, the configuration of those sites must satisfy all provisions of the statutes governing the applicable Department funding program or programs, and meet the following additional requirements:
(1) all of the developments on the various sites must have a single owner and property manager at the time of the closing of the Department loan, with the exception of any nonresidential condominium units; (2) the debt and associated security instruments of all lenders senior to the Department must be the same for all sites, and multiple senior lenders shall not be allowed;
Uniform Multifamily Regulations 11/15/2017 Page 7 of 35

=
(3) there must be a single annual report, schedule of rental income, and annual audit of project operations covering all sites;
(4) the Department must be secured against all sites, with lien priority relative to local public agency lenders and use of cash flow available for residual receipt loan payments
determined in accordance with Section 8314(a)(2)(A) and (B) of these regulations (with each lender’s share of residual receipts proportionate to their share of total Department and local government assistance for the entire multi-site project); and
(5) the Department must be named on applicable insurance policies subject to the Department’s approval covering all sites, including but not limited to title insurance policies and other policies with coverage for hazard and liability insurance for the Rental Housing Development, including flood
insurance, if applicable. The Department shall be named as a loss payee or an additional insured on all such policies.

Such policies also shall provide for notice to the Department in the event of any lapse of coverage and in the event of any claim thereunder. Insurance must be obtained and
maintained for the term of the Department’s program loan.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(4)(A), 50675.6, 50675.7(c)(3) and 50896.1(a), Health and Safety Code; 42 U.S.C. Section 5304(b); and 24 CFR Section

92.35(a).

Section 8304. Unit Standards.
(a) Restricted Units shall not differ substantially in size or amenity level from non-Restricted Units with the same number of bedrooms, and Units shall not differ in size or amenity level on the basis of incomelevel restrictions. Restricted Units shall not be segregated from non-Restricted Units, and Units shall not be segregated from each other on the basis of income-level restrictions. Within these limits, Sponsors may change the designation of a particular Unit from Assisted to non-Assisted or from one income-restriction to another over time. For Projects involving rehabilitation or conversion, the Department may permit certain Units to be designated as exclusively market-rate Units where necessary for fiscal integrity and where all other Program requirements are satisfied.

Uniform Multifamily Regulations 11/15/2017 Page 8 of 35

(b) For the full loan term, the number, size, type, and amenity level of Assisted Units shall not be fewer than the number nor different from the size, type and amenity level described in the Regulatory Agreement.
(c) For projects assisted by MHP, the number of Assisted Units shall equal the number of Restricted Units to the extent allowed by the requirements of Article XXXIV of the California Constitution.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(c), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(4)(A), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), 50675.2(b), 50675.7, 50675.8 and 50896.1(a), Health and Safety Code; and 24 CFR Sections 92.252(e) and 92.504(c).

Section 8305. Tenant Selection.
(a) Sponsors shall select only Eligible Households as tenants of vacant Assisted Units, using procedures approved by the Department that include:
(1) reasonable criteria for selection or rejection of tenant applications which shall not discriminate in violation of any federal, state or local law governing discrimination, or any other arbitrary factor;
(2) prohibition of local residency requirements;
(3) prohibition of local residency preferences, except where there is evidence satisfactory to the Department that the preference as applied will comply with fair housing law and:
(A) where accompanied by an equal preference for
employment in the local area and applied to areas not
smaller than municipal jurisdictions or recognized
communities within unincorporated areas, or
(B) where a local ordinance grants a preference to
neighborhood residents who have been or are about
to be displaced;
(4) tenant selection procedures that include the following components, and that are available to prospective tenants upon request:
(A) selection of tenants based on order of application, lottery or other reasonable method approved by the
Uniform Multifamily Regulations 11/15/2017 Page 9 of 35

Department, including priority status under a local
coordinated entry (also known as centralized or
coordinated assessment, or coordinated access)
system established pursuant to federal regulations
governing the Continuum of Care program, 24 Code
of Federal Regulations, Part 578 (June 6, 2017)
hereby incorporated by reference;
(B) does not encourage or require applicants to wait in a physical line;
(C) notification to tenant applicants of eligibility for residency and, based on turnover history for Units in
the Rental Housing Development, the approximate
date when a Unit may be available;
(D) notification of tenant applicants who are found
ineligible to occupy an Assisted Unit of their
ineligibility and the reason for the ineligibility, and of their right to appeal this determination;
(E) maintenance of a waiting list of applicant households eligible to occupy Assisted Units and Units designated
for various tenant income levels, which shall be made
available to prospective tenants upon request;
(F) targeting specific Special Needs Populations (“Special Needs Populations” has the same meaning as
defined in Section 7301(s)) in accordance with the
Regulatory Agreement and applicable laws; and
(G) affirmative fair housing marketing procedures as
specified in the Affirmative Fair Housing Marketing
Plan Compliance Regulations of the United States
Department of Housing and Urban Development, 24
CFR part 200.620 (a)-(c), or similar affirmative fair
marketing housing plan as approved by the
Department.
(b) Sponsors shall rent vacant units to households with no less than the number of people specified in the following schedule:

Uniform Multifamily Regulations 11/15/2017 Page 10 of 35

Unit Size Minimum Number of Persons in
Household
SRO 1
0-BR 1
1-BR 1
2-BR 2
3-BR 4
4-BR 6
5-BR 8
Exceptions:
(1) Live-in aids may be allocated a separate bedroom.
(2) A separate bedroom may be allocated as a reasonable accommodation for individuals with disabilities who have a need for such an accommodation.
(3) For units covered under Housing Choice Vouchers or
project-based Section 8 rental assistance contracts,
Sponsors may defer to the local housing authority’s
determination of appropriate unit occupancy.

A Sponsor may assign tenant households to Units of sizes other than those indicated as appropriate in the table and exceptions listed above if the Sponsor reasonably determines that special circumstances warrant such an assignment and the reasons are documented in the tenant's file. The Sponsor’s determination is subject to approval by the Department. Through the Project’s tenant selection or management plan, a Sponsor may receive advance Department approval of additional categorical exceptions. (c) The Department may approve exceptions to the requirements of this section for Projects located on Native American Lands, based on the unique legal requirements applicable to Native American Lands.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), 50675.8(a)(1) and 50896.1(a), Health and Safety Code; and 24 CFR Sections 92.303, 92.350 and 92.351.

Uniform Multifamily Regulations 11/15/2017 Page 11 of 35

Section 8306. Tenant Recertification.
(a) The Sponsor shall annually recertify household size and income for Assisted Units.
(b) If at the time of recertification, a tenant's household size has changed and no longer meets the occupancy standards pursuant to the previous section, the Sponsor may require the tenant household to move to the next available appropriately sized Unit.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(c), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.1(c), 50675.8(a)(1) and 50896.1(a), Health and Safety Code, and 24 CFR Sections 92.303, 92.350 and 92.351.

Section 8307. Rental Agreement and Grievance Procedure. (a) All rental or occupancy agreements for Assisted Units are subject to Department approval and shall include:
(1) provisions requiring good cause for termination of tenancy.

One or more of the following constitutes "good cause":
(A) failure by the tenant to maintain applicable eligibility requirements under the Program or other eligibility
requirements as approved by the Department;
(B) material noncompliance by the tenant with the lease, including one or more substantial violations of the
lease or habitual minor violations of the lease which:

1. adversely affect the health and safety of any
person or the right of any tenant to the quiet
enjoyment of the leased premises and related
Project facilities;

2. substantially interfere with the management,
maintenance, or operation of the Rental
Housing Development; or

3. result from the failure or refusal to pay, in a
timely fashion, Rent or other permitted charges
when due. Failure or refusal to pay in a timely
fashion is a minor violation if payment is made
during the 3-day notice period;
Uniform Multifamily Regulations 11/15/2017 Page 12 of 35

(C) material failure by the tenant to carry out obligations under federal, state or local law;
(D) subletting by the tenant of all or any portion of the Assisted Unit;
(E) any other action or conduct of the tenant constituting significant problems which can be reasonably
resolved only by eviction of the tenant, provided that
the Sponsor has previously notified the tenant that the conduct or action in question would be considered
cause for eviction. Examples of action or conduct in
this category include the refusal of a tenant, after
written notice, to accept reasonable rules or any
reasonable changes in the lease or the refusal to
recertify income or household size; or
(F) for Transitional Housing, the end of the maximum
term prescribed for tenant occupancy by the Program
operated in a particular Transitional Housing Project.
(2) a provision requiring that the facts constituting the grounds for any eviction be set forth in the notice provided to the tenant pursuant to state law;
(3) notice of grievance procedures for hearing complaints of tenants and appeal of management action; and
(4) a requirement that the tenant annually recertify household income and size.
(b) The Sponsor shall adopt an appeal and grievance procedure to resolve grievances filed by tenants and appeals of actions taken by Sponsors with respect to tenants' occupancy in the Rental Housing Development, and prospective tenants' applications for occupancy.

The Sponsor’s appeal and grievance procedure shall be subject to Department approval and, at a minimum, shall include the following:
(1) a requirement for delivery to each tenant and applicant of a written copy of the appeal and grievance procedure;
Uniform Multifamily Regulations 11/15/2017 Page 13 of 35

(2) procedures for informal dispute resolution;
(3) a right to a hearing before an impartial body, which shall consist of one or more persons with the power to render a final decision on the appeal or grievance; and
(4) procedures for the conduct of an appeal or grievance hearing and the appointment of an impartial hearing body.
(c) Neither utilization of, nor participation in any of the appeal and grievance procedures shall constitute a waiver of or affect the rights of the tenant, prospective tenant, or Sponsor to a trial de novo or judicial review in any judicial proceeding which may thereafter be brought in the matter.
(d) This section shall not be construed to pre-empt or supersede requirements established by local government which further limit good cause for eviction.
(e) For Projects located on Native American Lands, the Department may approve exemptions to the requirements of this section, based on the unique legal requirements applicable to Native American Lands.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(3), 50517.5(d)(5), 50517.5(e)(2), 50675.8(a)(1), 50675.8(a)(2) and 50896.1(a), Health and Safety Code; and 24 CFR Sections

92.253 and 92.303.

Section 8308. Operating Reserves.

The Sponsor shall establish an operating reserve for the purpose of defraying operating shortfalls resulting from Department-approved Operating Expenses exceeding Operating Income beyond the rent-up period.
a) Withdrawals from the operating reserve shall require prior written approval of the Department. Should the Department fail to take action on a request for an eligible withdrawal from the operating reserve within 30 days from documented receipt of the request, that request shall be deemed approved.
b) The initial deposit to the operating reserve shall be funded from development funding sources in an amount determined by the Department, which shall be not less than the total of the following:
4 months of projected Operating Expenses (excluding the cost of on-site Supportive Services coordination), 4 months of required Uniform Multifamily Regulations 11/15/2017 Page 14 of 35

replacement reserve deposits, and 4 months of non-contingent debt service. For projects with tax credits, the requirement shall be 3 months of these items. In setting the initial funding requirement, the Department shall consider factors including, but not limited to the projected level of Project cash flow, the adequacy of the operating budget, Project location, local market characteristics, the number of sites, and Project design.
c) Sponsor shall fully replace any withdrawals from the Operating Reserve, up to the minimum initial deposit amount specified in subsection (b) above, as may be modified in accordance with subsection (d) or (e) below, using available cash flow prior to use of any cash flow to pay deferred Developer Fee, partnership management or similar fees, or Distributions.
d) In the absence of some extraordinary occurrences, such as litigation affecting the project or construction defects, and upon occurrence of both of the following events, the Department shall reduce the required minimum balance: (i) operation at a debt service coverage ratio of 1.15 or greater for 5 years; and (ii) operation at an Operating Expense coverage ratio of 1.08, where Operating Expense ratio is defined to equal effective gross income, less required replacement reserve deposits and non-contingent debt service, divided by total Operating Expenses, not including the approved cost of Supportive Services coordination.
e) The Department may agree with other financing sources to allocate authority regarding amounts deposited into or withdrawn from the Operating Reserve, where the Department determines that such arrangement would not jeopardize the fiscal integrity of the Project and the minimum reserve requirements would be maintained. For Projects subject to direct federal loan or grant programs, including the Native American Housing Assistance and Self Determination Act programs, or receiving a permanent loan from CalHFA, the Department may also defer to the operating reserve requirements of these agencies during the time such projects are regulated by a federal agency or CalHFA, and not require deposits in the amounts specified in subsection (b).
f) Where all Project development funding sources are legally precluded from using their funds to capitalize the operating reserve as required by subsection (b), the Sponsor may fund this account out of Operating Income, provided that cash flow is sufficient to reasonably ensure that the required balance can be accumulated within six years of initial occupancy.

Uniform Multifamily Regulations 11/15/2017 Page 15 of 35

=
g) In no event shall this reserve balance be used to fund limited partner exit costs, except for amounts in excess of the reserve balance required by the Department.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5, 50675.5(b)(8) and 50896.1(a), Health and Safety Code.

Section 8309. Replacement Reserves.

The Sponsor shall establish a replacement reserve to repair or replace failed or damaged capital items and to cover extraordinary maintenance expenses, as approved by the Department. Extraordinary maintenance expenses are expenses for infrequent major repairs and replacements of building components too costly to be absorbed by the Project’s annual operating budget. In no event shall this reserve be used to fund limited partner exit costs. (a) Withdrawals from the replacement reserve shall require prior written approval of the Department. Should the Department fail to take action on a request for an eligible withdrawal from the replacement reserve within 30 days of documented receipt of the request, that request shall be deemed approved.
(b) The replacement reserve shall be funded from Operating Income, development sources or a combination of Operating Income and development sources.
(1) For new construction or conversion Projects, the initial amount of annual deposits to the replacement reserve
account shall be equal to at least the lesser of 0.6% of estimated construction costs associated with structures in the Project, excluding construction contingency and general contractor profit, overhead and general requirements, or $500 per unit. However, the Department may approve a
different amount based on the results of a third-party reserve analysis, which it may require, or other reliable indicators of the need for replacement reserve funds over the initial 20 years of operation, or, in the case of transactions involving restructuring of existing Department loans, 20 years of operations after the restructuring.
(2) For rehabilitation Projects, the initial amount of annual deposits to the replacement reserve account shall be
determined by the Department based on the results of a
third-party physical needs assessment or other reliable indicators of the need for replacement reserve funds over Uniform Multifamily Regulations 11/15/2017 Page 16 of 35

the initial 20 years of operation. In its initial underwriting, in the absence of an approved physical needs assessment or other reliable indicators of the need for replacement reserve funds, the Department may assume that the initial amount of annual deposits shall be $500 per unit.
(3) The Department may periodically adjust the amount of required deposits to the replacement reserve for a particular Project based on the results of reserve analysis or other reliable indicators of the need for replacement reserve funds over time.
(4) The Department may agree with other financing sources to allocate authority regarding amounts deposited into or
withdrawn from the replacement reserve, where the
Department determines that such arrangement would not
jeopardize the fiscal integrity of the Project and the minimum reserve requirements would be maintained. For Projects
subject to direct federal loan or grant programs, including Native American Housing Assistance and Self Determination Act programs, or receiving a permanent loan from CalHFA, the Department may also defer to the replacement reserve requirements of these agencies during the time such
projects are regulated by a federal agency or CalHFA.
(5) If the Department requires a reserve analysis because the Department determines the reserve is inadequate due to
annual replacement costs exceeding or being reasonably
likely to exceed the amounts deposited to the reserve, or due to a request by the Sponsor to adjust the required
reserve amount, the analysis must result in a due diligence report that examines the current physical conditions at property(ies), specifies repairs or replacements needed immediately, and budgets for the long-term capital repair and replacement needs during the life of an asset, such as the results of using the Capital Needs Assessment eTool,
developed by the U.S. Department of Housing and Urban
Development.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(1), 50675.5(b)(8) and 50896.1(a), Health and Safety Code.

Uniform Multifamily Regulations 11/15/2017 Page 17 of 35

Section 8310. Underwriting Standards.

In analyzing Project feasibility, the Department shall, at a minimum, utilize the following assumptions and criteria:
(a) Residential vacancy rates shall be assumed to be 5%, unless a different figure is required by another funding source (including TCAC) or supported by compelling market evidence.
(b) Vacancy rates for Commercial Space shall be assumed to be 50%, except the Department may use the vacancy loss assumption of the Project’s senior lender or equity investor under either of the following circumstances:
(1) where the commercial income is guaranteed by the
Sponsor through a long-term master lease and the
amount of the Sponsor’s annual master lease
payment is both:
(A) less than one percent of the Sponsor’s cash
and cash equivalent current assets; and
(B) less than or equal to the projected commercial
income, as evidenced by a market study or
appraisal commissioned by the first lien lender
or equity investor, and reflected in the final pro
forma approved by the first lien lender or equity
investor; or
(2) where the Commercial Space has been leased to a
national or regional firm widely recognized by the
general public, and the term of the lease extends at
least five years past the projected date of construction completion.
(c) Total Operating Expenses (not including property taxes or the approved costs of on-site service coordination) shall not be less than those specifically listed in California Code of Regulations, Title 4, Section 10327 as minimum Operating Expenses (without the reduction allowed by those regulations for bond-financed projects).

The Department may project higher Operating Expenses where warranted by the experience of comparable properties and particular building characteristics, such as the nature of the tenant population or the level of rehabilitation. Prior to loan closing, the Department may approve total Operating Expenses that are less than those specified in Section 10327, supra, only if the Project has Uniform Multifamily Regulations 11/15/2017 Page 18 of 35

an extraordinary design feature, such as its own electrical generation system, which results in a quantifiable operating cost savings as documented by a qualified third party.
(d) All Operating Expenses, including property management fees, shall be within the normal market range, as periodically determined by the Department in surveys or based on costs observed in its portfolio.
(e) The first year Debt Service Coverage Ratio shall not be:
(1) less than 1.10:1 or
(2) greater than 1.20:1, except where a higher first-year ratio is necessary to:
(A) project first-year cash flow after debt service and required reserve deposits equal to or less than 12
percent of operating expenses;
(B) meet the requirements of subsection (i);
(C) meet CalHFA’s standard underwriting requirements or those of a direct federal lending program; or
(D) project a positive cash flow over 20 years, using the assumptions specified in subsection (i).

In applying the requirements of subsections (e)(1) and (e)(2), the annual MHP Program loan payment of 0.42% will be considered debt service.

The Department may modify the application of these requirements on a case-by-case basis for Projects receiving operating or rental subsidies structured to allow for breakeven operation, or for operation at a level of cash flow that differs from that resulting from application of these requirements in order to meet the cash flow obligations in this subsection.
(f) Balloon payments are not allowed on senior debt, except where the Department’s affordability covenant or regulatory agreement (collectively “Use Restriction”) is recorded in a position that is senior to the debt with a balloon payment. Any such Use Restriction may include provisions that, upon foreclosure of the debt instrument securing such debt, allow the Use Restriction to be amended to delete any portion of the Use Restriction that is not Uniform Multifamily Regulations 11/15/2017 Page 19 of 35

necessary to ensure the continued restriction of the project to the same affordability level for all occupants, rents or amounts charged pursuant thereto, reporting requirements not related to tenant occupancy and affordability, and level of operations and maintenance (collectively, the “Affordability Provisions”). The Sponsor may also include an executory provision in the original Use Restriction that immediately limits the effect of the Use Restriction to only those set forth in the Affordability Provisions.

Furthermore, in the event project-based rental assistance is terminated, the Affordability Provisions may include a provision allowing rents to increase to the minimum extent required for fiscal integrity, as defined in Section 7301(g), but not in any event shall rents exceed 30% of 50% of area median income, as such area median income is determined by the U. S. Department of Housing and Urban Development, adjusted by bedroom count by TCAC pursuant to 26 U.S. Code Section 42(g)(2)(C) with the annually published TCAC Income Limits and Maximum Rents posted on the TCAC website.
(g) Balloon payments are allowed on junior debt during the term of the Program loan only where the Department determines that the balloon payment will not jeopardize project feasibility. (h) Variable interest rate debt shall be underwritten at the ceiling interest rate, unless the Department determines that using a lower interest rate assumption will not jeopardize project feasibility. (i) The Project must demonstrate a positive cash flow for 15 years, using income and expenses increase rate assumptions specified in California Code of Regulations, Title 4, Section 10327. If projected Project income includes rental assistance or operating subsidy payments under a renewable contract, the Department may assume that this contract will be renewed, where the renewal of the rental assistance or operating subsidy is likely.
(j) Where the Department is providing construction-period financing, the minimum budgeted construction contingency shall be 5 percent of construction costs for new construction projects and 10 percent of construction costs for rehabilitation and conversion projects. (k) Local public agency loans shall not have required payments exceeding 0.5% per year of the original principal loan amount.

Uniform Multifamily Regulations 11/15/2017 Page 20 of 35

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(d)(2), 50517.5(e)(2), 50675.7(b)(3) and 50896.1(a), Health and Safety Code; and 24 CFR Section 92.252.

Section 8311. Limits on Development Costs.
(a) Project development costs must be reasonable, as measured by the ratio of the project’s total eligible basis to its total adjusted threshold basis limits, calculated at the time of application for Department funds. Both total eligible basis and total adjusted basis limits shall be computed in accordance with TCAC regulations and procedures set forth in Title 4, California Code of Regulations, Sections 10325 - 10327, except as follows:
(1) There shall not be an adjustment of threshold basis limits based on units that will be income and rent restricted at or below certain area median income levels, such as that in Title 4, California Code of Regulations, Section
10327(c)(5)(C) as in effect as of September 2016.
(2) Costs shall be deemed reasonable under this section if the ratio calculated pursuant to the above subsection (a) is less than 160 percent.
(b) If the ratio calculated above in subsection (a) exceeds 170 percent, calculated based on actual development costs following completion of construction, the Sponsor shall incur up to 20 negative points which may, in the Department’s discretion, be assessed, and which negative points shall reduce the Sponsor’s score by the same amount for future applications to any of the Department’s Notice of Funding Availability for any of the Department’s programs, and may continue to be repeatedly assessed for any and all successive NOFAs for a period of up to three years following the date on which the Department determined that the cost exceeded the 170 percent limit.
(c) Builder overhead, profit and general requirements shall be limited in accordance with California Code of Regulations, Title 4, Section 10327.
(d) Property acquisition prices shall not exceed appraised value, except where the increment above appraised value is fully covered by junior public agency financing that carries no mandatory debt service.

Uniform Multifamily Regulations 11/15/2017 Page 21 of 35

- -
(e) Proposed Project sites shall not require site development work that is significantly more costly than that typical for other similar projects in the local market area, unless either:
(1) the proposed site acquisition cost together with the site development costs are less than the cost of a typical site together with typical site development costs in the Project’s market area; or
(2) there are no other sites available in the market area with a lower combined cost.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675(a), 50675.4(b)(2), 50675.4(c)(1), 50675.5 and 50896.(1)(a), Health and Safety Code.

Section 8312. Developer Fee.
(a) For Projects not utilizing low income housing tax credits, Developer Fee shall not exceed the amount calculated in accordance with subsections (1), (2) or (3) below. The per unit amounts will be adjusted in thousand dollar increments in accordance with changes in the CPI when, following the year 2016, the CPI has indicated the next full thousand dollar increment has been reached.
(1) For new construction Projects and Projects where the contract for the rehabilitation work equals or exceeds
$35,000 per Unit:
(A) For the first 30 Units, $26,000 per Unit.
(B) For each Unit in excess of 30, $10,500 per Unit.
(2) For other Projects involving acquisition and rehabilitation where the contract amount for the rehabilitation work,
excluding contractor profit and overhead, equals or exceeds $10,500 per Unit and is less than $35,000 per Unit:
(A) For the first 30 Units, $12,000 per Unit.
(B) For each Unit in excess of 30, $5,500 per Unit.
(3) For all other Projects, $2,000 per Unit.
(b) For Projects utilizing 9% competitive low income housing tax credits, Developer Fee payments shall not exceed the amount that Uniform Multifamily Regulations 11/15/2017 Page 22 of 35

may be included in project costs pursuant to California Code of Regulations, Title 4, Section 10327.
(c) For Projects utilizing 4% percent tax credits, Developer Fee payments shall not exceed the lesser of $3,500,000 or the sum of:
(1) the amount that could be included in project costs pursuant to Title 4, California Code of Regulations, Section 10327 if the project was receiving 9% competitive credits; plus
(2) any remaining deferred Developer Fee (payable exclusively from operating income) that is allowed in eligible basis under Title 4, California Code of Regulations, Section 10327 of the TCAC regulations.
(Subsection (c) limits Developer Fee paid from development funding sources.)
(d) The dollar value of any capital contribution of funds or real property made by the Sponsor or an affiliate, as approved by the Department, for Project development costs shall increase the Developer Fee limit by the dollar value of the capital contribution. (e) The limits set forth in this section shall apply to each Project pursuant to the terms of a program standard agreement, as memorialized in Department loan or grant documents entered into pursuant thereto (the “Original Award”). For any future work performed for the benefit of the Project, to the extent such work was not captured, set forth, or otherwise contemplated in any of the legal documents memorializing terms related to the Original Award, the fees for such new developer work benefiting the Project shall be recalculated in accordance with this section, treating that new work as if it were a separate project.
(f) For projects where less than 25 percent of total units are counted in the determination of maximum Department loan or grant amounts, the Department may defer to the limits on Developer Fees applicable to other public agency project funding sources, to the extent it deems necessary to attract sufficient applications to utilize available Department funding.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.5(b)(5), 50675.8(a)(5) and 50896.1(a), Health and Safety Code.

Uniform Multifamily Regulations 11/15/2017 Page 23 of 35

Section 8313. Program Compatibility.
(a) Where the requirements of federal funding for a Project (including low income housing tax credits and direct federal loans but excluding federal loan guarantees) would cause a violation of the requirements to these regulations, the Department may modify these requirements as minimally necessary to ensure program compatibility.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50406(n), 50675.1(d), 50675.9, 50517.5(a)(1), 50517.5(a)(3), 50896.1(a) and 50896.3(b), Health and Safety Code.

Section 8313.1 Funding Source Surpluses.
(a) If, upon completion of construction, permanent development funding sources exceed actual total development costs the following requirements apply to the resulting funding surplus:
(1) If there are local public agency lenders providing
construction–period financing, and the Department is
providing only permanent financing, the local lenders may reduce their loans by an amount not exceeding the
contingency shown in the loan documents approved by the Department at construction loan closing.
(2) In other cases, or to the extent that the surplus exceeds the budgeted contingency, the Department loan amount shall be reduced by an amount not less than the surplus multiplied by the ratio of the Department’s loan amount to total local government assistance, as defined in 8315(c)(3).
(3) As an alternative to (1) or (2), the Department may approve use of surplus funds to reduce tenant rents or for other direct tenant benefits.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.5(b)(5), and 50896.1(a), Health and Safety Code.

Uniform Multifamily Regulations 11/15/2017 Page 24 of 35

Section 8313.2 Special Purpose Entity(ies).
(a) The Department may permit the ultimate borrower or recipient of Department funds to be a special purpose entity formed and controlled by the Sponsor if and only if the Sponsor can demonstrate to the satisfaction of the Department all the following criteria:
(1) The Sponsor will remain as equally liable to the Department as the special purpose entity with respect to the specific performance of the obligations of the loan or grant
documents. The Sponsor may be as equally liable to the
Department as the special purpose entity with respect to the financial obligations of the loan or grant documents;
(2) The Sponsor shall not intentionally or in effect limit or abrogate its legal liability to the Department by utilizing the special purpose entity; and
(3) There shall be no more than two corporate entities between the Sponsor and the special purpose entity in the corporate control and organizational structure(s). For the purposes of this subsection, “corporate entity” may include a corporation, limited liability company, business trust, limited partnership, or general partnership. For the purposes of determining “control,” the Sponsor must provide, at the very minimum, evidence satisfactory to the Department that the Sponsor (or Sponsors) through direct control of the corporate entities between the Sponsor and the special purpose entity,
performs the substantial management duties on behalf of the special purpose entity that involves:
(A) renting, maintaining and repairing the low-income
housing property (or if these duties are delegated to
an agent, hiring and overseeing the agent’s duties);
(B) acquiring, holding, assigning or disposing of property or any interest in property;
(C) borrowing money on behalf of the special purpose
entity, encumbering the special purpose entity’s
assets, placing title in the name of a nominee to
obtain financing, preparing items in whole or in part, in connection to refinancing, increasing, modifying or
extending any obligation; and
Uniform Multifamily Regulations 11/15/2017 Page 25 of 35

(D) determining the amount and timing of distributions to partners and establishing and maintaining all required
reserves.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50896.1(a) and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.2(g) and 50896.1(a), Health and Safety Code.

Section 8314. Use of Operating Cash Flow.
(a) Operating income remaining after payment of approved current and prior year operating expenses, reserve deposits and mandatory debt service shall be applied in the following priority order:
(1) First, towards payment of any:
(A) Approved deferred Developer Fee, pursuant to
Section 8312;
(B) Asset management, partnership management and
similar fees, including fees paid to investors, in an
amount not to exceed the sum of:

1. An amount for the current year, equal to $30,000
for 2016 and increased at the rate of 3.5% for
each subsequent year, plus

2. Unpaid asset management, partnership
management, and similar fees accrued for a
period not to exceed three project fiscal years
following the year during which they are earned,
up to the difference between the limit for the
year and the amount paid for that year; and
(C) Supportive Services Costs that these regulations
would allow to be paid as operating costs, but that
other funding sources do not.
(2) Second, 50 percent to the Sponsor as Distributions and 50 percent to the Department as payments on the Program
loan.
(A) If the terms of other public agencies’ financing also require payments from remaining cash flow, the
Department may agree to share what would otherwise
be its 50 percent share of available cash flow with the Uniform Multifamily Regulations 11/15/2017 Page 26 of 35

public agencies in amounts proportional to the
agencies’ respective assistance amounts (total local
government assistance, as defined in Section 8315,
and total Department loans and grants).
(B) To be consistent with the terms of other public agency loans or leases, the Department may agree to set the
percentage payable to the Sponsor at an amount less
than 50 percent.
(C) For projects with income from project-based Section 8 or similar project-based rental assistance that is not
underwritten by other Project lenders, the Department
may reduce the Sponsor’s share to an amount
equivalent to the amount they would receive if one of
the other lender’s loan amount was based on an
income stream that included the income from the
rental assistance.
(b) A Sponsor may not accumulate Distributions from year to year. A Sponsor may deposit all or a portion of permitted Distributions into a Project account for distribution in subsequent years. These future Distributions shall not reduce the otherwise permitted Distribution in those subsequent years.
(c) The limits on payments for Developer Fee pursuant to subsection (a)(1)(A) and for asset management, partnership management, and similar fees pursuant to subsection (a)(1)(B) shall not apply to payments of those fees made from Distributions.
(d) Payment of Distributions, deferred Developer Fee, asset management fees, partnership management fees and similar fees shall be permitted only after the Sponsor submits a complete annual report and operating budget, and the Department
determines that the report and budget demonstrate compliance with all Program requirements for the applicable year. Circumstances under which no Distributions, deferred Developer Fee, asset management fees, or partnership management fees, and similar fees shall be paid include:
(1) when written notice of default has been issued by any entity with an equitable or beneficial interest in the Project; (2) when the Department determines that the Sponsor has failed to comply with the Department's written notice of any
reasonable requirement for proper maintenance or operation Uniform Multifamily Regulations 11/15/2017 Page 27 of 35

of the Rental Housing Development or use of Project
income;
(3) if all currently required debt service, including mandatory payments on the Program loan, and Operating Expenses
have not been paid;
(4) if the replacement reserve account, operating reserve account, or any other reserve accounts are not fully funded pursuant to Sections 8308 and 8309 and the Regulatory
Agreement.
(e) For 2017, the following limits shall apply to total Supportive Services Costs paid as Operating Expenses. These limits shall be increased each year after 2017 at the rate of 2.5 percent per year:
(1) $4,080 per unit per year for supportive housing restricted to individuals or families experiencing chronic homelessness, as defined consistent with Health and Safety Code Section 50675.14;
(2) $3,060 per unit per year
(A) for supportive housing that is not restricted to
individuals or families experiencing chronic
homelessness as defined pursuant to Health and
Safety Code Section 50675.14; and
(B) for units restricted to occupancy by Special Needs
Populations under any Department programs
(“Special Needs Population” has the same meaning
as defined in Section 7301(s));
(3) $1,051 per unit per year for other units where the Sponsor, their affiliate, or a service provider under contract to provide Supportive Services at the Project has both:
(A) qualified staff devoted exclusively to oversight and quality control of resident services in affordable
housing, including the Project; and
(B) a system to track and report on tenant outcomes,
such as changes in employment status and income;
Uniform Multifamily Regulations 11/15/2017 Page 28 of 35

(4) $250 per unit per year for other units, where the Sponsor, their affiliate, or a service provider under contract does not satisfy the requirements set forth in subsection (e)(3). (f) The following limits shall apply to Supportive Services Costs paid as Operating Expenses:
(1) The cost of staff supervision shall not exceed 10% of the cost of on-site staff salaries.
(2) Administrative overhead expenses, including accounting and human relations, shall not exceed 15% of the total Supportive Services Costs paid as Operating Expenses.
(g) Sponsors paying Supportive Services Costs as Operating Expenses shall maintain onsite and available for Department inspection records of group activities (including calendars and signin sheets) and individualized services and referrals. The Department may also require annual reporting on these and related matters.
(h) For supportive housing, as defined pursuant to Health and Safety Code Section 50675.14, and upon approval by the Department, Sponsors may establish a reserve to cover unexpected shortfalls in revenues to pay for resident services coordination and case management costs. This reserve may be funded through project cash flow available after funding Operating Expenses and other required reserves, or through development sources. The
maximum balance shall not exceed three times the per-unit, peryear limits specified in subsection (e).

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11, 50896.1(a) and 50896.3(b), Health and Safety Code.

Reference: Sections 50517.5(a)(1), 50517.5(c)(2), 50517.5(e)(2), 50675.8(a)(5), and 50896.1(a), Health and Safety Code.

Section 8315. Subordination Policy.
(a) The Department may execute and cause to be recorded a subordination agreement subordinating the Department's lien so long as the subordination does not increase the Department's risk beyond that contemplated in the Program loan or grant
commitment, as may be amended from time to time, and so long as the subordination would further the interest of the Program.

However, and except for Projects assisted by the U.S. Department of Housing and Urban Development under the Section 811 or Section 202 programs, the Department shall not enter into a Uniform Multifamily Regulations 11/15/2017 Page 29 of 35

subordination agreement or other agreement that contains any of the following:
(1) Any limitation of, or condition on, the Department's exercise of its remedies including, but not limited to issuing a notice of default based on a breach under the Department's loan
documents, including a default based solely on a breach of the senior lienholder's documents.
(2) An agreement that the senior lienholder's acceptance of a deed in lieu of foreclosure would result in the senior
lienholder taking title to the Rental Housing Development free and clear of the Department's lien(s).
(3) An agreement permitting any modification or supplement of the senior lienholder's lien without the prior written consent of the Department except an agreement that permits a
senior lienholder to make advances to: (i) cure a default under a lien with a higher priority than the Department's lien; (ii) pay delinquent taxes on the security property; (iii) pay delinquent hazard or liability insurance premiums for the security property; or (iv) to protect the health and safety of the tenants.
(4) An agreement that would require the Department to
undertake additional obligations to any party.
(b) The Department's lien(s) shall not be subordinated to the liens of a local governmental entity unless either:
(1) the total local governmental assistance to the Project is more than twice the amount of the Department's total assistance to the Project (including both loans and grants); or
(2) the total local governmental assistance to the Project is more than the Department's total assistance to the Project
(including both loans and grants) and the local government entity manages a portfolio of their own loans that includes over 10,000 rental units with rent and occupancy restrictions. (c) As used in this section:

Uniform Multifamily Regulations 11/15/2017 Page 30 of 35

(1) “Department's lien” means a deed of trust, regulatory agreement, or other agreement securing payment or
performance under an award of Program funds that has
been recorded in the office of the recorder of the county in which the Rental Housing Development is located.
(2) “Lien of a local government entity” means a recorded deed of trust, regulatory agreement, reversion, or other recorded agreement securing payment or performance, or a covenant running with the land that affects the maintenance, use, operation, or occupancy of the Rental Housing
Development. Except that covenants in favor of a community redevelopment agency or successor agency regarding the
use, maintenance, operation, or transferability of a Rental Housing Development including rent limitations or income restrictions on tenants, or prohibiting discrimination, shall not constitute liens subject to the requirements of this section. (3) “Total local government assistance” means the sum of the original principal amounts of loans and grants made by the local government entity plus other direct project costs paid for by the local governmental entity and approved by the Department including, but not limited to, costs of site preparation, demolition, environmental remediation, and land acquisition. The value of assistance in the form of land writedowns or donations shall be limited to the cost paid by the public agency to acquire the land, less any sales proceeds paid to the agency; or in the case of a leasehold, the cost paid by the public agency less the present value of projected lease payments.
(d) The Department's lien(s) shall not be subordinated to the liens of a lender affiliated with an entity that has an ownership interest in the Project unless a covenant, regulatory agreement, or similar instrument is recorded senior to the lender’s documents that includes the provisions specified in Section 8310(f).

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(d)(4)(D), 50675(e), 50675.1(b), 50675.6(d), 50896, 50896.1 and 50896.3, Health and Safety Code.

Uniform Multifamily Regulations 11/15/2017 Page 31 of 35

Section 8316. Leasehold Security.
(a) In any Project where the Sponsor proposes to control the Project land through a long-term ground lease, either:
(1) the Regulatory Agreement and other Program documents shall be recorded against both the Sponsor’s interest in the Project and the fee interest in the land, and the lease shall have a term remaining at the time of recordation at least equal to the term of the Program loan or grant; or
(2) if the Regulatory agreement and other Program documents are not recorded against the Project’s fee interest, the ground lease shall be subject to the Department’s approval, must not be subject to any other mortgages, regulatory
agreements, use restrictions, or equivalent instruments on the fee interest, and shall contain, or be amended to contain, provisions which:
(A) establish a remaining term of at least ninety (90)
years from the date the Department documents are
recorded, provided that the Department may accept a
lesser term, not less than 65 years, when the lessor is a public agency;
(B) ensure the validity of the lien of the Program loan and/or grant documents on the lease;
(C) ensure that the lease permits the Project to satisfy all Program requirements and permit the Department to
enforce the provisions of the Program loan and/or
grant without restriction;
(D) expressly consent to the lessee’s assignment of the lease to the Department without further consent of the
lessor, and permit the Department, after acquisition of the leasehold property, to transfer or assign the lease to a third party without consent of the lessor.
(E) provide that the lessor does not have the right to
terminate the lease or accelerate the rent upon
lessee’s breach without first giving the lessee and the Department reasonable notice and opportunity to cure
within a reasonable period;
Uniform Multifamily Regulations 11/15/2017 Page 32 of 35

(F) provide that no termination, modification or
amendment to any terms of the lease shall be
effective without the written consent of the
Department, and any attempt to take such actions
would be void without the Department’s consent;
(G) require that, in the event of destruction of any
improvements on the land, neither the lessor nor the
lessee shall terminate the lease if and so long as the
lessee or Department pursues reconstruction of the
improvements with reasonable diligence;
(H) provide that the Department shall not have any
liability for the performance of any of the obligations of lessee under the lease until the Department has
acquired the leasehold interest, and then only in
accordance with the terms of the lease and only with
respect to obligations that accrue during the
Department’s ownership of the leasehold interest;
(I) provide that neither the lessor nor the lessee, in the event of bankruptcy by either, will take the benefit of any provisions in the United States Bankruptcy Code
that would cause the termination of the lease or
otherwise render it unenforceable in accordance with
its terms;
(J) provide that the leasehold interest will not merge into the fee in the event that the lessee acquires the
reversionary interest in the Project; and
(K) provide that acquisition of the leasehold property by the Department will not result in a termination of the
leasehold; and upon such event, obligate the lessor to
enter into a new lease having a term at least as long
as the term remaining on the lease prior to acquisition by the Department and on substantially the same
terms and conditions.
(b) If any other regulatory agreement, use restriction, or equivalent instrument is recorded against the fee, the Department’s Regulatory Agreement or covenant must also be recorded against the fee. This subsection shall not apply if the total local governmental assistance to the Project is more than the Department's total assistance to the Project (including both loans and grants) and the local government entity manages a portfolio of Uniform Multifamily Regulations 11/15/2017 Page 33 of 35

their own loans that includes over 10,000 rental units with rent and occupancy restrictions. For the purposes of this subsection, the phrase “regulatory agreement, use restriction, or equivalent instrument” shall not be interpreted to include any instrument that does not relate in any way to affordability, or any affordability restriction that is not required as a condition of public financing. (c) Where the lessee and lessor are related or affiliated parties, the Program loan and/or grant documents shall be recorded against both the Sponsor’s interest in the Project and the fee interest in the land.
(d) To the extent consistent with the statutes and regulations governing the Program, the Department may modify or waive the
requirements of subparagraph (a)(2) where the lessor is a public agency that demonstrates that it is prohibited by law from meeting the requirements, or where the Project will be located on Native American Lands and there is a legal prohibition on meeting these requirements, and the Department determines that there remains adequate security for the Program loan.

Note: Authority cited: Sections 50406(n), 50517.5(a)(1), 50517.5(a)(3), 50675.1(d), 50675.11 and 50896.3(b), Health and Safety Code. Reference:

Sections 50517.5(d)(4)(A), 50675.7, 50896.1 and 50896.3, Health and Safety Code.

Section 8317. Restructuring Transaction Fees.
(a) To cover the Department’s costs of processing any specific Restructuring Transaction as defined in this section, the Department shall charge as authorized by subsections (f) and (n) of Section 50406 of the Health and Safety Code fees to cover the administrative costs incurred for the Department’s staff to negotiate and prepare the legal documents necessary to accomplish the subject Restructuring Transaction.
(b) For the purposes of this section, the term “Restructuring Transaction” means one or more of the following:
(1) extension of the Department’s loan term (or terms, if there are multiple Department loans),
(2) change of ownership (excluding transfer of ownership between two entities controlled by the same parent entity), (3) a new subordination of the Department’s loan or loans to a senior loan or loans, and/or investment of tax credit equity.

Uniform Multifamily Regulations 11/15/2017 Page 34 of 35

Other transactions, such as those limited to the placement of new junior public agency debt without required payments and assignments of limited partner interests, do not constitute a Restructuring Transaction.
(c) The fees charged by this section shall be calculated on a case-bycase basis, and shall be based on the number of work hours necessary for Department staff, at the respective rate for each staff’s classification, to negotiate and prepare final executable versions of all legal documents necessary to accomplish the subject Restructuring Transaction.
(d) Notwithstanding subsection (c), the Department shall not be authorized under this section to charge an amount exceeding the amount that the Department charges for the same or similar restructuring activities that the Department performs under other programs administered by the Department in its Related
Restructuring Programs, as defined by this section.
(e) For the purposes of this section, the term “Related Restructuring Programs” shall include but not be limited to the restructuring activities authorized by Section 50560(a) of the Health and Safety Code, and shall include any fees set forth by the Department pursuant to the guidelines (published on the Department’s website) adopted and authorized pursuant thereto under Health and Safety Code Section 50560.
(f) The legal documents necessary to accomplish the subject Restructuring Transaction shall be subject to the provisions set forth in this subchapter.

Note: Authority cited: Section 50406, Health and Safety Code. Reference:

Section 50406, Health and Safety Code.

Section 8318. Federal Loan Extensions.
(a) The term of any existing federal program loan or regulatory agreement enforced by the Department may be extended, if allowed by the subject federal statute. Such extensions shall not be for a period of less than 10 years nor more than 55 years.

Note: Authority cited: Sections 50406(n) and 50896.3(b), Health and Safety Code. Reference: 24 CFR part 92.

Uniform Multifamily Regulations 11/15/2017 Page 35 of 35

CITY OF SANTA BARBARA

COUNCIL AGENDA REPORT

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA AGENDA REPORT AGENDA DATE: September 10, 2024
TO: Mayor and Councilmembers
Finance Authority of the City of Santa Barbara Board of Directors FROM: Finance Department
SUBJECT: Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
CITY COUNCIL RECOMMENDATION:

That Council introduce and subsequently adopt, by reading of title only, an Ordinance of the City Council of the City of Santa Barbara Authorizing the Execution and Delivery by the City of a Ground Lease, a Lease Agreement, an Indenture, and a Continuing Disclosure Agreement in Connection with the Issuance of Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024, Approving the Issuance of Such Bonds in an Aggregate Principal Amount of Not to Exceed $135,000,000, Authorizing the Distribution of an Official Statement in Connection with the Offering and Sale of Such Bonds and Authorizing the Execution of Necessary Documents and Certificates and Related Actions; and FINANCE AUTHORITY BOARD RECOMMENDATION:

That the Board of Directors of the Finance Authority of the City of Santa Barbara adopt, by reading of title only and after holding a noticed public hearing, a Resolution of the Board of Directors of the Finance Authority of the City of Santa Barbara Authorizing the Execution and Delivery of a Ground Lease, a Lease Agreement, and an Indenture in Connection with the Issuance of Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024, Authorizing the Issuance of Such Bonds in an Aggregate Principal Amount of Not to Exceed $135,000,000, Authorizing the Distribution of an Official Statement in Connection Therewith and Authorizing the Execution of Necessary Documents and Certificates and Related Actions.

Agenda Item No. 15
File Code No. 210.05
Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 2 ends

DISCUSSION:

Executive Summary
The Santa Barbara voters approved Measure C in 2017 increasing the City’s sales tax rate from 7.75% to 8.75% generating approximately $30.0 Million annually for infrastructure and capital projects. Funding priorities since the tax rate increase have included the planning and construction of a new Police Station as well as many street, parks, library and other facility projects. Issuing debt to adequately finance the construction of a new police station and Dwight Murphy Field Renovation requires the City Council’s and City Finance Authority’s approval. The total, not-to-exceed, debt issuance amount is $135.0 Million for both projects which will result in an annual, required debt service payment of approximately $8.0 Million through FY2057.

Police Station
The existing Police Headquarters was constructed in 1959 for a staff of 85, which has now grown to 212 sworn and non-sworn officers. The existing Police Headquarters does not meet the seismic codes for essential services buildings, nor does it meet the current building code and accessibility standards. Currently, police staff are located in four separate locations. The location of the new Santa Barbara Police Station will replace an existing commuter parking lot in downtown Santa Barbara and will consist of a threestory, ±65,000-square-foot new Police Station, an ±85,000-square-foot secure parking structure and will have limited non-secure surface public parking and bicycle parking. The total project cost is estimated at $103.7 million.

Police operations will remain the same as presently exist at the current locations, including Investigative/Internal Operations Division, Field Operations Division, Community Support Services Division, and Common Areas (public lobby, multi-purpose meeting rooms, staff break rooms, fitness room, and locker rooms). The public lobby area will be separated from the secure staff areas. The site preparation and construction process are estimated to take approximately 24 to 27 months, which includes approximately 3 to 4 months for the earthwork phase and 23 to 24 months for the construction phase.

More information about the Police Station project can be found on the City’s website here.

Dwight Murphy Field Renovation
The Dwight Murphy Field Project will achieve a full-scale renovation of a 8.3 acre park with the installation of all new amenities, including a multi-sport synthetic turf field with lighting and fencing, a natural turf field, a universally accessible playground, outdoor fitness gym, family picnic areas, fully accessible restrooms, new trees and landscaping, bicycle parking, accessible entries, and improved circulation with pedestrian pathways surrounding and through the park and expanded park parking. Informal green spaces will support community gatherings, drop-in play, picnicking, casual exercise, and sports Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 3 ends

spectating. The total project cost is approximately $26.9 million, with $7.5 million of external funding.

The City Council initiated the renovation of Dwight Murphy Field in May 2018 with the development of a community-based master plan and authorized a memorandum of understanding with the Gwendolyn Strong Foundation to develop Gwendolyn’s Playground at Dwight Murphy Field, which will become Santa Barbara’s first and the region’s largest all-abilities playground. The Gwendolyn Strong Foundation and the City are co-funding the project design and construction. Final design and construction documents are complete and building permits will be secured in September 2024. With successful bidding for construction in fall 2024, project construction is anticipated begin in January 2025.

More information about the Dwight Murphy Field Renovation project can be found on the City’s website here.

Measure C – Santa Barbara Critical Infrastructure Sales Tax Measure With the passage of Measure C in 2017 which increased the general sales tax rate by

1.0%, a source of financing for these projects was made available. Measure C was intended to fund several infrastructure projects, including the new Police Station. The City Council adopted Resolution 18-011 on February 7, 2018, establishing the priorities for expenditure of Measure C funds for the first five fiscal years; the planning, permitting and bonding for a new Police Station facility listed as one of those priorities. The City Council adopted Resolution 23-161 on December 12, 2023, updating the priorities for the next five fiscal years, with one of the priorities identified as the construction and debt service payments for the new Police Station facility.

This bond issue will leverage a portion of the Measure C revenues to accelerate these two projects, with the sales tax serving as the source of General Fund revenues that will be budgeted for the annual debt service payment. The annual debt obligation will be that of the entire General Fund.

Financing Overview
The financing is being accomplished by the issuance of lease revenue bonds. To summarize the description of such debt as found in the City’s Debt Management Policy found here, lease obligations are secured by a lease-back arrangement between the City and a financing authority. The City’s lease payments are used to pay debt service on the lease revenue bonds. This financing structure is the method commonly used in California to leverage General Fund revenues.

The public entity that will serve as the City’s counterparty is its Finance Authority of the City of Santa Barbara (FACSB). This authority replaces a prior authority created in 2002 Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 4 ends

with the City’s Redevelopment Agency, which was effectively dissolved when the State of California dissolved redevelopment agencies in 2011. The FACSB is a joint powers agency that was created through a joint powers agreement between the City and the California Statewide Communities Development Authority authorized by an ordinance adopted on November 7, 2023, in anticipation of the upcoming debt issuance for the Police Station. The members of the City Council serve ex officio as the FACSB board of directors.

Actions by the City Council in adopting an ordinance and, acting as the Board of Directors of FACSB, in adopting a resolution, are necessary to approve the bond issuance. Both actions authorize the issuance of up to $135.0 Million in lease revenues, and approve in substantially final form the following documents:
 Ground Lease: Document leasing the site of the Police Station to the FACSB.  Lease Agreement: Document under which the City will lease back the completed Police Station and agree to make the lease payments required to repay the debt.

The lease agreement contains many covenants, including that it be maintained, insured and used for a public, tax-exempt purpose. Note that the Police Station will be subject to the Ground Lease and the Lease Agreement, as there will be sufficient rental value in the completed Police Station to secure the entire financing.

Nevertheless, a portion of the proceeds will be used towards the financing of the Dwight Murphy Field Renovation project.
 Indenture: The FACSB will assign its rights and obligations to U.S. Bank Trust Company as trustee for the benefit of the bond holders. The City will make its payments to the trustee, who will pay principal and interest on the bonds. The indenture contains other covenants and responsibilities relative to the administration of the bond issue.
 Notice of Intention to Sell: Published notice required by State law.  Official Notice of Sale: The bid form seeking bids from various underwriters. The bonds will be awarded to the underwriter or underwriting syndicate that offers the lowest true interest cost for the bond issue.
 Continuing Disclosure Agreement: The City must commit to the underwriter that certain information will be provided to bond holders on an annual basis, and that they be notified within ten days of certain events. This agreement is a requirement of federal securities law.
 Preliminary Official Statement: Represents the offering document for the bond issue. The Official Statement provides investors with the information they need to make an informed investment decision, including a description of the bonds, the security for the bonds, the projects, and information related to the City’s financial Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 5 ends

condition. It also outlines various risks to the security and the City that could materialize in the future. This document is also governed by federal securities law, which requires that the City include all material information and not omit material information. City staff and the financing team have taken great strides to meet these requirements. To the extent that Councilmembers have comments on this document, they are encouraged to contact the City Administrator and Finance Director immediately.

In addition to raising the funds required to fund the projects, there are other costs that are included in the sizing of the bond issue, as follows:

Uses of Funds
Project Fund $111,000,000 Provides funds for construction of the Police Station ($98.0M) and playground ($13.0M).

Capitalized
Interest
$15,563,400 Because this financing is being undertaken as a lease, under State law the City cannot commit to
paying rent until the project is complete and
available for use. Because interest on municipal
bonds is paid every six months, additional bond
proceeds are borrowed to cover interest costs
during construction. While this increases the size of
the bond issue, it also defers the City’s initial
payment obligations.

Reserve
Fund
$3,989,500 A debt service reserve fund is often utilized in lease financings to provide additional security to investors, not only in regards to construction delays but also in
the event of a temporary loss of use of the leased
facility; under such circumstances, the City’s rent
would be abated and there would be no other source
of funds to pay investors. A reserve equal to half of
a year’s debt service would provide to time to collect
on insurance in such circumstances.

Costs of
Issuance
UWD: $490,400
COI: $550,000
The various costs associated with the bond issue
are also financed out of proceeds, including the cost
of the underwriter (referred to as underwriter’s
discount), the cost of various professionals such as
bond counsel and municipal advisor, and the cost of
bond ratings.

SUBTOTAL $131,593,300 Total good-faith estimated uses.

Market
Contingency
$3,406,700 Contingency to address a deterioration of market conditions, higher-than-anticipated construction
bids, etc.

Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

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TOTAL $135,000,000 Total NOT-TO-EXCEED Par Amount.

BUDGET/FINANCIAL INFORMATION:

The table below itemizes the overall project budget for the Police Station project:

Construction Costs – General Contractor $90,000,000
Owner Furnished Items – Furniture, Fixtures, & Equipment $5,500,000 Construction Management $2,315,000
Construction Administration & Design $1,375,000
Inspections and Testing $550,000
Conditions of Approval Compliance $461,000
Permits & Fees $146,000
Owner Controlled Insurance Program (OCIP) $3,312,000
TOTAL ESTIMATED PROJECT COST $103,659,000
The table below itemizes the overall project budget for the Dwight Murphy Field Renovation project:

Master Plan Design (by Contract) $121,559
Preliminary & Final Design, Construction Documents (by Contract) $1,487,165 City Staff Project Management, Permits, Services $143,351 Design Subtotal $1,752,075
Construction Estimate $20,164,808
Construction Estimate Change Order Allowance (@15.0%) $2,016,481 City Furnished Materials and Equipment $500,000
Construction Subtotal $22,681,289
Other Construction Costs (testing, biology, soils, etc.) $162,516 Construction Support Services (by Contract) $125,000
Construction Management/Inspection (by City Staff) $2,016,581 Consultant Design Support (by Contract) $220,000
Other Costs Subtotal $2,524,097
Construction Subtotal
ll
$25,205,386
Council Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 7 ends

TOTAL ESTIMATED PROJECT COST $26,957,461
State law requires that the City report certain expected costs of the financing, information that is included as an attachment to the ordinance. Construction is anticipated to last approximately two years. During this time, the City will only need to make interest payments while deferring principal payments until projects are complete. During construction, annual debt service payments of approximately $6.1 Million will be budgeted during the annual budget process. After construction, the annual debt service payments will increase to approximately $8.0 Million through FY2057 when the 30-year bond will be fully paid off. Annual Measure C sales tax revenues are projected to be approximately $33.4 Million in the FY2025 budget; therefore, the required debt service payment represents 24.0% of the annual Measure C revenue budget. Adhering to the payment schedule and meeting all debt service requirements will be the highest priority use of Measure C funds though FY2057 to ensure compliance and maintaining the City’s high credit rating for potential future borrowings for strategic projects. The true interest cost of the entire issue is estimated to be $15.6 Million.

Debt service on the lease revenue bonds has already been incorporated into the longrange financial planning for Measure C revenues and will continue to be prioritized in future budget cycles. Per the City Council approved debt management policy, the City should maintain its General Fund-backed debt service at less than 10.0% of available annually budgeted revenues (i.e., lease burden). Based on the FY2025 adopted General Fund revenue budget of $220.0 Million, the lease burden post debt issuance will be approximately 3.6% – well below the 10.0% level noted in the policy.

ATTACHMENTS: 1. Ground Lease

2. Lease Agreement

3. Indenture

4. Notice of Intention to Sell

5. Continuing Disclosure Agreement

6. Official Notice of Sale

7. Preliminary Official Statement
PREPARED BY:

Brad Hess, Principal Project Manager, Public Works
Jill Zachary, Parks and Recreation Director
SUBMITTED BY: Keith DeMartini, Finance Director
APPROVED BY: Kelly McAdoo, City Administrator
OH&S 8/27/2024 Draft
4130-2300-8335.4

TO BE RECORDED FOR THE BENEFIT OF

THE CITY OF SANTA BARBARA, CALIFORNIA
AND WHEN RECORDED RETURN TO:

Orrick, Herrington & Sutcliffe LLP
355 S. Grand Ave. Suite 2700
Los Angeles, CA 90071
Attention: Sean J. Baxter

THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX PURSUANT TO SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION CODE.

THIS DOCUMENT IS EXEMPT FROM RECORDING FEES PURSUANT TO SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.

GROUND LEASE
by and between

CITY OF SANTA BARBARA
and

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA
Dated as of ______ 1, 2024
ATTACHMENT 1
4130-2300-8335.4

GROUND LEASE
THIS GROUND LEASE (this “Ground Lease”), dated as of ______ 1, 2024, is by and between the CITY OF SANTA BARBARA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), as lessor, and the FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), as lessee.

RECITALS
WHEREAS, the City desires to finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities (together, the “Series 2024 Project”);
WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, to finance the Series 2024 Project, the City is leasing certain real property and the improvements thereto as described in Exhibit A attached hereto (the “Property”), to the Authority pursuant to this Ground Lease, and the City is subleasing the Property back from the Authority pursuant to the Lease Agreement, dated as of the date hereof (the “Lease Agreement”); WHEREAS, to provide the funds necessary to finance the Series 2024 Project, the Authority is issuing $________ aggregate principal amount of its Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 (the “Series 2024 Bonds”), payable from the base rental payments to be made by the City pursuant to the Lease Agreement; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Ground Lease do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Ground Lease; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows:

ARTICLE I

DEFINITIONS
Except as otherwise defined herein, or unless the context clearly otherwise requires, capitalized undefined terms used herein shall have the meanings ascribed thereto in the Lease Agreement.

ARTICLE II
LEASE OF THE PROPERTY; RENTAL
Section 2.01. Lease of Property. The City hereby leases to the Authority, and the Authority hereby leases from the City, for the benefit of the Owners of the Bonds, the Property, subject only to Permitted Encumbrances, to have and to hold for the term of this Ground Lease.

Section 2.02. Rental. (a) The Authority shall pay to the City as and for rental of the Property hereunder, the sum of not to exceed $______ (the “Ground Lease Payment”). The Ground Lease Payment 2 4130-2300-8335.4
shall be paid from the proceeds of the Series 2024 Bonds; provided, however, that in the event the available proceeds of the Series 2024 Bonds are not sufficient to enable the Authority to pay such amount in full, the remaining amount of the Ground Lease Payment shall be reduced to an amount equal to the amount of such available proceeds.
(b) The City shall deposit the Ground Lease Payment in one or more separate funds or accounts to be held and administered for the purpose of financing the Project. The Authority and the City hereby find and determine that the amount of the Ground Lease Payment does not exceed the fair market value of the leasehold interest in the Property that is conveyed hereunder by the City to the Authority. No other amounts of rental shall be due and payable by the Authority for the use and occupancy of the Property under this Ground Lease.

ARTICLE III

QUIET ENJOYMENT
The parties intend that the Property will be leased back to the City pursuant to the Lease Agreement for the term thereof. Subject to any rights the City may have under the Lease Agreement (in the absence of a Lease Default Event) to possession and enjoyment of the Property, the City hereby covenants and agrees that it will not take any action to prevent the Authority from having quiet and peaceable possession and enjoyment of the Property during the term hereof and will, at the request of the Authority and at the City’s cost, to the extent that it may lawfully do so, join in any legal action in which the Authority asserts its right to such possession and enjoyment.

ARTICLE IV

SPECIAL COVENANTS AND PROVISIONS
Section 4.01. Waste. At all times that the Authority is in possession of the Property, it shall not commit, suffer, or permit any waste on the Property, and shall not willfully or knowingly use or permit the use of the Property for any illegal purpose or act.

Section 4.02. Further Assurances and Corrective Instruments. Each of the City and the Authority shall, from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Property hereby leased or intended so to be or for carrying out the expressed intention of this Ground Lease, the Indenture and the Lease Agreement.

Section 4.03. Waiver of Personal Liability. (a) All liabilities under this Ground Lease on the part of the Authority shall be solely liabilities of the Authority as a joint powers authority, and the City hereby releases each and every director, officer and employee of the Authority of and from any personal or individual liability under this Ground Lease. No director, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the City or to any other party whomsoever for anything done or omitted to be done by the Authority hereunder. (b) All liabilities under this Ground Lease on the part of the City shall be solely liabilities of the City as a charter city and municipal corporation, and the Authority hereby releases each and every member, officer and employee of the City of and from any personal or individual liability under this Ground Lease. No member, officer or employee of the City shall at any time or under any circumstances be individually or personally liable under this Ground Lease to the Authority or to any other party whomsoever for anything done or omitted to be done by the City hereunder. 3 4130-2300-8335.4
Section 4.04. Taxes. The City shall pay any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Property.

Section 4.05. Right of Entry. The City reserves the right for any of its duly authorized representatives to enter upon the Property at any reasonable time to inspect the same.

Section 4.06. Representations and Warranties of the City. The City represents and warrants as follows:
(a) the City has the full power and authority to enter into, to execute and to deliver this Ground Lease, and to perform all of its duties and obligations hereunder, and has duly authorized the execution of this Ground Lease;
(b) except for Permitted Encumbrances, the Property is not subject to any dedication, easement, right of way, reservation in patent, covenant, condition, restriction, lien, or encumbrance which would prohibit or materially interfere with the use of the Property for governmental purposes as contemplated by the City; and
(c) all taxes, assessments, or impositions of any kind with respect to the Property, except current taxes, have been paid in full.

Section 4.07. Representations and Warranties of the Authority. The Authority represents and warrants that the Authority has the full power and authority to enter into, to execute and to deliver this Ground Lease, to perform all of its duties and obligations under this Ground Lease and has duly authorized the execution and delivery of this Ground Lease.

ARTICLE V

RESTRICTIONS ON CITY
Except with respect to Permitted Encumbrances, the City shall not mortgage, sell, encumber, assign, transfer or convey the Property or any portion thereof during the term of this Ground Lease.

ARTICLE VI

IMPROVEMENTS
Title to all improvements made on the Property during the term hereof shall vest in the City.

ARTICLE VII
TERM; TERMINATION
Section 7.01. Term. The term of this Ground Lease shall commence as of the date of commencement of the term of the Lease Agreement and shall remain in full force and effect from such date to and including May 15, 20__, unless such term is extended or sooner terminated as hereinafter provided.

Section 7.02. Extension; Early Termination. If, on May 15, 20__, the Bonds shall not be fully paid, or provision therefor made in accordance with Article X of the Indenture, or the Indenture shall not be discharged by its terms, or if the Rental Payments payable under the Lease Agreement shall have been abated at any time, then the term of this Ground Lease shall be automatically extended until the date upon which all Bonds shall be fully paid, or provision therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, except that the term of this Ground Lease 4 4130-2300-8335.4
shall in no event be extended more than ten years. If, prior to May 15, 20__, all Bonds shall be fully paid, or provisions therefor made in accordance with Article X of the Indenture, and the Indenture shall be discharged by its terms, the term of this Ground Lease shall end simultaneously therewith.

ARTICLE VIII

MISCELLANEOUS
Section 8.01. Binding Effect. This Ground Lease shall inure to the benefit of and shall be binding upon the City, the Authority and their respective successors and assigns.

Section 8.02. Severability. In the event any provision of this Ground Lease shall be held invalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate or render unenforceable any other provision hereof.

Section 8.03. Amendments; Substitution and Release. This Ground Lease may be amended, supplemented, or otherwise modified only in accordance with the provisions of the Lease Agreement. The City shall have the right to substitute alternate real property for the Property or to release portions of the Property as provided in the Lease Agreement.

Section 8.04. Assignment. The Authority and City acknowledge that the Authority has assigned and transferred certain of its right, title, and interest in and to this Ground Lease to the Trustee pursuant to the Indenture. The City consents to such assignment.

Section 8.05. Section Headings. Headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Ground Lease.

Section 8.06. Governing Laws. This Ground Lease shall be governed by and construed in accordance with the laws of the State of California.

Section 8.07. Execution in Counterparts. This Ground Lease may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 5 4130-2300-8335.4
IN WITNESS WHEREOF, the parties hereto have caused this Ground Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above.

CITY OF SANTA BARBARA
By:
[City Officer]
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY
[City Attorney]

FINANCE AUTHORITY OF THE CITY OF

SANTA BARBARA
By:
[Authority Officer]
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY,
as General Counsel of the Authority
[City Attorney]
A-1
4130-2300-8335.4

EXHIBIT A

DESCRIPTION OF THE PROPERTY
All of that real property situated in the City of Santa Barbara, County of Santa Barbara, State of California, described as follows, and any improvements thereto:
4130-2300-8335.4

STATE OF CALIFORNIA )
) ss

COUNTY OF SANTA BARBARA )
On _____________, 2024, before me, ________________________, Notary Public, personally appeared ________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature [SEAL]
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
4130-2300-8335.4

STATE OF CALIFORNIA )
) ss

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

CERTIFICATE OF ACCEPTANCE
In accordance with Section 27281 of the California Government Code, this is to certify that the interest in the real property conveyed by the Ground Lease, dated as of ______ 1, 2024, by and between the City of Santa Barbara, a municipal corporation and charter city organized and existing under and by virtue of the laws of the State of California (the “City”), and the Finance Authority of the City of Santa Barbara, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), from the City to the Authority, is hereby accepted by the undersigned on behalf of the Authority pursuant to authority conferred by resolution of the Board of Directors of the Authority adopted on September 10, 2024, and the Authority consents to recordation thereof by its duly authorized officer.

Dated: ______ __, 2024

FINANCE AUTHORITY OF THE CITY OF

SANTA BARBARA
By:
[Authority Officer]
OH&S 8/27/2024 Draft
4161-2921-8127.4

LEASE AGREEMENT
by and between

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA
and

THE CITY OF SANTA BARBARA
Dated as of ______ 1, 2024
ATTACHMENT 2

TABLE OF CONTENTS
Page
i
4161-2921-8127.4
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION .......................................................1 ARTICLE II LEASE OF PROPERTY; TERM................................................................................4 ARTICLE III RENTAL PAYMENTS...............................................................................................5

ARTICLE IV CONSTRUCTION, IMPROVEMENT, AND INSTALLATION OF THE PROJECT; MAINTENANCE; ALTERATIONS AND ADDITIONS; LIENS .........8 ARTICLE V INSURANCE; NET PROCEEDS; EMINENT DOMAIN .......................................10

TABLE OF CONTENTS
(continued)
Page
ii
4161-2921-8127.4
ARTICLE VI REPRESENTATIONS; COVENANTS....................................................................13 ARTICLE VII LEASE DEFAULT EVENTS AND REMEDIES ....................................................15 ARTICLE VIII AMENDMENTS; ASSIGNMENT AND SUBLEASING; SUBSTITUTION OR RELEASE...........................................................................................................17 ARTICLE IX MISCELLANEOUS..................................................................................................19 EXHIBIT A DESCRIPTION OF THE PROPERTY..................................................................................1 EXHIBIT B DESCRIPTION OF THE PROJECT .....................................................................................1 EXHIBIT C BASE RENTAL PAYMENTS SCHEDULE.........................................................................1 4161-2921-8127.4

LEASE AGREEMENT
THIS LEASE AGREEMENT (this “Lease Agreement”), dated as of ______ 1, 2024, is by and between the FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), as lessor and the CITY OF SANTA BARBARA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), as lessee.

RECITALS
WHEREAS, the City desires to finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities (together, the “Series 2024 Project”);
WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, to finance the Series 2024 Project, the City is leasing certain real property and the improvements thereto as described in Exhibit A attached hereto (the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City is subleasing the Property back from the Authority pursuant to this Lease Agreement;
WHEREAS, to provide the funds necessary to (a) finance the Series 2024 Project, (b) finance capitalized interest with respect to the Series 2024 Bonds through May 15, 2027, (c) fund a debt service reserve fund for the Series 2024 Bonds, and (d) pay the costs of issuance of the Series 2024 Bonds, the Authority is issuing $________ aggregate principal amount of its Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 (the “Series 2024 Bonds”), payable from the base rental payments to be made by the City pursuant to this Lease Agreement; and WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Lease Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Lease Agreement; NOW, THEREFORE, in consideration of the premises and of the mutual agreements and covenants contained herein and for other valuable consideration, the parties hereto do hereby agree as follows:

ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
Definitions. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Lease Agreement, have the meanings herein specified, which meaningsshall be equally applicable to both the singular and plural forms of any of the terms herein defined.

Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Indenture. “Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.03 hereof.
2 4161-2921-8127.4
“Authority” means the Finance Authority of the City of Santa Barbara, a joint powers authority organized and existing under the laws of the State, and any successor thereto. “Authorized Representative” means (a) with respect to the Authority, the Chair, Vice Chair, Executive Director, Secretary, and Treasurer of the Authority, and any other Person designated as an Authorized Representative of the Authority in a Written Certificate of the Authority filed with the Trustee, and (b) with respect to the City, the Mayor, the Mayor Pro Tem, the City Administrator, the Assistant City Administrator, the Finance Director of the City, and any other Person designated as an Authorized Representative of the City in a Written Certificate of the City filed with the Trustee. “Base Rental Payments” means all amounts payable to the Authority from the City as Base Rental Payments pursuant to Section 3.02 hereof.
“Bonds” means the Series 2024 Bonds and any Additional Bonds. “City” means the City of Santa Barbara, a municipal corporation and charter city organized and existing under the laws of the State, and any successor thereto. “Code” means the Internal Revenue Code of 1986.
“Closing Date” means, as the context suggests, the date on which the respective Series of Bonds are initially delivered to the initial purchaser thereof. “Delivery Date” means ______ __, 20__.
“Fair Rental Value” means, with respect to the Property, the annual fair rental value thereof. “Fiscal Year” meansthe period beginning on July 1 of each year and ending on the nextsucceeding June 30, or any other twelve-month period hereafterselected and designated asthe official fiscal year period of the City.
“Ground Lease” means the Ground Lease, dated as of ______ 1, 2024, by and between the Authority and the City, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and hereof.
“Indenture” means the Indenture, dated as of ______ 1, 2024, by and among the Authority, the City and U.S. Bank Trust Company, National Association, as Trustee, as originally executed and as it may be amended or supplemented from time to time in accordance with the provisions thereof. “Interest Payment Dates” means May 15 and November 15 of each year, commencing ______ 15, 20__.
“Lease Agreement” means this Lease Agreement, dated as of ______ 1, 2024, by and between the City and the Authority, as the same may be amended or supplemented pursuant to the provisions hereof. “Lease Default Event” means any event or circumstance specified in Section 7.01 hereof as a Lease Default Event.
“Net Proceeds” means 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.
3 4161-2921-8127.4
“Opinion of Bond Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority and satisfactory to and approved by the Trustee.
“Outstanding” has the meaning ascribed to such term in the Indenture. “Permitted Encumbrances” means with respect to the Property, as of any particular time (a) liens for general ad valorem taxes and assessments, if any, not then delinquent, or that the City may, pursuant to provisions of Section 6.06 hereof, permit to remain unpaid, (b) this Lease Agreement, (c) the Ground Lease, (d) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions that exist of record as of the Closing Date, (e) any license with respect to the use of, or lease agreement for, solar equipment and footprint thereof or similar financing program as may be entered into by the City in support of a loan by the State of California Energy Commission or similar loan or grant by an agency or instrumentality of the State that the City certifies in writing does not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture; and (f) easements, rights of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Closing Date that the City certifies in writing do not affect the intended use of the Property or impair the security granted to the Trustee for the benefit of the Owners of the Bonds by the Indenture. “Project” means the Series 2024 Project as described in Exhibit B hereto, a portion of the costs of which are to be financed with proceeds of the Series 2024 Bonds and, as the context suggests, such other projects the costs of which are to be financed with proceeds of the Bonds. “Property” means the real property described in Exhibit A hereto and any improvements thereto. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments.
“Rental Period” means the period from the Closing Date through June 30, 2025, and, thereafter, the twelve-month period commencing on July 1 of each year during the term of this Lease Agreement. “Scheduled Termination Date” means May 15, 20__.
“Series 2024 Bonds” means the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024, issued under the Indenture. “Series 2024 Project” means costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities, as described in Exhibit B hereto, a portion of the costs of which are to be financed with proceeds of the Series 2024 Bonds. “State” means the State of California.
“Trustee” means U.S. Bank Trust Company, National Association, as trustee under the Indenture, or any successor thereto as trustee thereunder substituted in its place as provided therein. “Written Certificate” and “Written Request” of the City mean, respectively, a written certificate or written request signed in the name of the City by an Authorized Representative of the City and, of the Authority mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Representative of the Authority. Any such certificate or request may, but need not, be 4 4161-2921-8127.4
combined in a single instrument with any other instrument, opinion, or representation, and the two or more so combined shall be read and construed as a single instrument.

Rules of Construction. (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate.
(c) References herein to a document shall include all amendments, supplements or other modifications to such document, and any replacements, substitutions, or novation of, that document. (d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction, or effect hereof.
(g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Lease Agreement. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent words and phrases used herein refer to this Lease Agreement and not solely to the particular portion hereof in which any such word is used.

ARTICLE II
LEASE OF PROPERTY; TERM
Lease of Property. (a) The Authority hereby leasesto the City and the City hereby leases from the Authority the Property, on the terms and conditions hereinafter set forth, and subject to all Permitted Encumbrances.
(b) The leasing of the Property by the City to the Authority pursuant to the Ground Lease shall not effect or result in a merger of the City’s leasehold estate in the Property as lessee under this Lease Agreement and its leasehold or fee estate, as applicable, in the Property as lessor under the Ground Lease, and the Authority shall continue to have a leasehold estate in the Property pursuant to the Ground Lease throughout the term thereof and hereof. This Lease Agreement shall constitute a sublease with respect to the Property. The leasehold interest in the Property granted by the City to the Authority pursuant to the Ground Lease is and shall be independent of this Lease Agreement; this Lease Agreement shall not be an assignment or surrender of the leasehold interest in the Property granted to the Authority under the Ground Lease.
5 4161-2921-8127.4
Occupancy; Term. (a) The City shall take possession of the Property on the Closing Date.
(b) The term of this Lease Agreement shall commence on the Closing Date and shall end on the Scheduled Termination Date unless such term is extended or sooner terminated as hereinafter provided. (c) If all of the Property shall be taken under the power of eminent domain, and the City does not elect to cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, as provided in clause (i) of Section 5.07(c) hereof but, rather, elects to deliver or cause to be delivered any award made in eminent domain proceedings for such taking to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds, as provided in clause (ii) of Section 5.07(c) hereof, then, on the date that possession thereof shall be so taken, the term of this Lease Agreement shall terminate. (d) If, prior to the Scheduled Termination Date, all Bonds shall be fully paid, or deemed paid in accordance with Article X of the Indenture, then, on the date of such payment or deemed payment, the term of this Lease Agreement shall terminate.
(e) If on the Scheduled Termination Date, the Rental Payments payable hereunder shall have been abated at any time and for any reason, then the term of this Lease Agreement shall be extended until the date upon which all such Rental Payments shall have been paid in full, except that the term of this Lease Agreement shall in no event be extended more than ten years beyond the Scheduled Termination Date. (f) Upon the termination of the term of this Lease Agreement (other than as provided in Section 7.01 hereof), and the first date upon which the Bonds are no longer Outstanding, all right, title and interest in and to the Property shall vest in the City. Upon any such termination or expiration, the Authority and the Trustee shall execute such conveyances, deeds and other documents as may be necessary to effect such vesting of record.

ARTICLE III

RENTAL PAYMENTS
Rental Payments. (a) Rental Payments, consisting of Base Rental Payments and Additional Rental Payments, shall be paid by the City to the Authority for and in consideration of the right to use and occupy the Property and in consideration of the continued right to the quiet use and enjoyment thereof during each Rental Period for which such Rental Payments are to be paid. (b) The obligation of the City to make the Rental Payments, including 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.
(c) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the obligation of the City to pay Rental Payments shall continue to and including the Base Rental Deposit Date preceding the date of termination of this Lease Agreement, as so extended.

Base Rental Payments. (a) The City, subject to the provisions of Section 3.07 hereof, shall pay Base Rental Payments to the Authority. The Base Rental Payments shall be due and payable no later than the fifth Business Day next preceding each Interest Payment Date (the “Base Rental 6 4161-2921-8127.4
Deposit Date”) on which such Base Rental Payment is due in an amount equal to the principal, if any, of and interest on the Bonds due and payable on such Interest Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of the Bonds. (b) If the term of this Lease Agreement shall have been extended pursuant to Section 2.02 hereof, the Base Rental Payments shall be established so that the Base Rental Payment payable on each Base Rental Deposit Date after the Scheduled Termination Date shall be equal to the principal, if any, of and interest on the Bondsremaining due and payable on such Base Rental Deposit Date; provided, however, that the Rental Payments payable in any Rental Period shall not exceed the annual fair rental value of the Property.

Additional Rental Payments. (a) The City shall also pay, as Additional Rental Payments, such amounts as shall be required for the payment of the following:
(i) all taxes and assessments of any type or nature charged to the Authority or the City or affecting the Property or the respective interests or estates of the Authority or the City therein; (ii) insurance premiums for all insurance required pursuant to Article V hereof; and (iii) all other payments not constituting Base Rental Payments required to be paid by the City pursuant to the provisions of this Lease Agreement. (b) Amounts constituting Additional Rental Payments payable hereunder shall be paid by the City directly to the person or persons to whom such amounts shall be payable. The City shall pay all such amounts when due or at such later time as such amounts may be paid without penalty or, in any other case, within 60 days after notice in writing from the Trustee to the City stating the amount of Additional Rental Payments then due and payable and the purpose thereof.

Fair Rental Value. The parties hereto have agreed and determined that the Fair Rental Value of the Property is not lessthan $______ as of the Closing Date. In making such determinations of Fair Rental Value, consideration has been given to the uses and purposes that may be served by the Property and the benefits therefrom that will accrue to the City and the general public. Payments of the Rental Payments for the Property during each Rental Period shall constitute the total rental for said Rental Period.

Payment Provisions. Each installment of Base Rental Payments payable hereunder shall be paid in lawful money of the United States of America to or upon the order of the Authority at the Principal Office of the Trustee, orsuch other place or entity asthe Authority shall designate.

Each Base Rental Payment shall be deposited with the Trustee no later than the Base Rental Deposit Date preceding the Interest Payment Date on which such Base Rental Payment is due. Any Base Rental Payment that shall not be paid by the City when due and payable under the terms of this Lease Agreement shall bear interest from the date when the same is due hereunder until the same shall be paid a rate equal to the highest rate of interest on any of the Outstanding Bonds. Notwithstanding any dispute between the Authority and the City, the City shall make all Rental Payments when due without deduction or offset of any kind and shall not withhold any Rental Payments pending the final resolution of such dispute. In the event of a determination that the City was not liable for said Rental Payments or any portion thereof, said payments or excess of payments, as the case may be, shall be credited against subsequent Rental Payments due hereunder or refunded at the time of such determination.

Appropriations Covenant. The City shall take such action as may be necessary to include all Rental Payments due hereunder as a separate line item in its annual budgets and to make 7 4161-2921-8127.4
necessary annual appropriations for all such Rental Payments. The covenants on the part of the City herein contained shall be deemed to be and shall be construed to be duties imposed by law and it shall be the duty of each and every public official of the City to take such action and do such things as are required by law in the performance of the official duty of such officials to enable the City to carry out and perform the covenants and agreements in this Lease Agreement agreed to be carried out and performed by the City.

Rental Abatement. (a) Except as otherwise specifically provided in this Section, 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, Rental Payments shall be abated proportionately, and the City waives the benefits of California Civil Code Sections 1932(1), 1932(2) and 1933(4) and any and all other rights to terminate this Lease Agreement by virtue of any such interference, and this Lease Agreement shall continue in full force and effect. The City and the Authority shall, 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 shall 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. The City and the Authority shall provide the Trustee with a certificate setting forth the amount of abatement and the basis therefor. Such abatement shall continue for the period commencing with the date of interference resulting from such damage, destruction, condemnation or title defect and, with respect to damage to 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.
(b) Notwithstanding the foregoing, to the extent that Net Proceeds of rental interruption insurance are available for the payment of Rental Payments, Rental Payments shall not be abated as provided in subsection (a) of this Section but, rather, shall be payable by the City as a special obligation payable solely from such Net Proceeds.

Prepayment. (a) The City may cause all or a portion of the Bonds to be optionally redeemed pursuant to Section 4.02 of the Indenture by prepaying on any date on or after May 15, 20__, all or a portion of the Base Rental Payments from any source of available funds, which prepayment shall be accomplished by the City’s paying an amount sufficient to cause such Bonds to be redeemed pursuant to Section 4.02 of the Indenture on such prepayment date.
(b) The City may prepay, from any source of available funds, all or any portion of the Base Rental Payments by depositing with the Trustee moneys or securities as provided, and subject to the terms and conditions set forth, in Article X of the Indenture sufficient to make such Base Rental Payments when due or to make such Base Rental payments through a specified date on which the City has a right to prepay such Base Rental Payments pursuant to subsection (a) of this Section, and to prepay such Base Rental Payments on such prepayment date, at a prepayment price determined in accordance with subsection (a) of this Section.
(c) If less than all of the Base Rental Payments are prepaid pursuant to this Section then, as of the date of such prepayment pursuant to subsection (a) of this Section, or the date of a deposit pursuant to subsection (b) of this Section, the principal and interest components of the Base Rental Payments shall be recalculated in order to take such prepayment into account. The City agrees that if, following a partial prepayment of Base Rental Payments, the Property is damaged or destroyed or taken by eminent domain, or a defect in title to the Property is discovered, the City shall not be entitled to, and by such prepayment waives the right of, abatement of such prepaid Base Rental Payments and the City shall not be entitled to any reimbursement of such Base Rental Payments.
8 4161-2921-8127.4
(d) If all of the Base Rental Payments are prepaid in accordance with the provisions of this Lease Agreement then, as of the date of such prepayment pursuant to subsection (a) of this Section, or deposit pursuant to subsection (b) of this Section, the term of this Lease Agreement shall be terminated. (e) Before making any prepayment pursuant to this Article, the City shall give written notice to the Authority and the Trustee specifying the date on which the prepayment will be made, which date shall be not less than 45 days prior to the prepayment date, unless such notice shall be waived by the Authority and the Trustee.

ARTICLE IV
CONSTRUCTION, IMPROVEMENT, AND INSTALLATION OF THE PROJECT; MAINTENANCE; ALTERATIONS AND ADDITIONS; LIENS
Construction, Improvement, and Installation of the Project. The Authority hereby appoints the City as its agent to carry out all phases of the construction, improvement, and installation of the Project. The City hereby accepts such appointment and, as such agent, hereby assumes all duties, rights, responsibilities and liabilities of the Authority regarding the construction, improvement, and installation of the Project. The City, as agent of the Authority, will, in all respects, supervise and provide for, or cause to be supervised and provided for, the construction, improvement, and installation of the Project.

In connection with the construction, improvement, and installation of the Project, payment of a portion of the Project Costs shall be made from the moneys deposited with the Trustee in the Project Fund, which shall be disbursed for such purposes in accordance and upon compliance with Article III of the Indenture. Other than such moneys deposited in the Project Fund, and investment earnings thereon, the Authority shall have no obligation to provide moneys to pay any portion of the Project Costs.

The City represents and warrants that the moneys deposited in the Project Fund on the Delivery Date, and investment earnings thereon, are expected to be sufficient to pay the Project Costs in full.

Quiet Enjoyment. The Authority hereby covenants and agrees that it will not take any action to prevent the City, so long as the City is keeping and performing the covenants and agreements herein contained, from having quiet and peaceable possession and enjoyment of the Property during the term hereof.

Net-Net-Net Lease. This Lease Agreement shall be deemed and construed to be a “net-net-net lease” and the City hereby agrees that the Rental Payments shall be an absolute net return to the Authority, free and clear of any expenses, charges or set-offs whatsoever and notwithstanding any dispute between the City and the Authority.

Right of Entry. The Authority shall have the right to enter upon and to examine and inspect the Property during reasonable business hours (and in emergencies at all times) for any purpose connected with the Authority’s rights or obligations under this Lease Agreement, and for all other lawful purposes.

Maintenance and Utilities. Throughout the term of this Lease Agreement, as part of the consideration for rental of the Property, all improvement, repair and maintenance of the Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of all utility services supplied to the Property, which may include, without limitation, janitor service, security, power, gas, telephone, light, heating, ventilation, air conditioning, water and all other utility services, and 9 4161-2921-8127.4
shall pay for or otherwise arrange for payment of the cost of the repair and replacement of the Property resulting from ordinary wear and tear or want of care on the part of the City or any assignee or sublessee thereof. In exchange for the Rental Payments, the Authority agrees to provide only the Property.

Additions to Property. Subject to Section 4.08 hereof, the City and any sublessee shall, at its own expense, have the right to make additions, modifications and improvements to the Property.

To the extent that the removal of such additions, modifications or improvements would not cause material damage to the Property, such additions, modifications and improvements shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. Such additions, modifications and improvements shall not in any way damage the Property or cause it to be used for purposes other than those authorized under the provisions of state and federal law; and the Property, upon completion of any additions, modifications and improvements made pursuant to this Section, shall be of a value that is at least equal to the value of the Property immediately prior to the making ofsuch additions, modifications and improvements.

Installation of City’s Equipment. The City and any sublessee may at any time and from time to time, in its sole discretion and at its own expense, install or permit to be installed items of equipment or other personal property in or upon the Property. All such items shall remain the sole property of the City or such sublessee, and neither the Authority nor the Trustee shall have any interest therein. The City or such sublessee may remove or modify such equipment or other personal property at any time, provided that such party shall repair and restore any and all damage to the Property resulting from the installation, modification or removal of any such items; and the Property, upon completion of any installations, modifications or removals made pursuant to this Section, shall be of a value that is at least equal to the value of the Property immediately prior to the making of such installations, modifications or removals. Nothing in this Lease Agreement shall prevent the City or any sublessee from purchasing items to be installed pursuant to this Section under a conditional sale or lease purchase contract, or subject to a vendor’slien orsecurity agreement as security for the unpaid portion of the purchase price thereof, provided that no such lien or security interest shall attach to any part of the Property.

Mechanic’s, Etc. Liens. In the event the City shall at any time during the term of this Lease Agreement cause any changes, alterations, additions, improvements, or other work to be done or performed or materials to be supplied, in or upon the Property, the City shall pay, when due, all sums of money that may become due for, or purporting to be for, any labor, services, materials, supplies or equipment furnished or alleged to have been furnished to or for the City in, upon or about the Property and that may be secured by a mechanics’, materialmen’s or other lien against the Property or the Authority’s interest therein, and shall cause each such lien to be fully discharged and released at the time the performance of any obligation secured by any such lien matures or becomes due, except that, if the City desires to contest any such lien, it may do so as long as such contest is in good faith. If any such lien shall be reduced to final judgment and such judgment or such process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and said stay thereafter expires, the City shall forthwith pay and discharge said judgment.

Other Liens. The City shall keep the Property and all parts thereof free from judgments and materialmen’s and mechanics’ liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability that materially impairs the City in conducting its business or utilizing the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in any event be deemed to have waived or released the City from liability for or on account of any of its 10 4161-2921-8127.4
agreements and covenants contained herein, or from its obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand.

ARTICLE V
INSURANCE; NET PROCEEDS; EMINENT DOMAIN
Public Liability and Property Damage Insurance; Workers’ Compensation Insurance. [(a) The City shall maintain or cause to be maintained, throughout the term of this Lease Agreement, a standard comprehensive general liability insurance policy or policiesin protection of the City, the Authority and their respective members, officers, agents, and employees. Said policy or policies shall provide for indemnification of said parties against direct or contingent loss or liability for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property. Said policy or policies shall provide coverage in the minimum liability limits of $1,000,000 for personal injury or death of each person and $3,000,000 for personal injury or deaths of two or more persons in a single accident or event, and in a minimum amount of $500,000 for damage to property (subject to a deductible clause of not to exceed $100,000) resulting from a single accident or event. Such public liability and property damage insurance may, however, be in the form of a single limit policy in the amount of $3,000,000 covering all such risks. Such liability insurance may be maintained as part of or in conjunction with any other liability insurance coverage carried or required to be carried by the City. The Net Proceeds of such liability insurance shall be applied toward extinguishment or satisfaction of the liability with respect to which the Net Proceeds of such insurance shall have been paid. The City’s obligations under this subsection may be satisfied by self-insurance, provided that such self-insurance complies with the provisions of Section 5.04 hereof.
(b) The City shall maintain or cause to be maintained casualty insurance insuring the Property against fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood) to the full insurable value of the Property, subject to a $100,000 loss deductible provision. Full insurable value shall not be less than the aggregate principal amount of the Outstanding Bonds. The Net Proceeds of such casualty insurance shall be applied as provided in Section 5.05 hereof.

The City’s obligations under this subsection may be satisfied by self-insurance, provided that such selfinsurance complies with the provisions of Section 5.04 hereof. (c) The City shall maintain rental interruption insurance to cover the Authority’s loss, total or partial, of Base Rental Paymentsresulting from the loss, total or partial, of the use of any part of the Property as a result of any of the hazards required to be covered pursuant to subsection (b) of this Section in 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 Net Proceeds of such rental interruption insurance shall be applied to the payment of Rental Payments during the period in which, as a result of the damage or destruction to the Property that resulted in the receipt of such Net Proceeds, there is substantial interference with the City’s right to the use or occupancy of the Property. The City’s obligations under this subsection may not be satisfied by self-insurance.
(d) The insurance required by this Section other than self-insured as provided shall be provided by reputable insurance companies with claims paying abilities determined, in the reasonable opinion of the City’s professionally qualified risk manager or an independent insurance consultant, to be adequate for the purposes hereof.

Title Insurance. The City shall provide, on the Closing Date, at its own expense, one or more CLTA or ALTA title insurance policies for the Property, in the aggregate amount of not less 11 4161-2921-8127.4
than the aggregate principal amount of the Bonds. Said policy or policies shall insure (a) the fee interest of the City in the Property (b) the Authority’s ground leasehold estate in the Property under the Ground Lease, and (c) the City’s leasehold estate hereunder in the Property, subject only to Permitted Encumbrances; provided, however, that one or more of said estates may be insured through an endorsement to such policy or policies. The Net Proceeds of such title insurance shall be applied as provided as provided in Section

5.06 hereof.

Additional Insurance Provision; Form of Policies. (a) The City shall pay or cause to be paid when due the premiums for all insurance policies required by Section 5.01 hereof, and shall promptly furnish or cause to be furnished evidence of such payments to the Trustee. All such policies shall contain a standard lessee clause in favor of the Trustee and the general liability insurance policies shall be endorsed to show the Trustee, as an additional insured. All such policies shall provide that the Trustee shall be given 30 days’ notice of the expiration thereof, any intended cancellation thereof or any reduction in the coverage provided thereby. The Trustee shall be fully protected in accepting payment on account of such insurance or any adjustment, compromise or settlement of any loss agreed to by the City. (b) The City shall cause to be delivered to the Trustee, on or before August 15 of each year, commencing August 15, 2025, a schedule of the insurance policies being maintained in accordance herewith and a Written Certificate of the City stating that such policies are in full force and effect and that the City is in full compliance with the requirements of this Article. The Trustee shall be entitled to rely upon said Written Certificate of the City as to the City’s compliance with this Article. The Trustee shall not be responsible for the sufficiency of coverage or amounts of such policies.

Self-Insurance. Any self-insurance maintained by the City pursuant to this Article shall comply with the following terms:
(a) the self-insurance program shall be approved in writing by the City’s professionally qualified risk manager or by an independent insurance consultant; (b) the self-insurance program shall include an actuarially sound claims reserve fund out of which each self-insured claim shall be paid, the adequacy of each such fund shall be evaluated on a bi-annual basis by the City’s professionally qualified risk manager or by an independent insurance consultant and any deficiencies in any self-insured claims reserve fund shall be remedied in accordance with the recommendation of the City’s professionally qualified risk manager or such independent insurance consultant, as applicable; and (c) in the event the self-insurance program shall be discontinued, the actuarial soundness of its claims reserve fund, as determined by the City’s professionally qualified risk manager or by an independent insurance consultant, shall be maintained.

Damage or Destruction. (a) If the Property or any portion thereof shall be damaged or destroyed, the City shall, within 30 days of the occurrence of the event of damage or destruction, notify the Trustee in writing of the City’s determination as to whether or not such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. (b) If the City determines that such damage or destruction will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof. 12 4161-2921-8127.4
(c) If the City determines that such damage or destruction will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) apply sufficient funds from the Net Proceeds of any insurance (other than Net Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of such damage or destruction and other legally available funds to the repair or replacement of the Property or the portions thereof that have been damaged or destroyed to the condition that existed prior to such damage or destruction, provided that, within 40 days of the occurrence of the event of damage or destruction, the City delivers to the Trustee a Written Certificate of the City (A) certifying that the City has sufficient funds to so complete such repair or replacement of the Property or such portions thereof and identifying such funds and the location thereof, and (B) stating that such funds will not be used for any other purpose until such repair or replacement is completed, (ii) within 60 days of the occurrence of the event of damage or destruction, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section

8.03 hereof, or (iii) within 60 days of the occurrence of the event of damage or destruction, deliver sufficient funds from such Net Proceeds and other legally available funds to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in (I) the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being [at least equal to 105% of the maximum amount of the principal (including principal due and payable by reason of mandatory sinking fund redemption of such Bonds) of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, and (II) the fair replacement value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, as certified in a Written Certificate of the City delivered to the Trustee, being at least equal to the aggregate principal amount of the Bonds then Outstanding].

Net Proceeds of Title Insurance. (a) If a defect in title to the Property results in the creation of a right to receive Net Proceeds under any policy of title insurance with respect to the Property or any portion thereof, the City shall, within 30 days of the creation of such right, notify the Trustee in writing of the City’s determination as to whether or not such title defect will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. (b) If the City determines that such title defect will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, such Net Proceeds shall be remitted to the City and used for any lawful purpose thereof.
(c) If the City determines that such title defect will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) within 60 days of the creation of such right to receive such Net Proceeds, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, or (ii) immediately upon receipt thereof, deliver or cause to be delivered such Net Proceeds to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds.

Eminent Domain. (a) If all or a portion of the Property shall be taken under the power of eminent domain, the City shall, no later than 45 days prior to the day that possession thereof shall be so taken, notify the Trustee in writing of the City’s determination as to whether or not such taking will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof. 13 4161-2921-8127.4
(b) If the City determines that such taking will not result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, any award made in eminent domain proceedings for such taking shall be remitted to the City and used for any lawful purpose thereof. (c) If the City determines that such taking will result in a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments pursuant to Section 3.07 hereof, then the City shall (i) no later than 60 days prior to the day that possession thereof shall be so taken, cause alternate real property to be substituted for all or a portion of the Property pursuant to, and in accordance with the provisions of, Section 8.03 hereof, or (ii) immediately upon receipt thereof, deliver or cause to be delivered any award made in eminent domain proceedings for such taking to the Trustee for the application to the redemption, pursuant to Section 4.01 of the Indenture, of all or a portion of the Outstanding Bonds.

ARTICLE VI
REPRESENTATIONS; COVENANTS
Representations of the City. The City represents and warrants (a) that the City has the full power and authority to enter into, to execute and to deliver this Lease Agreement and to perform all of its duties and obligations hereunder, and has duly authorized the execution and delivery of this Lease Agreement, and (b) the Property will be used in the performance of essential governmental functions.

Representation of the Authority. The Authority represents and warrants that the Authority has the full power and authority to enter into, to execute and to deliver this Lease Agreement and the Indenture, and to perform all of its duties and obligations hereunder and thereunder, and has duly authorized the execution and delivery of this Lease Agreement and the Indenture.

Recordation. The City shall record, or cause to be recorded, with the Santa Barbara County Recorder, the Lease Agreement and the Ground Lease, or memoranda thereof, and a memorandum of the assignment of the City’s right, title and interest in and to the Ground Lease and the Lease Agreement pursuant to Section 5.01 of the Indenture.

Use of the Property. The City will not use, operate or maintain the Property improperly, carelessly, in violation of any applicable law or in a manner contrary to that contemplated by this Lease Agreement. In addition, the City agrees to comply in all respects (including, without limitation, with respect to the use, maintenance and operation of the Property) with all laws of the jurisdictions in which its operations may extend and any legislative, executive, administrative or judicial body exercising any power or jurisdiction over the Property; provided, however, that the City may contest in good faith the validity or application of any such law or rule in any reasonable manner that does not, in the opinion of the Authority, adversely affect the estate of the Authority in and to any of the Property or its interest or rights under this Lease Agreement.

Other Liens. The City shall keep the Property and all parts thereof free from judgments and materialmen’s and mechanic’s liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability that materially impairs the City in conducting its business or utilizing the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in 14 4161-2921-8127.4
any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand.

Taxes. (a) The City shall pay or cause to be paid all taxes and assessments of any type or nature charged to the Authority or affecting the Property or the respective interests or estatestherein; provided, however, that with respect to special assessments or other governmental charges that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are required to be paid during the term of this Lease Agreement as and when the same become due.
(b) After giving notice to the Authority and the Trustee, the City or any sublessee may, at the City’s or such sublessee’s expense and in its name, in good faith contest any such taxes, assessments, utility and other charges and, in the event of any such contest, may permit the taxes, assessments or other charges so contested to remain unpaid during the period of such contest and any appeal therefrom unless the Authority shall notify the City or such sublessee that, in the opinion of independent counsel, by nonpayment of any such items, the interest of the Authority in the Property will be materially endangered or the Property, or any part thereof, will be subject to loss or forfeiture, in which event the City or such sublessee shall promptly pay such taxes, assessments or charges or provide the Authority with full security against any loss that may result from nonpayment, in form satisfactory to the Authority.

No Liability; Indemnification. (a) The Authority and its directors, officers, agents and employees, shall not be liable to the City or to any other party whomsoever for any death, injury or damage that may result to any person or property by or from any cause whatsoever in, on or about the Property. To the extent permitted by law, the City shall, at its expense, indemnify and hold the Authority and the Trustee and all directors, members, officers and employees thereof harmless against and from any and all claims by or on behalf of Person arising from the acquisition, construction, occupation, use, operation, maintenance, possession, conduct or management of or from any work done in or about the Property or from the subletting of any part thereof, including any liability for violation of conditions, agreements, restrictions, laws, ordinances, or regulations affecting the Property or the occupancy or use thereof, but excepting the negligence or willful misconduct of the persons or entity seeking indemnity. The City also covenants and agrees, at its expense, to pay and indemnify and save the Authority and the Trustee and all directors, officers and employees thereof harmless against and from any and all claims arising from (i) any condition of the Property and the adjoining sidewalks and passageways, (ii) any breach or default on the part of the City in the performance of any covenant or agreement to be performed by the City pursuant to this Lease Agreement, (iii) any act or negligence of licensees in connection with their use, occupancy or operation of the Property, or (iv) any accident, injury or damage whatsoever caused to any person, firm or corporation in or about the Property or upon or under the sidewalks and from and against all costs, reasonable counsel fees, expenses and liabilities incurred in any action or proceeding brought by reason of any claim referred to in this Section, but excepting the negligence or willful misconduct of the person or entity seeking indemnity. In the event that any action or proceeding is brought against the Authority or the Trustee or any director, member, officer or employee thereof, by reason of any such claim, the City, upon notice from the Authority or the Trustee or such director, member, officer or employee thereof, covenants to resist or defend such action or proceeding by counsel reasonably satisfactory to the Authority or the Trustee or such director, member, officer or employee thereof. (b) In no event shall the Authority be liable for any incidental, indirect, special, or consequential damage in connection with or arising out of this Lease Agreement or the City’s use of the Property.
15 4161-2921-8127.4
Further Assurances. The City shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Lease Agreement and for the better assuring and confirming unto the Authority of the rights and benefits provided in this Lease Agreement.

ARTICLE VII

LEASE DEFAULT EVENTS AND REMEDIES
Lease Default Events and Remedies. (a) If (i) the City shall fail (A) to pay any Rental Payment payable hereunder when the same becomes due and payable, time being expressly declared to be of the essence in this Lease Agreement, or (B) to keep, observe or perform any other term, covenant or condition contained herein to be kept or performed by the City, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority, or the Owners of not less than 5% of the aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute a Lease Default Event hereunder if corrective action is instituted by the City within such 30 day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days, (ii) except as otherwise provided in Article VIII hereof, the City’s interest in this Lease Agreement or any part thereof be assigned or transferred, either voluntarily or by operation of law or otherwise, (iii) the City or the Authority shall commence a voluntary case under Title 11 of the United States Code or any substitute or successor statute, or (iv) the City shall fail to observe and perform any of the covenants, agreements or conditions on its part in the Indenture contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority or the Owners of not less than 5.0% of the aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute a Lease Default Event hereunder if corrective action isinstituted by the City within such 30-day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days, such failure or event shall constitute a Lease Default Event under this Lease Agreement. (b) Upon the occurrence of any Lease Default Event hereunder, the Authority, in addition to all other rights and remedies it may have at law, shall have the option to do any of the following:
(i) Upon the happening of any of the Events of Default specified in Section 7.01(a) hereof, it shall be lawful for the Authority or its assignee, subject to the terms of this Lease Agreement, including subsection (c) of this Section, to exercise any and all remedies available or granted to it pursuant to law or hereunder.
(ii) Upon the occurrence of an Lease Default Event, the Authority or its assignee must thereafter maintain this Lease Agreement in full force and effect and may only recover rent and other monetary charges as they become due, all without terminating the City's right to possession of the Facilities, regardless of whether or not the City has abandoned the Facilities; THIS SHALL

BE THE SOLE AND EXCLUSIVE REMEDY AVAILABLE AGAINST THE CITY UNDER THIS FACILITY LEASE OR OTHERWISE. In such event, the City shall remain liable and agrees to keep or perform all covenants and conditions herein contained to be kept or performed by the City and, to pay the rent to the end of the term of this Lease Agreement and further agrees to pay 16 4161-2921-8127.4
said rent and/or rent deficiency punctually at the same time and in the same manner as hereinabove provided for the payment of rent hereunder (without acceleration). (iii) The Authority expressly waives the right to receive any amount from the City pursuant to Section 1951.2(a)(3) of the California Civil Code. (iv) In addition to any Lease Default Event resulting from breach by the City of any agreement, condition, covenant or term hereof, if the City's interest herein or any part thereof is assigned, sublet or transferred without the written consent of the Authority (except as otherwise permitted by Section 8.05 hereof), either voluntarily or by operation of law; or the City or any assignee shall file any petition or institute any proceedings under any act or acts, state or federal, dealing with or relating to the subject of bankruptcy or insolvency or under any amendment of such act or acts, either as a bankrupt or as an insolvent or as a debtor or in any similar capacity, wherein or whereby the City asks or seeks or prays to be adjudicated a bankrupt, or is to be discharged from any or all of its debts or obligations, or offers to its creditors to effect a composition or extension of time to pay its debts, or asks, seeks or prays for a reorganization or to effect a plan of reorganization or for a readjustment of its debts or for any other similar relief, or if the City shall make a general or any assignment for the benefit of its creditors; or the City shall abandon or vacate the Property or any portion thereof (except as permitted by Section 8.05 hereof); then in each and every such case the City shall be deemed to be in default hereunder. (v) Neither the City nor the Authority shall be in default in the performance of any of its obligations hereunder (except for the obligation to make Base Rental Payments pursuant to Section 3.01 hereof) unless and until it shall have failed to perform such obligation within 30 days after notice by the City of the Authority, as the case may be, to the other party properly specifying wherein it has failed to perform such obligation.
(vi) The City and Authority and its successors and assigns shall honor the exclusive rights of the City to use the Property.

The City hereby waives any and all claims for damages caused or that may be caused by the Authority in re-entering and taking possession of the Property as herein provided and all claims for damages that may result from the destruction of or injury to the Property and all claims for damages to or loss of any property belonging to the City, or any other person, that may be in or upon the Property. (c) In addition to the other remedies set forth in this Section, upon the occurrence of a Lease Default Event hereunder, the Authority shall be entitled to proceed to protect and enforce the rights vested in the Authority by this Lease Agreement or by law. The provisions of this Lease Agreement and the duties of the City and of its board, officers or employees shall be enforceable by the Authority by mandamus or other appropriate suit, action or proceeding in any court of competent jurisdiction. Without limiting the generality of the foregoing, the Authority shall have the right to bring the following actions:
(i) Accounting. By action or suit in equity to require the City and its board, officers and employees and its assigns to account as the trustee of an express trust. (ii) Injunction. By action or suit in equity to enjoin any acts or things that may be unlawful or in violation of the rights of the Authority. (iii) Mandamus. By mandamus or other suit, action or proceeding at law or in equity to enforce the Authority’s rights against the City (and its board, officers, and employees) and to 17 4161-2921-8127.4
compel the City to perform and carry out its duties and obligations under the law and its covenants and agreements with the City as provided herein.
(d) Each and all of the remedies given to the Authority hereunder or by any law now or hereafter enacted are cumulative and the single or partial exercise of any right, power or privilege hereunder shall not impair the right of the Authority to the further exercise thereof or the exercise of any or all other rights, powers or privileges. The term “re-let” or “re-letting” as used in this Section shall include, but not be limited to, re-letting by means of the operation by the Authority of the Property subject to applicable law and the City charter. If any statute or rule of law validly shall limit the remedies given to the Authority hereunder, the Authority nevertheless shall be entitled to whatever remedies are allowable under any statute or rule of law.
(e) In the event the Authority shall prevail in any action brought to enforce any of the terms and provisions of this Lease Agreement, the City agrees to pay a reasonable amount as and for attorney’s fees incurred by the Authority in attempting to enforce any of the remedies available to the Authority hereunder.
(f) Notwithstanding anything to the contrary contained in this Lease Agreement, the Authority shall have no right upon a default by the City hereunder, a Lease Default Event hereunder or otherwise to accelerate Rental Payments.
(g) Notwithstanding anything herein to the contrary, the termination of this Lease Agreement by the Authority on account of a Lease Default Event hereunder shall not effect or result in a termination of the lease of the Property by the City to the Authority pursuant to the Ground Lease.

Waiver. Failure of the Authority to take advantage of any default on the part of the City shall not be, or be construed as, a waiver thereof, nor shall any custom or practice that may grow up between the parties in the course of administering this instrument be construed to waive or to lessen the right of the Authority to insist upon performance by the City of any term, covenant or condition hereof, or to exercise any rights given the Authority on account of such default. A waiver of a particular default shall not be deemed to be a waiver of any other default or of the same default subsequently occurring. The acceptance of Rental Payments hereunder shall not be, or be construed to be, a waiver of any term, covenant or condition of this Lease Agreement.

ARTICLE VIII
AMENDMENTS; ASSIGNMENT AND SUBLEASING;

SUBSTITUTION OR RELEASE
Amendments. (a) This Lease Agreement and the Ground Lease, and the rights and obligations of the Authority and the City hereunder and thereunder, may be amended at any time by an amendment hereto or thereto, which shall become binding upon execution by the City and the Authority, but only with the prior written consent of the Owners of a majority of the aggregate principal amount the Bonds then Outstanding, provided that no such amendment shall (i) extend the payment date of any Base Rental Payment or reduce any Base Rental Payment, without the prior written consent of the Owner of each Bond so affected, or (ii) reduce the percentage of the aggregate principal amount the Bonds, the consent of the Owners of which is required for the execution of any amendment of this Lease Agreement or the Ground Lease, without the prior written consent of the Owners of all the Bonds then Outstanding. (b) This Lease Agreement and the Ground Lease, and the rights and obligations of the City and the Authority hereunder and thereunder, may also be amended at any time by an amendment hereto or 18 4161-2921-8127.4
thereto, which shall become binding upon execution by the City and the Authority, without the written consents of any Owners, but only to the extent permitted by law and only for any one or more of the following purposes:
(i) to add to the agreements, conditions, covenants, and terms required by the Authority or the City to be observed or performed herein or therein other agreements, conditions, covenants, and terms thereafter to be observed or performed by the Authority or the City, or to surrender any right or power reserved herein or therein to or conferred herein or therein on the Authority or 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 therein or in regard to questions arising hereunder or thereunder that the Authority or the City may deem desirable or necessary and not inconsistent herewith or therewith, and that shall not materially adversely affect the rights or interests of the Owners;
(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 on Tax-Exempt Bonds or maintain any federal interest subsidies expected to be received with respect to any Bonds; or
(iv) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Section 2.10 and Section 2.11 of the Indenture; (v) to provide for the substitution or release of a portion of the Property in accordance with the provisions of Section 8.03 hereof; or
(vi) to make such other changes herein or therein or modifications hereto or thereto as the Authority or the City may deem desirable or necessary, and that shall not materially adversely affect the interests of the Owners.

Assignment and Subleasing. Neither this Lease Agreement nor any interest of the City hereunder shall be sold, mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation of law or otherwise; provided, however, that the Property may be subleased in whole or in part by the City, provided that any such sublease shall be subject to all of the following conditions:
(a) this Lease Agreement and the obligation of the City to make all Rental Payments hereunder shall remain the primary obligation of the City; (b) the City shall, within 30 days after the delivery thereof, furnish or cause to be furnished to the Authority and the Trustee a true and complete copy of such sublease; (c) any sublease of the Property by the City shall explicitly provide that such sublease is subject to all rights of the Authority under this Lease Agreement, including, the right to re-enter and re-let the Property or terminate this Lease Agreement upon a Lease Default Event hereunder; and
(d) the City shall furnish the Authority and the Trustee with an Opinion of Bond Counsel to the effect that such sublease will not, in and of itself, cause the interest on Tax-Exempt Bonds to be included in gross income for federal income tax purposes. 19 4161-2921-8127.4
Substitution or Release of the Property. The City shall have the right to substitute alternate real property for any portion of the Property or to release a portion of the Property from this Lease Agreement. All costs and expenses incurred in connection with such substitution or release shall be borne by the City. Notwithstanding any substitution or release pursuant to this Section, there shall be no reduction in or abatement of the Base Rental Payments due from the City hereunder as a result of such substitution or release. Any such substitution or release of any portion of the Property shall be subject to the following specific conditions, which are hereby made conditions precedent to such substitution or release:
(a) [the City shall have provided the Trustee with a Written Certificate of the City certifying that the Property, as constituted after such substitution or release (i) has an annual fair rental value greater than or equal to 105% of the maximum amount of the principal of and interest on the Bonds coming due in the then current Rental Period or any subsequent Rental Period, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds), (ii) has a fair replacement value at least equal to the aggregate principal amount of the Bonds then Outstanding, and (iii) has a useful life equal to or greater than the useful life of the Property, as constituted prior to such substitution or release]; (b) the City shall have obtained or caused to be obtained an CLTA or ALTA title insurance policy or policies with respect to any substituted property in the amount of the fair market value ofsuch substituted property (which fair market value shall have been determined by the City), of the type and with the endorsements described in Section 5.02 hereof; (c) the City shall have certified to the Trustee that the substituted real property is of approximately the same degree of essentiality to the City as the portion of the Property for which it is being substituted;
(d) the City shall have provided the Trustee with an Opinion of Bond Counsel to the effect that such substitution or release will not, in and of itself, cause the interest on Tax-Exempt Bonds to be included in gross income for federal income tax purposes; and (e) the City, the Authority and the Trustee shall have executed, and the City shall have caused to be recorded with the Santa Barbara County Recorder, any document necessary to reconvey to the City the portion of the Property being substituted or released and to include any substituted real property in the description of the Property contained herein and in the Ground Lease.

ARTICLE IX

MISCELLANEOUS
Assignment to Trustee. The City understands and agrees that, upon the execution and delivery of the Indenture (which is occurring simultaneously with the execution and delivery hereof), certain right, title and interest of the Authority in and to this Lease Agreement will be sold, assigned and transferred to the Trustee for the benefit of the Owners of the Bonds. The City hereby consents to such sale, assignment and transfer. Upon the execution and delivery of the Indenture, references in the operative provisions hereof to the Authority shall be deemed to be references to the Trustee, as assignee of the Authority.

Validity and Severability. If for any reason this Lease Agreement shall be held by a court of competent jurisdiction to be void, voidable or unenforceable by the Authority or by the City, 20 4161-2921-8127.4
or if for any reason it is held by such a court that any of the covenants and conditions of the City hereunder, including the covenant to pay Rental Payments, is unenforceable for the full term hereof, then and in such event this Lease Agreement is and shall be deemed to be a lease agreement under which the Rental Payments are to be paid by the City annually in consideration of the right of the City to possess, occupy and use the Property, and all of the terms, provisions and conditions of this Lease Agreement, except to the extent that such terms, provisions and conditions are contrary to or inconsistent with such holding, shall remain in full force and effect.

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 Santa Barbara
PO Box 1990
Santa Barbara, CA 93102-1990
Phone: [_____________]
Attention: Finance Director
If to the Authority: Santa Barbara Public Financing Authority PO Box 1990
Santa Barbara, CA 93102-1990
Phone: [_____________]
Attention: Finance Director
If to the Trustee: U.S. Bank Trust Company, National Association 633 West Fifth Street, 24th Floor
Los Angeles, CA 90071
Attention: Global Corporate Trust
Re: Santa Barbara LRB Series 2024
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 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, (c) 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, or (d) if given by any other means, upon delivery at the address specified in this Section.

Section Headings. All section headings contained herein are for convenience of reference only and are not intended to define or limit the scope of any provision of this Lease Agreement.

Governing Laws. This Lease Agreement shall be governed by and construed in accordance with the laws of the State.

Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Lease 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 Lease Agreement using an electronic signature, it issigning, adopting, and accepting this Lease Agreement and thatsigning this Lease Agreement 21 4161-2921-8127.4
using an electronic signature is the legal equivalent of having placed its handwritten signature on this Lease Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Lease Agreement in a usable format.

Execution in Counterparts. This Lease Agreement may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Lease Agreement to be executed by their respective officers thereunto duly authorized, all as of the day and year first written above.

CITY OF SANTA BARBARA
By:
[City Officer]
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY
[City Attorney]

FINANCE AUTHORITY OF THE CITY OF

SANTA BARBARA
By:
[Authority Officer]
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY,
as General Counsel of the Authority
[City Attorney]
1 4161-2921-8127.4

EXHIBIT A

EXHIBIT B

DESCRIPTION OF THE PROJECT
The design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities.
1 4161-2921-8127.4

EXHIBIT C

BASE RENTAL PAYMENTS SCHEDULE
Rental
Payment Date
Principal
Component of
Rental Payment
Interest
Component of
Rental Payment†
Total Rental
Payment
05/10/2025
11/10/2025
05/10/2026
11/10/2026
05/10/2027
11/10/2027
05/10/2028
11/10/2028
05/10/2029
11/10/2029
05/10/2030
11/10/2030
05/10/2031
11/10/2031
05/10/2032
11/10/2032
05/10/2033
11/10/2033
05/10/2034
11/10/2034
05/10/2035
11/10/2035
05/10/2036
11/10/2036
05/10/2037
11/10/2037
05/10/2038
11/10/2038
05/10/2039
11/10/2039
05/10/2050
11/10/2050
05/10/2051
11/10/2051
05/10/2052
11/10/2052
05/10/2053
11/10/2053
05/10/2054
†
Interest is capitalized and paid from the Capitalized Interest Account from ______ __, 20__ through [May 15, 2027]. 2 4161-2921-8127.4
Rental
Payment Date
Principal
Component of
Rental Payment
Interest
Component of
Rental Payment†
Total Rental
Payment
11/10/2054
05/10/2055
11/10/2055
05/10/2056
11/10/2056
05/10/2057
11/10/2057
05/10/2058
11/10/2058
05/10/2059
11/10/2059
05/10/2050
11/10/2050
05/10/2051
11/10/2051
05/10/2052
11/10/2052
05/10/2053
11/10/2053
05/10/2054
11/10/2054
05/10/2055
11/10/2055
05/10/2056
11/10/2056
05/10/2057
†
Interest is capitalized and paid from the Capitalized Interest Account from ______ __, 20__ through [May 15, 2027].

OH&S 8/27/2024 Draft
4149-3738-0431.4

INDENTURE
by and among

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA
and

CITY OF SANTA BARBARA
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,

AS TRUSTEE
Dated as of _______ 1, 2024
Relating to
Finance Authority of the City of Santa Barbara
Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 ATTACHMENT 3

TABLE OF CONTENTS
Page
i
4149-3738-0431.4
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY ...................2 Section 1.01. Definitions......................................................................................................2 Section 1.02. Rules of Construction.....................................................................................9 Section 1.03. Equal Security ..............................................................................................10 ARTICLE II THE BONDS.............................................................................................................10 Section 2.01. Authorization of Bonds................................................................................10 Section 2.02. Terms of Series 2024 Bonds ........................................................................10 Section 2.03. Execution of Bonds......................................................................................12 Section 2.04. Authentication of Bonds...............................................................................12 Section 2.05. Registration Books.......................................................................................12 Section 2.06. Transfer and Exchange of Bonds .................................................................12 Section 2.07. Book-Entry System ......................................................................................12 Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen ................................................14 Section 2.09. Temporary Bonds.........................................................................................15 Section 2.10. Conditions for the Issuance of Additional Bonds ........................................15 Section 2.11. Procedure for the Issuance of Additional Bonds..........................................16 ARTICLE III DELIVERY OF BONDS; APPLICATION OF AMOUNTS ...................................17 Section 3.01. Issuance of Series 2024 Bonds.....................................................................17 Section 3.02. Issuance of Series 2024 Bonds; Application of Proceeds............................18 Section 3.03. Costs of Issuance Fund.................................................................................18 Section 3.04. Project Fund .................................................................................................18 ARTICLE IV REDEMPTION OF BONDS.....................................................................................19 Section 4.01. Extraordinary Redemption ...........................................................................19 Section 4.02. Optional Redemption ...................................................................................19 Section 4.03. Mandatory Sinking Fund Redemption .........................................................19 Section 4.04. Notice of Redemption ..................................................................................21 Section 4.05. Selection of Bonds for Redemption .............................................................21 Section 4.06. Partial Redemption of Bonds .......................................................................21 Section 4.07. Effect of Notice of Redemption ...................................................................21 ARTICLE V PLEDGE AND ASSIGNMENT; FUNDS AND ACCOUNTS................................22 Section 5.01. Pledge and Assignment ................................................................................22 Section 5.02. Payment Fund...............................................................................................22 Section 5.03. Redemption Fund .........................................................................................23 Section 5.04. Reserve Fund................................................................................................23 Section 5.05. Rebate Fund..................................................................................................25 Section 5.06. Investments...................................................................................................25

TABLE OF CONTENTS
(continued)
Page
ii
4149-3738-0431.4
ARTICLE VI NET PROCEEDS AND TITLE INSURANCE; COVENANTS..............................26 Section 6.01. Application of Net Proceeds ........................................................................26 Section 6.02. Title Insurance..............................................................................................27 Section 6.03. Punctual Payment.........................................................................................28 Section 6.04. Compliance with Indenture ..........................................................................28 Section 6.05. Compliance with Ground Lease and Lease Agreement ...............................28 Section 6.06. Observance of Laws and Regulations..........................................................28 Section 6.07. Other Liens...................................................................................................28 Section 6.08. Prosecution and Defense of Suits.................................................................29 Section 6.09. Recordation ..................................................................................................29 Section 6.10. Tax Covenants..............................................................................................29 Section 6.11. Continuing Disclosure..................................................................................29 Section 6.12. Notifications Required by the Act................................................................29 Section 6.13. Further Assurances.......................................................................................30 ARTICLE VII EVENTS OF DEFAULT AND REMEDIES............................................................30 Section 7.01. Events of Default..........................................................................................30 Section 7.02. Action on Default.........................................................................................31 Section 7.03. Other Remedies............................................................................................31 Section 7.04. Remedies Not Exclusive ..............................................................................31 Section 7.05. Application of Amounts After Default.........................................................31 Section 7.06. Power of Trustee to Enforce.........................................................................31 Section 7.07. Owners’ Direction of Proceedings...............................................................32 Section 7.08. Limitation on Owners’ Right to Sue ............................................................32 Section 7.09. Termination of Proceedings.........................................................................32 Section 7.10. No Waiver of Default...................................................................................33 ARTICLE VIII THE TRUSTEE; SECURITIES INTERMEDIARY.................................................33 Section 8.01. Duties and Liabilities of Trustee ..................................................................33 Section 8.02. Qualifications; Removal and Resignation; Successors ................................33 Section 8.03. Liability of Trustee.......................................................................................34 Section 8.04. Right to Rely on Documents and Opinions..................................................35 Section 8.05. Accounting Records and Financial Statements............................................37 Section 8.06. Preservation and Inspection of Documents..................................................37 Section 8.07. Compensation and Indemnification of the Trustee ......................................37 Section 8.08. Securities Intermediary ................................................................................37 ARTICLE IX SUPPLEMENTAL INDENTURES..........................................................................39 Section 9.01. Supplemental Indentures..............................................................................39 Section 9.02. Effect of Supplemental Indenture.................................................................40

TABLE OF CONTENTS
(continued)
Page
iii
4149-3738-0431.4
Section 9.03. Endorsement of Bonds; Preparation of New Bonds.....................................40 Section 9.04. Amendment of Particular Bonds..................................................................40 ARTICLE X DEFEASANCE.........................................................................................................40 Section 10.01. Discharge of Indenture .................................................................................40 Section 10.02. Bonds Deemed to Have Been Paid...............................................................41 Section 10.03. Unclaimed Moneys ......................................................................................42 ARTICLE XI MISCELLANEOUS..................................................................................................42 Section 11.01. Successor Deemed Included in all References to Predecessor.....................42 Section 11.02. Limitation of Rights.....................................................................................42 Section 11.03. Destruction of Bonds....................................................................................43 Section 11.04. Severability of Invalid Provisions................................................................43 Section 11.05. Notices..........................................................................................................43 Section 11.06. Evidence of Rights of Owners......................................................................43 Section 11.07. Disqualified Bonds.......................................................................................44 Section 11.08. Money Held for Particular Bonds ................................................................44 Section 11.09. Funds and Accounts.....................................................................................44 Section 11.10. Business Days ..............................................................................................45 Section 11.11. Waiver of Personal Liability ........................................................................45 Section 11.12. Conclusive Evidence of Regularity..............................................................45 Section 11.13. Partial Invalidity...........................................................................................45 Section 11.14. Governing Laws...........................................................................................45 Section 11.15. Electronic Signature .....................................................................................45 Section 11.16. Execution in Counterparts............................................................................45 EXHIBIT A PERMITTED INVESTMENTS.............................................................................................1 EXHIBIT B FORM OF BOND ..................................................................................................................1 4149-3738-0431.4

INDENTURE
THIS INDENTURE (this “Indenture”), dated as of _______ 1, 2024, is by and among the FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), the CITY OF SANTA BARBARA, a municipal corporation and charter city organized and existing under the laws of the State of California (the “City”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, astrustee (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the City desires to finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities (together, the “Series 2024 Project”);
WHEREAS, the Authority desires to assist the City with such financing; WHEREAS, to finance the Series 2024 Project, the City is leasing certain real property, and the improvements thereto (the “Property”), to the Authority pursuant to a Ground Lease, dated as of the date hereof, and the City is subleasing the Property back from the Authority pursuant to a Lease Agreement, dated as of the date hereof (the “Lease Agreement”);
WHEREAS, in order to provide the funds necessary to (a) finance the Series 2024 Project, (b) finance capitalized interest with respect to the Series 2024 Bonds through May 15, 2027, (c) fund a debt service reserve fund for the Series 2024 Bonds, and (d) pay the costs of issuance of the Series 2024 Bonds, the Authority and the City desire to provide for the issuance of $________ aggregate principal amount of its Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 (collectively, the “Series 2024 Bonds”), payable from the base rental payments to be made by the City pursuant to the Lease Agreement;
WHEREAS, in order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof, premium, if any, and interest thereon, each of the Authority and the City has authorized the execution and delivery of this Indenture; WHEREAS, the Authority and the City desire to provide for the issuance of additional bonds (the “Additional Bonds”) payable from the Base Rental Payments on a parity with the Series 2024 Bonds (the Series 2024 Bonds and any such Additional Bonds being collectively referred to as the “Bonds”); WHEREAS, the Authority and the City have determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid and binding special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of this Indenture has been in all respects duly authorized; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of this Indenture do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Indenture. 2 4149-3738-0431.4
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of, and premium, if any, and interest on all Bonds at any time issued and outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt whereof is hereby acknowledged, the Authority and the City do hereby covenant and agree with the Trustee, for the benefit of the respective owners from time to time of the Bonds, as follows:

DEFINITIONS; RULES OF CONSTRUCTION; EQUAL SECURITY
Section 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any certificate, opinion or other document herein mentioned, have the meanings herein specified. Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the Lease Agreement. “Accounts” means the accounts from time to time established pursuant to this Indenture in any of the Funds established and maintained by the Trustee pursuant hereto. “Act” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code.
“Additional Bonds” means Bonds other than Series 2024 Bonds issued hereunder in accordance with the provisions of Sections 2.10 and 2.11 hereof.
“Additional Rental Payments” means all amounts payable by the City as Additional Rental Payments pursuant to Section 3.03 of the Lease Agreement. “Annual Debt Service” means, for each Bond Year, the sum of (a) the interest due on the Outstanding Bonds in such Bond Year, assuming that the Outstanding Bonds are retired as scheduled (including by reason of mandatory sinking fund redemptions), and (b) the scheduled principal amount of the Outstanding Bonds due in such Bond Year (including any mandatory sinking fund redemptions due in such Bond Year).
“Authority” means the Finance Authority of the City of Santa Barbara, a joint powers authority organized and existing under the laws of the State, and any successor thereto. “Authorized Denominations” means, with respect to the Bonds, $5,000 and integral multiples thereof.
“Authorized Representative” means (a) with respect to the Authority, the Chair, Vice Chair, Executive Director, Secretary, and Treasurer of the Authority, and any other Person designated as an Authorized Representative of the Authority in a Written Certificate of the Authority filed with the Trustee, and (b) with respect to the City, the Mayor, the Mayor Pro-Tem, the City Administrator, the Assistant City Administrator, the Finance Director or any officer designated in writing by the City Administrator of the City, and any other Person designated as an Authorized Representative of the City in a Written Certificate of the City filed with the Trustee.
3 4149-3738-0431.4
“Average Annual Debt Service” means the average of the Annual Debt Service for all Bond Years, including the Bond Year in which the calculation is made. “Base Rental Payments” means all amounts payable to the Authority by the City as Base Rental Payments pursuant to Section 3.02 of the Lease Agreement. “Beneficial Owners” means those Persons for which the Participants have caused the Depository to hold Book-Entry Bonds.
“Bond Year” means each twelve-month period beginning on May 16 in each year and extending to the next succeeding May 15, both dates inclusive, except that the first Bond Year shall begin on the Closing Date and end on May 15, 20__.
“Bonds” means the Finance Authority of the City of Santa Barbara Lease Revenue Bonds issued hereunder and includes the Series 2024 Bonds and any Additional Bonds. “Book-Entry Bonds” means the Bonds registered in the name of the Depository, or the Nominee thereof, as the registered owner thereof pursuant to the terms and provisions of Section 2.07. “Business Day” means a day that is not (a) a Saturday, Sunday or legal holiday in the State, (b) a day on which banking institutions in the State, or in any state in which the Office of the Trustee is located, are required or authorized by law (including executive order) to close, or (c) a day on which the New York Stock Exchange is closed.
“Capitalized Interest Subaccount” means the Subaccount within the Series 2024 Interest Account by that name established within the Interest Account pursuant to Section 5.02 hereof. “Cede & Co.” means Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to Book-Entry Bonds.
“City” means the City of Santa Barbara, a municipal corporation and charter city organized and existing under the laws of the State, and any successor thereto. “Closing Date” means, with respect to the Series 2024 Bonds, the date upon which the Series 2024 Bonds are delivered to the Original Purchaser, being ______ __, 2024. “Code” means the Internal Revenue Code of 1986.
“Common Reserve Account” means the Account of that name established in the Reserve Fund pursuant to Section 5.04 hereof to secure the Common Reserve Bonds. “Common Reserve Bonds” means any Series of Additional Bonds secured by the Common Reserve Account as provided in the Supplemental Indenture providing for the issuance of each such Series of Additional Bonds.
“Continuing Disclosure Agreement” means the Continuing Disclosure Agreement, dated as of _______ 1, 2024, by and between the City and U.S. Bank Trust Company, National Association, as dissemination agent, as originally executed and as it may from time to time be amended in accordance with the provisions thereof.
4 4149-3738-0431.4
“Costs of Issuance” means all the costs of issuing and delivering the Bonds, including, but not limited to: all printing and document preparation expenses in connection with the Indenture, the Ground Lease, the Lease Agreement, the Bonds, and the preliminary official statement and final official statement pertaining to the Bonds; posting and publication costs; filing and recording fees, rating agency fees; title report and title insurance fees and premium; CUSIP Service Bureau charges; market study fees; initial fees, expenses and charges of the Trustee and any prior trustee and escrow bank, including fees and expenses of their respective counsel; legal fees and expenses of counsel, including with respect to the lease of the Property, any termination of a prior lease agreement and related property interests, any correction to the record of title, and the refunding of prior obligations; fees, charges and disbursements of attorneys, municipal advisors, accounting firms, consultants and other professionals; fees and charges for preparation, execution and safekeeping of the Bonds; any premium for a bond insurance policy securing payment of the Bonds, any premium for a reserve policy or facility and any other cost, charge, fee or expense in connection with the original execution of the Bonds, to the extent such fees and expenses are approved by the City. “Costs of Issuance Fund” means the Fund by that name established pursuant to Section 3.03 hereof.
“Defeasance Securities” means (a) non-callable direct obligations of the United States of America (including obligations issued or held in book entry form on the books of the Department of the Treasury of the United States of America and CATS and TGRS), or obligations the payment of principal of and interest on which are unconditionally guaranteed by the United States of America (“United States Treasury Obligations”), and (b) evidences of ownership of proportionate interests in future interest and principal payments on United States Treasury Obligations held by a bank or trust company as custodian, under which the owner of the investment is the real party in interest and has the right to proceed directly and individually against the obligor and the underlying United States Treasury Obligations are not available to any Person claiming through the custodian or to whom the custodian may be obligated. “Depository” means DTC, and its successors as securities depository for any Book-Entry Bonds, including any such successor appointed pursuant to Section 2.07 hereof. “DTC” means The Depository Trust Company, a limited-purpose trust company organized under the laws of the State of New York.
“Electronic Means” means e-mail, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder.
“Event of Default” means any event or circumstance specified in Section 7.01 hereof. “Fair Market Value” means, with respect to any investment, the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security--State and Local Government Series that is acquired in accordance with applicable regulations of the United States 5 4149-3738-0431.4
Bureau of Public Debt, or (iv) any commingled investment fund in which the City and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment.
“Funds” means the separate funds from time to time established and maintained by the Trustee pursuant hereto.
“Ground Lease” means the Ground Lease, dated as of _______ 1, 2024, by and between the Authority and the City, as originally executed and as it may from time to time be amended in accordance with the provisions thereof and of the Lease Agreement. “Indenture” means this Indenture, dated as of _______ 1, 2024, by and among the Authority, the City and U.S. Bank Trust Company, National Association, as Trustee, as originally executed and as it may from time to time be amended or supplemented by any Supplemental Indenture. “Independent Accountant” means any accountant or firm of such accountants duly licensed or registered or entitled to practice and practicing as such under the laws of the State, appointed by or acceptable to the City, and who, or each of whom: (a) is in fact independent and not under domination of the City; (b) does not have any substantial interest, direct or indirect, with the City; and (c) is not connected with the City as an officer or employee of the City, but who may be regularly retained to make reports to the City.
“Interest Account” means the Series 2024 Interest Account and each additional Account established for the payment of interest of a Series of Additional Bonds within the Payment Fund pursuant to Section 5.02 hereof.
“Interest Payment Dates” means May 15 and November 15 of each year, commencing _______ 15, 20__.
“Lease Agreement” means the Lease Agreement, dated as of _______ 1, 2024, by and between the City and the Authority, as originally executed and as it may from time to time be amended in accordance with the provisions thereof.
“Lease Default Event” means an event of default pursuant to and as described in Section 7.01 of the Lease Agreement.
“Lease Revenues” means all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event.
“Letter of Representations” means the Letter of Representations from the Authority to the Depository, in which the Authority makes certain representations with respect to issues of its securities for deposit by the Depository.
“Maximum Annual Debt Service” means the largest Annual Debt Service for any Bond Year, including the Bond Year the calculation is made.
“Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors, and assigns, except that if such corporation shall no longer perform 6 4149-3738-0431.4
the function of a securities rating agency for any reason, the term “Moody’s” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority. “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant to Section 2.07 hereof.
“Office of the Trustee” means the principal corporate trust office of the Trustee in Los Angeles, California, or such other office as may be specified to the Authority and the City in writing; provided, however, that with respect to presentation of Bonds for payment or for registration of transfer and exchange, such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust agency business shall be conducted, which other office or agency shall be specified to the Authority and the City by the Trustee in writing.
“Opinion of Bond Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, appointed and paid by the Authority and satisfactory to and approved by the Trustee.
“Original Purchaser” means the original purchaser of the Bonds from the Authority. “Outstanding” means, when used as of any particular time with reference to Bonds, subject to the provisions of Section 11.07 hereof, all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee under this Indenture except (a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation, (b) Bonds with respect to which all liability of the Authority shall have been discharged in accordance with Section 10.01 hereof, and (c) Bonds in lieu of which other Bonds shall have been authenticated and delivered by the Trustee, or that have been paid without surrender thereof, pursuant to Section 2.08 hereof.
“Owner” means, with respect to a Bond, the Person in whose name such Bond is registered on the Registration Books.
“Participant” means any entity that isrecognized as a participant by DTC in the book-entry system of maintaining records with respect to Book-Entry Bonds. “Participating Underwriters” has the meaning ascribed thereto in the Continuing Disclosure Agreement.
“Payment Fund” meansthe Fund by that name established in accordance with Section 5.02 hereof. “Permitted Investments” is defined in Exhibit A attached hereto. “Person” means an individual, corporation, limited liability company, firm, association, partnership, trust, or other legal entity or group of entities, including a governmental entity or any agency or political subdivision thereof.
“Principal Account” means the Series 2024 Principal Account and each additional Account established for the payment of principal of a Series of Additional Bonds within the Payment Fund pursuant to Section 5.02 hereof.
“Principal Payment Date” means a date on which the principal of the Bonds becomes due and payable as a result of the maturity thereof or by mandatory sinking fund redemption. 7 4149-3738-0431.4
“Project Costs” means all costs of constructing and installing the Project, including but not limited to (a) all costs which the Authority or the City shall be required to pay to a seller or any other Person under the terms of any contract or contracts for the purchase of the Project, (b) all costs which the Authority or the City shall be required to pay a contractor or any other Person for the acquisition, construction and installation of the Project, (c) obligations of the Authority or the City incurred for services (including obligations payable to the Authority or the City for actual out-of-pocket expenses of the Authority or the City) in connection with the acquisition, construction and installation of the Project, including reimbursement to the Authority or the City for all advances and payments made in connection with the Project prior to or after issuance of the Bonds, (d) the actual out-of-pocket costs of the Authority or the City for test borings, surveys, estimates and preliminary investigations therefor, as well as for the performance of all other duties required by or consequent to the proper acquisition, construction and installation of the Project, including administrative expenses under the Lease Agreement and hereunder relating to the acquisition, construction and installation of the Project, and (e) any sums required to reimburse the Authority or the City for advances made by the Authority or the City for any of the above items or for any other costs incurred and for work done by the Authority or the City that are properly chargeable to the Project.
“Project Fund” means the Fund by that name established pursuant to Section 3.04 hereof. “Rebate Fund” means the Fund by that name established pursuant to Section 5.05 hereof. “Rebate Requirement” has the meaning ascribed thereto in the Tax Certificate. “Record Date” means the close of business 15 days immediately preceding an Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means the Fund by that name established pursuant to Section 5.03 hereof. “Redemption Price” means the aggregate amount of principal of and premium, if any, on the Bonds upon the redemption thereof pursuant hereto.
“Registration Books” means the records maintained by the Trustee for the registration of ownership and registration of transfer of the Bonds pursuant to Section 2.05 hereof. “Rental Payments” means, collectively, the Base Rental Payments and the Additional Rental Payments.
“Rental Period” means the period from the Closing Date through June 30, 2025, and, thereafter, the twelve-month period commencing on July 1 of each year during the term of the Lease Agreement. “Reserve Account” means either the Common Reserve Account or any other reserve account established pursuant to Section 5.04 hereof, which Account may secure one or more Series of Additional Bonds as provided in the Supplemental Indenture providing for the establishment thereof. “Reserve Facility” means any line of credit, letter of credit, insurance policy, surety bond or similar instrument, in form reasonably satisfactory to the Trustee, that (a) names the Trustee as beneficiary thereof, (b) provides for payment on demand, (c) cannot be terminated by the issuer thereof so long as any of the Bonds secured by such Reserve Facility remain Outstanding, (d) is issued by an obligor, the obligations of which under the Reserve Facility are, at the time such Reserve Facility is substituted for all or part of the moneys on deposit in the applicable Reserve Account, rated in one of the two highest rating 8 4149-3738-0431.4
categories (without regard to any modifier) by any one rating agency then rating the Bonds secured by such Reserve Facility, and (e) is deposited with the Trustee pursuant to Section 5.04 hereof. “Reserve Fund” means the Fund by that name established pursuant to Section 5.04 hereof. “Reserve Requirement” means, (a) with respect to the Common Reserve Bonds, as of the date of any calculation, the least of (i) 50.0% Maximum Annual Debt Service of such Common Reserve Bonds, (ii) 10% of the original aggregate principal amount of the Common Reserve Bonds (excluding Bonds refunded with the proceeds of subsequently issued Bonds), and (iii) 125.0% of Average Annual Debt Service of such Common Reserve Bonds, and (b) with respect to any Series of Additional Bonds that are not Common Reserve Bonds, such amount, if any, as shall be specified in the Supplemental Indenture authorizing the issuance of such Series of Additional Bonds; provided, however, that in no event shall any Reserve Requirement exceed an amount permitted by the Code. “S&P” means S&P Global Ratings, a division of S&P Global Inc., and its successors and assigns, except that if such entity shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term “S&P” shall be deemed to refer to any other nationally recognized securities rating agency selected by the Authority or the City by notice in writing to the Trustee. “Securities Intermediary” means U.S. Bank National Association, as securities intermediary under this Indenture, or any successor thereto as Securities Intermediary under this Indenture substituted in its place as provided herein.
“Series” means the initial series of Bonds executed, authenticated, and delivered on the date of initial issuance of the Bonds and identified pursuant to this Indenture as the Series 2024 Bonds, and any Additional Bonds issued pursuant to a Supplemental Indenture and identified as a separate Series of Bonds. “Series 2024 Bonds” means the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024, issued under the Indenture. “Series 2024 Interest Account” means the Interest Account by that name within the Payment Fund established pursuant to Section 5.02 hereof.
“Series 2024 Principal Account” means the Principal Account by that name within the Payment Fund established pursuant to Section 5.02 hereof.
“Series 2024 Project” means the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities, as described in Exhibit B hereto, a portion of the costs of which are to be financed with proceeds of the Series 2024 Bonds. “Series 2024 Reserve Account” means Reserve Account by that name within the Reserve Fund established pursuant to Section 5.04 hereof.
“Series 2024 Reserve Account Requirement” means, as of the date of any calculation, 50.0% Maximum Annual Debt Service of the Series 2024 Bonds.
“State” means the State of California.
“Subaccounts” means the subaccounts from time to time established pursuant to this Indenture in any of the Accounts established and maintained by the Trustee pursuant hereto. 9 4149-3738-0431.4
“Supplemental Indenture” means any supplemental indenture amendatory of or supplemental to this Indenture, but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
“Tax Certificate” means the Tax Certificate executed by the Authority at the time of issuance of the Series 2024 Bonds, relating to the requirements of Section 148 of the Code, as originally executed and as it may from time to time be amended in accordance with the provisions thereof. “Tax-Exempt” means, with respect to interest on any obligations of a state or local government, including interest on the Series 2024 Bonds, that such interest is excluded from the gross income of the holders thereof for federal income tax purposes, whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating other tax liabilities, including any alternative minimum tax or environmental tax under the Code. “Trustee” means U.S. Bank Trust Company, National Association, a national banking association organized and existing under the laws of the United States of America, or any successor thereto as Trustee hereunder substituted in its place as provided herein.
“Verification Report” means, with respect to the deemed payment of Bonds pursuant to Section

10.02(a) hereof, a report of a nationally recognized certified public accountant, or firm of such accountants, verifying that the Defeasance Securities and cash, if any, deposited in connection with such deemed payment satisfy the requirements of clause (ii)(B) of subsection (a) of Section 10.02(a) hereof. “Written Certificate” and “Written Request” (a) of the Authority mean, respectively, a written certificate or written request signed in the name of the Authority by an Authorized Representative of the Authority, and (b) of the City mean, respectively, a written certificate or written request signed in the name of the City by an Authorized Representative of the City. Any such certificate or request may, but need not, be combined in a single instrument with any other instrument, opinion, or representation, and the two or more so combined shall be read and construed as a single instrument.

Section 1.02. Rules of Construction. (a) The terms defined herein expressed in the singular shall, unless the context otherwise indicates, include the plural and vice versa. (b) The use herein of the masculine, feminine or neuter gender is for convenience only and shall be deemed and construed to include correlative words of the masculine, feminine or neuter gender, as appropriate.
(c) References herein to a document shall include all amendments, supplements or other modifications to such document, and any replacements, substitutions, or novation of, that document. (d) Any term defined herein by reference to another document shall continue to have the meaning ascribed thereto whether or not such other document remains in effect. (e) The use herein of the words “including” and “includes,” and words of similar import, shall be deemed to be followed by the phrase “without limitation.” (f) Headings of Articles and Sections herein and the table of contents hereof are solely for convenience of reference, do not constitute a part hereof and shall not affect the meaning, construction, or effect hereof.
10 4149-3738-0431.4
(g) All references herein to designated “Articles,” “Sections,” “Exhibits,” “subsections,” “paragraphs,” “clauses,” and other subdivisions are to the designated Articles, Sections, Exhibits, subsections, paragraphs, clauses, and other subdivisions of this Indenture. (h) The words “hereof” (except when preceded by a specific Section or Article reference) “herein,” “hereby,” “hereunder,” “hereinabove,” “hereinafter,” and other equivalent words and phrases used herein refer to this Indenture and not solely to the particular portion hereof in which any such word is used.

Section 1.03. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of all Bonds authorized, executed, issued and delivered hereunder and then Outstanding to secure the full and final payment of the principal of, and premium, if any, and interest on all Bonds that may from time to time be authorized, executed, issued and delivered hereunder, subject to the agreements, conditions, covenants and provisions contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Authority or the City shall be for the equal and proportionate benefit, protection and security of all Owners of the Bonds without distinction, preference or priority as to security or otherwise of any Bonds over any other Bonds by reason of the number or date thereof or the time of authorization, sale, execution, issuance or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein.

THE BONDS
Section 2.01. Authorization of Bonds. (a) The Authority hereby authorizes the issuance of the Bonds under and subject to the terms of this Indenture, the Act and other applicable laws of the State. The Bonds may consist of one or more Series of varying denominations, dates, maturities, interest rates and other provisions, subject to the provisions and conditions contained herein. The Bonds shall be designated generally as the “Finance Authority of the City of Santa Barbara Lease Revenue Bonds,” with each Series thereof to bear such additional designation as may be necessary or appropriate to distinguish such Series from every other Series of Bonds.
(b) The Bonds shall be special obligations of the Authority, payable solely from the Lease Revenues and the other assets pledged therefor hereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds.
(c) Notwithstanding anything to the contrary contained herein, if, as a result of the limitations contained in Section 3.07 of the Lease Agreement, Base Rental Payments cannot be paid by the City in an amount sufficient to pay the principal of, or interest on, the Bonds otherwise payable on any date, such principal or interest shall be deemed not to be payable on such date, the nonpayment thereof on such date shall not constitute a default or an Event of Default under this Indenture and such principal or interest shall become payable on the date on which such Base Rental Payments becomes payable under and pursuant to the Lease Agreement.

Section 2.02. Terms of Series 2024 Bonds. (a) The Series 2024 Bonds shall be designated “Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024.” The aggregate principal amount of Series 2024 Bonds that may be issued and Outstanding under this Indenture shall not exceed $________, except as may be otherwise provided in Section 2.08 hereof.
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The Series 2024 Bonds shall be issued in fully registered form without coupons in Authorized Denominations, so long as no Series 2024 Bond shall have more than one maturity date. The Series 2024 Bonds shall be dated as of the Closing Date,shall be issued in the aggregate principal amount of $________, shall mature on May 15 of each year, shall bear interest at the rates per annum (calculated on the basis of a 360-day year comprised of twelve 30-day months) and shall be in the principal amounts as follows:

Maturity Date
(May 15)
Principal
Amount
Interest
Rate
2057
(b) Interest on the Series 2024 Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Series 2024 Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Series 2024 Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Series 2024 Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for.

Interest shall be paid in lawful money of the United States on each Interest Payment Date. Except as otherwise provided in the Letter of Representations, interest shall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2024 Bonds at their respective addresses shown on the Registration Books as of the close of business on the preceding Record Date, or by wire transfer at the written request of an Owner of not less than $1,000,000 aggregate principal amount of Series 2024 Bonds, which written request is received by the Trustee on or prior to the Record Date. Notwithstanding the foregoing, interest on any Series 2024 Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefor, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Series 2024 Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. (c) The principal of and premium, if any, on the Series 2024 Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.
(d) The Series 2024 Bonds shall be in substantially the form set forth in Exhibit B hereto, with appropriate or necessary insertions, omissions and variations as permitted or required hereby. 12 4149-3738-0431.4
Section 2.03. Execution of Bonds. The Bonds shall be executed in the name and on behalf of the Authority with the manual or facsimile signature of an Authorized Representative of the Authority attested by the manual or facsimile signature of the Secretary of the Authority. The Bonds shall then be delivered to the Trustee for authentication by it. In case any of such officers of the Authority who shall have signed or attested any of the Bonds shall cease to be such officers before the Bonds so signed or attested shall have been authenticated or delivered by the Trustee, or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though those who signed and attested the same had continued to be such officers, and also any Bonds may be signed and attested on behalf of the Authority by such Persons as at the actual date of execution of such Bonds shall be the proper officers of the Authority although at the nominal date of such Bonds any such Person shall not have been such officer of the Authority.

Section 2.04. Authentication of Bonds. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form as that set forth in Exhibit A hereto for the Series 2024 Bonds, manually executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of or on behalf of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

Section 2.05. Registration Books. The Trustee shall keep or cause to be kept, at the Office of the Trustee, sufficient records for the registration and transfer of ownership of the Bonds, which shall be available for inspection and copying by the Authority and the City during regular business hours and upon reasonable notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on such records, the ownership of the Bonds as herein provided.

Section 2.06. Transfer and Exchange of Bonds. (a) Any Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. (b) The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other Authorized Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
(c) The Trustee shall not be obligated to make any transfer or exchange of Bonds of a Series pursuant to this Section during the period commencing on the date five days before the date of selection of Bonds of such Series for redemption and ending on the date of mailing notice of such redemption, or with respect to any Bonds of such Series selected for redemption.

Section 2.07. Book-Entry System. (a) Prior to the issuance of a Series of Bonds, the Authority may provide that such Series of Bonds shall initially be issued as Book-Entry Bonds, and in such event, the Bonds of such Series for each maturity date shall be in the form of a separate single fully registered Bond (which may be typewritten); provided, however, that if different CUSIP numbers are assigned to Bonds of a Series maturing in a single year or, if Bonds of the same Series maturing in a single year are issued with different interest rates, additional bond certificates shall be prepared for each such maturity. Upon initial 13 4149-3738-0431.4
issuance, the ownership of each such Bond of such Series shall be registered in the Registration Books in the name of the Nominee, as nominee of the Depository. The Series 2024 Bonds shall initially be issued as Book-Entry Bonds.

Payment of principal of, and interest and premium, if any, on, any Book-Entry Bond registered in the name of the Nominee shall be made on the applicable payment date by wire transfer of New York clearing house or equivalent next day funds or by wire transfer of same day funds to the account of the Nominee. Such payments shall be made to the Nominee at the address that is, on the Record Date, shown for the Nominee in the Registration Books.
(b) With respect to Book-Entry Bonds, the Authority, the City, and the Trustee shall have no responsibility or obligation to any Participant or to any Person on behalf of which such a Participant holds an interest in such Book-Entry Bonds. Without limiting the immediately preceding sentence, the Authority, the City and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee or any Participant with respect to any ownership interest in BookEntry Bonds, (ii) the delivery to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any notice with respect to Book-Entry Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in Book-Entry Bonds of a maturity to be redeemed in the event such Book-Entry Bonds are redeemed in part, (iv) the payment to any Participant or any other Person, other than an Owner as shown in the Registration Books, of any amount with respect to principal of, or premium, if any, or interest on Book-Entry Bonds, or (v) any consent given or other action taken by the Depository as Owner.
(c) The Authority, the City and the Trustee may treat and consider the Person in whose name each Book-Entry Bond is registered in the Registration Books as the absolute Owner of such Book-Entry Bond for the purpose of payment of principal of, and premium, if any, and interest on such Bond, for the purpose of selecting any Bonds, or portions thereof, to be redeemed, for the purpose of giving notices of redemption and other matters with respect to such Book-Entry Bond, for the purpose of registering transfers with respect to such Book-Entry Bond, for the purpose of obtaining any consent or other action to be taken by Owners and for all other purposes whatsoever, and the Authority, the City and the Trustee shall not be affected by any notice to the contrary.
(d) In the event of a redemption of all or a portion of a Book-Entry Bond, the Depository, in its discretion (i) may request the Trustee to authenticate and deliver a new Book-Entry Bond, or (ii) if the Depository is the sole Owner of such Book-Entry Bond, shall make an appropriate notation on the BookEntry Bond indicating the date and amounts of the reduction in principal thereof resulting from such redemption, except in the case of final payment, in which case such Book-Entry Bond must be presented to the Trustee prior to payment.
(e) The Trustee shall pay all principal of, and premium, if any, and interest on the Book-Entry Bonds only to or “upon the order of” (as that term is used in the Uniform Commercial Code as adopted in the State) the respective Owner, as shown in the Registration Books, or such Owner’s respective attorney duly authorized in writing, and all such payments shall be valid and effective to fully satisfy and discharge the obligations with respect to payment of principal of, and premium, if any, and interest on the Book-Entry Bonds to the extent of the sum or sums so paid. No Person other than an Owner, as shown in the Registration Books, shall receive an authenticated Book-Entry Bond. Upon delivery by the Depository to the Owners, the Authority, the City, and the Trustee of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such nominee of the Depository. 14 4149-3738-0431.4
(f) In order to qualify the Book-Entry Bonds for the Depository’s book-entry system, the Authority shall execute and deliver to the Depository a Letter of Representations. The execution and delivery of a Letter of Representations shall not in any way impose upon the Authority, the City, or the Trustee any obligation whatsoever with respect to Persons having interests in such Book-Entry Bonds other than the Owners, as shown on the Registration Books. Such Letter of Representations may provide the time, form, content, and manner of transmission, of notices to the Depository. In addition to the execution and delivery of a Letter of Representations by the Authority, the Authority, the City, and the Trustee shall take such other actions, not inconsistent with this Indenture, as are reasonably necessary to qualify BookEntry Bonds for the Depository’s book-entry program. (g) In the event the Authority determines that it is in the best interests of the Beneficial Owners that they be able to obtain certificated Bonds and that such Bonds should therefore be made available, and notifies the Depository and the Trustee of such determination, the Depository will notify the Participants of the availability through the Depository of certificated Bonds. In such event, the Trustee shall transfer and exchange certificated Bonds as requested by the Depository and any other Owners in appropriate amounts. In the event (i) the Depository determines not to continue to act as securities depository for BookEntry Bonds, or (ii) the Depository shall no longer so act and gives notice to the Trustee of such determination, then the Authority shall discontinue the Book-Entry system with the Depository. If the Authority determines to replace the Depository with another qualified securities depository, the Authority shall prepare or direct the preparation of a new single, separate, fully- registered Bond of the appropriate Series for each maturity date of such Book-Entry Bonds, registered in the name of such successor or substitute qualified securities depository or its nominee. If the Authority fails to identify another qualified securities depository to replace the Depository, then the Book-Entry Bonds shall no longer be restricted to being registered in the Registration Books in the name of the Nominee, but shall be registered in whatever name or names the Owners transferring or exchanging such Bonds shall designate, in accordance with the provisions of Sections 2.06, 2.08 and 2.09. Whenever the Depository requests the Authority to do so, the Authority shall cooperate with the Depository in taking appropriate action after reasonable notice (i) to make available one or more separate certificates evidencing the Book-Entry Bonds to any Participant having Book-Entry Bonds credited to its account with the Depository, and (ii) to arrange for another securities depository to maintain custody of certificates evidencing the Book-Entry Bonds. (h) Notwithstanding any other provision of this Indenture to the contrary, if the Depository is the sole Owner of the Bonds of a Series, so long as any Book-Entry Bond is registered in the name of the Nominee, all payments of principal of, and premium, if any, and interest on such Book-Entry Bond of such Series and all notices with respect to such Book-Entry Bond shall be made and given, respectively, as provided in the Letter of Representations or as otherwise instructed by the Depository. (i) In connection with any notice or other communication to be provided to Owners pursuant to this Indenture by the Authority, the City or the Trustee, with respect to any consent or other action to be taken by Owners of Book-Entry Bonds, the Trustee shall establish a record date for such consent or other action and give the Depository notice of such record date not less than 15 calendar days in advance of such record date to the extent possible.
(j) Prior to any transfer of Book-Entry Bonds outside the Depository’s book-entry system, the Authority shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including any cost basisreporting obligations under Section 6045 of the Code.

Section 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series and maturity in a like aggregate principal 15 4149-3738-0431.4
amount in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Authority. If any Bond shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence and indemnity satisfactory to the Trustee shall be given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of the same Series and maturity in a like aggregate principal amount in lieu of and in replacement for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been selected for redemption, instead of issuing a replacement Bond, the Trustee may pay the same without surrender thereof). The Authority may require payment by the Owner of a sum not exceeding the actual cost of preparing each replacement Bond issued under this Section and of the expenses that may be incurred by the Authority and the Trustee. Any Bond of such Series issued under the provisions of this Section in lieu of any Bond of such Series alleged to be lost, destroyed or stolen shall constitute an original additional contractual obligation on the part of the Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be entitled to the benefits of this Indenture with all other Bonds of such Series secured by this Indenture.

Section 2.09. Temporary Bonds. The Bonds of a Series may be issued in temporary form exchangeable for definitive Bonds of such Series when ready for delivery. Any temporary Bonds may be printed, lithographed or typewritten, shall be of such Authorized Denominations as may be determined by the Authority, shall be in fully-registered form without coupons and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds of a Series it shall execute and deliver definitive Bonds of such Series as promptly thereafter as practicable, and thereupon the temporary Bonds may be surrendered, for cancellation, at the Office of the Trustee and the Trustee shall authenticate and deliver, in exchange for such temporary Bonds of such Series, an equal aggregate principal amount of definitive Bonds of such Series and maturities in Authorized Denominations. Until so exchanged, the temporary Bonds of a Series shall be entitled to the same benefits under this Indenture as definitive Bonds of such Series authenticated and delivered hereunder.

Section 2.10. Conditions for the Issuance of Additional Bonds. The Authority may at any time issue one or more Series of Additional Bonds (in addition to the Series 2024 Bonds) payable from Lease Revenues as provided herein on a parity with all other Bonds theretofore issued hereunder, but only subject to the following conditions, which are hereby made conditions precedent to the issuance of such Additional Bonds:
(a) neither the Authority nor the City shall be in default under this Indenture, the Lease Agreement, or the Ground Lease;
(b) the issuance of such Additional Bonds shall have been authorized under and pursuant to the Act and under and pursuant hereto and shall have been provided for by a Supplemental Indenture which shall specify the following:
(i) the purposes for which such Additional Bonds are to be issued; provided, that the proceeds of the sale of such Additional Bonds shall be applied only for one or more of the following purposes: (A) providing funds to pay costs of City facilities (including capitalized interest), (B) providing funds to refund any Bonds issued hereunder or other obligations of the City, (C) providing funds to pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and (D) providing funds to make any deposit to any Reserve Account required pursuant to paragraph (c) below; 16 4149-3738-0431.4
(ii) the principal amount and designation of such Series of Additional Bonds and the denomination or denominations of the Additional Bonds, which shall be Authorized Denominations;
(iii) that such Additional Bonds shall be payable as to interest on the Interest Payment Dates, except that the first installment of interest may be payable on either May 15 or November 15;
(iv) the date, the maturity date or dates and the dates on which mandatory sinking fund redemptions, if any, are to be made for such Additional Bonds; provided, that (A) the serial Bonds of such Series of Additional Bonds shall be payable as to principal annually on May 15 of each year in which principal falls due, and the term Bonds of such Series of Additional Bonds shall have annual mandatory sinking fund redemptions on May 15, (B) all Additional Bonds of a Series of like maturity shall be identical in all respects, except as to number or denomination, and (C) serial maturities of serial Bonds or mandatory sinking fund redemptions for term Bonds, or any combination thereof, shall be established to provide for the redemption or payment of such Additional Bonds on or before their respective maturity dates;
(v) the redemption premiums and terms, if any, for such Additional Bonds; (vi) the form of such Additional Bonds;
(vii) the designation as to whether such Additional Bonds shall (A) constitute Common Reserve Bonds secured by the Common Reserve Account, (B) be secured by any other Reserve Account, or (C) not be secured by any Reserve Account; and (viii) such other provisions that are appropriate or necessary and are not inconsistent with the provisions hereof;
(c) upon the issuance of such Additional Bonds, the amount on deposit in the Reserve Account applicable to such Additional Bonds, if any, shall be at least equal to the applicable Reserve Requirement for such Additional Bonds; and
(d) upon the issuance of such Additional Bonds, the sum of Base Rental Payments, including any increase in the Base Rental Payments as a result of the issuance of such Additional Bonds, plus Additional Rental Payments, in any Rental Period shall not be in excess of the annual fair rental value of the Property after taking into account the use of the proceeds of such Additional Bonds (evidence of the satisfaction of such condition shall be made by a Written Certificate of the City).

Section 2.11. Procedure for the Issuance of Additional Bonds. Whenever the Authority and the City shall determine to authorize the issuance of any Additional Bonds, the Authority, the City and the Trustee shall enter into a Supplemental Indenture satisfying the conditions of Section 2.10 hereof. Before such Additional Bonds shall be issued, the Authority and the City shall file or cause to be filed with the Trustee the following:
(a) an Opinion of Bond Counsel setting forth (i) that counsel rendering such opinion has examined the Supplemental Indenture, the amendment to the Lease Agreement, if any, and the amendment to the Ground Lease, if any, (ii) that the issuance of the Additional Bonds has been duly authorized by the Authority, (iii) that the execution and delivery of the Supplemental Indenture 17 4149-3738-0431.4
and, if any, the amendments to the Lease Agreement and the Ground Lease have been duly authorized, executed and delivered by the Authority and the City, (iv) that upon execution and delivery of such Supplemental Indenture and any such amendments to the Lease Agreement and the Ground Lease, this Indenture, as amended and supplemented by such Supplemental Indenture, and, if so amended, the Lease Agreement and the Ground Lease, as amended by such amendments, will be valid and binding obligations of the Authority and the City, and (v) that the execution and delivery of the Supplemental Indenture and, if any, the amendments to the Lease Agreement and the Ground Lease, in and of themselves, do not adversely affect the exclusion from gross income for federal income tax purposes of interest on Outstanding Tax-Exempt Bonds; (b) a Written Certificate of the Authority that the requirements of Section 2.10 hereof have been met;
(c) a Written Certificate of the City that the requirements of Section 2.10 hereof have been met, which shall include a certification as to the fair rental value of the Property, after giving effect to any amendments to the Lease Agreement and the Ground Lease entered into in connection with the issuance of the Additional Bonds and taking into account the use of proceeds of such Additional Bonds;
(d) certified copies of the resolutions of the Board of Directors of the Authority and the Board of Supervisors of the City authorizing the execution and delivery of the Supplemental Indenture and, if any, the amendments to the Lease Agreement and the Ground Lease; (e) executed counterparts or duly authenticated copies of the Supplemental Indenture and, if any, the amendments to the Lease Agreement and the Ground Lease, with satisfactory evidence that any such amendments to the Lease Agreement and the Ground Lease have been duly recorded in the appropriate records of the county in which the Property is located; (f) certified copies of the policies of insurance required by Section 5.01 of the Lease Agreement or certificates thereof, which shall evidence that the amounts of the insurance required under subsections (b) and (c) of Section 5.01 of the Lease Agreement have been increased, if applicable, to cover the amount of such Additional Bonds; and (g) a CLTA title insurance policy or other appropriate form of policy in the amount of the Additional Bonds of the type and with the endorsements described in Section 5.02 of the Lease Agreement.

Upon the delivery to the Trustee of the foregoing instruments and upon the Trustee’s being satisfied from an examination of said instruments that all of the documents required by this Section have been delivered, the Trustee shall authenticate such Additional Bonds, and shall deliver such Additional Bonds to, or upon the request of, the Authority.

DELIVERY OF BONDS; APPLICATION OF AMOUNTS
Section 3.01. Issuance of Series 2024 Bonds. The Authority may, at any time, execute the Series 2024 Bonds and deliver the same to the Trustee. The Trustee shall authenticate the Series 2024 Bonds and deliver the Series 2024 Bonds to the Original Purchaser upon receipt of a Written Request of the Authority and upon receipt of the purchase price therefor. 18 4149-3738-0431.4
Section 3.02. Issuance of Series 2024 Bonds; Application of Proceeds. On the Closing Date, the proceeds of the sale of the Series 2024 Bonds received by the Trustee, $______ shall be deposited by the Trustee as follows:
(a) the Trustee shall deposit the amount of $______ in the Costs of Issuance Fund; (b) the Trustee shall deposit the amount of $______ in the Capitalized Interest Subaccount;
(c) the Trustee shall deposit the amount of $______ in the Series 2024 Reserve Account; and
(d) the Trustee shall the Trustee shall deposit the amount of $______ in the Project Fund.

Section 3.03. Costs of Issuance Fund. (a) The Trustee shall establish and maintain in trust in the name of the Trustee a separate Fund designated the “Costs of Issuance Fund.” On the Closing Date, the Trustee shall deposit in the Costs of Issuance Fund the amount required to be deposited therein pursuant to Section 3.02 hereof. The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to time to pay the Costs of Issuance upon submission of a Written Request of the City stating (i) the Person to whom payment is to be made and instructions for such payment, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Costs of Issuance Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Costs of Issuance Fund, in each case together with a statement or invoice for each amount requested thereunder. On the last Business Day that is no later than six months after the Closing Date, the Trustee shall transfer any amount remaining in the Costs of Issuance Fund to the Project Fund and, upon making such transfer, the Costs of Issuance Fund shall be closed. (c) If the Costs of Issuance Fund has been closed in accordance with the provisions hereof, the Costs of Issuance Fund shall be reopened, reestablished, and maintained by the Trustee, in trust in the name of the Trustee, in connection with the issuance of any Additional Bonds, if so, provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued. There shall be deposited in the Costs of Issuance Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.

Section 3.04. Project Fund. (a) The Trustee shall establish and maintain in trust in the name of the Trustee a separate Fund designated the “Project Fund.” Within the Project Fund, the Trustee may establish and maintain in trust in the name of the Trustee a separate Account of the Project Fund designated for the respective Series of Bonds as may be specified in a Supplemental Indenture. On the Closing Date, the Trustee shall deposit in the Project Fund the amount required to be deposited therein pursuant to Section

3.02 hereof.
(b) The moneys in the Project Fund shall be used and withdrawn by the Trustee from time to time to pay the Project Costs upon submission of a Written Request of the City stating (i) the Person to whom payment is to be made and instructions for such payment, (ii) the amount to be paid, (iii) the purpose for which the obligation was incurred, (iv) that such payment is a proper charge against the Project Fund, and (v) that such amounts have not been the subject of a prior disbursement from the Project Fund, in each case together with a statement or invoice for each amount requested thereunder. (c) Upon the filing of a Written Certificate of the City stating (i) that the Project has been completed and that all costs of the Project have been paid, or (ii) that the Project has been substantially 19 4149-3738-0431.4
completed and that all remaining costs of the Project to be paid from the Project Fund have been determined and specifying the amount to be retained therefor, the Trustee shall (A) if the amount remaining in the Project Fund (less any such retention) is equal to or greater than $25,000, transfer the portion ofsuch amount equal to the largest integral multiple of $5,000 that is not greater than such amount to the Redemption Fund, to be applied to the redemption of Bonds, and (B) after making the transfer, if any, required to be made pursuant to the preceding clause (A), transfer all of the amount remaining in the Project Fund (less any such retention) to the Interest Account, to be applied to the payment of interest on the Bonds; provided, however, that, if, prior to such transfers, the Trustee receives (I) a Written Request of the City directing the Trustee make an alternate disposition of all or a portion of such amount remaining in the Project Fund (less any such retention), and (II) an Opinion of Bond Counsel to the effect that such disposition would not, in and of itself, adversely affect the exclusion of interest on the Tax-Exempt Bonds from gross income for federal income tax purposes, the Trustee shall make such alternate disposition of such remaining amount or portion thereof in accordance with such Written Request of the City. (d) If the Project Fund has been closed in accordance with the provisions hereof, the Project Fund shall be reopened, reestablished, and maintained by the Trustee, in trust in the name of the Trustee, in connection with the issuance of any Additional Bonds, if so provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued. There shall be deposited in the Project Fund the portion, if any, of the proceeds of the sale of any Additional Bonds required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.

REDEMPTION OF BONDS
Section 4.01. Extraordinary Redemption. The Series 2024 Bonds shall be subject to redemption, in whole or in part, on any date, in Authorized Denominations, from and to the extent of any Net Proceeds received with respect to all or a portion of the Property and deposited by the Trustee in the Redemption Fund in accordance with the provisions hereof, at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, without premium.

Section 4.02. Optional Redemption. The Series 2024 Bonds maturing on or after May 15, 20__ shall be subject to optional redemption, in whole or in part in Authorized Denominations on any date on or after May 15, 20__, from and to the extent of prepaid Base Rental Payments paid pursuant to subsection (a) of Section 3.08 of the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2024 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.

Section 4.03. Mandatory Sinking Fund Redemption. The Series 2024 Bonds maturing May 15, 20__, shall be subject to mandatory sinking fund redemption, in part, on May 15 in each year, commencing May 15, 20__, at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, without premium, in the aggregate respective principal amounts in the respective years as follows:
20 4149-3738-0431.4
Sinking Fund
Redemption Date
(May 15)
Principal Amount to be
Redeemed
20__
20__
20__
20__
†
† Maturity Date.

The Series 2024 Bonds maturing May 15, 20__, shall be subject to mandatory sinking fund redemption, in part, on May 15 in each year, commencing May 15, 20__, at a Redemption Price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, without premium, in the aggregate respective principal amounts in the respective years as follows:

Sinking Fund
Redemption Date
(May 15)
Principal Amount to be
Redeemed
20__
20__
20__
20__
†
† Maturity Date.

If some but not all of the Series 2024 Bonds maturing on May 15, 20__, are redeemed pursuant to Section 4.01 hereof, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be redeemed pursuant to this Section shall be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so redeemed pursuant to Section 4.01 hereof, such reduction to be allocated among redemption dates as nearly as practicable on a pro rata basis, in amounts equal to Authorized Denominations, as determined by the Trustee, notice of which determination shall be given by the Trustee to the Authority and the City. If some but not all of the Series 2024 Bonds maturing on May 15, 20__, are redeemed pursuant to Section 4.02 hereof, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be redeemed pursuant to this Section shall be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so redeemed pursuant to Section 4.02 hereof, such reduction to be allocated among redemption dates in Authorized Denominations, as designated by the City in a Written Certificate of the City.
21 4149-3738-0431.4
Section 4.04. Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall mail (by first class mail) notice of any redemption to the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books at least 20 but not more than 60 days prior to the date fixed for redemption. Such notice shall state the date of the notice, the redemption date, the redemption place and the Redemption Price and shall designate the CUSIP numbers, if any, the Bond numbers, Series and the maturity or maturities of the Bonds to be redeemed (except in the event of redemption of all of the Bonds of such Series, maturity or maturities in whole), and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the Redemption Price, giving notice also that further interest on such Bonds will not accrue from and after the date fixed for redemption. Neither the failure to receive any notice so mailed, nor any defect in such notice, shall affect the validity of the proceedings for the redemption of the Bonds or the cessation of accrual of interest thereon from and after the date fixed for redemption. With respect to any notice of any optional redemption of Bonds of a Series, unless at the time such notice is given the Bonds to be redeemed shall be deemed to have been paid within the meaning of Section 10.02 hereof, such notice shall state that such redemption is conditional upon receipt by the Trustee, on or prior to the date fixed for such redemption, of moneys that, together with other available amounts held by the Trustee, are sufficient to pay the Redemption Price of, and accrued interest on, the Bonds to be redeemed, and that if such moneys shall not have been so received said notice shall be of no force and effect and the Authority shall not be required to redeem such Bonds. In the event a notice of redemption of Bonds contains such a condition and such moneys are not so received, the redemption of Bonds as described in the conditional notice of redemption shall not be made and the Trustee shall, within a reasonable time after the date on which such redemption was to occur, give notice to the Persons and in the manner in which the notice of redemption was given, that such moneys were not so received and that there shall be no redemption of Bonds pursuant to such notice of redemption.

Section 4.05. Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any redemption pursuant to Section

4.01 hereof, among maturities of all Series of Bonds on a pro rata basis as nearly as practicable, (b) with respect to any optional redemption of Bonds of a Series, as directed in a Written Certificate of the City, and (c) with respect to any other redemption of Additional Bonds, among maturities as provided in the Supplemental Indenture pursuant to which such Additional Bonds are issued, and by lot among Bonds of the same Series with the same maturity in any manner which the Trustee in its sole discretion shall deem appropriate and fair. The Trustee shall promptly notify the Authority and the City in writing of the numbers of the Bonds so selected for redemption on such date. For purposes of such selection, all Bonds shall be deemed to be comprised ofseparate $5,000 denominations and such separate denominations shall be treated as separate Bonds that may be separately redeemed.

Section 4.06. Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of the same Series in Authorized Denominations equal in aggregate principal amount representing the unredeemed portion of the Bonds surrendered.

Section 4.07. Effect of Notice of Redemption. (a) Notice having been mailed as aforesaid, and moneys for the Redemption Price, and the interest to the applicable date fixed for redemption, having been set aside with the Trustee, the Bonds shall become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds shall be paid at the Redemption Price thereof, together with interest accrued and unpaid to said date.If, on said date fixed for redemption, moneys for the Redemption Price of all the Bonds to be redeemed, together with interest to said date, shall be held by the Trustee so as to be available therefor on such date, and, if notice of redemption thereof shall have been mailed as aforesaid and not canceled, then, from and after said date, interest on said Bonds shall cease to accrue and become payable. All moneys held by or on behalf of the Trustee for the redemption of Bonds 22 4149-3738-0431.4
shall be held in trust for the account of the Owners of the Bonds so to be redeemed without liability to such Owners for interest thereon.
(c) All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof shall be canceled upon surrender thereof and destroyed.

PLEDGE AND ASSIGNMENT; FUNDS AND ACCOUNTS
Section 5.01. Pledge and Assignment. (a) Subject only to the provisions of this Indenture permitting the application thereof for the purposes and on the terms and conditions set forth herein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act, the Authority hereby pledges to the Owners, and grants a lien on and a security interest in all right, title and interest of the Lease Revenues and any other amounts held in the Payment Fund whether now owned or hereafter arising as security for the payment of the principal of and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act. Said pledge and grant shall constitute a first lien on such assets, which shall immediately attach to such assets and be effective, binding and enforceable against the Authority, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, this Indenture, irrespective of whether those parties have notice of the pledge of, lien on and security interest in such assets and without the need for any physical delivery, recordation, filing or further act.
(b) The Authority hereby assigns and transfers to the Trustee, irrevocably and absolutely, without recourse, for the benefit of the Owners, all of its right, title and interest in and to the Ground Lease and the Lease Agreement, including, without limitation, the right to receive Base Rental Payments and the right to exercise any remedies provided in the Lease Agreement in the event of a default by the City thereunder; provided, however, that the Trustee shall not be required to perform any of the substantive obligations of the Authority thereunder, and, provided further, that Authority shall retain the rights to indemnification, to give consents and approvals thereunder, and to payment or reimbursement of its reasonable costs and expenses under the Lease Agreement. The Trustee hereby accepts said assignment for the benefit of the Owners, subject to the provisions of this Indenture. (c) The Trustee shall be entitled to and shall receive all of the Base Rental Payments, and any Base Rental Payments collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as agent of the Trustee and shall forthwith be paid by the Authority to the Trustee.

Section 5.02. Payment Fund. (a) The Trustee shall establish and maintain in trust in the name of the Trustee a separate Fund designated the “Payment Fund.” Within the Payment Fund, the Trustee shall establish and maintain in trust in the name of the Trustee a separate Account designated the “Series 2024 Interest Account” and a separate Account designated the “Series 2024 Principal Account.” Within the Series 2024 Interest Account, the Trustee shall establish and maintain in trust in the name of the Trustee a separate Subaccount designated the “Capitalized Interest Subaccount” until the date all amounts are transferred therefrom in accordance with subsection (c) of this Section. Upon the issuance of Additional Bonds, the Trustee shall also establish and maintain, within the Payment Fund, a separate Interest Account and a separate Principal Account for each Series of Additional Bonds. (b) All Lease Revenues received by the Trustee shall be deposited by the Trustee in the Payment Fund; provided, however, that Net Proceeds, other than those constituting proceeds of rental 23 4149-3738-0431.4
interruption insurance received with respect to the Property, shall not be deposited in the Payment Fund but, rather, shall be applied as provided in Section 6.01 or Section 6.02 hereof, as applicable. There shall additionally be deposited in the applicable Interest Account of the Payment Fund amounts transferred from the related Reserve Account pursuant to subsection (b) of Section 5.04 hereof. (c) The Trustee, on each Interest Payment Date, shall transfer from the Payment Fund to each Interest Account an amount equal to the interest on the related Series of Bonds coming due on such Interest Payment Date; provided, however, that if and to the extent that such amount is available for such Series of Bonds in any capitalized interest subaccount established pursuant to a Supplemental Indenture on such Interest Payment Date, the Trustee shall, instead, transfer such amount from such capitalized interest subaccount to the related Interest Account on such Interest Payment Date. With respect to the Series 2024 Bonds, on each Interest Payment Date occurring on or before [May 15, 2027], before making said deposit, if and to the extent available in the Capitalized Interest Subaccount within the Series 2024 Interest Account, an amount equal to the difference between (1) the aggregate amount of interest component coming due on such Interest Payment Date and (2) the aggregate amount of the interest component of any Base Rental Payments payable under the Lease Agreement,shall be transferred from the Capitalized Interest Subaccount to the Series 2024 Interest Account. Moneys in each Interest Account shall be withdrawn and used by the Trustee for the purpose of paying interest on the related Series of Bonds as and when due and payable. In the event that, on such Interest Payment Date, amounts in any Interest Account are insufficient to pay the interest on the Bonds due and payable on such Interest Payment Date, the Trustee shall apply available funds therein in accordance with the provisions of Section 7.05 hereof. (d) The Trustee, on each Principal Payment Date, shall transfer from the Payment Fund to each Principal Account an amount equal to the principal of the related Series of Bonds, including principal due and payable by reason of mandatory sinking fund redemption, coming due on such date. Moneys in each Principal Account shall be withdrawn and used by the Trustee for the purpose of paying principal of the related Series of Bonds, including principal due and payable by reason of mandatory sinking fund redemption, as and when due and payable. In the event that, on such Principal Payment Date, amounts in any Principal Account are insufficient to pay the principal due and payable on such Principal Payment Date, including principal due and payable by reason of mandatory sinking fund redemption of such Bonds, the Trustee shall apply available funds therein in accordance with the provisions of Section 7.05 hereof.

Section 5.03. Redemption Fund. The Trustee shall establish and maintain in trust in the name of the Trustee a special Fund designated the “Redemption Fund.” The Trustee shall deposit in the Redemption Fund any amounts required to be deposited therein pursuant to Section 6.01 or Section 6.02 hereof. Amounts in the Redemption Fund shall be disbursed therefrom by the Trustee for the payment of the Redemption Price of, and accrued interest on, Bonds redeemed pursuant to Section 4.01 hereof or Section 4.02 hereof.

Section 5.04. Reserve Fund. (a) The Trustee shall establish and maintain in trust in the name of the Trustee a special Fund designated the “Reserve Fund.” Within the Reserve Fund, the Trustee shall establish and maintain in trust in the name of the Trustee a separate account designated the “Series 2024 Reserve Account” and, if instructed, a separate Account designated the “Common Reserve Account” and may establish and maintain one or more additional Reserve Accounts, each of which may secure one or more Series of Bonds pursuant hereto and to the Supplemental Indenture authorizing the issuance thereof.

On the Closing Date, the Trustee shall deposit in the Common Reserve Account the amount required to be deposited therein as may be specified in a Supplemental Resolution. In connection with the issuance of Additional Bonds, there shall additionally be deposited in the Common Reserve Account or any other Reserve Account established and/or maintained for such Additional Bonds, as applicable, the amount required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued.
24 4149-3738-0431.4
(b) The City may substitute a Reserve Facility for all or part of the moneys on deposit in any Reserve Account by depositing such Reserve Facility with the Trustee, provided that, at the time of such substitution, the amount on deposit in such Reserve Account, together with the amount available under all Reserve Facilities on deposit in such Reserve Account, shall be at least equal to the Reserve Requirement for such Reserve Account. Moneys for which a Reserve Facility has been substituted as provided herein shall be transferred, at the election of the City, to the Redemption Fund for the purpose of redeeming the related Series of Bonds or, upon receipt of an Opinion of Bond Counsel that such transfer will not, in and of itself, adversely affect the exclusion of interest on Outstanding Tax-Exempt Bonds from gross income for federal income tax purposes, to the City and applied to the payment of capital costs of the City. Amounts on deposit in any Reserve Account which were not derived from payments under any Reserve Facility credited to such Reserve Account to satisfy a portion of the Reserve Requirement for such Reserve Account shall be used and withdrawn by the Trustee prior to using and withdrawing any amounts derived from payments under such Reserve Facility. In order to accomplish such use and withdrawal of such amounts not derived from payments under any such Reserve Facility, the Trustee shall, as and to the extent necessary, liquidate any investments purchased with such amounts.
(c) In the event that, on the second Business Day prior to a date on which the Trustee is to transfer money from the Payment Fund to the Interest Accounts pursuant to subsection (b) of Section 5.02 hereof or to the Principal Accounts pursuant to subsection (c) of Section 5.02 hereof, amounts in the Payment Fund are insufficient for such purpose, the Trustee shall withdraw from each Reserve Account, to the extent of any funds therein, the amount of the insufficiency of the related Series of Bonds, and shall transfer any amounts so withdrawn first to the related Interest Account and then to the related Principal Account. If the amount on deposit in any Reserve Account is not sufficient to make such transfer, the Trustee shall make a claim under any available Reserve Facility, in accordance with the provisions thereof, in order to obtain an amount sufficient to allow the Trustee to make such transfer as and when required. (d) In the event of any transfer from a Reserve Account or the making of any claim under a Reserve Facility, the Trustee shall, within two Business Days thereafter, provide written notice to the Authority and the City of the amount and the date of such transfer or claim; provided, however, that such notice need not be provided if such transfer is made pursuant to subsection (f) or subsection (g) of this Section.
(e) If the sum of the amount on deposit in any Reserve Account, plus the amount available under all available Reserve Facilities held for such Reserve Account, is less than the Reserve Fund Requirement for such Reserve Account, the first of Base Rental Payments thereafter received from the City under the Lease Agreement and not needed to pay the principal of and interest on the Bonds on the next Interest Payment Date or Principal Payment Date shall be used, first, to reinstate the amounts available under any Reserve Facilities that have been drawn upon and, second, to increase the amount on deposit in the Reserve Accounts, so that the amount available under all available Reserve Facilities, when added to the amount on deposit in the Reserve Fund, shall equal the Reserve Requirement for each Reserve Account; provided, however, that such Base Rental Payments shall be allocated among all Reserve Accounts ratably without preference or priority of any kind, according to each Reserve Account's percentage share of the total deficiencies in all Reserve Accounts.
(f) If, as a result of the payment of principal of or interest on any Series of Bonds, the Reserve Requirement applicable to such Series of Bonds is reduced, amounts on deposit in the applicable Reserve Account in excess of such reduced Reserve Requirement shall be transferred to the related Interest Account(s) and Principal Account(s) of the Payment Fund as directed in a Written Request of the City. (g) On any date on which Bonds of a Series are defeased in accordance with Section 10.02 hereof, the Trustee shall, if so directed in a Written Request of the City, transfer any moneys in the related 25 4149-3738-0431.4
Reserve Account in excess of the applicable Reserve Requirement resulting from such defeasance to the entity or fund so specified in such Written Request of the City, to be applied to such defeasance. (h) Moneys, if any, on deposit in a Reserve Account shall be withdrawn and applied by the Trustee for the final payments of principal of and interest on the Bonds secured by such Reserve Account.

Section 5.05. Rebate Fund. (a) The Trustee shall establish and maintain in trust in the name of the Trustee a special Fund designated the “Rebate Fund.” There shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate, as specified in a Written Request of the Authority or a Written Request of the City. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Requirement, for payment to the United States of America. Notwithstanding defeasance of the Bonds pursuant to Article X hereof or anything to the contrary contained herein, all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the written directions of the Authority or the City, and shall have no liability or responsibility to enforce compliance by the Authority or the City with the terms of the Tax Certificate. The Trustee may conclusively rely upon the determinations, calculations and certifications of the Authority or the City required by the Tax Certificate. The Trustee shall have no responsibility to independently make any calculation or determination or to review the calculations of the Authority or the City. (b) Any funds remaining in the Rebate Fund after payment in full of all of the Bonds and after payment of any amounts described in this Section, shall, upon receipt by the Trustee of a Written Request of the City, be withdrawn by the Trustee and remitted to the City.

Section 5.06. Investments. (a) Except as otherwise provided herein, all moneys in any of the Funds or Accounts established pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments, as directed in a Written Request of the City received by the Trustee no later than two Business Days prior to the making of such investment. Moneys in all such Funds and Accounts shall be invested in Permitted Investments maturing not later than the date on which it is estimated that such moneys will be required for the purposes specified in this Indenture. Absent a timely Written Request of the City with respect to the investment of moneys in any of the Funds or Accounts established pursuant to this Indenture held by the Trustee, the Trustee shall invest such moneys in Permitted Investments described in paragraph [(j)] of the definition thereof; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a Written Request of the City specifying a specific money market fund that satisfies the requirements of said paragraph in which such investment is to be made and, if no such Written Request of the City is so received, the Trustee shall hold such moneys uninvested.
(b) Subject to the provisions of Section 5.04 hereof, any interest or profits received with respect to investments held in any of the Funds or Accounts established under this Indenture shall be retained therein; provided, however, that any interest or profits received with respect to investments held in the Project Fund shall be credited to the Interest Account of the Payment Fund. (c) Permitted Investments acquired as an investment of moneys in any Fund or Account established under this Indenture shall be credited to such Fund or Account. For the purpose of determining the amount in any Fund or Account, all Permitted Investments credited to such Fund or Account shall be valued by the Trustee at the market value thereof, such valuation to be performed not less frequently than semiannually on or before each [June 15 and December 15]. In determining the market value of Permitted Investments, the Trustee may use and rely upon any generally recognized pricing information service (including brokers and dealers in securities) available to it. 26 4149-3738-0431.4
(d) Notwithstanding anything to the contrary contained herein, investments purchased with funds on deposit in any Reserve Account of the Reserve Fund shall have an average aggregate weighted term to maturity of not greater than five years.
(e) Investments (except investment agreements) in any Fund or Account established hereunder shall be valued, exclusive of accrued interest (i) not less often than annually nor more often than monthly, and (ii) upon any draw upon any Reserve Account. All investments of amounts deposited in any Fund or Account established hereunder shall be valued at the market value thereof. (f) Any interest or profits received with respect to investments held in any of the Funds or Accounts established under this Indenture (other than any Reserve Account) shall be retained therein. Any interest or profits received with respect to investments held in a Reserve Account shall be, until the date the related Written Certificate of the City required by subsection (c) of Section 3.04 hereof is filed with the Trustee, transferred to one or more Accounts or Subaccounts within the Project Fund as directed in a Written Request of the City and, thereafter, shall be transferred to the related Interest Account(s). Notwithstanding the foregoing, any such transfer or disbursement shall be made from a Reserve Account only if and to the extent that, after such transfer, the amount on deposit in such Reserve Account, together with amounts available to be drawn on all Reserve Facilities held for such Reserve Account, if any, is at least equal to the Reserve Requirement for such Reserve Account.
(g) The Trustee may act as principal or agent in the making or disposing of any investment.

Upon the Written Request of the City, the Trustee shall sell or present for redemption any Permitted Investments so purchased whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the Fund or Account to which such Permitted Investments are credited, and the Trustee shall not be liable or responsible for any loss resulting from any investment made or sold pursuant to this Section. For purposes of investment, the Trustee may commingle moneys in any of the Funds and Accounts established hereunder.
(h) Each of the Authority and the City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority or the City the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, each of the Authority and the City specifically waives receipt of such confirmations to the extent permitted by law.

The Trustee shall furnish the Authority and the City periodic cash transaction statements, which shall include details for all investment transactions made by the Trustee hereunder.

NET PROCEEDS AND TITLE INSURANCE; COVENANTS
Section 6.01. Application of Net Proceeds. (a) If the Property or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Property or the affected portion thereof in accordance with the provisions hereof.
(b) The Net Proceeds of any insurance (other than Net Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Property or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in a special Account and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Property or the affected portion thereof upon receipt of a Written Request of the City, together with invoicestherefor. Pending such application, such proceeds may, pursuant 27 4149-3738-0431.4
to a Written Request of the City, be invested by the Trustee in Permitted Investments that mature not later than such times as moneys are expected to be needed to pay such costs of repair or replacement. (c) Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Property or the portions of the Property that were damaged or destroyed. If the City does intend to replace or repair the Property or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special Account referred to above. (d) If such damage, destruction or loss was such that there resulted a substantial interference with the City’s right to the use or occupancy of the Property and an abatement in whole or in part of Rental Payments results from such damage or destruction pursuant to Section 3.07 of the Lease Agreement, then the City shall be required either to (i) apply sufficient funds from the insurance proceeds and other legally available funds to the replacement or repair of the Property or the portions thereof that have been damaged to the condition that existed prior to such damage or destruction, or (ii) apply sufficient funds from the insurance proceeds and other legally available funds to the redemption, pursuant to Section 4.01 hereof (A) of all of the Outstanding Bonds, or (B) of such portion of the Outstanding Bonds as shall result in the remaining, non-abated Base Rental Payments being sufficient to pay, as and when due, the principal of and interest on the Bonds that will remain Outstanding after such redemption. If the City is required to apply funds from the insurance proceeds and other legally available funds to the redemption of Bonds in accordance with clause (ii) above, the City shall direct the Trustee, in a Written Request of the City, to transfer the funds to be applied to such redemption to the Redemption Fund and the Trustee shall transfer such funds to the Redemption Fund. Any proceeds of any insurance, including the proceeds of any selfinsurance remaining after the portion of the Property that was damaged or destroyed is restored to and made available to the City in substantially the same condition and annual fair rental value as that that existed prior to the damage or destruction as required by clause (i) above, or the redemption of Bonds as required by clause (ii) above, in each case as evidenced by a Written Certificate of the City to such effect, shall be deposited in the Reserve Accounts, ratably without preference or priority of any kind according to each Reserve Account’s percentage share of the total deficiencies in all Reserve Accounts, to the extent that the amounts therein are less than the applicable Reserve Requirement. If the City is not required to replace or repair the Property, or the affected portion thereof, as set forth in clause (a) above, or to use such amounts to redeem Bonds as set forth in clause (b) above, then such proceeds shall be deposited in the Reserve Accounts, ratably without preference or priority of any kind according to each Reserve Account’s percentage share of the total deficiencies in all Reserve Accounts, to the extent that the amounts therein are lessthan the applicable Reserve Requirement. Any amounts not required to be so deposited into the Reserve Accounts shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Property after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100.0% of the maximum amount of Base Rental Payments becoming due under the Lease Agreement in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Property after such damage or destruction is at least equal to the sum of the then unpaid principal components of Base Rental Payments, be paid to the City to be used for any lawful purpose.
(e) The proceeds of any award in eminent domain shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to Section 4.01 hereof.

Section 6.02. Title Insurance. Net Proceeds of any policy of title insurance received by the Trustee in respect of the Property shall be applied and disbursed by the Trustee as follows:
(a) if the City determines that the title defect giving rise to such proceeds has not substantially interfered with its use and occupancy of the Property and will not result in an 28 4149-3738-0431.4
abatement of Rental Payments payable by the City under the Lease Agreement, such proceeds shall be remitted to the City and used for any lawful purpose thereof; or (b) if the City determines that the title defect giving rise to such proceeds has substantially interfered with its use and occupancy of the Property and will result in an abatement in whole or in part of Rental Payments payable by the City under the Lease Agreement, then the City shall, in a Written Request of the City, direct the Trustee to, and the Trustee shall immediately depositsuch proceedsin the Redemption Fund and such proceeds shall be applied to the redemption of Bonds in the manner provided in Section 4.01 hereof.

Section 6.03. Punctual Payment. The Authority shall punctually pay or cause to be paid the principal of, and premium, if any, and interest on the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of the Lease Revenues and other assets pledged for such payment as provided in this Indenture and received by the Authority or the Trustee.

Section 6.04. Compliance with Indenture. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in this Indenture required to be complied with, kept, observed and performed by it.

Section 6.05. Compliance with Ground Lease and Lease Agreement. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Ground Lease and the Lease Agreement required to be complied with, kept, observed and performed by it and, together with the Trustee, shall enforce the Ground Lease and the Lease Agreement against the other party thereto in accordance with their respective terms.

Section 6.06. Observance of Laws and Regulations. Each of the Authority and the City shall faithfully comply with, keep, observe and perform all valid and lawful obligations or regulations now or hereafter imposed on it by contract, or prescribed by any law of the United States of America or of the State, or by any officer, board or commission having jurisdiction or control, as a condition of the continued enjoyment of each and every franchise, right or privilege now owned or hereafter acquired by it, including its right to exist and carry on its businesses, to the end that such franchises, rights and privileges shall be maintained and preserved and shall not become abandoned, forfeited or in any manner impaired.

Section 6.07. Other Liens. (a) The City shall keep the Property and all parts thereof free from judgments and materialmen’s and mechanic’s liens and free from all claims, demands, encumbrances and other liens of whatever nature or character, and free from any claim or liability that materially impairs the City in conducting its business or utilizing the Property, and the Trustee at its option (after first giving the City ten days’ written notice to comply therewith and failure of the City to so comply within such ten-day period) may defend against any and all actions or proceedings, or may pay or compromise any claim or demand asserted in any such actions or proceedings; provided, however, that, in defending against any such actions or proceedings or in paying or compromising any such claims or demands, the Trustee shall not in any event be deemed to have waived or released the City from liability for or on account of any of its agreements and covenants contained herein, or from its obligation hereunder to perform such agreements and covenants. The Trustee shall have no liability with respect to any determination made in good faith to proceed or decline to defend, pay or compromise any such claim or demand. (b) So long as any Bonds are Outstanding, none of the Trustee, the Authority or the City shall create orsuffer to be created any pledge of or lien on the amounts on deposit in any of the Funds or Accounts created hereunder, other than the grant of lien on and a security interest in all right, title and interest of the 29 4149-3738-0431.4
Lease Revenues and any other amounts held in the Payment Fund in accordance with this Indenture and the Act.
(c) Neither the Authority nor the Trustee shall encumber the Property other than in accordance with the Ground Lease, the Lease Agreement, and this Indenture.

Section 6.08. Prosecution and Defense of Suits. The City shall promptly, upon request of the Trustee, take such action from time to time as may be necessary or proper to remedy or cure any cloud upon or defect in the title to the Property or any part thereof, whether now existing or hereafter developing, shall prosecute all actions, suits or other proceedings as may be appropriate for such purpose and shall indemnify and save the Trustee and every Owner harmless from all cost, damage, expense or loss, including attorneys’ fees, which they or any of them may incur by reason of any such cloud, defect, action, suit or other proceeding.

Section 6.09. Recordation. The City shall record, or cause to be recorded, with the Santa Barbara County Recorder, the Lease Agreement and the Ground Lease, or memoranda thereof, and a memorandum of the assignment of the City’s right, title and interest in and to the Ground Lease and the Lease Agreement pursuant to Section 5.01 hereof.

Section 6.10. Tax Covenants. (a) Neither the Authority nor the City shall take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Series 2024 Bonds under Section 103 of the Code. Without limiting the generality of the foregoing, each of the Authority and the City shall comply with the requirements of the Tax Certificate, which is incorporated herein as if fully set forth herein. This covenant shall survive payment in full or defeasance of the Series 2024 Bonds. (b) In the event that at any time the Authority or the City is of the opinion that for purposes of this Section it is necessary or helpful to restrict or limit the yield on the investment of any moneys held by the Trustee in any of the Funds or Accounts established hereunder, the Authority or the City shall so instruct the Trustee in writing, and the Trustee shall take such action as may be necessary in accordance with such instructions.
(c) Notwithstanding any provisions of this Section, if the Authority or the City shall provide to the Trustee an Opinion of Bond Counsel to the effect that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Series 2024 Bonds, the Trustee may conclusively rely on such opinion in complying with the requirements of this Section and of the Tax Certificate, and the covenants hereunder shall be deemed to be modified to that extent.

Section 6.11. Continuing Disclosure. The City shall comply with and carry out all of the provisions of the Continuing Disclosure Agreement. Notwithstanding any other provision of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not constitute an Event of Default hereunder; provided, however, that the Trustee may (and, at the written direction of the Participating Underwriters or the Owners of at least 25.0% of the aggregate principal amount of Outstanding Series 2024 Bonds, and upon receipt of indemnification reasonably satisfactory to the Trustee, shall) or any Owner or Beneficial Owner of the Series 2024 Bonds may, take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.

Section 6.12. Notifications Required by the Act. If at any time the Trustee failsto pay principal or interest due on any scheduled payment date for the Bonds or withdraws funds from a Reserve Account 30 4149-3738-0431.4
to pay principal and interest on any Series of Bonds, the Trustee shall notify the Authority in writing of such failure or withdrawal, as applicable, and, in accordance with Section 6599.1(c) of the Act, the Authority shall notify the California Debt and Investment Advisory Commission of such failure or withdrawal, as applicable, within 10 days of the failure or withdrawal, as applicable.

Section 6.13. Further Assurances. Each of the Authority and the Trustee shall make, execute and deliver any and all such further agreements, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture and for the better assuring and confirming unto the Owners of the rights and benefits provided in this Indenture, the Ground Lease and the Lease Agreement.

EVENTS OF DEFAULT AND REMEDIES
Section 7.01. Events of Default. The following events shall be Events of Default:
(a) failure to pay any installment of principal of any Bond as and when the same shall become due and payable, whether at maturity as therein expressed, by proceedings for redemption or otherwise;
(b) failure to pay any installment of interest on any Bond as and when the same shall become due and payable;
(c) the occurrence and continuation of a Lease Default Event; (d) failure by the Authority to observe and perform any of the other covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the Authority by the Trustee, the City or the Owners of not less than 5.0% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if, in the reasonable opinion of the Authority, the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Authority within such 30-day period and the Authority shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days;
(e) failure by the City to observe and perform any of the covenants, agreements or conditions on its part in this Indenture contained, if such failure shall have continued for a period of 30 days after written notice thereof, specifying such failure and requiring the same to be remedied, shall have been given to the City by the Trustee, the Authority or the Owners of not less than 5.0% in aggregate principal amount of the Bonds at the time Outstanding; provided, however, that if, in the reasonable opinion of the City, the failure stated in the notice can be corrected, but not within such 30-day period, such failure shall not constitute an Event of Default if corrective action is instituted by the City within such 30 day period and the City shall thereafter diligently and in good faith cure such failure in a reasonable period of time, provided, further, that, unless consented to by the Trustee, such period of time shall not exceed 180 days; or (f) the commencement by the Authority or the City of a voluntary case under Title 11 of the United States Code or any substitute or successor statute. 31 4149-3738-0431.4
Section 7.02. Action on Default. In each and every case during the continuance of an Event of Default, the Trustee may or, at the written direction of the Owners of not less than a majority of the aggregate principal amount of Bonds then Outstanding, shall exercise any of the remedies granted to the Authority under the Lease Agreement and, in addition, take whatever action at law or in equity may appear necessary or desirable to protect and enforce any of the rights vested in the Trustee or the Owners by this Indenture or by the Bonds, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement or for the enforcement of any other legal or equitable right, including any one or more of the remedies set forth in Section 7.03 hereof.

Section 7.03. Other Remedies. 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 Authority or the City or any member, director, officer or employee thereof, and to compel the Authority or the City or any such member, director, officer or employee to perform or carry out its or his or her duties under law and the agreements and covenants required to be performed by it or him or her contained herein or in the Bonds; (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 Authority or the City, or both, to account as if it or they were the trustee or trustees of an express trust.

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 Default. If an Event of Default shall occur and be continuing, all Lease Revenues and any other funds thereafter received by the Trustee under any of the provisions of this Indenture shall be applied by the Trustee as follows and in the following order:
(a) to the payment of any expenses incurred by the Trustee necessary in the opinion of the Trustee to protect the interests of the Owners and payment of reasonable fees, charges, and expenses of the Trustee (including reasonable fees and disbursements of its counsel) incurred in and about the performance of its powers and duties under this Indenture; (b) to the payment of all amounts then due for interest on the Bonds, ratably without preference or priority of any kind, according to the amounts of interest on such Bonds due and payable, with interest on the overdue interest at the rate borne by the respective Bonds; and (c) to the payment of all amounts then due for principal of the Bonds, ratably without preference or priority of any kind, according to the amounts of principal of the Bonds due and payable, with interest on the overdue principal at the rate borne by the respective Bonds.

Section 7.06. Power of Trustee to Enforce. All rights of action under this Indenture or the Bonds or otherwise may be prosecuted and enforced by the Trustee without the possession of any of the 32 4149-3738-0431.4
Bonds or the production thereof in any proceeding relating thereto, and any such suit, action or proceeding instituted by the Trustee shall be brought in the name of the Trustee for the benefit and protection of the Owners of such Bonds, subject to the provisions of this Indenture. Nothing herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Owner any plan of reorganization, arrangement, adjustment, or composition affecting the Bonds or the rights of any Owner thereof, or to authorize the Trustee to vote in respect of the claim of any Owner in any such proceeding without the approval of the Owners so affected.

Section 7.07. Owners’ Direction of Proceedings. Anything in this Indenture to the contrary notwithstanding, the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have the right, by an instrument or concurrent instruments in writing executed and delivered to the Trustee, and upon indemnification of the Trustee to its reasonable satisfaction, to direct the method of conducting all remedial proceedings taken by the Trustee hereunder; provided, however, that such direction shall not be otherwise than in accordance with law and the provisions of this Indenture, and, provided, further, that the Trustee shall have the right to decline to follow any such direction that in the opinion of the Trustee would be unjustly prejudicial to Owners not parties to such direction.

Section 7.08. Limitation on Owners’ Right to Sue. No Owner of any Bond shall have the right to institute any suit, action or proceeding at law or in equity, for the protection or enforcement of any right or remedy under this Indenture, the Act or any other applicable law with respect to such Bond, unless (a) such Owner shall have given to the Trustee written notice of the occurrence of an Event of Default, (b) the Owners of a majority in aggregate principal amount of the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name, (c) such Owner or said Owners shall have tendered to the Trustee indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request, and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.

Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy hereunder or under law; it being understood and intended that no one or more Owners shall have any right in any manner whatever by such Owner’s or Owners’ action to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners, or to enforce any right under the Bonds, this Indenture, the Act or other applicable law with respect to the Bonds, except in the manner herein provided, and that all proceedings at law or in equity to enforce any such right shall be instituted, had and maintained in the manner herein provided and for the benefit and protection of all Owners, subject to the provisions of this Indenture.

Section 7.09. Termination of Proceedings. If any action, proceeding or suit to enforce any right or to exercise any remedy is abandoned or determined adversely to the Trustee or any Owner, then, subject to any such adverse determination, the Trustee, such Owner, the Authority 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. In case any proceedings taken by the Trustee or any one or more Owners on account of any Event of Default shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Trustee or any Owner, then in every such case the Trustee, such Owner, the Authority and the City, subject to any determination in such proceedings, shall be restored to their former positions and rights hereunder, severally and respectively, and all rights, remedies, powers and duties of the Trustee, the Owners, the Authority and the City shall continue as though no such proceedings had been taken.
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Section 7.10. No Waiver of Default. No delay or omission of the Trustee or of any Owner to exercise any right or power arising upon the occurrence of any default or Event of Default shall impair any such right or power or shall be construed to be a waiver of any such default or Event of Default or an acquiescence therein, and every power and remedy given by this Indenture to the Trustee or to the Owners may be exercised from time to time and as often as may be deemed expedient.

THE TRUSTEE; SECURITIES INTERMEDIARY
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 Indenture. 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 Indenture, 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, which 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, or (ii) a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets. 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 Authority and 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 (i) at any time requested to do so by an instrument or concurrent instruments in writing signed by the Owners of not less than a majority in aggregate principal amount of the Bonds then 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 firstclass mail, postage prepaid, to the Authority and the City, 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.
(d) Upon removal or resignation of the Trustee, the Authority and the City shall promptly appoint a successor Trustee by an instrument in writing. 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 34 4149-3738-0431.4
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 Indenture shall signify its acceptance of such appointment by executing and delivering to the Authority and the City and to 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 Authority or the Written Request of the City or the request of 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 Indenture 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. Liability of Trustee. (a) The recitals of facts herein and in the Bonds contained shall be taken as statements of the Authority or the City, as applicable, and the Trustee shall not assume responsibility for the correctness of the same or incur any responsibility in respect thereof, other than as expressly stated herein in connection with the respective duties or obligations herein or in the Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its representations contained in its certificate of authentication on the Bonds.
(b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of any Bonds, or in respect of the security afforded by this Indenture and the Trustee shall incur no responsibility in respect thereof. The Trustee shall be under no responsibility or duty with respect to the issuance of the Bonds for value, the application of the proceeds thereof except to the extent that such proceeds are received by it in its capacity as Trustee, or the application of any moneys paid to the Authority, the City, or others in accordance with this Indenture.
(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 Indenture 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.
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(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 principal amount of the Bonds 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 Indenture.
(j) The Trustee may become the Owner of Bonds 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 principal amount of the Bonds 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 Bonds.
(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. (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 Indenture 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, requisition, 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) The Trustee shall have the right to accept and act upon a Written Request of the City delivered using Electronic Means. If the City elects to deliver a Written Request of the City to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee’s understanding of such Written Request shall be deemed controlling. The City understands and agrees that the Trustee cannot 36 4149-3738-0431.4
determine the identity of the actual sender of such Written Request and that the Trustee shall conclusively presume that Written Requests of the City that purport to have been sent by an Authorized Representative of the City have been sent by such Authorized Representative. The City shall be responsible for ensuring that only Authorized Representatives transmit such Written Requests of the City to the Trustee and that the City issolely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt thereof by the City. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Written Requests of the City delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent Written Request of the City. The City agrees (i) to assume all risks arising out of the use of Electronic Means to submit Written Requests of the City to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Written Requests of the City, and the risk of interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Written Requests of the City to the Trustee and that there may be more secure methods of transmitting Written Requests of the City than the method selected by the City, (iii) that the security procedures, if any, to be followed in connection with its transmission of Written Requests of the City provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances, and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. Notwithstanding the foregoing, the provisions of this subsection, and the Trustee’s actions pursuant hereto, are subject to the Trustee’s standard of care and limitations on liability set forth in Sections 8.03 and 8.04; provided, however, that the Trustee’s reliance on a Written Request of the City that purports to have been sent by an Authorized Representative of the City delivered in accordance with this Section using Electronic Means shall not, in and of itself, be construed as negligence.
(c) The Trustee shall have the right to accept and act upon a Written Request of the Authority delivered using Electronic Means. If the Authority elects to deliver a Written Request of the Authority to the Trustee using Electronic Means and the Trustee acts upon such Written Request, the Trustee’s understanding of such Written Request shall be deemed controlling. The Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Written Request and that the Trustee shall conclusively presume that Written Requests of the Authority that purport to have been sent by an Authorized Representative of the Authority have been sent by such Authorized Representative. The Authority shall be responsible for ensuring that only Authorized Representatives transmit such Written Requests of the Authority to the Trustee and that the Authority is solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt thereof by the Authority. The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Written Requests of the Authority delivered using Electronic Means notwithstanding such directions conflict or are inconsistent with a subsequent Written Request of the Authority. The Authority agrees (i) to assume all risks arising out of the use of Electronic Means to submit Written Requests of the Authority to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Written Requests of the Authority, and the risk of interception and misuse by third parties, (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Written Requests of the Authority to the Trustee and that there may be more secure methods of transmitting Written Requests of the Authority than the method selected by the Authority, (iii) that the security procedures, if any, to be followed in connection with its transmission of Written Requests of the Authority provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances, and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures. Notwithstanding the foregoing, the provisions of this subsection, and the Trustee’s actions pursuant hereto, are subject to the Trustee’s standard of care and limitations on liability set forth in Sections 8.03 and 8.04; provided, however, that the Trustee’s reliance on a Written Request of the Authority that purports to have been sent by an Authorized 37 4149-3738-0431.4
Representative of the Authority delivered in accordance with this Section using Electronic Means shall not, in and of itself, be construed as negligence.
(d) Whenever in the administration of the duties imposed upon it by this Indenture 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 Authority or Written Certificate of the City, and such Written Certificate shall be full warrant to the Trustee for any action taken or suffered in good faith under the provisions of this Indenture in reliance upon such Written Certificate, 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. (e) The Trustee may consult with counsel, who may be counsel to the Authority or the City, with regard to legal questions, including with respect to compliance herewith of amendments hereto or to the Lease Agreement or the Ground Lease, 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 Bonds, the Lease Revenues received by it and all Funds and Accounts established by it pursuant to this Indenture. Such books of record and account shall be available for inspection by the Authority and the City during regular business hours and upon reasonable notice and under reasonable circumstances as agreed to by the Trustee. The Trustee shall deliver to the Authority and the City a monthly accounting of the Funds and Accounts it holds under this Indenture; 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 Indenture shall be retained in its possession and shall be subject during business hours and upon reasonable notice to the inspection of the Authority, the City, the Owners and their agents and representatives duly authorized in writing.

Section 8.07. Compensation and Indemnification of the Trustee. 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 Indenture, and also all reasonable expenses, charges, legal and consulting fees pursuant to a pre-approved fee letter and other disbursements pursuant to a pre-approved fee letter and those of its attorneys, agents and employees, incurred in and about the performance of their powers and duties under this Indenture. The City shall, to the extent permitted by law, indemnify and save the Trustee and its officers, directors and employees harmless against any costs, suits, judgments, damages, liabilities, claims, expenses, including legal fees and expenses, and liabilities that it may incur in the exercise and performance of its powers and duties hereunder and under any related documents, 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 discharge and satisfaction of this Indenture.

Section 8.08. Securities Intermediary. (a) At all times during which the Trustee does not maintain hereunder securities accounts to which financial assets may be credited, there shall be a Securities Intermediary acting as such pursuant hereto.
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(b) U.S. Bank National Association is hereby appointed as the initial Securities Intermediary and U.S. Bank National Association hereby accepts such appointment. (c) The initial Securities Intermediary and any successor thereto (i) shall at all times be a trust company, national banking association or bank in good standing in or incorporated under the laws of the United States or any state thereof having (or if such trust company, national banking association or bank is a member of a bank holding company system, its parent bank holding company shall have) a combined capital and surplus of at least $250,000,000, and subject to supervision or examination by a federal or state agency, (ii) shall not be an affiliate of the Authority or the City, and (iii) shall, in the ordinary course of its business, maintain securities accounts for others and be so maintaining accounts hereunder. (d) Each Fund and Account shall be a securities account maintained with the Securities Intermediary to which financial assets may be credited and the Securities Intermediary shall treat the Trustee as entitled to exercise the rights that comprise such financial assets. (e) The Securities Intermediary shall not change the name or the account number of any Fund or Account without the prior written consent of the Trustee. (f) Each item of property credited to each Fund or Account shall be treated as a financial asset. (g) The Securities Intermediary shall comply with entitlement orders originated by the Trustee, without the need for consent by the Authority or any other Person. (h) The Securities Intermediary shall not agree with any Person, other than the Trustee, that it will comply with entitlement orders originated by any Person other than the Trustee. (i) The Securities Intermediary shall not take any action inconsistent with this Section or any other provision of this Indenture applicable to it. The Securities Intermediary shall not be a party to any agreement that is inconsistent with this Section or any other provision of this Indenture or that limits or conditions any of its obligations under this Section or any other provision of this Indenture. (j) Each item of property credited to each Fund or Account shall not be subject to, and the Securities Intermediary hereby waives, any security interest, lien, claim, encumbrance or right of setoff in favor of the Securities Intermediary or any Person claiming through the Securities Intermediary, other than the Trustee.
(k) For purposes of Article 8 of the Uniform Commercial Code, the securities intermediary’s jurisdiction of the Securities Intermediary with respect to the Funds and Accounts shall be the State. (l) It is the intent of the Authority, the Trustee, and the Securities Intermediary that each Fund and Account shall be a securities account of the Trustee and not an account of the Authority. (m) The Securities Intermediary shall be entitled to all of the immunities, protections, limitations of liability and indemnities afforded to the Trustee pursuant to Article VIII hereof. (n) The Securities Intermediary may at any time resign by providing no less than 30 days’ written notice of such resignation to the Trustee and the Authority. The Trustee may remove the Securities Intermediary by providing no less than 20 days’ written notice of such removal to the Securities Intermediary. In case at any time the Securities Intermediary shall cease to be eligible in accordance with the provisions of subsection (b) of this Section, the Securities Intermediary shall resign immediately. The Trustee shall promptly remove the Securities Intermediary if at any time the Securities Intermediary shall 39 4149-3738-0431.4
cease to be eligible in accordance with the provisions of subsection (b) of this Section. The Trustee shall appoint a successor Securities Intermediary that satisfies the provisions of subsection (b) of this Section.

The Trustee shall cause (i) each Fund and Account to be established and maintained with such successor Securities Intermediary in accordance with the terms hereof, and (ii) the successor Securities Intermediary to execute and deliver a written agreement between the Trustee and such successor Securities Intermediary, pursuant to which such successor SecuritiesIntermediary agreesto be the SecuritiesIntermediary hereunder and to be bound by the provisions of this Indenture applicable to the Securities Intermediary. The duties and obligations of the resigning or removed Securities Intermediary hereunder shall remain in effect until the successor Securities Intermediary has accepted its appointment and each Fund and Account and all property credited thereto have been transferred to the successor Securities Intermediary.

SUPPLEMENTAL INDENTURES
Section 9.01. Supplemental Indentures. (a) This Indenture and the rights and obligations of the Authority, the City, the Trustee and the Owners hereunder may be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into when there are filed with the Trustee the written consents of the Owners of a majority of the aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section

11.07 hereof. No such modification or amendment shall (i) extend the fixed maturity of any Bond, reduce the amount of principal thereof or the rate of interest thereon, extend the time of payment thereof or alter the redemption provisions thereof, without the consent of the Owner of each Bond so affected, (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 Indenture prior to or on a parity with the pledge contained in, and the lien and security interest created by, this Indenture or deprive the Owners of the pledge contained in, and the lien and security interest created by, this Indenture, except as expressly provided in this Indenture, without the consent of the Owners of all of the Bonds then Outstanding, or (iii) modify or amend this Section without the prior written consents of the Owners of all Bonds then Outstanding. (b) This Indenture and the rights and obligations of the Authority, the City, the Trustee, and the Owners hereunder may also be modified or amended from time to time and at any time by a Supplemental Indenture, which the Authority, the City and the Trustee may enter into without the consent of any Owners for any one or more of the following purposes:
(i) to add to the covenants and agreements of the Authority or the City in this Indenture contained other covenants and agreements thereafter to be observed, to pledge or assign additional security for the Bonds (or any portion thereof), or to surrender any right or power herein reserved to or conferred upon the Authority or the City; (ii) to make such provisions for the purpose of curing any ambiguity, inconsistency, or omission, or of curing or correcting any defective provision contained in this Indenture or in regard to questions arising hereunder that the Authority or the City may deem desirable or necessary and not inconsistent herewith, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder; (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 on the Tax-Exempt Bonds; and
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(iv) to provide for the issuance of one or more Series of Additional Bonds, and to provide the terms and conditions under which such Series of Additional Bonds may be issued, subject to and in accordance with the provisions of Section 2.10 and Section 2.11 hereof; (v) in any other respect whatsoever as the Authority or the City may deem necessary or desirable, provided that such modification or amendment does not materially adversely affect the rights or interests of the Owners hereunder.
(c) Promptly after the execution by the Authority, the City and the Trustee of any Supplemental Indenture, the Trustee shall mail a notice (the form of which shall be furnished to the Trustee by the Authority or the City), by first class mail postage prepaid, setting forth in general terms the substance ofsuch Supplemental Indenture, to the Owners at the respective addressesshown 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 Supplemental Indenture.

Section 9.02. Effect of Supplemental Indenture. Upon the execution of any Supplemental Indenture pursuant to this Article, this Indenture shall be deemed to be modified and amended in accordance therewith, and the respective rights, duties and obligations under this Indenture of the Authority, the City, the Trustee and the Owners shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any such Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

Section 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds delivered after the effective date of any Supplemental Indenture pursuant to this Article may and, if the Authority or the City so determines, shall bear a notation by endorsement or otherwise in form approved by the Authority and the City as to any modification or amendment provided for in such Supplemental Indenture and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, a suitable notation shall be made on such Bond. If the Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the opinion of the Authority and the City, to any modification or amendment contained in such Supplemental Indenture, shall be prepared and executed by the Authority and authenticated by the Trustee and, in that case, upon demand of the Owner of any Bond Outstanding at the time of such effective date, and presentation of such Bond for such purpose at the Office of the Trustee, such a new Bond in equal principal amount of the same Series, interest rate and maturity shall be exchanged for such Owner’s Bond so surrendered.

Section 9.04. Amendment of Particular Bonds. The provisions of this Article shall not prevent any Owner from accepting any amendment or modification as to any particular Bond owned by it, provided that due notation thereof is made on such Bond.

DEFEASANCE
Section 10.01. Discharge of Indenture. (a) If the Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding Bonds the principal thereof and the interest and premium, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners shall cease to be entitled to the pledge of, lien on and a security interest in the Lease Revenues and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority hereunder shall thereupon cease, terminate and become void and this Indenture shall be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Authority and the City all such instruments as may 41 4149-3738-0431.4
be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the Authority all money or securities held by it pursuant hereto that are not required for the payment of the principal of and interest and premium, if any, on the Bonds. (b) Subject to the provisions of subsection (a) of this Section, when any Bond shall have been paid and if, at the time of such payment, each of the Authority and the City shall have kept, performed and observed all of the covenants and promises in such Bonds and in this Indenture required or contemplated to be kept, performed and observed by it or on its part on or prior to that time, then this Indenture shall be considered to have been discharged in respect of such Bond and such Bond shall cease to be entitled to the pledge of, lien on and a security interest in the Lease Revenues and the other assets as provided herein, and all agreements, covenants and other obligations of the Authority and the City hereunder shall cease, terminate, become void and be completely discharged and satisfied as to such Bond. (c) Notwithstanding the discharge and satisfaction of this Indenture or the discharge and satisfaction of this Indenture in respect of any Bond, those provisions of this Indenture relating to the maturity of the Bonds, interest payments and dates thereof, exchange and transfer of Bonds, replacement of mutilated, destroyed, lost or stolen Bonds, the safekeeping and cancellation of Bonds, non-presentment of Bonds, 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 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 of and interest and premium, if any, on the Bonds, to pay to the Owners of the Bonds the funds so held by the Trustee as and when such payment becomes due. Notwithstanding the discharge and satisfaction of this Indenture, the obligation of the City to indemnify the Trustee pursuant to Section 8.07 shall remain in effect and be binding upon the City.

Section 10.02. Bonds Deemed to Have Been Paid. (a) If moneys shall have been set aside and held by the Trustee for the payment or redemption of any Bond and the payment of the interest thereon to the maturity or redemption date thereof, such Bond shall be deemed to have been paid within the meaning and with the effect provided in Section 10.01 hereof. Any Outstanding Bond shall prior to the maturity date or redemption 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 Bonds are to be redeemed on any date prior to their maturity date, the Authority shall have given to the Trustee in form satisfactory to it irrevocable instructionsto mail, on a date in accordance with the provisions of Section 4.03 hereof, notice of redemption of such Bond on said redemption 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 which shall be sufficient, or (B) Defeasance Securities, the principal of and the interest on which when due, and without any reinvestment thereof, together with the money, if any, deposited therewith, will provide moneys that shall be sufficient to pay when due the interest to become due on such Bond on and prior to the maturity date or redemption date thereof, as the case may be, and the principal of and premium, if any, on such Bond, and (iii) in the event such Bond is not by its terms subject to redemption within the next succeeding 60 days, the Authority 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 Bond that the deposit required by clause (ii) above has been made with the Trustee and that such Bond is deemed to have been paid in accordance with this Section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and premium, if any, on such Bond. Neither the money nor the Defeasance Securities deposited with the Trustee pursuant to this subsection in connection with the deemed payment of Bonds, nor principal or interest payments on any such Defeasance Securities, shall be withdrawn or used for any purpose other than, and shall be held in trust for and pledged to, the payment of the principal of and, premium, if any, and interest on such Bonds.
42 4149-3738-0431.4
(b) No Bond shall be deemed to have been paid pursuant to clause (ii) of subsection (a) of this Section unless the Authority or the City shall have caused to be delivered to the Authority, the City and the Trustee (i) an executed copy of a Verification Report with respect to such deemed payment, addressed to the Authority, the City and the Trustee, in form and in substance acceptable to the Authority and the City, (ii) 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 be in form and in substance acceptable to the Authority, the City and the Trustee, 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, and (iii) a copy of an Opinion of Bond Counsel, dated the date of such deemed payment and addressed to the Authority, the City and the Trustee, in form and in substance acceptable to the Authority and the City, to the effect that such Bond has been paid within the meaning and with the effect expressed in this Indenture, this Indenture has been discharged in respect of such Bond and all agreements, covenants and other obligations of the Authority and the City hereunder as to such Bond have ceased, terminated, become void and been completely discharged and satisfied. (c) The Trustee may seek and is entitled to rely upon (i) an Opinion of Bond Counsel reasonably satisfactory to the Trustee to the effect that the conditions precedent to a deemed payment pursuant to clause (ii) of subsection (a) of this Section have been satisfied, and (ii) such other opinions, certifications and computations, as the Trustee may reasonably request, of accountants or other financial consultants concerning the matters described in subsection (b) of this Section.

Section 10.03. Unclaimed Moneys. Any moneys held by the Trustee in trust for the payment and discharge of the principal of, or premium or interest on, any Bond that remain unclaimed for 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, shall, at the Written Request of the Authority, be repaid by the Trustee to the Authority as its absolute property free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owner of such Bond shall look only to the Authority for the payment of such principal, premium or interest. The Trustee shall hold any such moneys uninvested.

MISCELLANEOUS
Section 11.01. Successor Deemed Included in all References to Predecessor. Whenever the Authority, the City or the Trustee 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 Authority, the City or the Trustee, and all agreements, conditions, covenants and terms required hereby to be observed or performed by or on behalf of the Authority, the City or the Trustee shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.

Section 11.02. Limitation of Rights. Nothing in this Indenture or in the Bonds expressed or implied is intended or shall be construed to give to any Person other than the Trustee, the Authority, the City and the Owners, any legal or equitable right, remedy or claim under or in respect of this Indenture or any covenant, condition or provision therein or herein contained, and all such covenants, conditions and provisions are and shall be held to be for the sole and exclusive benefit of the Trustee, the Authority, the City and the Owners.
43 4149-3738-0431.4
Section 11.03. Destruction of Bonds. Whenever in this Indenture provision is made for the cancellation by the Trustee and the delivery to the Authority of any Bonds, the Trustee shall, in lieu of such cancellation and delivery, destroy such Bonds.

Section 11.04. Severability of Invalid Provisions. If any one or more of the provisions contained in this Indenture or in the Bonds shall for any reason be held to be invalid, illegal or unenforceable in any respect, then such provision or provisions shall be deemed severable from the remaining provisions contained in this Indenture and such invalidity, illegality or unenforceability shall not affect any other provision of this Indenture, and this Indenture shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein. The Authority hereby declares that it would have entered into this Indenture and each and every other Section, subsection, paragraph, sentence, clause or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that any one or more Sections, subsections, paragraphs, sentences, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable.

Section 11.05. Notices. Any written notice, statement, demand, consent, approval, authorization, offer, designation, request or other communication to be given 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 Authority: Santa Barbara Public Financing Authority PO Box 1990
Santa Barbara, CA 93102-1990
Phone: [_____________]
Attention: Finance Director
If to the City: City of Santa Barbara
PO Box 1990
Santa Barbara, CA 93102-1990
Phone: [_____________]
Attention: Finance Director
If to the Trustee: U.S. Bank Trust Company, National Association 633 West Fifth Street, 24th Floor
Los Angeles, CA 90071
Attention: Global Corporate Trust
Re: Santa Barbara LRB Series 2024
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 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, (c) 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, or (d) if given by any other means, upon delivery at the address specified in this Section.

Section 11.06. Evidence of Rights of Owners. (a) Any request, consent or other instrument required or permitted by this Indenture to be signed and executed by Owners may be in any number of concurrent instruments of substantially similar tenor and shall be signed or executed by such Owners in 44 4149-3738-0431.4
Person or by an agent or agents duly appointed in writing. Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, or of the holding by any Person of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Authority, the City and the Trustee if made in the manner provided in this Section. (b) The fact and date of the execution by any Person of any such request, consent or other instrument or writing may be proved by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the Person signing such request, consent or other instrument acknowledged to him or her the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such notary public or other officer. (c) The ownership of Bonds shall be proved by the Registration Books. (d) Any request, consent, or other instrument or writing of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of every Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Authority, the City or the Trustee in accordance therewith or reliance thereon.

Section 11.07. Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds that are actually known by the Trustee to be owned or held by or for the account of the Authority or the City or any other obligor on the Bonds, or by any Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City, shall be disregarded and deemed not to be Outstanding for the purpose of any such determination; provided, however, that if 100% of the Bonds are so owned or held, such Bonds shall be deemed to be Outstanding.

Bonds so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section if the pledgee shall establish to the satisfaction of the Trustee the pledgee’s right to vote such Bonds and that the pledgee is not a Person directly or indirectly controlling or controlled by, or under direct or indirect common control with, the Authority or the City or any other obligor on the Bonds. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Upon request of the Trustee, the Authority shall specify in a Written Certificate of the Authority delivered to the Trustee that Bonds, if any, are, as of the date of such Written Certificate, owned or held by or for the account of the Authority. Upon request of the Trustee, the City shall specify in a Written Certificate of the City delivered to the Trustee that Bonds, if any, are, as of the date of such Written Certificate, owned or held by or for the account of the City.

Section 11.08. Money Held for Particular Bonds. The money held by the Trustee for the payment of the interest, principal or premium due on any date with respect to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall, on and after such date and pending such payment, be set aside on its books and held in trust by it for the Owners entitled thereto, subject, however, to the provisions of Section 10.03 hereof but without any liability for interest thereon.

Section 11.09. Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Trustee may be established and maintained in the accounting records of the Trustee, either as a fund or an account, and may, for the purposes of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account; but all such records with respect to all such Funds and Accounts shall at all times be maintained in accordance with prudent corporate trust industry standards to the extent practicable, and with due regard for the requirements hereof and for the protection of the security of the Bonds and the rights of every Owner thereof. The Trustee may establish any such additional funds or accounts as it deems necessary to perform its obligations hereunder.
45 4149-3738-0431.4
Section 11.10. Business Days. If the date for making any payment or the last date for performance of any act or the exercising of any right, as provided in this Indenture shall not be a Business Day, such payment may be made or act performed or right exercised on the next succeeding Business Day, with the same force and effect as if done on the nominal date provided in this Indenture and, unless otherwise specifically provided in this Indenture, no interest shall accrue for the period from and after such nominal date
Section 11.11. Waiver of Personal Liability. Notwithstanding anything contained herein to the contrary, no member, officer or employee of the Authority or the City shall be individually or personally liable for the payment of any moneys, including without limitation, the principal of or interest on the Bonds, but nothing contained herein shall relieve any member, officer or employee of the Authority or the City from the performance of any official duty provided by any applicable provisions of law, by the Lease Agreement or hereby.

Section 11.12. Conclusive Evidence of Regularity. Bondsissued pursuant to this Indenture shall constitute evidence of the regularity of all proceedings under the Act relative to their issuance and the levy of the Special Taxes.

Section 11.13. Partial Invalidity. If any one or more of the agreements, conditions, covenants or terms required herein to be observed or performed by or on the part of the Authority, the City or the Trustee shall be contrary to law, then such agreement or agreements, such condition or conditions, such covenant or covenants or such term or terms shall be null and void to the extent contrary to law and shall be deemed separable from the remaining agreements, conditions, covenants and terms hereof and shall in no way affect the validity hereof or of the Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under any applicable provisions of law. The Authority, the City and the Trustee hereby declare that they would have executed this Indenture, and each and every Article, Section, paragraph, subsection, sentence, clause and phrase hereof and would have authorized the execution, authentication, issuance and delivery of the Bonds pursuant hereto irrespective of the fact that any one or more Articles, Sections, paragraphs, subsections, sentences, clauses or phrases hereof or the application thereof to any Person or circumstance may be held to be unconstitutional, unenforceable or invalid.

Section 11.14. Governing Laws. This Indenture and the Bonds shall be construed and governed in accordance with the laws of the State.

Section 11.15. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Indenture may be conducted by electronic means. Each party agrees, and acknowledges that it is such party’s intent, that if such party signs this Indenture using an electronic signature, it is signing, adopting, and accepting this Indenture and that signing this Indenture using an electronic signature is the legal equivalent of having placed its handwritten signature on this Indenture on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Indenture in a usable format.

Section 11.16. Execution in Counterparts. This Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. 46 4149-3738-0431.4
IN WITNESS WHEREOF, the Authority has caused this Indenture to be signed in its name by its representative thereunto duly authorized, the City has caused this Indenture to be signed in its name by its representative thereunto duly authorized and the Trustee, in token of its acceptance of the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its officer thereunto duly authorized, all as of the day and year first above written.

FINANCE AUTHORITY OF THE CITY OF

SANTA BARBARA
By:
[Authority Officer]
ATTEST:
____________________________________
Angelica Avila,
Secretary
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY,
as General Counsel of the Authority
[City Attorney]

CITY OF SANTA BARBARA
By:
[City Officer]
ATTEST:
____________________________________
Sarah Gorman, MMC
City Clerk Services Manager
APPROVED AS TO FORM:

SARAH J. KNECHT, CITY ATTORNEY
[City Attorney]
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION, as Trustee
By:

Authorized Officer
47 4149-3738-0431.4
U.S. BANK NATIONAL ASSOCIATION HEREBY ACCEPTS APPOINTMENT AS

SECURITIES INTERMEDIARY UNDER THIS INDENTURE AND AGREES TO BE BOUND BY THE PROVISIONS OF THIS INDENTURE APPLICABLE TO THE SECURITIES INTERMEDIARY.

U.S. BANK NATIONAL ASSOCIATION, as
Securities Intermediary
By:

Authorized Officer
1 4149-3738-0431.4

EXHIBIT A

PERMITTED INVESTMENTS
[“Permitted Investments” means any of the following which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein (provided that the Trustee shall be entitled to rely upon any investment direction from the City as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State and constitute Permitted Investments), but only to the extent that the same are acquired at Fair Market Value:
(a) Defeasance Securities;
(b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: Export-Import Bank, Farm Credit System Financial Assistance Corporation, Rural Economic Community Development Administration (formerly Farmers Home Administration), General Services Administration, U.S. Maritime Administration, Small Business Administration, Government National Mortgage Association, U.S. Department of Housing & Urban Development, Federal Housing Administration and Federal Financing Bank; (c) direct obligations for any of the following federal agencies which obligations are not fully guaranteed by the full faith and credit of the United States of America: senior debt obligations rated “Aaa” by Moody’s and “AAA” by S&P issued by Fannie Mae or Federal Home Loan Mortgage Corporation (FHLMC); obligations of the Resolution Funding Corporation (REFCORP); and senior debt obligations of the Federal Home Loan Bank System;
(d) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks which have a rating on their short term Series 2024 Bonds of deposit on the date of purchase of A-1 or A-1+ by S&P and P-1 by Moody’s, or which deposit accounts are collateralized by Federal Securities for amounts above FDIC insurance limits and maturing no more than 360 days after the date of purchase, including those of the Trustee or its affiliates; (e) commercial paper which is rated at the time of purchase in the single highest classification, A-1+ by S&P and P-1 by Moody’s and which matures not more than 270 days after the date of purchase; (f) investmentsin a money market fund rated AAAm or AAAm-G or better by S&P, excluding such funds with a floating net asset value but including funds for which the Trustee or its affiliates provide investment advisory or other management services;
(g) investments in the Local Agency Investment Fund (established under Section 16429.1 of the California Government Code), provided that such investment is held in the name and to the credit of the Trustee, and provided further that the Trustee may restrict such investment if required to keep moneys available for the purposes of the Indenture;
(h) [investments in the Santa Barbara County Treasurer's Investment Pool;] (i) shares in a State of California common law trust established pursuant to Title 1, Division 7, Chapter 5 of the California Government Code which invests exclusively in investments permitted by Section 53601 of Title 5, Division 2, Chapter 4 of the California Government Code, as it may be amended; 2 4149-3738-0431.4
(j) U.S. dollar denominated deposit accounts, federal funds, certificates of deposit (including those placed by a third party pursuant to a separate agreement between the City or the Authority and the Trustee), trust funds, trust accounts, other deposit products, overnight bank deposits, interest bearing deposits, interest bearing money market accounts and banker’s acceptances with domestic commercial banks, which may include the Trustee, its parent holding company, if any, and their affiliates, which have a rating on their short term certificates of deposit on the date of purchase of “A-1” or “A-l+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank or (ii) which are fully insured by the Federal Deposit Insurance Corporation; and
(k) any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and (i) which are rated, based on the escrow, in the highest rating category of S&P and Moody’s or (ii)(A) which are fully secured as to principal and interest and redemption premium, if any, by a fund consisting only of cash or Federal Securities, which fund may be applied only to the payment of such principal of and interest and redemption premium, if any, in such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (B) which fund is sufficient, as verified by an Independent Accountant and with the prior approval of S&P, to pay principal of and interest and redemption premium, if any, on the bonds or other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate.] 1 4149-3738-0431.4

EXHIBIT B

FORM OF BOND
No. R- ***$***

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA

LEASE REVENUE BONDS (PUBLIC SAFETY AND PARK PROJECTS),
SERIES 2024
Interest Rate Maturity Date Dated Date CUSIP
% May 15, 20__ ______ __, 2024
REGISTERED OWNER:

PRINCIPAL AMOUNT:

The Finance Authority of the City of Santa Barbara (the “Authority”) hereby promises to pay, solely from the sources hereinafter described, to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or on any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like lawful money from the date hereof payable semiannually on May 15 and November 15 in each year, commencing _______ 15, 20__, (the “Interest Payment Dates”), until payment of such Principal Amount in full.

This Bond is one of a series of a duly authorized issue of bonds designated “Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024” (the “Bonds”) in the aggregate principal amount of $________. The Bonds are issued pursuant to the Indenture, dated as of _______ 1, 2024, (the “Indenture”), by and among the Authority (the “Authority”), the City of Santa Barbara (the “City”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”), and this reference incorporates the Indenture herein, and by acceptance hereof the owner of this Bond assents to said terms and conditions. Pursuant to and as more particularly provided in the Indenture, Additional Bonds may be issued by the Authority payable from Lease Revenues as provided in the Indenture on a parity with the Series 2024 Bonds. The Series 2024 Bonds and any Additional Bonds are collectively referred to as the “Bonds.” The Indenture is entered into, and this Bond is issued under, the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code (the “Act”) and the laws of the State of California. Capitalized undefined terms used herein shall have the meanings ascribed thereto in the Indenture.

Interest on the Bonds shall be payable from the Interest Payment Date next preceding the date of authentication thereof unless (i) a Bond is authenticated on or before an Interest Payment Date and after the close of business on the preceding Record Date, in which event interest thereon shall be payable from such Interest Payment Date, (ii) a Bond is authenticated on or before the first Record Date, in which event interest thereon shall be payable from the Closing Date, or (iii) interest on any Bond is in default as of the date of authentication thereof, in which event interest thereon shall be payable from the date to which interest has previously been paid or duly provided for. Interest shall be paid in lawful money of the United States on each Interest Payment Date. Interestshall be paid by check of the Trustee mailed by first-class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds at their respective addresses shown on 2 4149-3738-0431.4
the Registration Books as of the close of business on the preceding Record Date. Notwithstanding the foregoing, interest on any Bond that is not punctually paid or duly provided for on any Interest Payment Date shall, if and to the extent that amounts subsequently become available therefore, be paid on a payment date established by the Trustee to the Person in whose name the ownership of such Bond is registered on the Registration Books at the close of business on a special record date to be established by the Trustee for the payment of such defaulted interest, notice of which shall be given to such Owner not less than ten days prior to such special record date. The principal of the Bonds shall be payable in lawful money of the United States of America upon presentation and surrender thereof upon maturity or earlier redemption at the Office of the Trustee.

The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues and the other assets pledged therefor thereunder. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds. The Lease Revenues consist of all Base Rental Payments payable by the City pursuant to the Lease Agreement, including any prepayments thereof, any Net Proceeds and any amounts received by the Trustee as a result of or in connection with the Trustee’s pursuit of remedies under the Lease Agreement upon a Lease Default Event.

The Series 2024 Bonds are secured by amounts on deposit in the [Series 2024 Reserve Account] and the Reserve Requirement with respect to the Series 2024 Bonds is as provided in the Indenture.

Pursuant to and as more particularly provided in the Indenture, subject only to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein, in order to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the provisions of the Indenture and the Act, the Authority pledges to the Owners, and grants a lien on and a security interest in all right, title and interest of the Lease Revenues and any other amounts held in the Payment Fund whether now owned or hereafter arising as security for the payment of the principal of and interest on the Bonds in accordance with their terms, the provisions of this Indenture and the Act, which shall immediately attach to such assets and be effective, binding and enforceable against the Authority, its successors, purchasers of any of such assets, creditors and all others asserting rights therein, to the extent set forth in, and in accordance with, the Indenture, irrespective of whether those parties have notice of the pledge of, lien on and a security interest in such assets and without the need for any physical delivery, recordation, filing or further act.

The Series 2024 Bonds are subject to redemption on the dates, at the Redemption Prices and pursuant to the terms set forth in the Indenture. Notice of redemption of any Bond or any portion thereof shall be given as provided in the Indenture.

The Series 2024 Bonds are issuable as fully-registered Bonds without coupons in Authorized Denominations ($5,000 and integral multiples thereof).

Any Bond may be transferred upon the Registration Books by the Person in whose name it is registered, in person or by such Person’s duly authorized attorney, upon surrender of such Bond to the Trustee for cancellation, accompanied by delivery of a written instrument of transfer, duly executed in a form acceptable to the Trustee. Whenever any Bond or Bonds shall be so surrendered for transfer, the Authority shall execute and the Trustee shall authenticate and shall deliver a new Bond or Bonds of the same Series and maturity in a like aggregate principal amount, in any Authorized Denomination. The Trustee shall require the Owner requesting such transfer to pay any tax or other governmental charge required to be paid with respect to such transfer. The Bonds may be exchanged at the Office of the Trustee for a like aggregate principal amount of Bonds of the same Series and maturity of other Authorized 3 4149-3738-0431.4
Denominations. The Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.

The Indenture and the rights and obligations of the Authority, the City the Trustee and the Owners may be modified or amended in the manner, to the extent, and upon the terms provided in the Indenture.

The Indenture contains provisions permitting the Authority to make provision for the payment of the principal of and the interest and premium, if any, on any of the Bonds so that such Bonds shall no longer be deemed to be Outstanding under the terms of the Indenture.

Unless this Bond is presented by an authorized representative of The Depository Trust Company to the Trustee for registration of transfer, exchange or payment, and any Bond 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.

IN WITNESS WHEREOF, the Authority has caused this Bond to be signed in its name and on its behalf by the manual or facsimile signature of its representative thereunto duly authorized, attested by the manual or facsimile signature of the Secretary of the Authority, all as of the Dated Date identified above.

FINANCE AUTHORITY OF THE CITY OF

SANTA BARBARA
By:
[Chair]
ATTEST:

Secretary
4 4149-3738-0431.4

CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture and registered on the Registration Books.

Date:

U.S. BANK TRUST COMPANY,

NATIONAL ASSOCIATION, AS TRUSTEE
By:

Authorized Signatory
5 4149-3738-0431.4

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 Bond 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 Bond in every particular without alteration or enlargement or any change whatsoever.

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4125-3801-6848.3

NOTICE OF INTENTION TO SELL
$__________*

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA

LEASE REVENUE BONDS (PUBLIC SAFETY AND PARK PROJECTS)
SERIES 2024
NOTICE IS HEREBY GIVEN that the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024 (the “Series 2024 Bonds”) will be offered for public sale by the Finance Authority of the City of Santa Barbara (the “Authority”) on ____day, ______ __, 2024, at the hour of 8:15 A.M. (California time), (or on such other date and time as may be determined by the Authority as provided below), through the PARITY®electronic bid submission system, subject to all of the terms and conditions of the Official Notice of Sale describing the Series 2024 Bonds (the “Official Notice of Sale”), copies of which (along with a Preliminary Official Statement relating to the Series 2024 Bonds) may be requested from KNN Public Finance, LLC, 2054 University Avenue, Suite 300, Berkeley, California 94704; Attn. Nedko Nedev (Phone: (925) 705-6863; Email:
[email protected]), or are expected to be available to authorized users on or about ______ __, 2024, at the PARITY® website at www.iDealprospectus.com.

The date and times of the sale of the Series 2024 Bonds may be changed at the sole discretion of the Authority by providing notice thereof through Thomson Municipal News not later than 1:00 p.m. (California time) on the day prior to the date bids are to be received.

Dated: _____ __, 2024 FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA __________________________
* Preliminary, subject to change.

ATTACHMENT 4
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CONTINUING DISCLOSURE AGREEMENT
This Continuing Disclosure Agreement (the “Disclosure Agreement”) is executed and delivered by the City of Santa Barbara (the “City”) and U.S. Bank Trust Company, National Association, as dissemination agent (the “Dissemination Agent”) in connection with the issuance by the Finance Authority of the City of Santa Barbara (the “Authority”) of $__________ aggregate principal amount of its Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 (the “Series 2024 Bonds”). The Series 2024 Bonds are being issued pursuant to an Indenture, dated as of ______ 1, 2024, (the “Indenture”), by and among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). Pursuant to Section 6.11 of the Indenture, the City has covenanted to comply with its obligations hereunder and to assume all obligations for continuing disclosure with respect to the Series 2024 Bonds.

The Series 2024 Bonds and additional Series of Bonds are referred to herein as the “Bonds.” The Series 2024 Bonds are being issued to finance the costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities (together, the “Series 2024 Project”). The City and the Dissemination Agent covenant and agree as follows:

Section 1. Purpose of the Disclosure Agreement. This Disclosure Agreement is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Series 2024 Bonds 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 Indenture, which apply to any capitalized terms used in this Disclosure Agreement 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 Agreement.
“Beneficial Owner” shall mean any person which has or shares the power, directly or indirectly, to make investment decisions concerning ownership of any Series 2024 Bonds (including persons holding Series 2024 Bonds through nominees, depositories, or other intermediaries). “Disclosure Representative” shall mean the Finance Director of the City or his or her designee, or such other officer or employee as the City shall designate in writing to the Dissemination Agent from time to time.
“Dissemination Agent” shall mean U.S. Bank Trust Company, National Association, or any successor Dissemination Agent designated in writing by the City pursuant to Section 8 of this Disclosure Agreement and which has filed with the City and the Dissemination Agent a written acceptance of such designation. The City hereby designates the U.S. Bank Trust Company, National Association to be the initial Dissemination Agent and U.S. Bank Trust Company, National Association hereby accepts such designation.
“EMMA” shall mean the Electronic Municipal Market Access system information about which may be found at the following Internet address: http://emma.msrb.org/. “Financial Obligation” shall mean (a) a debt obligation of the City, (b) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation of the City, or (c) a guarantee of (i) a debt obligation of the City, or (ii) a derivative instrument described in clause (b), above; provided, however, that the term “Financial Obligation” shall not ATTACHMENT 5
2 4139-2159-8545.2
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include “municipal securities” (as such term is defined in the Securities Exchange Act of 1934, as amended) as to which a “final official statement” (as such term is defined in the Rule) has been provided to the MSRB consistent with the Rule.
“Listed Events” shall mean any of the events listed in subsection (a) or subsection (b) of Section 5 hereof.
“MSRB” shall mean the Municipal Securities Rulemaking Board, or any other entity designated or authorized by the Securities and Exchange Commission to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the Securities and Exchange Commission, filings with the MSRB are to be made through the Electronic Municipal Market Access (EMMA) website of the MSRB, currently located at http://emma.msrb.org.
“Participating Underwriter” shall mean the original purchaser of the Series 2024 Bonds required to comply with the Rule in connection with offering of the Series 2024 Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.

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, commencing with the report for the 2023-24 fiscal year, provide to the MSRB an Annual Report which is consistent with the requirements of Section 4 of this Disclosure Agreement, with a copy to the Dissemination Agent. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross-reference other information as provided in Section 4 of this Disclosure Agreement; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the date required above for the filing of the Annual Report if not available by that date. If the City’s fiscal year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(c) hereof. The City shall provide a written certification with each Annual Report to the effect that such Annual Report constitutes the Annual Report required to be furnished by it hereunder. The Dissemination Agent may conclusively rely upon such certification of the City and shall have no duty or obligation to review such Annual Report.
(b) Not later than fifteen (15) Business Days prior to said date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If the City is unable to provide the MSRB an Annual Report by the date required in subsection (a), the City shall send a notice to each MSRB in substantially the form attached hereto as Exhibit A. (c) The Dissemination Agent, to the extent the City has provided the Annual Report to the Dissemination Agent, shall:
(i) determine each year prior to the date for providing the Annual Report the name and address of the MSRB, and
(ii) file a report with the City (if the Dissemination Agent is other than the City) certifying that the Annual Report has been provided pursuant to this Disclosure Agreement, stating the date it was provided and listing the MSRB to which it was provided. 3 4139-2159-8545.2
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Section 4. Content of Annual Reports: The City’s Annual Report shall contain or incorporate by reference the following:
(a) Audited financial statements of the City for the preceding Fiscal Year, prepared in accordance with the generally accepted auditing standards for municipalities in 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), the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the final Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) The City’s Annual Report shall include the following items, providing financial and operating data (as of the end of the preceding Fiscal Year) substantially similar to that provided in the corresponding tables and charts in the Official Statement:

1. Principal amount of each Series of Bonds and any Parity Debt outstanding.

2. City Principal Property Taxpayers;

3. City Assessed Valuations, Property Tax Rates, Secured Levies and Collection and Delinquencies;

4. General Fund Tax Revenues by Source;

5. City General Fund Balance Sheet;

6. City General Fund Summary of Revenues and Expenditures;

7. [Information in Appendix A of the Official Statement under the captions “ Retirement Systems” and “Other Post-Retirement Benefits”; and

8. Summary of City's current Fiscal Year's investments most recently completed and accepted by City Council, including types and amounts of investments, return on investments, average yield of investments and market value of investments.] (c) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which have been submitted to each of the MSRB or the Securities and Exchange Commission. If the document included by reference is a final official statement, it must be available from the Municipal Securities Rulemaking Board. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events. (a) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Series 2024 Bonds in a timely manner not later than ten business days after the occurrence of the event:
(i) Principal and interest payment delinquencies.
(ii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iii) Unscheduled draws on credit enhancements reflecting financial difficulties. (iv) Substitution of credit or liquidity providers, or their failure to perform. 4 4139-2159-8545.2
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(v) 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). (vi) Tender offers.
(vii) Defeasances.
(viii) Rating changes.
(ix) Bankruptcy, insolvency, receivership or similar event of the City. (x) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation, any of which reflect financial difficulties.

For purposes of the event identified in paragraph (ix), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for an obligated person 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) Pursuant to the provisions of this Section, the City shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the Bonds, if material, in a timely manner not later than ten business days after the occurrence of the event:
(i) Unless described in paragraph (v) of subsection (a) of this Section, material notices or determinations by the Internal Revenue Service with respect to the tax status of the Bonds or other material events affecting the tax status of the Bonds. (ii) Modifications to rights of holders of the Bonds.
(iii) Optional, unscheduled or contingent Bond calls.
(iv) Release, substitution, or sale of property securing repayment of the Bonds. (v) Non-payment related defaults.
(vi) 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.
(vii) Appointment of a successor or additional trustee or the change of name of a trustee. (viii) Incurrence of a Financial Obligation, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a Financial Obligation, any of which affect holders of the Bonds.
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(c) The Dissemination Agent shall, within one business day of obtaining actual knowledge of the occurrence of any of the Listed Events, contact the Disclosure Representative and inform such person of the event.
(d) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (b) of this Section, the City shall determine if such event would be material under applicable Federal securities law.
(e) Whenever the City obtains knowledge of the occurrence of a Listed Event described in subsection (a) of this Section, or determines that knowledge of a Listed Event described in subsection (b) of this Section would be material under applicable Federal securities law, the City shall, or shall cause the Dissemination Agent to, file a notice of the occurrence of such Listed Event with the MSRB, within ten business days of such occurrence.
(f) Notwithstanding the foregoing, notice of Listed Events described in paragraph (iii) of subsection (a) of this Section need not be given any earlier than the notice (if any) of the underlying event is given to holders of affected Series 2024 Bonds pursuant to the Indenture.

Section 6. Format for Filings with MSRB. Any report or filing with the MSRB pursuant to this Disclosure Agreement 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 and the Dissemination Agent’s obligations under this Disclosure Agreement shall terminate upon the legal defeasance prior to redemption or payment in full of all of the Series 2024 Bonds. If such termination occurs prior to the final maturity of the Series 2024 Bonds, the City shall give, or cause to be given, 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 Agreement, 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 Agreement. The initial Dissemination Agent shall be U.S.

Bank Trust Company, National Association.

Section 9. Amendment; Waiver. Notwithstanding any other provisions of this Disclosure Agreement, the City may amend this Disclosure Agreement, and any provision of this Disclosure Agreement may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Section 3(a), 4, 5(a) or 5(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 an obligated person with respect to the Series 2024 Bonds or the type of business conducted; (b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Series 2024 Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (c) the proposed amendment or waiver (i) is approved by Owners of the Series 2024 Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent 6 4139-2159-8545.2
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of Owners, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of Owners or Beneficial Owners of the Series 2024 Bonds.

In the event of any amendment or waiver of a provision of this Disclosure Agreement, 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 shall 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 Agreement shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Agreement 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 Agreement, in addition to that which is required by this Disclosure Agreement. 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 Agreement, the City shall have no obligation under this Disclosure Agreement 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 Agreement any Participating Underwriter or the Owners of at least 25.0% aggregate principal amount of the outstanding Series 2024 Bonds shall or any Owner or Beneficial Owner of the Series 2024 Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Agreement. A default under this Disclosure Agreement shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Agreement in the event of any failure of the City or the Dissemination Agent to comply with this Disclosure Agreement shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Series 2024 Bonds. If it performs the duties assigned to it hereunder, the Dissemination Agent shall not be responsible to any person for any failure by the City or the Dissemination Agent (if other than U.S. Bank Trust Company, National Association) to perform duties or obligations imposed hereby, or for any decision of the City regarding the reporting of Listed Events. The Dissemination Agent, if other than the City, shall not be responsible in any manner for the format or content of any notice or Annual Report prepared by the City pursuant to this Disclosure Agreement. If the Dissemination Agent is other than the City, the City will pay reasonable compensation to, and reimburse the expenses of, the Dissemination Agent.
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Section 13. Beneficiaries. The Disclosure Agreement shall inure solely to the benefit of the City and the Dissemination Agent, the Participating Underwriter and Owners and Beneficial owners from time to time of the Series 2024 Bonds, and shall create no rights in any other person or entity.

Section 14. Notices. Any notices or communications to or among any of the parties to this Disclosure Agreement may be given as follows:

To the City: City of Santa Barbara
735 Anacapa Street
Santa Barbara, California 93102
Attention: Finance Director
To the initial Dissemination Agent: U.S. Bank Trust Company, National Association 633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention: Global Corporate Trust
Section 15. Governing Laws. This Disclosure Agreement shall be governed by and construed in accordance with the laws of the State of California.

Section 16. Electronic Signature. Each of the parties hereto agrees that the transaction consisting of this Disclosure 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 Disclosure Agreement using an electronic signature, it is signing, adopting, and accepting this Disclosure Agreement and that signing this Disclosure Agreement using an electronic signature is the legal equivalent of having placed its handwritten signature on this Disclosure Agreement on paper. Each party acknowledges that it is being provided with an electronic or paper copy of this Disclosure Agreement in a usable format.

Section 17. Counterparts. This Disclosure 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.

IN WITNESS WHEREOF, the parties hereto have executed this Disclosure Agreement as of the date first above written.

Date: __________ __, 2024

CITY OF SANTA BARBARA
By:
[Authorized Officer]
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as dissemination agent
By:

Authorized Officer
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A-1
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EXHIBIT A

NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD OF

FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Finance Authority of the City of Santa Barbara Name of Bond Issue: Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects), Series 2024 Name of Obligated Person: City of Santa Barbara
Date of Issuance: _____ __, 2024
NOTICE IS HEREBY GIVEN that the City of Santa Barbara (the “City”) has not provided an Annual Report with respect to the above-named Bonds as required by the Continuing Disclosure Agreement, dated as of _______ 1, 2024, by and between the City and U.S. Bank Trust Company, National Association, as dissemination agent. The City anticipates that the Annual Report will be filed by ____________________.

Dated: ___________________
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, on behalf of City
By:

OH&S 8/27/24 Draft
4124-3525-6400.3
$__________
*

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA

LEASE REVENUE BONDS (PUBLIC SAFETY AND PARK PROJECTS)
SERIES 2024

OFFICIAL NOTICE OF SALE
NOTICE IS HEREBY GIVEN that electronically submitted proposals will be received by the Finance Authority of the City of Santa Barbara (the “Authority”) on ____DAY, ______ __, 2024,
at the time described below, for the purchase of $__________ *
aggregate principal amount of lease
revenue bonds designated “Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024” (the “Series 2024 Bonds”), to be issued pursuant to an Indenture, dated as of ______ 1, 2024, (the “Indenture”), by and among the Authority, the City of Santa Barbara (the “City”) and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Series 2024 Bonds are limited obligations of the Authority payable from Base Rental Payments to be received by the Authority from the City under a Lease Agreement, dated as of ______ 1, 2024, (the “Lease Agreement”), by and between the Authority and the City.

The Series 2024 Bonds will be awarded to the initial purchaser thereof (the “Purchaser”) on the basis described herein.

TIMES FOR BIDS: Bids must be delivered at or before 8:15 a.m. (California time) on the bid date.

PLACE: Bidders for the Series 2024 Bonds must deliver bids electronically as described under “TERMS OF SALE – ELECTRONIC BIDS”
below.

The Authority reserves the right to postpone said public sale to a later date and/or different time by announcing such postponement through Thomson Municipal News on Thomson Municipal Market Monitor (www.TM3.com) (the “News Service”) not later than 1:00 p.m. (California time) on the day prior to the date bids are to be received. If no legal bid or bids are received for the Series 2024 Bonds on said date (or such later date as is established as provided herein) at the time specified, bids will be received for the Series 2024 Bonds on such other date and at such other time as shall be designated through the News Service. Potential bidders will be notified via the News Service not later than 1:00 p.m. (California time) on the day prior to the date bids are to be received of any change to the principal payment schedule for the Series 2024 Bonds to be utilized for the bidding process.
*
Preliminary, subject to change.

ATTACHMENT 6
2 4124-3525-6400.3
As an accommodation to bidders, notice of such postponement and of the sale date or of a change in the principal payment schedule will be given to any bidder that has requested such notice from the City’s Municipal Advisor, KNN Public Finance, LLC, 2054 University Avenue, Suite 300, Berkeley, California 94704; Attn. Nedko Nedev (Phone: (925) 705-6863; Email: [email protected]).

Failure of any bidder to receive such telephonic or emailed notice shall not affect the legality of the sale. See “TERMS OF SALE - Postponement or Cancellation of Sale.” Bidders are referred to the Preliminary Official Statement dated _____ __, 2024, (the “Preliminary Official Statement”) for additional information regarding the City, the Authority, the Series 2024 Bonds, and the security therefor, and other matters. See “TERMS OF SALE - OFFICIAL STATEMENT” below.

TERMS RELATING TO THE SERIES 2024 BONDS
Important Note: This notice will be submitted to i-Deal LLC (“i-Deal”) for posting at the TM3 website and in the Parity bid delivery system. In the event i-Deal’s summary of the terms of sale of the Series 2024 Bonds disagrees with this Official Notice of Sale in any particulars, the terms of this Official Notice of Sale (as amended, if necessary, with notice of any amendment hereto to be given as described above) shall control.

SERIES: $__________
*
aggregate principal amount of Series 2024 Bonds are
being issued asfully registered Series 2024 Bondsin denominations of $5,000 or multiplesthereof, provided that no Series 2024 Bond shall represent principal maturing in more than one year, all dated the date of delivery thereof. The Series 2024 Bonds are the first series to be issued under the Indenture and additional bonds may be issued on a parity with the Series 2024 Bonds on the terms and subject to the conditions set forth in the Indenture.

INTEREST RATE: Interest is payable on May 15, 20__, and semiannually thereafter on May 15 and November 15 of each year. Bidders for the Series 2024 Bonds must specify the rate or rates of the on such Series 2024 Bonds hereby offered for sale and an aggregate purchase price.

Bidders for the Series 2024 Bonds may specify any number of separate rates and the same rate or rates may be repeated as often as desired, but:
• No Series 2024 Bond may bear an interest rate greater than 6.0% per annum; • [No Series 2024 Bond maturing on or after May 15, 2035 may bear an interest rate lower than 5% per annum;]
• No Series 2024 Bond shall bear a zero rate of interest; • No Series 2024 Bond shall bear more than one rate of interest; *
Preliminary, subject to change.
3 4124-3525-6400.3
• Each interest rate specified in any bid must be a multiple of 1/100 of one percent (e.g., 0.01%) per annum; and
• Each Series 2024 Bond shall bear interest from its date of delivery to its stated maturity date or earlier redemption at the interest rate specified in the applicable bid.

PURCHASE PRICES: The aggregate purchase price bid for the Series 2024 Bonds may not be less than one hundred percent (100.0%) of the principal amount of such Series 2024 Bonds. Premium bids for the Series 2024 Bonds must be paid as part of the purchase price, and no bid will be accepted which contemplates the waiver of any interest or other concession by the bidder as substitute for payment in full of the purchase price. Bids that do not conform to the terms of this section may be rejected. See “TERMS OF SALE – RIGHT OF REJECTION” below. The Authority reserves the right to modify or amend the terms of the sale prior to the time bids are received and to waive any irregularity in bids received.

BOOK-ENTRY ONLY: The Series 2024 Bonds shall be issued in registered form by means of a book-entry system with no distribution of the Series 2024 Bonds made to the public.

One Series 2024 Bond representing each Series 2024 Bond maturity date and interest rate will be issued to The Depository Trust Company (“DTC”), registered in the name of Cede & Co., its nominee. The book-entry system will evidence ownership of the Series 2024 Bonds in the principal amount of $5,000 or any integral multiple thereof, with transfers of ownership effected on the records of DTC.

PAYMENT OF DTC FEES: The Authority will submit or cause to be submitted all requisite documents to DTC for DTC-eligibility purposes. However, the Purchaser will be responsible for payment of all fees related to the Series 2024 Bonds charged by DTC. 4 4124-3525-6400.3
MATURITIES*: The Series 2024 Bonds shall mature on May 15 in each of the years, and in the amounts, as follows:

Year
(May 15) Amount*
$__________
*
ADJUSTMENT OF PRINCIPAL PAYMENTS: The principal amountsset forth in this Official Notice of Sale reflect certain estimates of the Authority with respect to the likely interest rates of the winning bid for the Series 2024 Bonds and the premium and underwriting discount contained in the winning bid for the Series 2024 Bonds. Potential bidders will be notified via the News Service not later than 1:00 p.m. (California time) on the business day prior to the date bids are to be received of any change to the principal payment schedule for the Series 2024 Bonds to be utilized for the bidding process. The final maturity schedule will be designed so that the financing objectives of the Authority will be met. The Authority expects the Series 2024 Bond financing to generate approximately $_____* Million of net proceeds to be used to (i) pay costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities and (ii) pay capitalized interest with respect to the Series 2024 Bonds through May 15, 2027, (iii) fund a debt service reserve fund for the Series 2024 Bonds, and (iv) pay the costs of issuance of the Series 2024 Bonds. The Authority reserves the right to increase or decrease the aggregate principal amount, the individual principal amount of each maturity, and/or the number of maturities of the Series 2024 Bonds following the submission of the bids, without restriction. Each principal payment is subject to increase or *
Preliminary, subject to change.
5 4124-3525-6400.3
decrease in $5,000 increments, without restriction. The Purchaser may not withdraw its bid or change its interest rates bid as a result of any changes made to the principal amounts. Subsequent to the adjustment of principal payments, the dollar amount of the purchase price will be changed so that the net compensation to the Purchaser of Series 2024 Bonds (expressed as a percentage of the aggregate principal amount of such Series 2024 Bonds) does not increase or decrease from what it would have been if no adjustment had been made to the principal amounts, taking into consideration the reoffering yields for the different maturities.

SERIAL BONDS AND/OR TERM BONDS: Bidders may provide that all the Series 2024 Bonds be issued as Serial Bonds or may provide that any one or more consecutive annual principal amounts be combined into one or more Term Bonds. All Series 2024 Bonds maturing on the same date must either be executed and delivered as serial bonds, or part of the same term bond.

REDEMPTION*: The Series 2024 Bonds maturing prior to May 15, 20__, shall not be subject to optional redemption prior to their respective stated maturity dates. The Series 2024 Bonds maturing on or after May 15, 20__, shall be subject to optional redemption, in whole or in part in Authorized Denominations on any date on or after May 15, 20__, from and to the extent of prepaid Base Rental Payments paid pursuant to the Lease Agreement, at a Redemption Price equal to the principal amount of the Series 2024 Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.

The Series 2024 Bonds are also subject to extraordinary redemption upon the terms and conditions, and at the prices, set forth in the Preliminary Official Statement.

PURPOSE: The Series 2024 Bonds are to be issued to (a) finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities, (b) finance capitalized interest with respect to the Series 2024 Bonds through May 15, 2027, (c) fund a debt service reserve fund for the Series 2024 Bonds, and (d) pay the costs of issuance of the Series 2024 Bonds.

SECURITY: The Series 2024 Bonds are payable from, and are secured by a pledge of, Base Rental Payments payable to the Authority by the City pursuant to a Lease Agreement, dated as of ______ 1, 2024, (the “Lease Agreement”). The City has covenanted under the Lease Agreement that as long as the Property (as defined therein) is available for the City’s use and occupancy, it will take such action as may be necessary to include the Base Rental Payments in its annual budgets and to make the necessary annual appropriations therefor. The Authority has pledged to the Trustee for the benefit of the owners of the Series 2024 Bonds and all parity bonds the Authority’s right to receive Base Rental Payments, and its right to receive and collect any proceeds of any insurance maintained under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority.

DEBT SERVICE RESERVE FUND: [A reserve fund is established under the Indenture and is required to be funded, as of the date of calculation, in an amount equal to 50% of *
Preliminary, subject to change.
6 4124-3525-6400.3
the maximum annual amount of principal of and interest on the Series 2024 Bonds coming due in any Bond Year (the “Reserve Requirement”).]
TAX-EXEMPT STATUS: In the opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, 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, interest on the Series 2024 Bonds 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 Bond Counsel, interest on the Series 2024 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Series 2024 Bondsincluded in adjusted financialstatement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Series 2024 Bonds. See “TAX MATTERS” in the Preliminary Official Statement. In the event that prior to the issuance of the Series 2024 Bonds (i) the income received by private owners of obligations of the same type and character as the Series 2024 Bonds shall be declared to be includable in gross income (either at the time of such declaration or at any future date) for purposes of federal income tax laws, either by the terms of such laws or by ruling of a federal income tax authority or official, which is followed by the Internal Revenue Service or by decision of any federal court, or (ii) any federal income tax law is adopted that will have a substantial adverse tax effect upon owners of the Series 2024 Bonds as such, the Purchaser may, at its option, prior to the tender of said Series 2024 Bonds, be relieved of its obligation under the contract to purchase the Series 2024 Bonds, and in such case the deposit accompanying its bid will be returned.

LEGAL OPINION: The legal opinion of Orrick, Herrington & Sutcliffe LLP, Los Angeles, California, approving the validity of the Series 2024 Bonds will be furnished to the Purchaser without cost.

DISCLOSURE COUNSEL LETTER: The Purchaser will receive a disclosure letter addressed to them regarding the Official Statement from Orrick, Herrington & Sutcliffe LLP, to the effect that no information has come to the attention of such counsel to cause such counsel to believe that, subject to customary exclusions, the Official Statement contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading.

REOFFERING PRICE CERTIFICATE AND ESTABLISHMENT OF ISSUE PRICE: Upon notification that it has submitted the winning bid, the Purchaser shall provide the initial offering prices at which it has offered or reasonably expects to offer all of the Series 2024 Bonds of each maturity to the general public (excluding bond houses, brokers or similar persons acting in the capacity of underwriters or wholesalers) in a bona fide public offering. (a) Prior to delivery of the Series 2024 Bonds, the Purchaser shall be required to provide to the Authority a reoffering price certification in form and substance similar to either the certificate attached as Appendix A or the certificates attached as Appendix B and Appendix C.

In addition, based on reasonable requests of Bond Counsel, the Purchaser will provide information 7 4124-3525-6400.3
regarding its sales of the Series 2024 Bonds. For purposes of this paragraph, sales of the Series 2024 Bonds to other securities brokers or dealers will not be considered sales to the general public. (b) The Authority intends that the provisions of Treasury Regulation Section

1.148-1(f)(3)(i) (defining “competitive sale” for purposes of establishing the issue price of the Series 2024 Bonds) will apply to the initial sale of the Series 2024 Bonds (the “competitive sale requirements”) because:
(1) the Authority shall disseminate this Notice of Sale to potential underwriters in a manner that is reasonably designed to reach potential underwriters; (2) all bidders shall have an equal opportunity to bid; (3) the Authority may receive bids from at least three underwriters of municipal bonds who have established industry reputations for underwriting new issuances of municipal bonds; and
(4) the Authority anticipates awarding the sale of the Series 2024 Bonds to the bidder who submits a firm offer to purchase the Series 2024 Bonds at the highest price (or lowest overall true interest cost), as set forth in this Notice of Sale.

Any bid submitted pursuant to this Notice of Sale shall be considered a firm offer for the purchase of the Series 2024 Bonds, as specified in the bid. (c) In the event that the competitive sale requirements are not satisfied, the Authority shall so advise the Purchaser. In such event, the Authority shall treat the first price at which 10% of a maturity of the Series 2024 Bonds (the “10.0% test”) is sold to the public as the issue price of that maturity unless the Purchaser has elected and agreed with the Authority to apply the “hold-the-offering price rule,” as described below, in which case the initial offering price to the public as of the sale date of any maturity of the Series 2024 Bonds will be treated as the issue price of that maturity, in each case applied on a maturity-by-maturity basis. In the event that the competitive sale requirements are not satisfied, the Purchaser shall advise the Authority if any maturity of the Series 2024 Bonds satisfies the 10.0% test as of the date and time of the award of the Series 2024 Bonds, and if the Purchaser has elected to apply the hold-the-offering-price rule, the Purchaser shall notify the Authority, within one hour of the time of award of the Series 2024 Bonds, which maturities of the Series 2024 Bonds satisfy the 10.0% test and which maturities shall be subject to the hold-the-offering-price rule. Bids will not be subject to cancellation in the event that the competitive sale requirements are not satisfied. (d) By submitting a bid, the Purchaser shall (i) confirm that the underwriters have offered or will offer the Series 2024 Bonds to the public on or before the date of award at the offering price or prices (the “initial offering price”), or at the corresponding yield or yields, set forth in the bid submitted by the Purchaser and (ii) if the Purchaser has elected to use the hold-theoffering-price rule, the Purchaser agrees, on behalf of the underwriters participating in the purchase of the Series 2024 Bonds, that the underwriters will neither offer nor sell unsold Series 2024 Bonds of any maturity to which the hold-the-offering-price rule shall apply 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:
8 4124-3525-6400.3
(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 Series 2024 Bonds to the public at a price that is no higher than the initial offering price to the public.

The Purchaser shall promptly advise the Authority when the underwriters have sold

10.0% of that maturity of the Series 2024 Bonds to the public at a price that is no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.
(e) If the competitive sale requirements are notsatisfied, and the Purchaser does not elect to use the hold-the-offering-price rule, then until the 10.0% test has been satisfied as to each maturity of the Series 2024 Bonds, the Purchaser agrees to promptly report to the Authority the prices at which such unsold Series 2024 Bonds of that maturity have been sold to the public.

That reporting obligation shall continue, whether or not the Closing Date has occurred, until the

10.0% test has been satisfied as to the Series 2024 Bonds of that maturity or until all Series 2024 Bonds of that maturity have been sold.
(f) The Authority acknowledges that, if the Purchaser has elected to use the hold-the-offering-price rule, in making the representation set forth above, the Purchaser will rely on (i) the agreement of each underwriter to comply with the hold-the-offering-price rule, 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 Series 2024 Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-theoffering-price rule, as set forth in a selling group agreement and the related pricing wires, and (iii) in the event that an underwriter is a party to a retail distribution agreement that was employed in connection with the initial sale of the Series 2024 Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, as set forth in the retail distribution agreement and the related pricing wires. The Authority further acknowledges that each underwriter shall be solely liable for its failure to comply with its agreement regarding the hold-the-offering-price rule 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 retail distribution agreement to comply with its corresponding agreement regarding the hold-the-offering-price rule as applicable to the Series 2024 Bonds. (g) By submitting a bid, each bidder confirms that: (i) any agreement among underwriters, any selling group agreement and each retail distribution agreement (to which the bidder is a party) relating to the initial sale of the Series 2024 Bonds 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 selling group, and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Series 2024 Bonds of each maturity allotted to it until it is notified by the Purchaser that either the 10.0% test has been satisfied as to the Series 2024 Bonds of that maturity or all Series 2024 Bonds of that maturity have been sold to the public and (B) comply with the hold-theoffering-price rule, if applicable, in each case if and for so long as directed by the Purchaser and as set forth in the related pricing wires, and (ii) any agreement among underwriters relating to the 9 4124-3525-6400.3
initial sale of the Series 2024 Bonds to the public, together with the related pricing wires, contains or will contain language obligating each underwriter that is a party to a retail distribution agreement to be employed in connection with the initial sale of the Series 2024 Bonds to the public to require each broker-dealer that is a party to such retail distribution agreement to (A) report the prices at which it sells to the public the unsold Series 2024 Bonds of each maturity allotted to it until it is notified by the Purchaser or such underwriter that either the 10% test has been satisfied as to the Series 2024 Bonds of that maturity or all Series 2024 Bonds of that maturity have been sold to the public and (B) comply with the hold-the-offering-price rule, if applicable, in each case if and for so long as directed by the Purchaser or such underwriter and as set forth in the related pricing wires.
(h) Sales of any Series 2024 Bonds to any person that is a related party to an underwriter shall not constitute sales to the public for purposes of this Notice of Sale. Further, for purposes of this Notice of Sale:
(i) “public” means any person other than an underwriter or a related party, (ii) “underwriter” means (A) any person that agrees pursuant to a written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Series 2024 Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Series 2024 Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series 2024 Bonds to the public),
(iii) a purchaser of any of the Series 2024 Bonds 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
(iv) “sale date” means the date that the Series 2024 Bonds are awarded by the Authority to the Purchaser.

TERMS OF SALE
BEST BID: Unless all bids with respect to the Series 2024 Bonds are rejected, as described below under “—RIGHT OF REJECTION,” the Series 2024 Bonds will be awarded to the bidder whose bid as submitted (and without regard to any adjustment of principal amounts and/or maturities after the receipt of bids) will result in the lowest true interest cost (“TIC”) to the Authority. The TIC will be that nominal annual interest rate which, when compounded semiannually using a 360-day year and used to discount to the dated date of the Series 2024 Bonds 10 4124-3525-6400.3
all payments of principal of and interest payable on all the Series 2024 Bonds, results in an amount equal to the purchase price of all of the Series 2024 Bonds to be received by the Authority.

The interest used in this computation will be the interest rates stated in the bid.

If two or more bidders offer bids for the Series 2024 Bonds at the same lowest TIC, the bidder that submitted the winning bid for the Series 2024 Bonds first to the Bid Service (as defined below), as determined by the Authority, shall be awarded the Series 2024 Bonds. Bid evaluations or rankings made by Parity are not binding on the Authority or the City.

RIGHT OF REJECTION: The Authority reserves the right, in its discretion, to reject any and all proposals for the Series 2024 Bonds and to waive any irregularity or informality in any proposals. The Authority retains absolute discretion to determine whether any bid is timely, complete, or legible. The Authority takes no responsibility for informing any bidder prior to the time for receiving bids that its bid is incomplete, illegible, or not received.

MULTIPLE BIDS FROM A SINGLE BIDDER: In the event multiple bids for the Series 2024 Bonds are received from a single bidder, the Authority shall be entitled to accept the bid with the lowest TIC, calculated in accordance with this Notice of Sale, as determined by the Authority, from among all such bids, and each bidder agrees by submitting any bid to be bound by such lowest bid unless such bid is unambiguously withdrawn prior to the deadline for receiving bids. See “BEST BID.”
PROMPT AWARD: The Authority will take action awarding the Series 2024 Bonds or rejecting all bids for the Series 2024 Bonds not later than thirty (30) hours after the expiration of the time herein prescribed for the receipt of proposals unless such time of award is waived by the Purchaser. Notice of the award of the Series 2024 Bonds will be given promptly to the Purchaser.

POSTPONEMENT OR CANCELLATION OF SALE: The Authority may postpone or cancel the sale of the Series 2024 Bonds at or prior to the time for receiving bids.

Notice of such postponement or cancellation shall be given through Parity and/or the News Services as soon as practicable following such postponement or cancellation. If a sale is postponed, notice of a new sale date will be given through Parity and/or the News Services as soon as practicable following a postponement and no later than 1:00 p.m., California time, on the business day preceding the new date for receiving bids. Failure of any potential bidder to receive notice of postponement or cancellation will not affect the sufficiency of any such notice.

RIGHT TO MODIFY OR AMEND: Other than with respect to postponement or cancellation as described in this Official Notice of Sale, and in addition to the Authority’s right to adjust the payment amounts of the Series 2024 Bonds as provided in “TERMS RELATING TO THE SERIES 2024 BONDS - Adjustment of Principal Payments,” the Authority reserves the right to modify or amend this Official Notice of Sale in any respect including, without limitation, increasing or decreasing the principal amount of any serial maturity or sinking account installment redemption for the Series 2024 Bonds and adding or deleting serial or term maturity and sinking account installment redemption dates, along with corresponding principal amounts with respect thereto; provided, that, subject to the terms of this Official Notice of Sale (see “TERMS 11 4124-3525-6400.3
RELATING TO THE SERIES 2024 BONDS - Adjustment of Principal Payments”) any such modification or amendment will be communicated to potential bidders through Parity and/or the News Services not later than 1:00 p.m., California time, on the business day preceding the date for receiving bids. Failure of any potential bidder to receive notice of any modification or amendment will not affect the sufficiency of any such notice or the legality of the sale.

QUALIFICATION FOR SALE; BLUE SKY: The Purchaser will assume responsibility for taking any action necessary to qualify the Series 2024 Bonds for offer and sale in jurisdictions other than California, and for complying with the laws of all jurisdictions on resale of the Series 2024 Bonds, and shall indemnify and hold harmless the Authority, the City and their respective officers and officials from any loss or damage resulting from any failure to comply with any such law.

Compliance with Blue Sky laws shall be the sole responsibility of the Purchaser, and the Purchaser shall pay all fees and disbursements related to the qualification of the Series 2024 Bonds for sale under the securities or Blue Sky laws of various jurisdictions. The Authority will furnish such information and take such action not inconsistent with law as the Purchaser may request and the Authority shall deem necessary or appropriate to qualify the Series 2024 Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States of America as may be designated by the Purchaser; provided, however, that neither the Authority nor the City shall execute a general orspecial consent to service of process or qualify to do business in connection with such qualification or determination in any jurisdiction. The Purchaser will not offer to sell, or solicit any offer to buy, the Series 2024 Bonds in any jurisdiction where it is unlawful for such Purchaser to make such offer, solicitation or sale, and the Purchaser shall comply with the Blue Sky and other securities laws and regulations of the states and jurisdictions in which the Purchaser sells the Series 2024 Bonds.

DELIVERY AND PAYMENT: Delivery of the Series 2024 Bonds will be made to the Purchaser through DTC and is expected to occur on or about ______ __, 2024, (“Closing Date”). Payment for the Series 2024 Bonds must be made in immediately available funds, by wire transfer initiated by 7:00 A.M (California time) to, or upon the order of, the Authority. Any expense of providing immediately available funds, whether by transfer of Federal Reserve Bank funds or otherwise, shall be borne by the Purchaser.

RIGHT OF CANCELLATION: The Purchaser of the Series 2024 Bonds shall have the right, at its option, to cancel the contract of purchase if the Authority shall fail to issue the Series 2024 Bonds and tender the same for delivery within 60 daysfrom the date ofsale thereof, and in such event, the Purchaser shall be entitled to the return of the deposit accompanying his or her bid.

FORM OF BIDS: Each bid for the Series 2024 Bonds must be unconditional and conform to all of the sale terms provided herein and may be submitted electronically as described below under “ELECTRONIC BIDS.” By submitting a bid for the Series 2024 Bonds, the bidder agrees to all of the terms and conditions of this Official Notice of Sale. In submitting a bid for the Series 2024 Bonds, each bidder acknowledges that the bid is an offer to purchase all of the Series 2024 Bonds, and if accepted, will become a contract to purchase such Series 2024 Bonds on the 12 4124-3525-6400.3
terms contained herein. All bids shall be deemed to incorporate all of the terms of this Official Notice of Sale.

ELECTRONIC BIDS: Solely as an accommodation to bidders, the Authority will receive bids delivered electronically through the following service (the “Bid Service” or “Parity”).

S&P Global
55 Water Street
New York, NY 10041
Phone: (212) 849-5023
If any provision of this Official Notice of Sale conflicts with information provided by the Bid Service, this Official Notice of Sale shall control. Each bidder submitting an electronic bid agrees by doing so that it is solely responsible for all arrangements with (including any charges by) the Bid Service, that the Authority does not endorse or encourage the use of the Bid Service, and that the Bid Service is not acting as an agent of the Authority. Instructions for submitting electronic bids must be obtained from the Bid Service, and the Authority does not assume any responsibility for ensuring or verifying bidder compliance with the Bid Service’s procedures. The Authority shall be entitled to assume that any bid received via the Bid Services has been made by a duly authorized agent of the bidder.

If a bidder submits an electronic bid for the Series 2024 Bonds, such bidder thereby agrees to the following terms and conditions: (i) If any provision in this Official Notice of Sale with respect to the Series 2024 Bonds conflicts with information or terms provided or required by the Bid Service, this Official Notice of Sale, including any amendments issued through the News Service, shall control; (ii) each bidder shall be solely responsible for making necessary arrangements to access the Bid Service for purposes of submitting its bid in a timely manner and in compliance with the requirements of this Official Notice of Sale; (iii) the Authority shall not have any duty or obligation to provide or assure access to the Bid Service to any bidder, and the Authority shall not be responsible for proper operation of, or have any liability for, any delays, interruptions or damages caused by use of the Bid Service or any incomplete, inaccurate or untimely bid submitted by any bidder through the Bid Service; (iv) the Authority is using the Bid Service as a communication mechanism, and not as an agent of the Authority, to conduct the electronic bidding for the Series 2024 Bonds; (v) the Bid Service is acting as an independent contractor, and is not acting for or on behalf of the Authority; (vi) the Authority is not responsible for ensuring or verifying bidder compliance with any procedures established by the Bid Service; (vii) the Authority may regard the electronic transmission of a bid through the Bid Service (including information regarding the purchase price for the Series 2024 Bonds and interest rates for any maturity of the Series 2024 Bonds) asthough the information were executed on the bidder’s behalf by a duly authorized signatory; (viii) if the bidder’s bid is accepted by the Authority, this Official Notice of Sale and the information that is transmitted electronically through the Bid Service shall form a contract, and the bidder shall be bound by the terms of such contract; (ix) information provided by the Bid Service to bidders shall form no part of any bid or any contract between the Purchaser and the Authority unless that information is included in this Official Notice of Sale provided by the Authority.
13 4124-3525-6400.3
WARNINGS REGARDING ELECTRONIC BIDS: THE AUTHORITY WILL

ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON THE OFFICIAL BID FORM CREATED FOR SUCH PURPOSE. EACH BIDDER SUBMITTING AN

ELECTRONIC BID UNDERSTANDS AND AGREES BY DOING SO THAT IT IS SOLELY

RESPONSIBLE FOR ALL ARRANGEMENTS WITH PARITY, THAT THE AUTHORITY

NEITHER ENDORSES NOR EXPLICITLY ENCOURAGES THE USE OF PARITY AND THAT PARITY IS NOT ACTING AS AN AGENT OF THE AUTHORITY. INSTRUCTIONS

AND FORMS FOR SUBMITTING ELECTRONIC BIDS MUST BE OBTAINED FROM

PARITY, AND THE AUTHORITY ASSUMES NO RESPONSIBILITY FOR ENSURING OR VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF PARITY. THE

AUTHORITY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY HAS BEEN MADE BY A DULY AUTHORIZED AGENT OF THE BIDDER.

THE AUTHORITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE ELECTRONIC BIDS; HOWEVER, THE AUTHORITY, THE MUNICIPAL ADVISOR AND

BOND COUNSEL ASSUME NO RESPONSIBILITY FOR ANY ERROR CONTAINED IN

ANY BID SUBMITTED ELECTRONICALLY, OR FOR FAILURE OF ANY BID TO BE

TRANSMITTED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED BY THE

AUTHORITY AT THE PLACE OF BID OPENING AND THE AUTHORITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME KEPT BY PARITY AS THE OFFICIAL TIME. THE

AUTHORITY ASSUMES NO RESPONSIBILITY FOR INFORMING ANY BIDDER PRIOR

TO THE DEADLINE FOR RECEIVING BIDS THAT ITS BID IS INCOMPLETE OR NOT RECEIVED.

GOOD FAITH DEPOSIT: The Purchaser is required to provide, not more than three hours after the communication of the award of its bid for the Series 2024 Bonds, a good faith deposit payable to the order of the Authority in the amount of $[500,000] (the “Good Faith Deposit”) by wire transfer in immediately available funds. Potential bidders of the Series 2024 Bonds may request the wire instructions in advance of bidding. If a Good Faith Deposit is not received from the Purchaser within the timeframe described above, the Authority reserves the right to rescind the award of the Series 2024 Bonds and to award the Series 2024 Bonds to another bidder.

On the Closing Date, the Purchaser of the Series 2024 Bonds shall pay, or cause to be paid, the purchase price of the Series 2024 Bonds purchased, less the amount of such Purchaser’s Good Faith Deposit, without interest on such deposit. If the Purchaser of the Series 2024 Bonds fails to accept delivery of and pay for the Series 2024 Bonds on the Closing Date as provided in this Official Notice of Sale, such deposit shall be retained by the Authority as and for full liquidated damages for the failure of such Purchaser to accept delivery of and pay for the Series 2024 Bonds. The retention of such deposit shall constitute a full release and discharge of all claims and rights of the Authority and the City against the Purchaser of the Series 2024 Bonds on account of such failure and a waiver of any right the Authority or the City may have to additional damages for such failure. By submitting a bid for the Series 2024 Bonds, the Purchaser waives any right to claim that actual damages resulting from such failure are less than the amount of such Good Faith Deposit and agreesthat the amount ofsuch Good Faith Deposit is a reasonable estimate of damages that the Authority and the City may suffer in the event of such failure. 14 4124-3525-6400.3
In the event the Series 2024 Bonds are not issued, the Authority shall return such Good Faith Deposit to the Purchaser who provided it without any interest thereon, as described under “DELIVERY AND PAYMENT” herein.

STATEMENT OF TRUE INTEREST COST; REOFFERING YIELDS: Each bidder is requested, but not required, to state in his bid the percentage true interest cost to the Authority, which shall be considered as informative only and not binding on either the bidder or the Authority. The accepted bidder shall submit a Reoffering Price Certificate in the form attached as Appendix A, all as described under “TERMS RELATING TO THE SERIES 2024 BONDS - REOFFERING PRICE CERTIFICATE AND ESTABLISHMENT OF ISSUE PRICE” herein.

NO LITIGATION: Other than as disclosed in the Preliminary Official Statement, there is no litigation pending concerning the validity of the Series 2024 Bonds, the existence of the City or the Authority or the entitlement of the officers thereof to their respective offices, and the City and the Authority will each furnish to the Purchaser a no-litigation certificate certifying to the foregoing as of and at the time of the delivery of the Series 2024 Bonds.

CUSIP NUMBERS: It is anticipated that CUSIP numbers will be printed on the Series 2024 Bonds, but neither failure to print such numbers on any Series 2024 Bond nor any error with respect thereto shall constitute cause for a failure or refusal by the Purchaser to accept delivery of and pay for the Series 2024 Bonds in accordance with the terms of this Official Notice of Sale. The Municipal Advisor will apply for the CUSIP numbers and all expenses in relation to the printing of CUSIP numbers on the Series 2024 Bonds shall be paid for by the Authority; provided, however, that the CUSIP Service Bureau charge for the assignment of said numbers shall be the responsibility of and shall be paid for by the Purchaser.

CALIFORNIA DEBT AND INVESTMENT ADVISORY COMMISSION
FEE: Attention of bidders is directed to California Government Code Section 8856, which provides that the lead underwriter or the purchaser of the Series 2024 Bonds will be charged the California Debt and Investment Advisory Commission fee.

OFFICIAL STATEMENT: A Preliminary Official Statement has been prepared, copies of which may be obtained upon request made to the City’s Municipal Advisor, KNN Public Finance, LLC, 2054 University Avenue, Suite 300, Berkeley, California 94704; Attn. Nedko Nedev (Phone: (925) 705-6863; Email: [email protected]). The Preliminary Official Statement shall be “deemed final” by the Authority and the City prior to the sale date for purposes of Securities Exchange Commission Rule 15c2-12(b)(1), but is subject to revision, amendment, and completion in a final Official Statement. A copy of the certificates executed by the Authority and the City indicating that the Preliminary Official Statement has been deemed final as of its date will be provided to potential bidders upon request to the Municipal Advisor. The Finance Director of the City or his designee has reviewed and will further review the Official Statement and will certify that as of the date of the final Official Statement, to the best of such officer’s knowledge, the Official Statement does not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading. The Authority will deliver to the Purchaser a certificate of the Authority as to the above, dated the date of delivery of the Series 2024 Bonds, 15 4124-3525-6400.3
authorizing the Purchaser to distribute copies of the Official Statement in connection with the resale of the Series 2024 Bonds. The Authority will furnish to the Purchaser, at no expense to the Purchaser, an electronic copy of the Official Statement within seven (7) business days of the award date. Printed copies will be made available upon request, submitted to the Municipal Advisor no later than twenty-four hours after the time of receipt of bids, at the Purchaser’s expense, for use in connection with any resale of the Series 2024 Bonds.

By making a bid for the Series 2024 Bonds, the Purchaser agrees (i) to disseminate to all members of the underwriting syndicate, if any, copies of the final Official Statement, including any supplements prepared by the Authority, (ii) to promptly file a copy of the final Official Statement, including any supplements prepared by the Authority, with the Municipal Securities Rulemaking Board (“MSRB”), and (iii) to take any and all other actions necessary to comply with applicable Securities and Exchange Commission and MSRB rules governing the offering, sale and delivery of the Series 2024 Bonds to the ultimate purchasers.

CONTINUING DISCLOSURE: In order to assist bidders in complying with Securities Exchange Commission Rule 15c2-12(b)(5) (the “Rule”), the City will undertake, pursuant to a Continuing Disclosure Agreement, to provide certain annual financial information relating to the City and notices of the occurrence of certain events. A description of this undertaking is set forth in the Preliminary Official Statement and will also be set forth in the Official Statement. See “CONTINUING DISCLOSURE” and Appendix E – “FORM OF CONTINUING DISCLOSURE AGREEMENT” in the Preliminary Official Statement. [Remainder of page intentionally blank].
16 4124-3525-6400.3
Dated: ______ __, 2024
/s/
[Treasurer]
Finance Authority of the City of Santa Barbara
A-1
4124-3525-6400.3

EXHIBIT A
FORM OF REOFFERING PRICE CERTIFICATE*
TO BE DELIVERED IF COMPETITIVE SALE REQUIREMENTS ARE MET (I.E., 3 BIDS

FROM COMPETITIVE PROVIDERS ARE RECEIVED)
This certificate is being delivered by _____________________, the purchaser (the “Purchaser”) in connection with the issuance of the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024 (the “Series 2024 Bonds”).

The Purchaser hereby certifies and represents that:

1. Issue Price. The Purchaser received the notice of sale issued in connection with the sale of the Series 2024 Bonds, submitted a bid that constituted a firm bid to purchase the Series 2024 Bonds, and was not given the opportunity to review other bids prior to submitting its bid. As of _________ __, 2024, the Purchaser reasonably expected to offer the Series 2024 Bonds to the Public at the Initial Offering Prices. The Initial Offering Prices are the prices used by the Purchaser in formulating its bid to purchase the Series 2024 Bonds. Attached hereto as Schedule 1 is a true and correct copy of the bid provided by Purchaser to purchase the Series 2024 Bonds.

To the extent not included in the bid provided by Purchaser to purchase the Series 2024 Bonds, Schedule 1 also includes the Initial Offering Prices used by the Purchaser in formulating its bid to purchase the Series 2024 Bonds.

2. Defined Terms.
a) Initial Offering Price means the prices or yields set forth on Schedule 1 hereto.
b) Maturity means Series 2024 Bonds with the same credit and payment terms.

Series 2024 Bonds with different maturity dates, or Series 2024 Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. c) 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.
d) Related Party means any entity if an Underwriter and such entity are subject, directly or indirectly, to (i) more than 50.0% 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 50.0% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50.0% 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).
e) Underwriter means (A) the Purchaser and any person that agrees pursuant to a written contract with the Purchaser to form an underwriting syndicate to participate in the initial sale of the Series 2024 Bonds to the Public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the A-2
4124-3525-6400.3
initial sale of the Series 2024 Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series 2024 Bonds to the Public.

The Purchaser understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate to which this certificate is included as Exhibit A and with respect to compliance with the federal income tax rules affecting the Series 2024 Bonds, and by Orrick, Herrington & Sutcliffe LLP, Bond Counsel, in connection with their opinions as to the exclusion of interest on the Series 2024 Bonds from federal gross income, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Series 2024 Bonds. The Purchaser is certifying only as to facts in existence on the date hereof. Nothing herein represents the Purchaser’s interpretation of any laws; in particular the Treasury Regulations under the Internal Revenue Code of 1986, or the application of any laws to these facts. 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.

Dated: ___________
[PURCHASER]
By: _________________________________
Authorized Representative
* To be delivered by the Purchaser as described under “REOFFERING PRICE CERTIFICATE” in the Official Notice of Sale.

S-1
4124-3525-6400.3
SCHEDULE 1

BIDDING DOCUMENTATION AND INITIAL OFFERING PRICES
B-1
4124-3525-6400.3

APPENDIX B
FORM OF REOFFERING PRICE CERTIFICATE*
TO BE DELIVERED IF COMPETITIVE SALE REQUIREMENTS ARE NOT MET (3 COMPETITIVE BIDS ARE NOT RECEIVED) AND 10% TEST IS USED FOR ISSUE PRICE This certificate is being delivered by _____________________, the purchaser (the “Purchaser”) in connection with the issuance of the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024 (the “Series 2024 Bonds”).

The Purchaser hereby certifies and represents that:

1. Issue Price.

As of ________ __, 2024, (the “Sale Date”), all of the Series 2024 Bonds were the subject of an offering to the Public at the Initial Offering Prices set forth in the final pricing wire for the Series 2024 Bonds or an equivalent communication, a copy of which is attached hereto as Schedule 1.

1. As of the date hereof, the first price at which 10.0% of each of the Maturities of the Series 2024 Bonds listed on Schedule 1 as a “10.0% Test Maturity” was sold to the Public was the Initial Offering Price for such Maturity.

2. With respect to the Maturities of the Series 2024 Bonds listed on Schedule 1 as unsold maturities (the “Undersold Maturities”), 10.0% of each of the Undersold Maturities has not been sold to the Public at any single price. The Purchaser will promptly report to the Authority the first price at which 10.0% ofsuch Undersold Maturities have been sold to the public.

If all of an Undersold Maturity is sold to the Public but not more than 10.0% of the Undersold Maturity is sold to the Public at any particular price, the Purchaser will notify the Authority in writing of the amount of the Undersold Maturity sold to the Public at each respective price.

Defined Terms.
a) Initial Offering Price means the prices or yields set forth on Schedule 1 hereto.
b) Maturity means Series 2024 Bonds with the same credit and payment terms.

Series 2024 Bonds with different maturity dates, or Series 2024 Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. c) 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.
d) Related Party means any entity if an Underwriter and such entity 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 profit 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 B-2
4124-3525-6400.3
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).
e) Underwriter means (A) the Purchaser and any person that agrees pursuant to a written contract with the Purchaser to form an underwriting syndicate to participate in the initial sale of the Series 2024 Bonds to the Public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Series 2024 Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series 2024 Bonds to the Public.

The Purchaser understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate to which this certificate is included as Exhibit A and with respect to compliance with the federal income tax rules affecting the Series 2024 Bonds, and by Orrick, Herrington & Sutcliffe LLP, Bond Counsel, in connection with their opinions as to the exclusion of interest on the Series 2024 Bonds from federal gross income, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Series 2024 Bonds. The Purchaser is certifying only as to facts in existence on the date hereof. Nothing herein represents the Purchaser’s interpretation of any laws; in particular the Treasury Regulations under the Internal Revenue Code of 1986, or the application of any laws to these facts. 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.

Dated: ___________
[PURCHASER]
By: ________________________________
Authorized Representative
* To be delivered by the Purchaser as described under “REOFFERING PRICE CERTIFICATE” in the Official Notice of Sale.

S-1
4124-3525-6400.3
SCHEDULE 1
LISTING OF 10% TEST AND UNDERSOLD MATURITIES
C-1
4124-3525-6400.3

APPENDIX C
FORM OF REOFFERING PRICE CERTIFICATE*
TO BE DELIVERED IF COMPETITIVE SALE REQUIREMENTS ARE NOT MET (3 COMPETITIVE BIDS ARE NOT RECEIVED) AND PURCHASER ELECTS TO USE HOLDTHE-OFFERING-PRICE FOR ISSUE PRICE This certificate is being delivered by _____________________, the purchaser (the “Purchaser”) in connection with the issuance of the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024 (the “Series 2024 Bonds”).

The Purchaser hereby certifies and represents that:

Issue Price.

1. As of ________ __, 2024, (the “Sale Date”), all of the Series 2024 Bonds were the subject of an offering to the Public at the Initial Offering Prices set forth in the final pricing wire for the Series 2024 Bonds or an equivalent communication, a copy of which is attached hereto as Schedule 1.

2. As of the date hereof, the first price at which 10% of each of the Maturities of the Series 2024 Bonds listed on Schedule 1 as a “10.0% Test Maturity” was sold to the Public was the Initial Offering Price for such Maturity.

3. With respect to each of the Maturities of the Series 2024 Bonds listed on Schedule 1 as a “Hold-The-Price Maturity,” as set forth in the Official Notice of Sale and bid award, the Purchaser has agreed in writing that (i) it would neither offer nor sell any of the Series 2024 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 agreement among underwriters shall contain the agreement of each underwriter, any selling group agreement shall contain the agreement of each dealer who is a member of the selling group, and any retail distribution agreement shall contain the agreement of each broker-dealer who is a party to the retail distribution agreement, to comply with the hold-theoffering-price rule. Pursuant to such agreement, the Purchaser has not offered or sold any Maturity of the Series 2024 Bonds at a price that is higher than the respective Initial Offering Price for that Maturity of the Series 2024 Bonds during the Holding Period. Attached as Schedule 2 are separate issue price certificates executed by each Underwriter receiving an allotment of any Series 2024 Bonds of any Hold-The-Price Maturity.]
Defined Terms.
a) 10% Test Maturity means those Maturities of the Series 2024 Bonds listed on Schedule 1 as a “10% Test Maturity.”
b) Hold-the-Price Maturity means those Maturities of the Series 2024 Bonds listed on Schedule 1 as a “Hold-the-Price Maturity.”
c) Holding Period means, with respect to a Hold-the-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 (_________ __, 2024) or (ii) the date on which at least 10.0% of such Hold-the-Price C-2
4124-3525-6400.3
Maturity has been sold to the Public at prices that are no higher than the Initial Offering Price for such Hold-the-Price Maturity.
d) Initial Offering Price means the prices or yields set forth on Schedule 1 hereto.
e) Maturity means Series 2024 Bonds with the same credit and payment terms.

Series 2024 Bonds with different maturity dates, or Series 2024 Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities. f) Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
g) Related Party means any entity if an Underwriter and such entity are subject, directly or indirectly, to (i) more than 50.0% 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 50.0% common ownership of their capital interests or profit interests, if both entities are partnerships (including direct ownership by one partnership of another), or (iii) more than 50.0% 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).
h) Underwriter means (A) the Purchaser and any person that agrees pursuant to a written contract with the Purchaser to form an underwriting syndicate to participate in the initial sale of the Series 2024 Bonds to the Public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Series 2024 Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Series 2024 Bonds to the Public.

C-3
4124-3525-6400.3
Dated: ___________
[PURCHASER]
By: _______________________________
Authorized Representative
* To be delivered by the Purchaser as described under “REOFFERING PRICE CERTIFICATE” in the Official Notice of Sale.

S-2-1
4124-3525-6400.3
SCHEDULE 2

FORM OF UNDERWRITER ISSUE PRICE CERTIFICATE
This certificate is being delivered by _____________________, (the “Underwriter”) in connection with the issuance of the Finance Authority of the City of Santa Barbara Lease Revenue Bonds (Public Safety and Park Projects) Series 2024 (the “Series 2024 Bonds”). The Purchaser hereby certifies and represents that:

Issue Price

1. The Underwriter has not offered or sold any Series 2024 Bond of a Maturity that is listed on Schedule 3 to any person at a price higher than or a yield lower than the respective Initial Offering Price for that Series 2024 Bond for a period of time starting on the ________ __, 2024, (the “Sale Date”) and ending on the earlier of (a) the date on which [Name of Purchaser] notified the Underwriter that 10% of the respective Maturity was sold at one or more prices no higher than or yields no lower than the Initial Offering Price or (b) the close of the fifth business day following the Sale Date.

2. The Underwriter has agreed in writing (in any agreement among underwriters, selling group agreement or retail distribution agreement) that, for each Maturity of the Series 2024 Bonds that is listed on Schedule 3, the Underwriter would neither offer nor sell any of the Series 2024 Bonds of such Maturity to any person at a price that is higher than the Initial Offering Price for such Maturity during the period of time starting on the Sale Date and ending on the earlier of (a) the date on which [Name of Purchaser] notified the Underwriter that 10% of the respective Maturity was sold at one or more prices no higher than or yields no lower than the Initial Offering Price or (b) the close of the fifth business day following the Sale Date.

Defined Terms.

Initial Offering Price means the prices or yields set forth on Schedule 3 hereto.

Maturity means Series 2024 Bonds with the same credit and payment terms. Series 2024 Bonds with different maturity dates, or Series 2024 Bonds with the same maturity date but different stated interest rates, are treated as separate Maturities.

The Underwriter understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Certificate to which this certificate is included as Exhibit A and with respect to compliance with the federal income tax rules affecting the Series 2024 Bonds, and by Orrick, Herrington & Sutcliffe LLP, Bond Counsel, in connection with their opinions as to the exclusion of interest on the Series 2024 Bonds from federal gross income, the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Series 2024 Bonds. The Underwriter is certifying only asto facts in existence on the date hereof. Nothing herein represents the Underwriter’s interpretation of any laws; in particular the Treasury Regulations under the Internal Revenue Code of 1986, or the application of any laws to these facts.

The certifications contained herein are not necessarily based on personal knowledge, but may S-2-2
4124-3525-6400.3
instead be based on either inquiry deemed adequate by the undersigned or institutional knowledge (or both) regarding the matters set forth herein.

Dated: ___________
[UNDERWRITER]
By: _______________________________
Authorized Representative
S-3
4124-3525-6400.3
SCHEDULE 3

LISTING OF HOLD-THE-PRICE MATURITIES AND INITIAL OFFERING PRICES OH&S 8/27/24 Draft
4140-2813-5503.3
PRELIMINARY OFFICIAL STATEMENT DATED ______ __, 2024
NEW ISSUE – FULL BOOK ENTRY Ratings: Standard & Poor’s: “___” Moody’s: “___”
See “RATINGS” herein.

In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel to the Authority, 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, interest on the Series 2024 Bonds 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 Bond Counsel, interest on the Series 2024 Bonds is not a specific preference item for purposes of the federal individual alternative minimum tax. Bond Counsel observes that interest on the Series 2024 Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the Series 2024 Bonds. See “TAX MATTERS.”
$__________
*
Finance Authority of the City of Santa Barbara
Lease Revenue Bonds (Public Safety and Park Projects)
Series 2024
Dated: Date of Delivery Due: May 15, as shown on the inside cover page This cover page contains certain information for general reference only. It is not intended to be a summary of the security or terms of this issue. Investors are advised to read the entire Official Statement to obtain information essential to the making of an informed investment decision.

Capitalized terms used on this cover page not otherwise defined shall have the meanings set forth herein.

The Finance Authority of the City of Santa Barbara (the “Authority”) is issuing $__________ *
aggregate principal amount of its Lease
Revenue Bonds (Public Safety and Park Projects), Series 2024 (the “Series 2024 Bonds”), pursuant to an Indenture, dated as of ______ 1, 2024, (the “Indenture”), by and among the Authority, the City of Santa Barbara (the “City”), and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”). The Series 2024 Bonds are being issued to provide funds to (i) finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise a new City Police Station, the design, engineering, construction, and improvement of Dwight Murphy Field, and the construction of related capital facilities (together, the “Series 2024 Project”) within the City, (ii) finance capitalized interest on the Series 2024 Bonds through May 15, 2027, (iii) fund a debt service reserve fund for the Series 2024 Bonds, and (iv) pay the costs of issuance of the Series 2024 Bonds. See “SERIES 2024 PROJECT” herein.

Interest on the Series 2024 Bonds will be payable on May 15 and November 15 in each year, commencing ______ 15, 20__. The Series 2024 Bonds will be issued in denominations of $5,000 or any integral thereof. See “THE BONDS” herein. The Series 2024 Bonds are issuable as fully registered bonds and, when issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC will act as securities depository for the Series 2024 Bonds, and individual purchases of the Series 2024 Bonds will be made in bookentry form only. Principal of and interest on the Series 2024 Bonds will be payable by the Trustee to DTC, which is obligated in turn to remit such principal and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Series 2024 Bonds, as described herein. See APPENDIX D – “BOOK-ENTRY SYSTEM” herein. The Series 2024 Bonds and additional series of bonds which may be issued in accordance with the Indenture are referred to herein as the “Bonds.”
The Series 2024 Bonds are subject to redemption prior to maturity, as described herein. See “THE BONDS” herein.

The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues and the other assets pledged therefor thereunder. The Lease Revenues consist of all Base Rental Payments to be received by the Authority from the City under a Lease Agreement, dated as of ______ 1, 2024, (the “Lease Agreement”), by and between the Authority and the City. Pursuant to the Ground Lease, dated as of ______ 1, 2024, (the “Ground Lease”), between the City and the Authority, the City will lease to the Authority that real property and improvements, upon completion, constituting the City Police Station to be completed thereon as more particularly described herein (the “Property”), and the Authority will sublease the Property to the City pursuant to the Lease Agreement. The Base Rental Payments to be made by the City pursuant to the Lease Agreement are payable by the City from its General Fund and any other legally available funds of the City, as annual rental payments with principal and interest components, the interest components being payable semi-annually, subject only to abatement, in accordance with the Lease Agreement.

See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.”
The Bonds are special obligations of the Authority. Neither the faith and credit nor the taxing power of the Authority, the City or the State, or any political subdivision thereof, is pledged to the payment of the Bonds. 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. The Authority has no taxing power.

Electronic bids for the purchase of the Series 2024 Bonds will be received by the Authority, as set forth in the Official Notice of Sale, dated ______ __, 2024, (the “Notice of Sale”), at 8:00 a.m., California time, on _____day _____ __, 2024, unless postponed or cancelled as set forth in the Notice of Sale.

The Series 2024 Bonds will be offered when, as and if executed, delivered, and received by the Initial Purchaser, subject to the approval as to their legality by Orrick, Herrington & Sutcliffe LLP, Bond Counsel, and certain other conditions. KNN Public Finance is serving as municipal advisor to the City in connection with the issuance of the Series 2024 Bonds. Certain legal matters will be passed upon for the Authority and the City by the City Attorney for the City of Santa Barbara. It is anticipated that the Series 2024 Bonds will be available for delivery through the facilities of the DTC book-entry only system in New York, New York on or about _____ __, 2024.

Dated ______ __, 2024
* Preliminary, subject to change.

ATTACHMENT 7
4140-2813-5503.3
MATURITY SCHEDULE*
$__________

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA

LEASE REVENUE BONDS (PUBLIC SAFETY AND PARK PROJECTS)
SERIES 2024
BASE CUSIP†: 801262
$________ Serial Series 2024 Bonds
Maturity
(May 15)
Principal
Amount
Interest
Rate Yield CUSIP†
$________ ____% Term Series 2024 Bonds due May 15, 20__ – Price ____% CUSIP No. ________ †
$________ ____% Term Series 2024 Bonds due May 15, 2057 – Price ____% CUSIP No. ________ †
*
Preliminary, subject to change.
† Copyright 2024, American Bankers Association. CUSIP data herein is provided by Standard and Poor’s, CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP Service. CUSIP numbers are provided for convenience of reference only. None of the Authority, the City or the Initial Purchaser can assume any responsibility for the accuracy of such numbers. 4140-2813-5503.3

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA
and

CITY OF SANTA BARBARA

CITY COUNCIL
Randy Rowse, Mayor
Mike Jordan, Mayor Pro Tempore
Alejandra Gutierrez, Councilmember
Oscar Gutierrez, Councilmember
Kristen Sneddon, Councilmember
Eric Friedman, Councilmember
Meagan Harmon, Councilmember

CITY OFFICIALS
Kelly McAdoo, City Administrator
Sarah Gorman, City Clerk Services Manager
Sarah J. Knecht, City Attorney
Keith DeMartini, Finance Director
Clifford M. Maurer, Public Works Director
Jill Zachery, Parks and Recreation Director

SPECIAL SERVICES
Municipal Advisor
KNN Public Finance, LLC
Berkeley, California
Bond and Disclosure Counsel
Orrick, Herrington & Sutcliffe LLP
Los Angeles, California
Trustee
U.S. Bank Trust Company, National Association
Los Angeles, California
4140-2813-5503.3
No dealer, broker, salesperson, or other person has been authorized to give any information or to make any representations other than those contained herein and, if given or made, such other information or representations must not be relied upon as having been authorized by any of the foregoing. This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the Series 2024 Bonds by a person in any jurisdiction in which it is unlawful for such person to make such an offer, solicitation or sale.

This Official Statement is not to be construed as a contract with the purchasers of the Series 2024 Bonds.

Santa Barbara City CouncilSeptember 10, 2024

Santa Barbara City Council
September 10, 2024