Agenda packet, first session — Santa Barbara City Council, September 10, 2024 (part 1 of 6)

CITY OF SANTA BARBARA

CITY COUNCIL

FINANCE COMMITTEE

FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA
Randy Rowse
Mayor
Kelly McAdoo
City Administrator
Mike Jordan
Mayor Pro Tempore
Mike Jordan
Ordinance Committee Chair
Sarah J. Knecht
City Attorney
Alejandra Gutierrez
Finance Committee Chair
Eric Friedman
Meagan Harmon
Oscar Gutierrez
Kristen W. Sneddon
City Hall
735 Anacapa Street
http://www.SantaBarbaraCA.gov
SEPTEMBER 10, 2024, 2:00 PM
AGENDA
IN-PERSON PUBLIC COMMENT: At the beginning of each meeting of the City Council, Finance Committee, or Ordinance Committee, any member of the public may address the City Council concerning any item not on the Council's agenda. Any person wishing to make such address should first complete and deliver a "Request to Speak" form prior to the time that public comment is taken up by the City Council. Each speaker will be given a total of 3 minutes to address the Council. Pooling of time is not allowed during general public comment. The time allotted for general public comment at the beginning of the 2:00 p.m. session is 30 minutes.

Any member of the public who did not speak during the 2:00 p.m. session but who submitted a request to do so during the 2:00 p.m. 30 minute session may do so at the end of the meeting when the additional “Public Comment (If Necessary)” is announced. The City Council, upon majority vote, may decline to hear a speaker on the grounds that the subject matter is beyond their jurisdiction.

REMOTE PUBLIC COMMENT: Members of the public wishing to speak must “raise their hand” in the Zoom platform by selecting the virtual hand icon when their item is called. The keyboard shortcut for this is Alt+Y for Windows and Option+Y for Macs. City staff will activate the speaker’s microphone when the speaker’s name is called. The speaker will then need to unmute themselves. The keyboard shortcut for this is Alt+M for Windows or Command-Shift-A for Macs.

HOW TO REMOTELY OBSERVE AND/OR SPEAK LIVE AT A MEETING
• Web: https://santabarbaraca-gov.zoom.us/webinar/register/WN_JJS2kazqRyu2i83tshCkPw (Participation via Zoom)
• Telephone: Dial 1-669-900-6833, Enter Webinar ID: 894 2384 2846 (press *9 to raise/lower hand; press *6 to mute/unmute) • Online Streaming: Council meetings are streamed live at www.SantaBarbaraCA.gov/CAP • TV: Each regular City Council meeting is broadcast live in English and Spanish on City TV Channel 18 and rebroadcast in English on Wednesdays and Thursdays at 7:00 p.m. and Saturdays at 8:00 a.m., and in Spanish on Sundays at 3:00 p.m.

Each televised Council meeting is closed captioned for the hearing impaired. Check the City TV program guide at www.santabarbaraca.gov/citytv for rebroadcasts of Finance and Ordinance Committee meetings. (CONTINUED ON NEXT PAGE)
WRITTEN PUBLIC COMMENT: Public comments may also be submitted via email to [email protected] prior to the beginning of the Council Meeting. All public comments submitted via email will be provided to City Council and will become part of the public record.

ORDER OF BUSINESS: Regular meetings of the Finance Committee and the Ordinance Committee begin at 12:00 p.m. The regular City Council meeting begins at 2:00 p.m. in the Council Chambers at City Hall.

REPORTS: Copies of the reports relating to agenda items are available for review at http://www.SantaBarbaraCA.gov/CAP.In accordance with state law requirements, this agenda generally contains only a brief general description of each item of business to be transacted or discussed at the meeting. Should you wish more detailed information regarding any particular agenda item, you are encouraged to obtain a copy of the Council Agenda Report (a "CAR") online at the City's website (http://www.SantaBarbaraCA.gov/CAP). Materials related to an item on this agenda submitted to the City Council after distribution of the agenda packet are posted to the City’s website as soon as reasonably feasible.

CONSENT CALENDAR: The Consent Calendar is comprised of items that will not usually require discussion by the City Council. A Consent Calendar item is open for discussion by the City Council upon request of a Councilmember, City staff, or member of the public. Items on the Consent Calendar may be approved by a single motion. Should you wish to comment on an item listed on the Consent Agenda, after turning in your "Request to Speak" form, you should come forward to speak or raise your hand in Zoom at the time the Council considers the Consent Calendar.

LANGUAGE TRANSLATION AND INTERPRETATION: The City of Santa Barbara offers live Spanish translation and interpretation for City Council Meetings via the Wordly platform. Follow the directions below to access the service. • Go to: https://attend.wordly.ai/join/QQBV-6746
o Ensure the Session ID QQBV-6746 is displayed.
o Select “Spanish” and click on the “Attend” button.
o You can now read the captions on your device and/or listen to the translation of the City Council meeting. o Click the speaker button to hear a text-to-speech version of the translated dialogue. • If you have any questions or concerns, please contact City TV at 805-564-5311.

SPANISH INTERPRETATION: If you need interpretation of your communications to Council from Spanish into English, please contact the City Clerk’s Office at 564-5309 or by email at [email protected]. If possible, notification of at least 48 hours will usually enable the City to make arrangements.

INTERPRETACIÓN EN ESPAÑOL: Si necesita una interpretación del español al inglés, para sus comunicaciones al Consejo, comuníquese con la Oficina del Secretario Municipal al 564-5309, o por correo electrónico a [email protected]. Si es posible, la notificación de al menos 48 horas generalmente permitirá a la Ciudad hacer los arreglos.

AMERICANS WITH DISABILITIES ACT: If you need auxiliary aids or services or staff assistance to attend or participate in this meeting, please contact the City Administrator's Office at 564-5305 or by email at [email protected]. If possible, notification at least 48 hours prior to the meeting will usually enable the City to make reasonable arrangements. For those who need accessibility accommodation in using the “raise hand” function and/or registering to participate in the Zoom session, please contact the Clerk’s office by 5:00 p.m. the day before the meeting for assistance. Additionally, a speaker may email [email protected] by 5:00 p.m. the day before a meeting, stating which item they wish to speak on. Specialized services, such as sign language interpretation or documents in Braille, may require additional lead time to arrange. 09/10/2024 Santa Barbara City Council Final Agenda Page 1 SEPTEMBER 10, 2024 AGENDA
FINANCE COMMITTEE MEETING - 12:00 P.M. IN THE DAVID GEBHARD PUBLIC MEETING ROOM, 630 GARDEN STREET (120.03)

1. Subject: Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution] (120.03) Recommendation: That Finance Committee recommend:

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.
(FINANCE COMMITTEE MEETING AGENDA CONTINUED ON NEXT PAGE) 09/10/2024 Santa Barbara City Council Final Agenda Page 2

2. Subject: Authorization to Apply for Matching Funds Totaling $2.9 Million from the State’s Local Housing Trust Fund Program for Affordable Housing Projects (120.03)
Recommendation: That Finance Committee consider and recommend that Council:

A. Authorize submittal of an application to the California Department of Housing and Community Development Local Housing Trust Fund (LHTF) program requesting $2,900,000 in matching funds with the City of Santa Barbara Local Housing Trust Fund for eligible projects selected from the City of Santa Barbara’s notice of funding availability, and authorize the Community Development Director to execute such documents, subject to approval as to form by the City Attorney, as necessary; B. Adopt, by reading of title only, 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, Authorizing Application to the California Department of Housing and Community Development Local Housing Trust Fund Program for Matching Funds of $2,900,000;
C. Adopt, by reading of title only, 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; and
D. Adopt, by reading of title only, 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 City of Santa Barbara Local Housing Trust Fund. 09/10/2024 Santa Barbara City Council Final Agenda Page 3

REGULAR CITY COUNCIL/FINANCE AUTHORITY
OF THE CITY OF SANTA BARBARA MEETING - 2:00 P.M

CALL TO ORDER

PLEDGE OF ALLEGIANCE

ROLL CALL

CEREMONIAL ITEMS

1. Subject: Employee Recognition – Service Award Pins (120.04) Recommendation: That Council authorize the City Administrator to express the City’s appreciation to employees who are eligible to receive service award pins for their years of service through September 30, 2024.

CHANGES TO THE AGENDA

CONSENT CALENDAR

2. Subject: Minutes (000.00)
Recommendation: That Council waive reading and approve the minutes for the special meetings of August 20, 2024, and August 27, 2024, and for the regular meetings of August 20, 2024, and August 27, 2024.

3. Subject: Annual Assessments for Downtown Community Benefit Improvement District and Coast Village Community Benefit Improvement District [Resolution] (290.00)
Recommendation: That Council:

A. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Requesting the Board of Supervisors of Santa Barbara County to Include the Downtown Community Benefit Improvement District Special Assessment on the 2024-2025 Tax Roll; and
B. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Requesting the Board of Supervisors of Santa Barbara County to Include the Coast Village Community Benefit District Special Assessment on the 2024-2025 Tax Roll.
09/10/2024 Santa Barbara City Council Final Agenda Page 4

4. Subject: Resolution Approving the 2024-2026 Hourly Employees Bargaining Unit Memorandum of Understanding, and Amendment of Resolution No. 24- 071, the Position and Salary Control Resolution for Fiscal Year 2025 [Resolution] (440.02)
Recommendation: That Council:

A. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Adopting the 2024-2026 Memorandum of Understanding Between the City of Santa Barbara and the Service Employees' International Union, Local 620, Hourly Employees’ Bargaining Unit; and B. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Amending Resolution No. 24-071, the Position and Salary Control Resolution for Fiscal Year 2025, Affecting the Salaries of Classifications in the Hourly Employees’ Bargaining Unit, Effective September 7, 2024.

5. Subject: Resolution Approving the 2024-2025 Management Salary Plan and Amendment of Resolution No. 24-071, the Position and Salary Control Resolution for Fiscal Year 2025 [Resolution] (410.06)
Recommendation: That Council:

A. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Adopting the 2024-2025 Salary Plan Applicable Only to Unrepresented Managers and Professional Attorneys (except the City Administrator and City Attorney), and the 2024-2025 Salary Plan Applicable Only to Certain Unrepresented Safety Managers.

B. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Barbara Amending Resolution No. 24-071, the Position and Salary Control Resolution for Fiscal Year 2025, Affecting Certain Management Classifications Effective June 29, 2024.
09/10/2024 Santa Barbara City Council Final Agenda Page 5

6. Subject: Water Resources Energy Master Plan [Resolution; Agreement] (540.08)
Recommendation: That Council:

A. Authorize the Public Works Director to execute a City Professional Services contract with Hazen and Sawyer, in the amount of $368,948 for the development of a Water Resources Energy Master Plan, and authorize the Public Works Director to approve expenditures up to $55,342 for extra services that may result from necessary changes in the scope of work; and B. Adopt, by reading of title only, a Resolution of the Council of the City of Santa Babara Amending Resolution No. 24-066, Adopting the Budget for Fiscal Year 2025, to Appropriate Funds for the Water Resources Energy Master Plan.

7. Subject: Fiscal Year 2025 Interim Financial Statements for the First Month Ended July 31, 2024 (250.02)
Recommendation: That Council accepts the Fiscal Year 2025 Interim Financial Statements for the first month ended July 31, 2024.

8. Subject: Sewer Service Agreement for 898 Veronica Springs Road [Agreement] (540.13)
Recommendation: That Council authorize the Public Works Director to execute an Agreement for Provision of Sewer Service to the Real Property Located Outside City Limits, between the City and Kriger Family Trust to provide City sewer service to 898 Veronica Springs Road (APN 049-072-001).

9. Subject: Contract Updates for the U.S. 101 State Street Undercrossing Project [Agreement] (530.04)
Recommendation: That Council:

A. Approve a sole source purchase order with David Shelton Inc. in the amount of $551,431 for fabrication and installation of ironwork for the U.S. 101 State Street Undercrossing Project; and authorize the General Services Manager to execute the purchase order; and
B. Authorize the Public Works Director to execute the Fourth Contract Amendment with Bengal Engineering, Inc., for design support services for the U.S. 101 State Street Undercrossing Project, Contract No. 26,510A, in the amount of $95,000, for a total expenditure authority of $973,622. 09/10/2024 Santa Barbara City Council Final Agenda Page 6

10. Subject: Approval of Parcel Map and Execution of Agreements for 1018 Garden Street [Agreement] (640.08)
Recommendation: That Council approve and authorize the City Administrator to execute and record Parcel Map Number 20,842 and a standard agreement relating to the approved one-lot subdivision at 1018 Garden Street.

11. Subject: Authorization to Directly Negotiate with Vendors for Fleet-Related Purchases and to Standardize Equipment Manufacturers in Fiscal Years 2025 Through 2027 (530.01)
Recommendation: That Council:

A. Authorize the General Services Manager to waive the formal bidding process under Santa Barbara Municipal Code section 4.52.070 for fleet purchases for fiscal years 2025 through 2027 on the condition that either a cooperative agreement is used based on the lowest price or best value, or a vehicle is bought off the dealer’s lot at or below the manufacturers' suggested retail price; and
B. Approval to standardize Scelzi truck bodies, Whelen Engineering products, and John Deere equipment based on a best interest finding per Section

4.52.070 (L) of the Municipal Code.

12. Subject: Designation of Voting Delegate for League of California Cities Annual Conference (180.01)
Recommendation: That Council designate Councilmember Oscar Gutierrez as the City’s voting delegate and designate Mayor Randy Rowse as an alternate to represent the City of Santa Barbara at the League of California Cities Annual Meeting, October 16 – 18, 2024.

REPORT FROM THE FINANCE COMMITTEE

GENERAL PUBLIC COMMENT

PULLED CONSENT ITEMS

COUNCILMEMBER COMMITTEE ASSIGNMENT REPORTS
09/10/2024 Santa Barbara City Council Final Agenda Page 7

CITY COUNCIL ADMINISTRATIVE AND ATTORNEY REPORTS

PUBLIC WORKS DEPARTMENT

13. Subject: Highway 101 Carpinteria to Santa Barbara and Parallel Projects Update (530.04)
Recommendation: That Council receive an update from the Santa Barbara County Association of Governments, District 5 of the California Department of Transportation, and City of Santa Barbara staff on the Highway 101 Carpinteria to Santa Barbara and Parallel Projects within the City of Santa Barbara.
09/10/2024 Santa Barbara City Council Final Agenda Page 8

COMMUNITY DEVELOPMENT DEPARTMENT

PUBLIC HEARING

14. Subject: Authorization to Apply for Matching Funds Totaling $2.9 Million from the State’s Local Housing Trust Fund Program for Affordable Housing Projects [Resolution] (660.01)
Recommendation: That Council:

A. Open the public hearing and take public comment, if any, and authorize submittal of an application to the California Department of Housing and Community Development Local Housing Trust Fund (LHTF) program requesting $2,900,000 in matching funds with the City of Santa Barbara Local Housing Trust Fund for eligible projects selected from the City of Santa Barbara’s notice of funding availability, and authorize the Community Development Director to execute such documents, subject to approval as to form by the City Attorney, as necessary;
B. Adopt, by reading of title only, 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, Authorizing Application to the California Department of Housing and Community Development Local Housing Trust Fund Program for Matching Funds of $2,900,000;
C. Adopt, by reading of title only, 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; and
D. Adopt, by reading of title only, 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 City of Santa Barbara Local Housing Trust Fund. 09/10/2024 Santa Barbara City Council Final Agenda Page 9

CONVENE JOINT MEETING WITH THE BOARD OF DIRECTORS OF THE FINANCE

AUTHORITY OF THE CITY OF SANTA BARBARA

FINANCE AUTHORITY GENERAL PUBLIC COMMENT

PUBLIC HEARING

15. Subject: Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution] (210.05) Recommendation:

CITY COUNCIL RECOMMENDATION:

A. 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:

B. 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 the 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 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.

ADJOURN FINANCE AUTHORITY OF THE CITY OF SANTA BARBARA

COUNCIL AND STAFF COMMUNICATIONS

COUNCILMEMBER ENGAGEMENTS

PUBLIC COMMENT (IF NECESSARY)

ADJOURNMENT

CITY OF SANTA BARBARA

FINANCE COMMITTEE MEETING

MEETING AGENDA
DATE: September 10, 2024 Alejandra Gutierrez, Chair
TIME: 12:00 PM Eric Friedman
PLACE: David Gebhard Public Meeting Room Meagan Harmon
630 Garden Street
Kelly McAdoo Keith DeMartini
City Administrator Finance Director
Members of the public may participate in person or via Zoom. Zoom instructions are below.  Web: (Participation via Zoom) Register in advance for this webinar:
https://santabarbaraca-gov.zoom.us/webinar/register/WN_sueE-kTDR1-Yde5OxnK4UA Webinar ID: 851 8556 0339
Passcode: 111463
After registering, you will receive a confirmation email containing information about joining the webinar.
 Telephone: Dial 1-669-900-6833, Enter Webinar ID: 851 8556 0339 (press *9 to raise/lower hand; press *6 to mute/unmute) REMOTE PUBLIC COMMENT: Members of the public wishing to speak must “raise their hand” in the Zoom platform by selecting the virtual hand icon when their item is called. The keyboard shortcut for this is Alt+Y for Windows and Option+Y for Macs. City staff will activate the speaker’s microphone when the speaker’s name is called. The speaker will then need to unmute themselves.

The keyboard shortcut for this is Alt+M for Windows or Command-Shift-A for Macs.

For those who need accessibility accommodation in using the “raise hand” function and/or registering to participate in the Zoom session, please contact the Finance Department by 5:00 p.m. the day before the meeting for assistance. Additionally, a speaker may email [email protected] by 5:00 p.m. the day before a meeting, stating the item on which they wish to speak.

File Code No. 120.03
ITEMS FOR CONSIDERATION:

1. Subject: Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
Recommendation: That Finance Committee recommend:

CONTINUED ON NEXT PAGE

2. Subject: Authorization to Apply for Matching Funds Totaling $2.9 Million from the State’s Local Housing Trust Fund Program for Affordable Housing Projects That Finance Committee consider and recommend that Council:

A. Authorize submittal of an application to the California Department of Housing and Community Development Local Housing Trust Fund (LHTF) program requesting $2,900,000 in matching funds with the City of Santa Barbara Local Housing Trust Fund for eligible projects selected from the City of Santa Barbara’s notice of funding availability, and authorize the Community Development Director to execute such documents, subject to approval as to form by the City Attorney, as necessary; B. Adopt, by reading of title only, 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, Authorizing Application to the California Department of Housing and Community Development Local Housing Trust Fund Program for Matching Funds of $2,900,000;
C. Adopt, by reading of title only, 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; and
D. Adopt, by reading of title only, 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 City of Santa Barbara Local Housing Trust Fund.

CITY OF SANTA BARBARA

FINANCE COMMITTEE AGENDA REPORT
AGENDA DATE: September 10, 2024
TO: Finance Committee
FROM: Finance Department
SUBJECT: Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
RECOMMENDATION: That Finance Committee recommend:

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.

Agenda Item No. 1
File Code No. 120.03
Finance Committee Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 2 ends

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 an 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 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.

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

Page 3 ends

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 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 by 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.

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

Page 4 ends

 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 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.

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

Page 5 ends

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.

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

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

Page 6 ends

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
TOTAL ESTIMATED PROJECT COST $26,957,461
Finance Committee Agenda Report
Debt Issuance for the Police Station and Dwight Murphy Field Renovation [Ordinance Introduction; Resolution]
September 10, 2024

Page 7 ends

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

8. Ordinance

9. Resolution
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
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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.
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“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.
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“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.
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(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.
11 4149-3738-0431.4
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.
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(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.
35 4149-3738-0431.4
(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.
38 4149-3738-0431.4
(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
40 4149-3738-0431.4
(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.

OH&S 8/27/24 Draft
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
OH&S 8/27/24 Draft
4139-2159-8545.2
40805-65

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
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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
OH&S 8/27/24 Draft
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
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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
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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.

Statements contained in this Official Statement which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.

The information and expressions of opinions herein are subject to change without notice, and neither delivery of this Official Statement nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof.

The issuance and sale of the Series 2024 Bonds have not been registered under the Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, and the Indenture has not been qualified under the Trust Indenture Act of 1939, as amended, in reliance upon exemptions provided thereunder.

All descriptions and summaries of documents and statutes hereinafter set forth do not purport to be comprehensive or definitive, and reference is made to each document and statute for complete details of all terms and conditions. Allstatements herein are qualified in their entirety by reference to each such document and statute. Certain capitalized terms used but not defined herein are defined in APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – DEFINITIONS.”
The Initial Purchaser may offer and sell the Series 2024 Bonds to certain dealers, institutional investors, and others at prices lower than the public offering prices stated on the inside cover page hereof and said public offering prices may be changed from time to time by the Initial Purchaser.

Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forwardlooking statements.” In this respect, the words “estimate,” “project,” “anticipate,” “expect,” “intend,” “believe,” “plan,” “budget,” and similar expressions are intended to identify forward-looking statements. Projections, forecasts, assumptions, expressions of opinions, estimates and other forward statements are not to be construed as representations of fact and are qualified in their entirety by the cautionary statements set forth in this Official Statement.

The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Authority and the City do not plan to issue any updates or revisions to those forward-looking statements if or when its expectations or events, conditions, or circumstances on which such statements are based occur or do not occur.

CUSIP data herein is provided by Standard & Poor’s CUSIP Service Bureau, a division of The McGraw-Hill Companies, Inc., and is set forth herein for convenience of reference only. None of the City, the Authority or the Municipal Advisor assumes any responsibility for the accuracy of such numbers.

The City maintains a website. However, the information presented on that website is not part of this Official Statement and should not be relied upon in making investment decisions with respect to the Series 2024 Bonds. i
4140-2813-5503.3

TABLE OF CONTENTS
Page
INTRODUCTION .......................................................................................................................................1 Purpose............................................................................................................................................1 The Authority..................................................................................................................................1 The City of Santa Barbara...............................................................................................................2 The Series 2024 Bonds...................................................................................................................3 Authority for Issuance of the Series 2024 Bonds ...........................................................................3 Additional General Fund Obligations.............................................................................................3 Security for the Bonds ....................................................................................................................4 Summaries Not Definitive ..............................................................................................................5 Continuing Disclosure ....................................................................................................................5 LEASED PROPPERTY...............................................................................................................................5 SERIES 2024 PROJECT .............................................................................................................................6 ESTIMATED SOURCES AND USES OF FUNDS ...................................................................................8 THE BONDS ...............................................................................................................................................8 General............................................................................................................................................8 Payment of Principal and Interest...................................................................................................9 Redemption Terms of the Series 2024 Bonds.................................................................................9 SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.........................................................12 Pledge Under the Indenture ..........................................................................................................12 Base Rental Payments...................................................................................................................13 Abatement.....................................................................................................................................14 Series 2024 Reserve Account of the Reserve Fund ......................................................................15 Insurance.......................................................................................................................................16 Damage or Destruction of the Property ........................................................................................18 Additional Bonds..........................................................................................................................18 Investment of Bond Funds............................................................................................................19 Debt Service Schedule ..................................................................................................................19 RISK FACTORS .......................................................................................................................................19 General..........................................................................................................................................19 Limited Obligation........................................................................................................................20 Limitations on Base Rental Payments; Abatement Risk ..............................................................21 No Acceleration Upon Default .....................................................................................................21 Teeter Plan Termination ...............................................................................................................22 Limitations on Remedies..............................................................................................................22 Economic and Tourism Factors....................................................................................................23 Bankruptcy of the City..................................................................................................................23 City Obligations............................................................................................................................24 No Limitation on Incurring Additional Obligations.....................................................................24 Natural Disasters...........................................................................................................................24 Hazardous Substances...................................................................................................................27 Climate Change Issues..................................................................................................................28 Cybersecurity................................................................................................................................28 ii
4140-2813-5503.3
Other Financial Matters................................................................................................................29

CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND
APPROPRIATIONS..................................................................................................................................29 Article XIIIA of the State Constitution.........................................................................................29 Article XIIIB of the State Constitution.........................................................................................30 Articles XIIIC and XIIID of the State Constitution......................................................................30 Proposition 26...............................................................................................................................32 Proposition 1A of 2004.................................................................................................................32 Proposition 22...............................................................................................................................32 Initiative, Referendum and Charter Amendments ........................................................................33 THE CITY .................................................................................................................................................33 THE AUTHORITY ...................................................................................................................................34 CITY FINANCIAL INFORMATION.......................................................................................................34 CONTINUING DISCLOSURE.................................................................................................................34 TAX MATTERS........................................................................................................................................35 LEGAL MATTERS...................................................................................................................................37 LITIGATION.............................................................................................................................................37 MUNICIPAL ADVISOR...........................................................................................................................38 RATINGS ..................................................................................................................................................38 SALE AND REOFFERING ......................................................................................................................38 MISCELLANEOUS ..................................................................................................................................38 APPENDIX A THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC, AND FINANCIAL INFORMATION.........................................................................................1

APPENDIX B CITY OF SANTA BARBARA ANNUAL COMPREHENSIVE FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2023........................................1 APPENDIX C DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.................1 APPENDIX D BOOK ENTRY SYSTEM..................................................................................................1 APPENDIX E FORM OF CONTINUING DISCLOSURE AGREEMENT..............................................1 APPENDIX F PROPOSED FORM OF OPINION OF BOND COUNSEL...............................................1 4140-2813-5503.3
$__________
*
Finance Authority of the City of Santa Barbara
Lease Revenue Bonds (Public Safety and Park Projects)
Series 2024

INTRODUCTION
This Introduction is qualified in its entirety by reference to the more detailed information included and referred to elsewhere in this Official Statement. The offering of the Series 2024 Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used in this Introduction and not otherwise defined herein shall have the respective meanings assigned to them elsewhere in this Official Statement.

Purpose
The purpose of this Official Statement, including the cover page, and inside cover page, and the appendices hereto, is to provide certain information concerning the sale and delivery 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 will be payable from Base Rental Payments (as defined below) to be made to the Authority by the City of Santa Barbara (the “City”) pursuant to a Lease Agreement, dated as of ______ 1, 2024, (the “Lease Agreement”), by and between the Authority and the City. 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, (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” and “ESTIMATED SOURCES AND USES OF FUNDS” herein. It is anticipated that the Series 2024 Bonds will be available for delivery to the Initial Purchaser thereof on or about _____ __, 2024.

Base Rental Payments to be made by the City in accordance with the Lease Agreement will be rent for 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 The Authority
The Authority is a Joint Powers Authority created pursuant to a Joint Exercise of Powers Agreement, dated as of November 1, 2023, (the “Joint Powers Agreement”), between the City and the California Statewide Communities Development Authority, a joint exercise of powers agency, duly organized and existing under the laws of State of California (“CSCDA”), to facilitate financings by the City and CSCDA. See “THE AUTHORITY.”
*
Preliminary, subject to change.
2 4140-2813-5503.3
The City of Santa Barbara
The City was incorporated on August 26, 1850. The City is a charter city under the laws of the State and operates under a Council-Administrator form of government. The City Council consists of seven members, with six members elected by district (each district shall elect one member), and an at-large, elected Mayor, each of whom, including the Mayor, shall have the right to vote on all questions coming before the City Council. General Municipal Elections for the election of officers and for such other purposes as the City Council may prescribe are held in the City on the first Tuesday after the first Monday in November in each even-numbered year.

The City utilizes a biennial budget process. The City's fiscal year for budgeting and accounting purposes runs from July 1 to June 30. In its budget proceedings, the City adopts a two-year financial plan, with the first year representing the adopted annual budget and the second year serving as a financial plan and a starting point for the following year. On June 13, 2023, the City adopted its Two-Year Financial Plan for Fiscal Years 2023-24 and 2024-25 including the operating and capital budget for Fiscal Year 2023-24, as required by the City Charter. Although the Fiscal Year 2023-24 budget included a small use of reserves, it represented a balanced budget. On June 11, 2024, the City adopted its operating and capital budget for Fiscal Year 2024-25. The Fiscal Year 2024-25 budget is comprised of all City funds, including the General Fund, special revenue funds, and enterprise funds. Each fund accounts for distinct and uniquely funded operations. As described herein, over the past five years, the City has been required to reduce operating expenses, reprioritize major initiatives and capital projects, and redesign and implement new and streamlined ways of serving the public in order to balance the City’s operating budget. The City has also had to tap into reserves to sustain operations and continue providing the same level of services the community expects. The Fiscal Year 2024-25 budget closed a $7.4 Million General Fund deficit requiring the use of reserves and expenditure reductions, as modest revenue growth not projected to be adequate to cover ongoing expenditure increases from current commitments, including pension costs, high inflation, insurance, capital investment. Based on current trends and projections, the General fund would continue to have an operating deficit over the next three fiscal years if not balanced through new revenues, reduced expenditures, the deferral of capital projects, labor concessions; or the [additional] use of reserves. [The General fund is currently projected to have an operating deficit over the next three fiscal years.] Santa Barbara and the central coast of California are popular tourist destinations, and the City’s economy is directly affected by the number of visitors to the City. Inflation, changes in travel and purchasing habits over the past three years have substantially impacted local businesses and residents in the City. As a result of the COVID-19 pandemic, the City experienced a significant decline in major revenue sources, including sales tax, transient occupancy tax (TOT), and various departmental revenues from reduced or cancelled programs and services, following an approximately $30.0 Million reduction in revenue across all funds. Of this, the impact to the General Fund, which provides funding for essential City services like public safety, is estimated to be over $20.0 Million, or more than 10.0% of revenues. As a result, the City was forced to take additional steps to control and reduce costs by eliminating nearly all hourly employees, delaying projects, and reducing services. Some examples of this have been reducing staff or not filling open positions in nearly all City departments, including Public Safety. However, the end of Fiscal Year 2021-22 and through Fiscal Year 2022-23 saw stronger economic activity and revenue growth in the City’s major tax sources. Tax revenues have stabilized and grown at a much slower pace into Fiscal Year 2023-24, suggesting a leveling of economic activity to a new baseline. 3 4140-2813-5503.3
A significant source of local revenues is attributable to the Measure C sales tax which commenced in the fourth quarter of Fiscal Year 2017-18. The City expects that Measure C sales tax revenues will be applied to make Base Rental Payments. Maintaining police, fire and 911 emergency medical response is a core priority of Measure C funds. See “Measure C Sales Tax” in Appendix A. In addition, a half-cent sales tax measure is being proposed for the upcoming November 2024 election that will fund City services. If approved by Santa Barbara voters, the measure will generate an estimated $15.6 Million annually to support the City’s General Fund. See “Proposed Sales Tax Measure – ‘Essential Local Services Measure’” in Appendix A.

See “THE CITY” and APPENDIX A – “THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION.”
The Series 2024 Bonds
The Series 2024 Bonds will be issued in the aggregate principal amount and will mature on the dates and bear interest at the rates shown on the inside cover page of this Official Statement. The Series 2024 Bonds will be dated the date of original delivery and will bear interest from that date. 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 multiple thereof.

The Depository Trust Company (“DTC”) will act as the initial securities depository for the Series 2024 Bonds, which will be issued initially pursuant to a book-entry only system. Purchases of the Series 2024 Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Series 2024 Bonds on DTC’s records. The ownership interest of each actual purchaser of each Series 2024 Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records (each as defined herein). See APPENDIX D – “BOOK-ENTRY SYSTEM.” Authority for Issuance of the Series 2024 Bonds
The Series 2024 Bonds are being issued in accordance with the Marks-Roos Local Bond Pooling Act of 1985, constituting Section 6584 et seq. of the California Government Code (the “Act”), and other applicable laws of the State of California (the “State”). Pursuant thereto and in accordance with the City Charter, an ordinance adopted by the City and a resolution adopted by the Authority prior to the issuance of the Series 2024 Bonds, the City will lease that real property and improvements constituting the City Police Station to be completed thereon as more particularly described herein (the “Property”) to the Authority pursuant to a Ground Lease, dated as of ______ 1, 2024, (the “Ground Lease”) and the City will lease the Property back from the Authority pursuant to the Lease Agreement. The Series 2024 Bonds will be 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”) and are payable from base rental payments (the “Base Rental Payments”) to be made by the City under the Lease Agreement for the right to the use the Property. See “LEASED PROPPERTY.” Under the Indenture and the Lease Agreement, the Authority may issue additional bonds (the “Additional Bonds”) payable from Base Rental Payments on a parity basis with the Series 2024 Bonds.

The Series 2024 Bonds and any Additional Bonds are collectively referred to in this Official Statement as the “Bonds.” See the caption “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Additional Bonds.”
Additional General Fund Obligations
Base Rental Payments will be payable from any funds lawfully available to the City. The City has not pledged such funds nor limited its ability to use such funds for other purposes. Measure C revenues 4 4140-2813-5503.3
constitute a portion of such funds, and the City expects to apply Measure C revenues to pay Base Rental Payments due under the Lease Agreement. The City does not currently have any significant capital lease obligations payable from the City’s General Fund revenues except for its obligations under a facility lease with respect to the Santa Barbara Financing Authority Revenue Refunding Bonds (Airport Project), Series 2019 (the “2019 Airport Revenue Refunding Bonds”), the related lease payment obligations of which have to date been offset in full by the City’s Airport Fund. The City does have other obligations related to retirement benefits and other post-employment benefits as well as certain other liabilities, a portion of which is payable from General Fund revenues and other funds lawfully available to the City. See “RISK FACTORS – City Obligations” and “– No Limitation on Incurring Additional Obligations” herein. Neither the Lease Agreement nor the Indenture contains any limitations on the ability of the City to enter into other obligations that may constitute additional claims against its General Fund revenues including, without limitation, Measure C revenues.

The 2019 Airport Revenue Refunding Bonds are limited obligations of the Santa Barbara Financing Authority (a joint powers authority issuer unrelated to the Authority, the “SBFA”) payable solely from, and secured solely by, revenues of the SBFA, consisting primarily of base rental payments to be received by the SBFA from the City under a Facility Lease, dated as of April 1, 2019, (the “2019 Facility Lease”), by and between the SBFA and the City, and installment payments received by the SBFA from the City under an Installment Payment Contract, dated as of April 1, 2019, by and between the SBFA and the City. As provided in the 2019 Facility Lease with respect to the 2019 Airport Revenue Refunding Bonds, on any date upon which a base rental payment is due, the City’s obligation to pay such base rental payment is deemed satisfied to the extent that the City’s obligation to make installment payments has been satisfied as of such date. See APPENDIX A – “THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION – Outstanding Indebtedness.”
Security for the Bonds
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 payable by the City pursuant to the Lease Agreement, including any prepayments thereof. The City will covenant under the Lease Agreement to take such action as may be necessary to include all Rental Payments, which are comprised of Base Rental Payments and Additional Rental Payments (which include taxes and assessments affecting the Property, administrative costs of the Authority relating to the Property, fees and expenses of the Trustee and other amounts payable under the Lease Agreement), due under the Lease Agreement [as a separate line item in its annual budgets] and to make the necessary annual appropriations therefor, subject to abatement as described herein. The Base Rental Payments to be made by the City pursuant to the Lease Agreement are payable by the City from its General Fund.

Rental Payments are subject to complete or partial abatement in the event and to the extent that there is substantial interference with the City's right to use and occupy the Property or any portion thereof.

See “RISK FACTORS – Limitations on Base Rental Payments; Abatement Risk.” Abatement of Base Rental Payments under the Lease Agreement, to the extent payment is not made from alternative sources as set forth below, would result in all Bond Owners receiving less than the full amount of principal of and interest on the Bonds. To the extent that Net Proceeds (as defined herein) of rental interruption insurance are available for the payment of Rental Payments due under the Lease Agreement, Rental Payments will not be abated as provided above but, rather, will be payable by the City as a special obligation payable solely from such Net Proceeds. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Base Rental Payments.”
5 4140-2813-5503.3
The Base Rental Payments to be made by the City pursuant to the Lease Agreement are payable in an amount equaling the debt service for the Series 2024 Bonds for the right to use and the possession of the real property and facilities comprising the Property. As provided in the Lease Agreement, such Property may be substituted or released in accordance therewith. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT.” A debt service reserve account (the “Series 2024 Reserve Account”) is established under the Indenture for the benefit of the Series 2024 Bonds, to be held in trust and maintained by the Trustee, and is required to be funded, as of the date of calculation, an amount equal to 50% of the maximum annual amount of principal of and interest on the Series 2024 Bonds coming due in any Bond Year (the “Series 2024 Reserve Requirement”) as described herein. See “SECURITYAND SOURCES OF PAYMENT FOR THE BONDS - Series 2024 Reserve Account of the Reserve Fund.” Summaries Not Definitive
Brief descriptions of the Series 2024 Bonds, the Authority, the City, and the Property are included in this Official Statement, together with summaries of the Ground Lease, the Lease Agreement, and the Indenture. Such descriptions and summaries do not purport to be comprehensive or definitive. All references herein to the Series 2024 Bonds, the Ground Lease, the Lease Agreement, and the Indenture are qualified in their entirety by reference to the actual documents, or with respect to the Series 2024 Bonds, the forms thereof included in the Indenture, copies of all of which are available for inspection by written request mailed to the City of Santa Barbara, 735 Anacapa Street, Santa Barbara, California 93101, Attention: City Administrator, and will be available upon request and payment of duplication costs from the Trustee.

Continuing Disclosure
The City has covenanted for the benefit of the Owners and Beneficial Owners of the Series 2024 Bonds to provide certain financial information and operating data relating to the City by not later than nine months after the end of the City’s Fiscal Year (presently June 30) (the “Annual Report”), commencing with the report for the 2023-24 fiscal Year, and to provide notices of the occurrence of certain enumerated events, if material. The nature of the information to be contained in the Annual Report or the notices of enumerated events is summarized below under the caption “CONTINUING DISCLOSURE.” See also, APPENDIX E – “FORM OF CONTINUING DISCLOSURE AGREEMENT.”

LEASED PROPPERTY
The Property consists of that real property upon which is to be located the City Police Station, at 601 Santa Barbara Street (formerly 119 E. Cota Street) in the City, an approximately 1.61-acre site, and the improvements to be completed thereon. See “SERIES 2024 PROJECT” below.

The City and the Authority have agreed and determined that based on the aggregate value of the land comprising the Property as of the date of delivery of the Series 2024 Bonds, and as of the completion of the Series 2024 Project, the Property will have an annual fair rental value greater than or equal to the maximum Base Rental Payments payable by the City in any Rental Period, and that the Fair Rental Value of the Property. 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.
6 4140-2813-5503.3
The City will lease the Property to the Authority pursuant to the Ground Lease. The Authority will then sublease the Property to the City pursuant to the Lease Agreement.

As provided in the Lease Agreement, such Property may be substituted or released in accordance therewith. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT” – Substitution or Release of the Property.” SERIES 2024 PROJECT
The Series 2024 Bonds are being issued to provide net proceeds 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.

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. A new building at a new location is required to house all Police Department operations in one place and to ensure uninterrupted public safety services to the community. The new location will be located at 601 Santa Barbara Street at the intersection of Cota Street and Santa Barbara Street on property which is currently owned by the City.

Over the past four years, major work efforts have included site selection and acquisition, community outreach, environmental review, and preliminary design. The Police Station project consists of demolition of an existing parking lot and construction of a new three-story, approximately 53-foot-high, approximately 64,000-square-foot Police Station building, and associated 37.5-foot-high, approximately 84,000-square-foot parking structure to accommodate 236 parking spaces (128 for Police Department fleet vehicles and 108 for employee vehicles). Each structure will also have a subterranean level. Emergency service antennas will be installed on the roof of the parking structure. Eight additional vehicle surface parking spaces and four bicycle parking spaces will be provided for visitors. Construction is anticipated to begin in late 2024 with a completion date in late 2026. The City expects that approximately $_______ of net proceeds of the Series 2024 Bonds will be applied to provide funds to finance costs of the design, engineering, construction, improvement, and installation of facilities to comprise the City Police Station.

The Police Station project is expected to be completed in late 2026. As described herein, a Capitalized Interest Subaccount within the Series 2024 Interest Account has been funded to make interest payments on Interest Payment Date occurring on or before [May 15, 2027]. [To be updated: Following the solicitation of bids and a review and selection process, the City awarded the Police Station project design to Cearnal Collective LLP, a Santa Barbara architectural, design, and project management firm (the “Architect”) and TynanGroup LP, a national real estate development services firm construction management firm founded in the City to act as owner’s representative (the “Construction Manager”). Completing the construction team will be ______________, as general contractor (the “Builder”) to build the Police Station as provided in a fixed price contract between the [City/Authority] and the Builder (the “Construction Contract”). The Construction Contract includes a price of $_______ subject to its terms.]
The Police Station project and its completion on budget and on time may be subject to unavoidable delays for a variety of reasons. Such unavoidable delays under the Construction Contract include any delay in the performance by any contractor, subcontractors, and/or the Builder of its respective obligations with respect to construction of the Police Station project caused by strikes or labor disputes, acts of God, 7 4140-2813-5503.3
unavoidable casualties, adverse weather conditions, acts of terrorists, delays by an agency having jurisdiction over the Police Station project (including, but not limited to, unanticipated delays in providing inspections or approvals by such agency), governmental embargo restrictions, site conditions not reasonably and previously identified, or other causes beyond the reasonable control of the contractor, subcontractors, and/or the Builder, which, after the exercise of due diligence to mitigate the effects thereof, delay construction of the Police Station project. Such unavoidable delays will entitle the contractor, subcontractors, and the Builder to an extension of the delivery date of the Police Station project but is not expected to entitle the contractor and subcontractors to additional compensation.

Pursuant to the Construction Contract, the Builder will procure and maintain, and cause contractor and subcontractors to procure and maintain, for the duration of the Construction Contract, builder’s risk insurance, which will provide funds for reconstruction costs during any period of reconstruction required by an insured peril. The Builder is required to obtain payment and performance bonds to insure its performance under the Construction Contract.]
Only the real property upon which is to be located the City Police Station and the improvements to be completed thereon, will constitute the Property to be leased under the Lease Agreement, subject to substitution and release thereof in accordance with the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT.” Dwight Murphy Field Project. The property known as Dwight Murphy Field was acquired by the City of Santa Barbara in 1925. Commonly known as the Municipal Soccer Field, it was named in honor of Dwight Murphy in recognition of his civic leadership. Today, it still serves as the City’s only dedicated soccer facility, and also includes a softball field, outdoor fitness area, and playground.

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.

Construction is anticipated to begin in January 2025 with a completion date in March 2026. The City expects that approximately $[13 million] of net proceeds of the Series 2024 Bonds will be applied to pay costs of the design, engineering, construction, and improvement of Dwight Murphy Field.

In late 2016, the Gwendolyn Strong Foundation reached out to the Parks and Recreation Department (the “Parks Department”) with a vision to develop Santa Barbara’sfirst all-abilities playground.

Dwight Murphy Field was identified asthe best site for the new and exciting project. The Parks Department has partnered with the Gwendolyn Strong Foundation to develop Gwendolyn’s Playground, Santa Barbara’s first and the region’s largest all-abilities playground. Together, a design was created for a whimsical play space that removes the physical barriers of traditional playgrounds that prevent children living with disabilities from playing side by side with other children.

In 2019, the City Council approved the Dwight Murphy Master Plan. Through a memorandum of understanding, the City and the Gwendolyn Strong Foundation are co-funding the project design and construction of Gwendolyn’s Playground. Funding for project construction includes $6.0 Million raised by the Gwendolyn Strong Foundation, $1.5 Million Community Project Funding grant the awarded to the City through U.S. Congressman Salud Carbajal, and $6 million committed through a Measure C capital allocation in Fiscal Year 2023.
8 4140-2813-5503.3

ESTIMATED SOURCES AND USES OF FUNDS
The estimated sources and uses of funds with respect to the Series 2024 Bonds are as follows:

Sources of Funds
Aggregate Principal Amount of Series 2024 Bonds.............................

Original Issue Premium/Discount.........................................................

Total Sources..................................................................................

Uses of Funds
Project Fund (1)......................................................................................

Capitalized Interest Subaccount (2).......................................................

Series 2024 Reserve Account
Costs of Issuance Fund (3).....................................................................

Total Uses....................................................................................... (1) To be applied to pay a portion of the costs of the Series 2024 Project. (2) To be applied to pay capitalized interest on the Series 2024 Bonds through May 15, 2027. (3)
Includeslegal fees, financing and consulting fees, fees of bond counsel, disclosure counsel and trustee, printing costs, rating agency fees, and other miscellaneous expenses.

THE BONDS
The following is a summary of certain provisions of the Series 2024 Bonds. Reference is made to the Series 2024 Bonds for the complete text thereof and to the Indenture for a more detailed description of these provisions. The discussion herein is qualified by such reference. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – INDENTURE.” General
The Series 2024 Bonds will be issued in the aggregate principal amount and will mature on the dates and bear interest at the rates shown on the inside cover page of this Official Statement. The Series 2024 Bonds will be dated the date of original delivery and will bear interest from that date. Interest on the Series 2024 Bonds will be payable on May 15 and November 15 in each year, commencing ______ 15, 20__, (each, an “Interest Payment Date”). The Series 2024 Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof (each, an “Authorized Denomination”).

The Series 2024 Bonds, when issued, will be registered in the name of Cede & Co., as nominee of DTC. Individual purchases of interests in the Series 2024 Bonds will be made in book-entry form only, in authorized denominations. Purchasers of interests will not receive certificates representing their interests in the Series 2024 Bonds. For a description of the method of payment of principal, premium, if any, and interest on the Series 2024 Bonds and matters pertaining to transfers and exchanges while in the book-entry system, see APPENDIX D – “BOOK-ENTRY SYSTEM.”
So long as Cede & Co. is the registered owner of the Series 2024 Bonds, the Trustee will pay principal of and interest on the Series 2024 Bonds to DTC, which will remit principal, premium, if any, and interest payments to the Beneficial Owners of the Series 2024 Bonds, as described under APPENDIX D – “BOOK-ENTRY SYSTEM.” DTC will act as the initial securities depository for the Series 2024 Bonds.

Under the Indenture, the Authority may appoint a successor securities depository to DTC for the Series 9 4140-2813-5503.3
2024 Bonds. The information under this caption, “THE BONDS” is subject in its entirety to the provisions described below under APPENDIX D – “BOOK-ENTRY SYSTEM” while the Series 2024 Bonds are in the book-entry only system.

Payment of Principal and Interest
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 isin 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. As defined in the Indenture, the term Record Date means the close of business 15 days immediately preceding an Interest Payment Date, whether or not such day is a Business Day.

Interest will be paid in lawful money of the United States on each Interest Payment Date. Interest will be paid by wire transfer to DTC. Notwithstanding the foregoing, interest on any Series 2024 Bond which is not punctually paid or duly provided for on any Interest Payment Date will, 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 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.

While the Series 2024 Bonds are book-entry bonds, payment of the principal of and interest on any Series 2024 Bonds will be made by the Trustee directly to DTC, to the account of Cede & Co. In the event the Series 2024 Bonds are no longer in a book-entry system, principal or purchase price on such Series 2024 Bonds will be payable at the Principal Corporate Trust Office of the Trustee, and interest on the Series 2024 Bonds due on or before the maturity or prior redemption thereof 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 Bonds at their respective addresses shown on 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.

Redemption Terms of the Series 2024 Bonds
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 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. 10 4140-2813-5503.3
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 insurance proceeds or condemnation award received (in excess of $50,000) with respect to all or a portion of the Property and deposited by the Trustee in the Redemption Fund in accordance with the Indenture, at a redemption price equal to the principal amount thereof, plus accrued interest thereon to the date fixed for redemption, without premium.

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:

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 by the terms for extraordinary redemption, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be subject to sinking fund redemption will be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so redeemed by the terms for extraordinary redemption, 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 will 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 optionally redeemed, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be subject to sinking fund redemption will be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so optionally redeemed, such reduction to be allocated among redemption dates in Authorized Denominations, as designated by the City in a Written Certificate of the City.

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.
11 4140-2813-5503.3
If some but not all of the Series 2024 Bonds maturing on May 15, 20__, are redeemed by the terms for extraordinary redemption, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be subject to sinking fund redemption will be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so redeemed by the terms for extraordinary redemption, 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 will 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 optionally redeemed, the principal amount of Series 2024 Bonds maturing on May 15, 20__, to be subject to sinking fund redemption will be reduced by the aggregate principal amount of the Series 2024 Bonds maturing on May 15, 20__, so optionally redeemed, such reduction to be allocated among redemption dates in Authorized Denominations, as designated by the City in a Written Certificate of the City.

Notice of Redemption. The Trustee on behalf and at the expense of the Authority will 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 will state the date of the notice, the redemption date, the redemption place and the redemption price and will 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 will 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 in accordance with the Indenture, such notice will 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 will 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 will not be made and the Trustee will, 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 will be no redemption of Bonds pursuant to such notice of redemption.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee will select the Bonds to be redeemed from all Bonds not previously called for redemption (a) with respect to any extraordinary redemption, 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 will promptly notify the Authority and the City in writing of the numbers of the Bondsso selected for redemption on such date. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 denominations and such separate denominations will be treated as separate Bonds that may be separately redeemed.
12 4140-2813-5503.3
Partial Redemption of Bonds. Upon surrender of any Bonds redeemed in part only, the Authority will execute, and the Trustee will 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.

Effect of Notice of Redemption. 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 will become due and payable on said date, and, upon presentation and surrender thereof at the Office of the Trustee, said Bonds will 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, will 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 will 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.

All Bonds paid at maturity or redeemed prior to maturity pursuant to the provisions hereof will be canceled upon surrender thereof and destroyed.

SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
Pledge Under the Indenture
The Bonds are payable from and secured by Lease Revenues and any other amounts held in the Payment Fund established under the Indenture. The term “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. Base Rental Payments shall be paid by the City from any and all legally available funds.

The Trustee will establish and maintain a separate fund designated the “Payment Fund” to be held in trust under and in accordance with the Indenture. Within the Payment Fund, the Trustee will establish and maintain 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 a separate account designated the “Capitalized Interest Subaccount” until the date all amounts are transferred therefrom in accordance with the Indenture. 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.

As provided in the Indenture, to secure the payment of the principal of, premium, if any, and interest on the Bonds in accordance with their terms, the Authority will pledge to the Owners of the Bonds, and grant 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 the Indenture and the Act. This pledge and grant will constitute a first lien on such assets, which shall immediately attach to such assets and be effective, binding, and enforceable against the Authority in accordance with the Indenture without the need for any physical delivery, recordation, filing or further act, and will be subject only to the provisions of the Indenture.
13 4140-2813-5503.3
As further provided in the Indenture, the Authority will assign to the Trustee for the benefit of the Bond Owners all of the Authority's right, title and interest in and to the Lease Agreement, including, without limitation, its right to receive Base Rental Payments to be paid by the City under and pursuant to the Lease Agreement; provided that, the Authority will retain the rights to indemnification and to payment of reimbursement of its reasonable costs and expenses under the Lease Agreement. The City will pay Base Rental Payments directly to the Trustee, as assignee of the Authority. See “— Base Rental Payments” below.

The Bonds are special obligations of the Authority, payable, as provided in the Indenture, solely from Lease Revenues and the other assets pledged therefor under the Indenture. 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. Each annual obligation of the City to make the Base Rental Payments and Additional Payments under the Lease Agreement shall constitute a current expense of the City and shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained in the Lease Agreement constitute a pledge of the general tax revenues, funds or moneys of the City. The Bonds are not a debt of the City, the State or any of its political subdivisions, and neither the City, the State nor any of its political subdivisions is liable thereon, nor in any event shall the Bonds be payable out of any funds or properties other than those of the Authority as provided in the Indenture. The Authority has no taxing power.

All of the Bonds are equally secured by a pledge of and charge and lien upon the Lease Revenues, and the Lease Revenues constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the Bonds as provided in the Indenture.

Base Rental Payments
Pursuant to the Lease Agreement, the Authority will sublease the Property, obligating the City to make Base Rental Payments as required therein, subject to abatement. The term “Property” means that that real property and improvements constituting the City Police Station to be completed thereon (financed with a portion of the net proceeds of the Series 2024 Bonds) as specifically described in the Lease Agreement.

As provided in the Lease Agreement, such Property may be substituted or released in accordance therewith.

See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT.”
Rental Payments, including Base Rental Payments, will 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. Each Base Rental Payment shall be deposited with the Trustee no later than the fifth Business Day next preceding each Interest Payment Date (the “Base Rental Deposit Date”) on which such Base Rental Payment is due. All Base Rental Payments will be paid directly by the City to the Trustee, and if received by the Authority at any time will be transferred by the Authority to the Trustee within one Business Day after the receipt thereof. All Base Rental Payments received by the Trustee will be deposited by the Trustee in the Payment Fund.

As provided in the Indenture, 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 interruption insurance received with respect to the Property, shall not be deposited in the Payment Fund but, rather, shall be applied to the cost of repair or replacement of the Property or the affected portion 14 4140-2813-5503.3
thereof, or to the extraordinary redemption of Bonds as provided in the Indenture. There shall additionally be deposited in the applicable Interest Account of the Payment Fund amounts transferred from the related Reserve Account pursuant to the Indenture. See “Series 2024 Reserve Account of the Reserve Fund” below.

The Indenture requiresthat the Base Rental Payments be deposited in the Payment Fund maintained by the Trustee. In accordance with the Indenture, the Trustee will transfer such amounts as are necessary to the Interest Account or the Principal Account, as the case pay be, to pay principal of and interest on the Bonds as the same becomes due and payable. On each Principal Payment Date, following the payment of principal of and interest on the Bonds, any excess amount in the Payment Fund will be transferred to the Reserve Fund, as necessary in connection with the issuance of Additional Bonds, if any, and thereafter deposited into the Payment Fund to be applied to pay the principal of and interest on the Bonds. With respect to the Series 2024 Bonds, on each Interest Payment Date occurring on or before ______ 15, 20__, 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. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – INDENTURE – Creation of Funds and Accounts.”
[Base Rental Payments are calculated on an annual basis, for twelve-month periods commencing on May 15 and ending on March 31, and each annual Base Rental Payments will be divided into two interest components, due on May 15 and November 15, and one principal component, due on May 15, except that the first Base Rental Payment period will commence on the date of recordation of the Lease Agreement and end on May 14, 2025. Each Base Rental Payment with respect to the Lease Agreement will be payable on the 26th day of the month immediately preceding each Interest Payment Date on the Series 2024 Bonds.

Each annual Base Rental payment will be for the use of the Property for the twelve-month period commencing on May 15 of the period in which such installments are payable (except for the first Base Rental Payment period which will commence on the date of recording of the Lease Agreement).] The obligation of the City to make Base Rental payments is an obligation payable solely from amounts legally available therefore and does not constitute a debt of the City or of the State or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction or an obligation for which the City must levy or pledge, or has levied or pledged, any form of taxation.

For a further description of the provisions of the Lease Agreement, including the terms thereof and a description of certain covenantstherein, including construction, maintenance, utilities, taxes, assessments, insurance and events of default and available remedies, see APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT.” For information regarding the City, see Appendix A and Appendix B attached hereto. See also “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Abatement
Base Rental Payments are paid by the City in each rental payment period for and in consideration of the right of use and occupancy of the Property during each such period for which said rental is to be paid.

The Base Rental Payments and Additional Payments are subject to abatement under the Lease Agreement.

As provided therein, except to the extent of (a) amounts held by the Trustee in the Interest Account, (b) amounts received in respect of rental interruption insurance, and (c) amounts, if any, otherwise legally available to the Trustee for payments in respect of the Series 2024 Bonds, Rental Payments shall be abated 15 4140-2813-5503.3
proportionately (in the proportion in which the annual fair rental value of that portion of the Property rendered unusable bears to the annual fair rental value of the whole of the Property) 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. As provided in the Lease Agreement, the City and the Authority will 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. 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.

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 above but, rather, shall be payable by the City as a special obligation payable solely from such Net Proceeds.

See “RISK FACTORS – Limitations on Base Rental Payments; Abatement Risk.” Such abatement shall continue for the period commencing with such damage or destruction and ending with the substantial completion of the work of repair or reconstruction. In the event of any such damage or destruction, the Lease Agreement shall continue in full force and effect and the City waives any right to terminate the Lease Agreement by virtue of any such damage or destruction. In the event the Property cannot be repaired during the period of time that proceeds of the City’s rental interruption insurance will be available in lieu of Base Rental Payments (a period of two years), or in the event that casualty insurance proceeds are insufficient to provide for complete repair of the Property, there could be insufficient funds to cover payments to Owners of the Bonds in full. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT – Rental Abatement” and “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Insurance.” Series 2024 Reserve Account of the Reserve Fund
The Trustee will establish and maintain in trust in the name of the Trustee a special Fund designated the “Reserve Fund.” Within the Reserve Fund, the Trustee will establish and maintain in trust in the name of the Trustee a separate account designated the “Common Reserve Account” and may establish and maintain one or more additional Reserve Accounts, [including the Series 2024 Reserve Account which the Trustee will establish and maintain for the benefit of the holders of the Series 2024 Bonds], each of which may secure one or more Series of Bonds pursuant to the Indenture and to the Supplemental Indenture authorizing the issuance thereof. On the Closing Date, the Trustee will deposit in the Series 2024 Reserve Account $________ in accordance with the Indenture. In connection with the issuance of Additional Bonds, there will additionally be deposited in the Common Reserve Account or any other Reserve Account established and/or maintained forsuch Additional Bonds, as applicable, the amount required to be deposited therein under the Supplemental Indenture pursuant to which such Additional Bonds are issued. As defined in the Indenture, the term “Series 2024 Reserve Account Requirement” means, as of the date of any calculation, 50% Maximum Annual Debt Service of the Series 2024 Bonds.

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 ofsuch 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 16 4140-2813-5503.3
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 will 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 will, as and to the extent necessary, liquidate any investments purchased with such amounts.

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 or to the Principal Accounts pursuant to the Indenture, amounts in the Payment Fund are insufficient for such purpose, the Trustee will withdraw from each Reserve Account, to the extent of any funds therein, the amount of the insufficiency of the related Series of Bonds, and will 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 will 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.

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 will 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 will 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.

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 will 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.

On any date on which Bonds of a Series are defeased as provided in the Indenture, the Trustee will, if so directed in a Written Request of the City, transfer any moneys in the related 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.

See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – INDENTURE – Pledge and Assignment; Funds and Accounts – Reserve Fund.” Insurance
The Lease Agreement requires the City to maintain or cause to be maintained throughout the term of the Lease Agreement, a standard comprehensive general liability insurance policy or policies in protection of the City, the Authority and their respective members, officers, agents, and employees. Such policy or policies will provide for indemnification of said parties against direct or contingent loss or liability 17 4140-2813-5503.3
for damages for bodily and personal injury, death or property damage occasioned by reason of the use or ownership of the Property. Such policy or policies will 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 ofsuch liability insurance will be applied toward extinguishment orsatisfaction of the liability with respect to which the Net Proceeds of such insurance have been paid. The City's obligations as described above may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT – Insurance to be Maintained by the City.”
The City will 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 insurance]) to the [then] full insurable value of the Property, subject to a $100,000 loss deductible provision. Full insurable value will not be less than the aggregate principal amount of the Outstanding Bonds. Such coverage may be provided in the form of a policy insuring the Property and additional property owned by the City against such risks; provided, however, that the amount of the coverage provided pursuant to such policy may be less than the aggregate amount of the full insurable value of all properties insured thereby if the City provides to the Trustee a written evaluation of a qualified insurance consultant that the City's coverage is reasonable given the maximum foreseeable loss in the event of fire, lightning and all other risks covered by an extended coverage endorsement (excluding earthquake and flood), the nature of such risks insured and the proximity of the insured properties to each other. The Net Proceeds of such casualty insurance will be applied as set forth below under “Damage or Destruction of the Property.” The City's obligations as described above may be satisfied by self-insurance in accordance with the Lease Agreement. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT.”
The City will maintain rental interruption insurance to cover the Authority's loss, total or partial, of Base Rental Payments resulting 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 the paragraph immediately above 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 will 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 as described above may not be satisfied by self-insurance. The insurance required above will 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 of the Lease Agreement.

The City is required under the Lease Agreement to provide, at its own expense, a CLTA or ALTA title insurance policy for the Property, in the aggregate amount of not less than the initial aggregate principal amount of the respective series of the Bonds, insuring (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 in the Property under the Lease Agreement, subject only to Permitted Encumbrances, and providing that all proceeds thereunder are payable to the Trustee for the benefit of the Owners. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT – Insurance to be Maintained by the City.”
18 4140-2813-5503.3
Damage or Destruction of the Property
If the Property or any portion thereof is damaged or destroyed, the City will, 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 the Lease Agreement. 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 the Lease Agreement, the City' will, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof.

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 the Lease Agreement, then the City will (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 the Lease Agreement, 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 from and to the extent of any insurance proceeds or condemnation award received with respect to all or a portion of the Property (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. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT – Abatement,” “– Substitution or Release of the Property” and “– Damage or Destruction.”
Additional Bonds
The Authority may at any time issue one or more Series of Additional Bonds payable from Lease Revenues, as provided under the Indenture, on a parity with the Series 2024 Bonds and all other Bonds theretofore issued thereunder, but only subject to the conditions set in the Indenture and the Lease Agreement, which are thereby made conditions precedent to the issuance of such Additional Bonds, and which are further described in APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – INDENTURE – Additional Bonds.” As provided in the Indenture, (i) the proceeds of the sale of such Additional Bonds will be applied to (A) pay costs of City facilities (including capitalized interest), (B) refund any Bonds issued hereunder or other obligations of the City, (C) pay Costs of Issuance incurred in connection with the issuance of such Additional Bonds, and (D) make any deposit 19 4140-2813-5503.3
to any Reserve Account that may be established in connection with the issuance of Additional Bonds, if any; (ii) that the Lease Agreement shall have been amended, if necessary, so that 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 will 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 will be made by a Written Certificate of the City).

As discussed herein, the Base Rental Payments will be payable from any funds lawfully available to the City. The City has not pledged such funds nor limited its ability to use such funds for other purposes.

See APPENDIX A – “THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION – Outstanding Indebtedness.”
Investment of Bond Funds
Pursuant to the Indenture, all money held by the Trustee in any of the funds or accounts established pursuant to the Indenture are required to be invested only in “Permitted Investments” as defined in the Indenture. See APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – DEFINITIONS.”
Debt Service Schedule
The following table shows the debt service schedule relating to the Series 2024 Bonds:

DEBT SERVICE SCHEDULE
Bond Year
(May 15) Principal Interest Total
Bond Year
(May 15) Principal Interest Total
2057

RISK FACTORS
The following factors, which represent material risk factors that have been identified at this time, should be considered along with all other information in this Official Statement by potential investors in evaluating the Series 2024 Bonds. There can be no assurance made that other risk factors will not become evident at any future time. In addition, the order in which the following factors are presented is not intended to reflect the relative importance of any such risks.

General
The Series 2024 Bonds are payable solely from the Lease Revenues of the Authority under the Indenture consisting primarily of the Base Rental Payments payable by the City pursuant to the Lease Agreement for the beneficial use and occupancy of the Property. 20 4140-2813-5503.3
The practical realization of any rights upon default by the City under the Lease Agreement will depend upon the exercise of various remedies specified in such instrument, as restricted by state and federal law. The federal bankruptcy laws may have an adverse effect on the ability of the Trustee to enforce its rights under the Indenture and of the Authority to enforce its rights under the Lease Agreement. See “– Limitation on Remedies” below.

In certain situations, with the consent of the Owners of a majority in aggregate principal amount of the Outstanding Bonds, certain amendments to the Indenture, the Lease Agreement may be made. Such amendments could affect the security of Owners of the Bonds.

Future economic and other conditions may adversely affect the value or essential nature of the Property and, consequently, the value of the Property to the Authority in exercising available remedies upon default by the City. In addition, there are certain other factors discussed herein as a result of which certain remedies available to the Trustee or the Authority may not be a viable option.

Limited Obligation
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. 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.

Each annual obligation of the City to make the Base Rental Payments and Additional Payments under the Lease Agreement shall constitute a current expense of the City and shall not in any way be construed to be a debt of the City in contravention of any applicable constitutional or statutory limitation or requirement concerning the creation of indebtedness by the City, nor shall anything contained in the Lease Agreement constitute a pledge of the general tax revenues, funds or moneys of the City. Base Rental Payments and Additional Payments due under the Lease Agreement shall be payable only from current funds which are budgeted and appropriated or otherwise legally available for the purpose of paying Base Rental Payments and Additional Payments or other payments due under the Lease Agreement as consideration for use of the Property. The Lease Agreement shall not create an immediate indebtedness for any aggregate payments which may become due under the Lease Agreement in the event that the term of the Lease Agreement is continued. The City has not pledged the full faith and credit of the City to the payment of the Base Rental Payments and Additional Payments or any other payments due under the Lease Agreement.

The Authority shall not be required to advance any money derived from any source other than the Lease Revenues as provided in the Indenture for the payment of the interest on or principal of or redemption premiums, if any, on the Bonds or for the performance of any agreements or covenants in the Indenture contained. Nothing contained in the Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee, and Owners of the Bonds any right, remedy or claim under or by reason thereof. Any agreement or covenant required in the Indenture to be performed by or on behalf of the Authority or any member, officer or employee thereof shall be for the sole and exclusive benefit of the Authority, the Trustee, and Owners of the Bonds.
21 4140-2813-5503.3
Limitations on Base Rental Payments; Abatement Risk
General. The Base Rental Payments and Additional Payments due under the Lease Agreement (including insurance, payment of costs of repair and maintenance of the Property, taxes and other governmental charges and assessments levied against the Property) are not secured by any pledge of taxes or other revenues of the City but are payable from any funds lawfully available to the City. The City will incur other obligations in the future payable from the same sources as the Base Rental Payments. In the event the City’s revenue sources are less than its total obligations, the City could choose to fund other City services before making Base Rental Payments. The same result could occur if, because of State Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues. The City’s appropriations, however, have never exceeded the limitation on appropriations under Article XIIIB of the California Constitution. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIB of the State Constitution.” Covenant to Budget and Appropriate. Pursuant to the Lease Agreement, the City will covenant to take such action as may be necessary to include Base Rental Payments due in its annual budgets and to make the necessary annual appropriations for all such payments. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Base Rental Payments.” Such covenants are deemed to be duties imposed by law, and it is the duty of the public officials 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 such covenants. A court, however, in its discretion may decline to enforce such covenants. Upon issuance of the Series 2024 Bonds, Bond Counsel will render its opinion (substantially in the form of Appendix F attached hereto) to the effect that, subject to the limitations and qualifications described therein, the Lease Agreement constitutes a valid and binding obligation of the City. As to the Trustee’s or the Authority’s practical realization of remedies upon default by the City, see “– Limitations on Remedies” below.

Abatement Risk. During any period in which, by reason of material damage or destruction, there is substantial interference with the use and occupancy by the City of any portion of the Property, rental payments due under the Lease Agreement with respect to the Property will be abated proportionately, in the proportion in which the annual fair rental value of that portion of the Property rendered unusable bears to the annual fair rental value of the whole of the Property, and the City waives any and all rights to terminate the Lease Agreement by virtue of any such interference and the Lease Agreement shall continue in full force and effect. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – Abatement.” Project Completion Risk. Completion of the City Police Station component of the Series 2024 Project may be delayed as a result of any number of causes, including but not limited to, [future financing difficulties including revenue shortfalls, shortages of or other supply problems relating to labor and materials, increases in costs due to inflation, design or construction defects, global health concerns, delays in obtaining governmental or agency approvals and permits, construction contract difficulties or disputes, adverse weather conditions, unavailability of subcontractors, negligence on the part of subcontractors or materials, labor disputes, litigation, unexpected subterranean archaeological or environmental conditions, or unanticipated or increased costs of construction]. Any of these events or occurrences, separately or in combination, could have a material adverse effect on the ability to complete the City Police Station component of the Series 2024 Project, or to complete it as planned within the expected budget and schedule and period of capitalized interest. See “SERIES 2024 PROJECT” above.

No Acceleration Upon Default
In the event of a default, there is no remedy of acceleration of the total Base Rental Payments due over the term of the Lease Agreement, and the Trustee is not empowered to sell a fee simple interest in the 22 4140-2813-5503.3
Property and use the proceeds of such sale to prepay the Series 2024 Bonds or pay debt service thereon.

Any suit for money damages would be subject to limitations on legal remedies against public agencies in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest as described below.

Teeter Plan Termination
The County has implemented the Teeter Plan as an alternate procedure for the distribution of certain property tax and assessment levies on the secured roll. Pursuant to its Teeter Plan, the County has elected to provide local agencies and taxing areas with full tax and assessment levies instead of actual tax and assessment collections. In return, the County is entitled to retain all delinquent tax and assessment payments, penalties, and interest. Thus, the County’s Teeter Plan may help protect Owners of the Bonds from the risk of delinquencies in the payment of property taxes. However, the County is entitled, and under certain circumstances could be required, to terminate its Teeter Plan with respect to all or part of the local agencies and taxing areas covered thereby. See APPENDIX A – “THE CITY OF SANTA BARBARA:

ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION – Assessed Valuation, Property Tax Levies and Collections – The Teeter Plan.”
Limitations on Remedies
The enforcement of any remedies provided in the Lease Agreement and the Indenture could prove both expensive and time consuming. Although the Lease Agreement provides that if the City defaults the Trustee may reenter the Property and re-let it, portions of the Property may not be easily recoverable, and even if recovered, could be of little value to others because of the Property’specialized nature. Additionally, the Trustee may have limited ability to re-let the Property to provide a source of rental payments under the Lease Agreement sufficient to pay the principal and interest on the Bonds so as to preserve the tax-exempt nature of interest on the Series 2024 Bonds. The Trustee is not obligated to re-let the Property in a manner so as to preserve the tax-exempt nature of interest on the Series 2024 Bonds. Furthermore, due to the governmental nature of the Property, it is not certain whether a court would permit the exercise of the remedy of re-letting with respect thereto.

Alternatively, the Trustee may terminate the Lease Agreement and proceed against the City to recover damages pursuant thereto. Any suit for money damages would be subject to limitations on legal remedies against public agencies in the State, including a limitation on enforcement of judgments against funds needed to serve the public welfare and interest.

The rights of the Owners of the Bonds are subject to certain limitations on legal remedies against cities and other governmental entities in the State, including but not limited to a limitation on enforcement against funds that are otherwise needed to serve the public welfare and interest. Additionally, the rights of the Owners of the Bonds may be subject to (i) bankruptcy, insolvency, reorganization, moratorium, or similar laws limiting or otherwise affecting the enforcement of creditors’ rights generally (as such laws are now or hereafter may be in effect), (ii) equity principles(including but not limited to concepts of materiality, reasonableness, good faith and fair dealing) and the possible unavailability of specific performance or injunctive relief, regardless of whether considered in a proceeding in equity or law, (iii) the exercise by the United States of America of the powers delegated to it by the Constitution, and (iv) the reasonable and necessary exercise, in certain exceptional situations, of the police powers inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose.

Under Chapter 9 of the Bankruptcy Code (Title 11, United States Code), which governs bankruptcy proceedings for public agencies, there are no involuntary petitions in bankruptcy. If the City were to file a petition under Chapter 9 of the Bankruptcy Code, the Owners, the Trustee, and the Authority could be 23 4140-2813-5503.3
prohibited or severely restricted from taking any steps to enforce their rights under the Lease Agreement and from taking any steps to collect amounts due from the City under the Lease Agreement.

Economic and Tourism Factors
Santa Barbara and the central coast of California are tourist destinations, and the City’s economy is directly affected by the number of visitors to the City. Numerous factors, many of which are beyond the control of the City, could have an adverse impact on the number of visitors to the City, including but not limited to, the national economy and levels of tourism, terrorist attacks, natural disasters, competition from other vacation and convention center destinations, sales taxes, energy costs and airline fares.

Bankruptcy of the City
In addition to the limitation on remedies contained in the Indenture, the rights and remedies provided in the Indenture and the Lease Agreement may be limited by and are subject to the provisions of federal bankruptcy laws and to other laws or equitable principles that may affect the enforcement of creditors’ rights. The City is a unit of State government and therefore is not subject to the involuntary procedures of the United States Bankruptcy Code (the “Bankruptcy Code”). However, pursuant to Chapter 9 of the Bankruptcy Code, the City may seek voluntary protection from its creditors for purposes of adjusting its debts. In the event the City were to become a debtor under the Bankruptcy Code, the City would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Among the adverse effects of such a bankruptcy might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the City or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the City; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have a priority of payment superior to that of Owners of Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the City’s debt (a “Plan”) without the consent of the Trustee or all of the Owners of Bonds, which Plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable.

In addition, the City could either reject the Lease Agreement or assume the Lease Agreement despite any provision of the Lease Agreement which makes the bankruptcy or insolvency of the City an event of default thereunder. In the event the City rejects the Lease Agreement, the Trustee, on behalf of the Owners of the Bonds, would have a pre-petition claim that may be limited under the Bankruptcy Code and treated in a manner under a Plan over the objections of the Trustee or Owners of the Bonds. Moreover, such rejection would terminate the Lease Agreement and the City’s obligations to make payments thereunder.

The Authority is a public agency and, like the City, is not subject to the involuntary procedures of the Bankruptcy Code. TheAuthority may also seek voluntary protection under Chapter 9 of the Bankruptcy Code. In the event the Authority were to become a debtor under the Bankruptcy Code, the Authority would be entitled to all of the protective provisions of the Bankruptcy Code as applicable in a Chapter 9 proceeding. Such a bankruptcy could adversely affect the payments under the Indenture. Among the adverse effects might be: (i) the application of the automatic stay provisions of the Bankruptcy Code, which, until relief is granted, would prevent collection of payments from the Authority or the commencement of any judicial or other action for the purpose of recovering or collecting a claim against the Authority; (ii) the avoidance of preferential transfers occurring during the relevant period prior to the filing of a bankruptcy petition; (iii) the existence of unsecured or court-approved secured debt which may have priority of payment superior to that of the Owners of the Bonds; and (iv) the possibility of the adoption of a plan for the adjustment of the Authority’s debt without the consent of the Trustee or all of the Owners of the Bonds, 24 4140-2813-5503.3
which plan may restructure, delay, compromise or reduce the amount of any claim of the Owners if the Bankruptcy Court finds that the Plan is fair and equitable. However, the bankruptcy of the Authority, and not the City, should not affect the Trustee’s rights under the Lease Agreement. The Authority could still challenge the assignment, and the Trustee and/or the Owners of the Bonds could be required to litigate these issues in order to protect their interests.

City Obligations
Except for its obligations under the Lease Agreement and under the 2019 Facility Lease with respect to the Santa Barbara Financing Authority Revenue Refunding Bonds (Airport Project), Series 2019 (the “2019 Airport Revenue Refunding Bonds”), the related lease payment obligations of which have to date been offset in full by the City’s Airport Fund, the City does not currently have any significant capital lease obligations payable from the City’s General Fund revenues, but does have other obligations related to retirement benefits and other post-employment benefits as well as certain other liabilities.

The 2019 Airport Revenue Refunding Bonds are limited obligations of the SBFA payable solely from, and secured solely by, revenues of the SBFA, consisting primarily of base rental payments to be received by the SBFA from the City under a 2019 Facility Lease and installment payments received by the SBFA from the City under an Installment Payment Contract, dated as of April 1, 2019, by and between the SBFA and the City. As provided in the 2019 Facility Lease with respect to the 2019 Airport Revenue Refunding Bonds, on any date upon which a base rental payment is due, the City’s obligation to pay such base rental payment is deemed satisfied to the extent that the City’s obligation to make installment payments has been satisfied as ofsuch date. SeeAPPENDIX A– “THE CITY OF SANTABARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION – Outstanding Indebtedness.” No Limitation on Incurring Additional Obligations
Neither the Lease Agreement nor the Indenture contains any limitations on the ability of the City to enter into other obligations that may constitute additional claims against its General Fund revenues. To the extent that the City incurs additional obligations, the funds available to make Base Rental Payments may be decreased. The City is currently liable on other obligations payable from General Fund revenues.

Natural Disasters
[The obligation to pay Base Rental Payments may be adversely affected if the Property is damaged or destroyed by natural disasters such as earthquake, flood, or wildfire. While the City currently maintains both earthquake insurance and flood insurance over City-owned facilities, City-wide, which include the Property (currently, an earthquake and flood limit of $50.9 Million per occurrence over a pool of insurable City property), there can be no assurance that any such proceeds will be sufficient to cover any or all claims, and the City has no obligation to continue either form of insurance through the remainder of the lease term.

The City is not obligated under the Lease Agreement to maintain earthquake insurance on the Property.

Damage or destruction to the Property caused by earthquake or flood could result in abatement of Base Rental Payments. Pursuant to and under the circumstances described in the Lease Agreement, the City is required to maintain or is permitted to self-insure for casualty, workers’ compensation, and standard comprehensive public entity liability. However, no assurance can be given that such insurance or selfinsurance at the time of any casualty or loss will be adequate to cover any claims that might arise.

The City may not self-insure for loss of use and occupancy of any portion of the Property (rental or business interruption insurance). See “SECURITYAND SOURCES OF PAYMENT FOR THE BONDS – Insurance” and APPENDIX C – “DEFINITIONS AND SUMMARY OF PRINCIPAL LEGAL DOCUMENTS – LEASE AGREEMENT – Insurance to be Maintained by the City.” 25 4140-2813-5503.3
Wildfires. The City is exposed to a variety of wildfire hazard conditions ranging from very low levels of risk along the coastal portions of the County, to extreme hazards in the inland and chaparral covered hillsides of the Santa Ynez Mountains and the Los Padres National Forest. Currently, fire hazard severity is a function of fuel conditions, historic climate, and topography. Population density or the number of structures in a particular region are not currently used to determine the fire hazard severity for a particular region. Areas throughout the County have been designated as having a “Very High Severity Hazard,” “High Hazard,” or “Moderate Hazard.” In the County, most of the area that has been designated as having a “Very High Severity Hazard” are located in the Santa Ynez Mountains and the Los Padres National Forest. These areas exhibit the combination of vegetative fuel, topography, and human proximity that contribute to an extreme fire hazard potential. The fact that an area is in a Moderate Hazard designation does not mean it cannot experience a damaging fire; it means only that the probability is reduced, generally because the number of days a year that the area has “fire weather” is less. Since 1990, 13 significant fires burned the southern parts of the County close to Goleta, Santa Barbara, and Carpinteria. Impact to the City’s General Fund has been minimal.

Santa Barbara has recently been impacted by wildfires in and around the City and County areas.

In November 2008, a wildfire consumed approximately 1,940 acres in nearby Montecito. As is often the case with Southern California wildfires, the wind caused the fire to hopscotch in places, sparing some homes while igniting others. The Montecito fire was relatively smaller than many of the wildfires that have occurred in Southern California in recent years, but its speed and ferocity took its toll in property damage, racing through the populated slopes of the Santa Ynez Mountains, exacerbated by 70 mph winds, combustible brush and narrow roads. The Montecito fire destroyed 151 residences in the City and 80 residences in the County and damaged others. At that time, Governor Schwarzenegger declared a state of emergency for Santa Barbara County.

On May 5, 2009, a wildfire started in Santa Barbara County, immediately exacerbated by high winds. The fire, referred to as Santa Barbara Jesusita Fire, burned for over a week, blackened approximately 8,733 acres, destroyed 80 homes, 1 commercial building and 79 outbuildings, damaged 15 homes and 2 outbuildings and injured 30 firefighters. Approximately 30,000 people were forced from their homes.

In May 2013, a wildfire originated in the Los Padres National Forest. The fire, referred to as the White Fire burned approximately 1,984 acres of recreational areas.

In July 2016, a wildfire originated in the Los Padres National Forest. The fire, referred to as the Sherpa Fire was fully contained on July 12, after having burned approximately 7,474 acres. In August 2016, a wildfire originated in an area southeast of Lake Cachuma in the range above the Santa Ynez River.

The fire, referred to as the Rey Fire was fully contained on September 16, after having burned approximately 32,606 acres. In September 2016, a wildfire originated in a canyon at the southern half of Vandenberg Air Force Base in the County. The fire, referred to as the Canyon Fire was fully contained on September 24, it had burned approximately 12,742 acres.

In July 2017, the Whittier Fire originated as a wildfire in the Santa Ynez Mountains, south of Lake Cachuma. Upon containment on July 28, the fire had burned approximately 18,430 acres and destroyed 16 homes. In December 2017, one of the largest Southern California wildfires which had originated in Ventura County spread into Santa Barbara County. The fire, referred to as Thomas Fire included mandatory evacuation orders for large swaths of the County, including Montecito and some parts of the City, with approximately 95,000 placed under mandatory evacuation. Upon containment on January 12, 2018, approximately 281,893 acres had burned.
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In July 2024, the Lake Fire grew to more than 37,000 acres (59 square miles) northeast of Santa Ynez. Six structures were damaged by the blaze, including an outbuilding on forest land and some recreational residences.

As in this case, the Fire Management Assistance declaration process is initiated when a state submits a request for assistance to the FEMA Regional Director at the time a “threat of major disaster” exists. The entire process is accomplished on an expedited basis and a FEMA decision is rendered in a matter of hours. The Fire Management Assistance Grant Program (FMAGP) provides a 75 percent Federal cost share and the State pays the remaining 25 percent for actual costs. Typically costs accrue to public safety, with fire suppression costs being the most significant. Eligible firefighting costs may include expenses for field camps; equipment use, repair and replacement; tools, materials, and supplies; and mobilization and demobilization activities. The recent fires have not caused material negative impacts on tax receipts to the City.

When wildfires scorch thousands of acres in Southern California, they destroy all vegetation on mountains and hillsides. As a result, when heavy rain falls in the winter, there is nothing to stop the rain from penetrating directly into the soil. In addition, waxy compounds in plants and soil that are released during fires create a natural barrier in the soil that prevents rainwater from seeping deep into the ground.

The result is erosion, mudslides, and excess water running off the hillsides often causing flash flooding as described below.

Flooding. Flood zones are identified by FEMA. FEMA designates land located in a low– to moderate-risk flood zone (i.e., not in a floodplain) and has less than a 1% chance of flooding each year as being within a Non-Special Flood Hazard Area (a “NSFHA”). [The Property is located in areas designed by FEMA as subject to low to moderate flood risk.] The City can make no representation that future maps will not be revised to include the Property within an area deemed subject to flooding. To the north of the City lies the Goleta Valley, which is bordered on the south by the coastal plateaus that encompass the Ellwood Mesa, Isla Vista, the University of California, Santa Barbara (UCSB), and the More Mesa areas.

The northern limit of the Goleta Valley is defined by the foothills of the Santa Ynez Mountains. To the east, the Goleta Valley extends to the hills near the western edge of the City. Most of the valley drains into the Goleta Slough, a coastal salt marsh located south of the City of Goleta. Several flat-floored stream valleys, including Glen Annie Creek, San Pedro Creek, Las Vegas Creek, San Jose Creek, and Maria Ygnacio Creek, convey water through the slough from the Santa Ynez Mountains.

The City most recently experienced severe flooding and mudslides in 2017 and 2018 and 2023. In 2017, heavy rains caused flooding, mud and debris slides, and downed trees. Evacuations included several apartment complexes. In addition to fast moving water in the canyons, burn areas associated with the Sherpa, Rey and Canyon fires of 2016 caused concern to emergency responders. The storm caused minimal damage to public property in the City. In 2018, record rainfall unleashed flash floods, mudslides and debris flow including downed trees in Santa Barbara County. As above, burn areas associated with the Thomas Fire were a concern. During that storm, many homes were lost or severely damaged and many lives were lost, all within the unincorporated area known as Montecito. Damage to public property in the City occurred primarily in two areas: Coast Village Road, a commercial corridor flanked to the north and south by Montecito; and Gibraltar Reservoir, which has and will continue to see increased siltation due to extraordinary runoff in part caused by the Thomas Fire’s removal of vegetation. The total damage to City property as a result of the combined fire and debris flow incidents is approximately $146.0 Million, of which $145.0 Million is the estimated damage to Gibraltar Reservoir. U.S. Route 101 was flooded with runoff water from Montecito Creek and was closed to traffic. Debris and mudflow blocked the railway for the main line of the Union Pacific Railroad through Montecito, California. In January 2023, another historic storm brought torrential rain, mudflows, flooding, evacuations, and damage to communities in the City and the County. Major flooding resulted in the closing of many roads in the City and the surrounding areas, 27 4140-2813-5503.3
and the closing of the airport for a period of time. Again, the City’s infrastructure was tested at its upper limits, but avoided any catastrophic failures. Hundreds of rescues were completed, with no deaths or injuries reported, and no homes or structures were damaged beyond repair.

The City is obligated under the Lease Agreement to maintain flood insurance on the Property. The occurrence of flooding to the Property could result in an abatement of Base Rental Payments and could have an adverse effect on the ability of the City to make timely Base Rental Payments.

Seismic Factors. Generally, seismic activity occurs on a regular basis in the State. Periodically, the magnitude of a single seismic event can cause significant ground shaking and potential damage to property located at or near the center of such seismic activity. The Property is located in a seismically active area of southern California. Significant ground shaking as a result of a local or regional earthquake is likely to occur during the term of the Lease Agreement. Due to the presence of groundwater and loose to medium dense silty sand, the site is considered to be susceptible to liquefaction in the event of a strong earthquake.

In addition, the City issusceptible to tsunami and seiche hazards. Atsunami is a sea wave generated by a submarine earthquake, landslide, or volcanic eruption. A seiche is another form of earthquake– or landslide-induced wave or oscillation that can be generated in an enclosed body of water such as a lagoon or harbor. [The Property is located within the tsunami run-up zone as identified in the City’s Master Environmental Assessment.] The proposed project consists of new infill development and would not substantially change the level of public exposure nor result in increased tsunami risks beyond existing levels. Impacts are considered less than significant. [The Property is not particularly subject to seiche hazards.]
Both the City and the County have a program requiring the retrofitting of certain property to meet higher standards of earthquake safety. Implementation of this program is ongoing and will continue for some years. There has been no major earthquake with an epicenter located in the County since August 1978; however, a number of faults located both within and outside of the County could become the site of quake activity impacting the County. The 1994 earthquake in Los Angeles County, which was centered in Northridge and was felt in the City, did not result in any deaths, injuries, or property damage in the County according to the County Office of Emergency Services. In December 2003, an earthquake registering 6.5 on the Richter scale occurred with an epicenter 11 miles northeast of San Simeon.

The City is not obligated under the Lease Agreement to maintain earthquake insurance on the Property. In the event of damage or destruction to the Property caused by perils for which the City does not provide insurance and is not required to provide insurance under the Lease Agreement, the City is not obligated to repair, replace, or reconstruct the Property. If an earthquake were to cause serious damage to the Property during any period when such facilities were not insured for earthquake damage, or if the proceeds of any earthquake insurance were insufficient to replace or repair the damaged Property, the City would be limited to its General Fund, reserves, and emergency grants, if any, in seeking to make appropriate repairs. Pending such repairs, the City’s obligation to make Base Rental Payments would be subject to abatement and rental interruption insurance proceeds likely would not cover losses caused by earthquakes.

The City will not be obligated to repair or restore the Property in the event of uninsured damage caused by an earthquake. See “RISK FACTORS – Limitations on Base Rental Payments; Abatement Risk.”] Hazardous Substances
The City knows of no existing hazardous substances which require remedial action on or near the Property. However, it is possible that such substances do currently or potentially exist and that the City is not aware of them.
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Owners and operators of real property may be required by law to remedy conditions of the property relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as “CERCLA” or the “Superfund Act,” is the most well-known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance whether or not the owner (or operator) has anything to do with creating or handling the hazardous substance. Further, such liabilities may arise not simply from the existence of a hazardous substance but from the method of handling it. All of these possibilities could significantly and adversely affect the operations and finances of the City.

Climate Change Issues
On July 2, 2024, the City Council adopted a resolution providing a climate goal for achieving carbon neutrality by 2035. The City’s Climate Action Plan (the “CAP”), entitled Together to Zero, serves as the City’s roadmap to achieve this goal through reducing GHG emissions across the City and new strategies to remove carbon from the atmosphere. The CAP has been developed based on substantial public engagement and over 10 public meetings as an update to the City’s original 2012 Climate Action Plan. By design, the implementation of Together to Zero is expected to reduce emissions from all municipal, residential, and commercial sectors within City bounds.

The CAP outlines a “10-year plan” of strategies that the City intends to undertake over the next decade given the best information we have today, and a “2-year plan” detailing the strategies either in process or quickly planned, for which funding and capacity currently exist. The City intends to review the CAP annually and adapt the priorities and timeline to current developments and best practices, and to review local greenhouse gas emissions at least every five years and incorporating the results into renewed commitments and strategies.

Cybersecurity
The City, like other public and private entities, relies on a large and complex technology environment to conduct its operations, and consequently faces the threat of cybersecurity incidents. Such incidents can result from unintentional events, or from deliberate attacks by unauthorized entities or individuals attempting to gain access to the City’s information technology systems to misappropriate assets or information or to cause operational disruption and damage. The City and its departments face cyber threats from time to time, including but not limited to hacking, viruses, malware, phishing, distributed denial-of-service, and other attacks on computers, networks, and systems. The City has not experienced a major cyber breach that resulted in a financial loss. The City currently purchases cyber insurance coverage.

The City contracts with Arctic Wolf for managed detection and response. Managed detection and response provide monitoring of City networks, endpoints, and cloud environments to help detect, respond, and recover from cyber-attacks as follows. Detection includes broad visibility into the City’s technology stack, 24/7 monitoring, and identification of advanced threats. Response includes investigations of suspicious activity, log retention for additional investigations that may be needed, and timely response to security incidents. Recovery from cyber-attacks includes guided remediation to validate the threat has been neutralized, root cause analysis, and recommendations to enhance the City’s multi-layered security posture.

In addition, the City contracts with Arctic Wolf for managed security awareness training for all employees. Training consists of regular focused micro-training to prepare employees, measure their understanding, and create a culture of security for the City and its departments. 29 4140-2813-5503.3
Other Financial Matters
Due to economic changes in the State and the United States as may be attributable to terrorist attacks, military movements, and responses thereto, it is possible that the general revenues of the City will decline, particularly those based on tourism. Such a reduction in revenues may include, but may not be limited to, a decline in transient occupancy tax and sales tax revenues, and the loss of vehicle license fee revenue. Such financial matters may have a detrimental impact on the City’s General Fund. See APPENDIX A – “THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION” for additional information.

CONSTITUTIONALAND STATUTORY LIMITATIONS

ON TAXES AND APPROPRIATIONS
Article XIIIA of the State Constitution
Article XIIIAof the State Constitution, known as Proposition 13, was approved by California voters in June 1978. Section 1(a) of Article XIIIA limits the maximum ad valorem tax on real property to one percent of “full cash value,” and provides that such tax shall be collected by the counties and apportioned according to State law. Section 1(b) of Article XIIIA provides that the one percent limitation does not apply to ad valorem taxes to pay interest or redemption charges on (1) indebtedness approved by the voters prior to July 1, 1978, (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after July 1, 1978, by two-thirds of the votes cast by the voters voting on the proposition, or (3) bonded indebtednessincurred by a school district or community college district for the construction, reconstruction, rehabilitation or replacement of school facilities or the acquisition or lease of real property for school facilities, approved by 55.0% of the voters of the district, but only if certain accountability measures are included in the proposition.

Section 2 of Article XIIIA defines “full cash value” to mean the county assessor’s valuation of real property as shown on the 1975-76 fiscal year tax bill or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred. The full cash value may be adjusted annually to reflect inflation at a rate not to exceed two percent per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction or may be reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that, notwithstanding any other law, local agencies may not levy any additional ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above. Such legislation further provides that each county will levy the maximum tax permitted by Article XIIIA, which is $1.00 per $100 of taxable value.

Since its adoption, Article XIIIA has been amended a number of times. These amendments have created a number of exceptions to the requirement that property be assessed when purchased, newly constructed or a change in ownership has occurred. These exceptions include certain transfers of real property between family members, certain purchases of replacement dwellings for persons over age 55 and by property owners whose original property has been destroyed in a declared disaster, and certain improvements to accommodate disabled persons and for seismic upgrades to property. These amendments have resulted in marginal reductions in the property tax revenues of the City.

Both the California State Supreme Court and the United States Supreme Court have upheld the validity of Article XIIIA.
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Article XIIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by local governments, certain other revenues of the State and most local governments are subject to an annual “appropriations limit” imposed by Article XIIIB of the State Constitution, which limits the amount of revenues that government entities are permitted to spend. Article XIIIB, approved by California voters in June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of each government entity applies to “proceeds of taxes,” which consist of tax revenues, state subventions and certain other funds, including proceeds from regulatory licenses, user charges or other fees to the extent that such proceeds exceed “the cost reasonably borne by such entity in providing the regulation, product or service.” “Proceeds of taxes” excludes tax refunds and some benefit payments such as unemployment insurance. No limit is imposed on appropriations of funds which are not “proceeds of taxes,” such as reasonable user charges or fees, and certain other non-tax funds.

Article XIIIB also does not limit appropriation of local revenues to pay debt service on bonds existing or authorized by January 1, 1979, or subsequently authorized by the voters, appropriations required to comply with mandates of courts or the federal government, appropriations for qualified capital outlay projects, and appropriation by the State of revenues derived from any increase in gasoline taxes and motor vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be exceeded in cases of emergency; however, the appropriationslimit for the three years following such emergency appropriation must be reduced to the extent by which it was exceeded, unless the emergency arises from civil disturbance or natural disaster declared by the Governor, and the expenditure is approved by two-thirds of the legislative body of the local government.

The State and each local government entity has its own appropriations limit. Each year the limit is adjusted to allow for changes, if any, in the cost of living, the population of the jurisdiction, and any transfer to or from another government entity of financial responsibility for providing services. Proposition 111 requires that each governmental entity’s actual appropriations be tested against its limit every two years. If the aggregate “proceeds of taxes” for the preceding two-year period exceeds the aggregate limit, the excess must be returned to such entity’s taxpayers through tax rate or fee reductions over the following two years.

For Fiscal Year 2023-24, permitted appropriations of “proceeds of taxes” are limited to $176,743,884, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2023-24 are expected to be within such limit. The City has estimated that for Fiscal Year 2024-25, permitted appropriations of “proceeds of taxes” are limited to $183,783,010, and the City’s budgeted appropriations from the proceeds of taxes for Fiscal Year 2024-25 Fiscal Year are within such limit.

Articles XIIIC and XIIID of the State Constitution
On November 5, 1996, the voters of the State approved Proposition 218 – the “Right to Vote on Taxes Act.” Proposition 218 added Articles XIIIC and XIIID to the State Constitution, which affect the ability of local governments, including cities, to impose new, or increase or extend existing, taxes, assessments, fees, and charges. Proposition 218 became effective on November 6, 1996, although application of some of its provisions was deferred until July 1, 1997.

Article XIIIC requires that all new local taxes be submitted to the electorate for approval before such taxes becomes effective. General taxes imposed for general governmental purposes of the City require a majority vote and special taxes imposed for specific purposes (even if deposited in the general fund) require a two-thirds vote. The voter approval requirements of Article XIIIC reduce the flexibility of local governments to deal with fiscal problems by raising revenue through new, extended, or increased taxes. No 31 4140-2813-5503.3
assurance can be given that the City will be able to raise taxes in the future to meet increased expenditure requirements.

Under Proposition 218, the City can only continue to collect taxes that were imposed after January 1, 1995, if they were approved by voters by November 6, 1998. Any tax levied by the City subject to such approval has been either authorized in accordance with Proposition 218 or discontinued.

Among other things, Section 3 of Article XIIIC states that “. . . the initiative power shall not be prohibited or otherwise limited in matters of reducing or repealing any local tax, assessment, fee or charge.” Absent the application of other legal authority, Section 3 of Article XIIIC could result in a local initiative measure to retroactively reduce or repeal any property related fees contributing to the City’s General Fund revenues.

Such initiative power could be subject to the limitations imposed on the impairment of contracts under the contract clause of the United States Constitution. Additionally, the Proposition 218 Omnibus Implementation Act enacted in 1997 to prescribe specific procedures and parameters for local jurisdictions in complying with Article XIIIC and Article XIIID (“SB 919”) provides that the initiative power provided for in Proposition 218 “shall not be construed to mean that any owner or beneficial owner of a municipal security, purchased before or after (the effective date of Proposition 218) assumes the risk of, or in any way consents to, any action by initiative measure that constitutes an impairment of contractual rights” protected by the United States Constitution. However, no assurance can be given that the voters within the City will not, in the future, approve an initiative that reduces or repeals local taxes, assessments, fees or charges or what limitations, if any, future court decisions may place on the initiative power granted under Article XIIIC.

The City raises a portion of its revenues from various local taxes which could be reduced by initiative under Article XIIIC. “Assessment,” “fee” and “charge” are not defined in Article XIIIC, and it is not clear whether the definitions of these terms in Article XIIID (which are generally property-related, as described below) would be applied to Article XIIIC. However, on July 24, 2006, the California Supreme Court ruled in Bighorn-Desert View Water Agency v. Virjil (Kelley) that charges for ongoing water delivery are property related fees and charges within the meaning of Article XIIID and are also fees or charges within the meaning of Section 3 of Article XIIIC.

Article XIIID contains several provisions making it generally more difficult for local agencies, such as the City, to levy and maintain “assessments” for local services and programs. “Assessment” is defined to mean any levy or charge upon real property for a special benefit conferred upon real property, and expressly includes standby charges. Article XIIID also includes new provisions affecting “fees” and “charges,” defined for purposes of Article XIIID to mean “any levy other than an ad valorem tax, a special tax, or an assessment, imposed by a county upon a parcel or upon a person as an incident of property ownership, including a user fee or charge for a property related service.” All new and existing property related fees and charges must conform to specific requirements and prohibitions set forth in Article XIIID.

Further, before any property related fee or charge may be imposed or increased, written notice must be given to the record owner of each parcel of land affected by such fee or charge. The City must then hold a hearing upon the proposed imposition or increase, and if written protests against the proposal are presented by a majority of the owners of the identified parcels, the City may not impose or increase the fee or charge.

Moreover, except for fees or charges for sewer, water and refuse collection services (or fees for electrical and gas service, which are not treated as “property related” for purposes of Article XIIID), no property related fee or charge may be imposed or increased without majority approval by the property owners subject to the fee or charge, or, at the option of the local agency, two-thirds voter approval by the electorate residing in the affected area.
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Proposition 26
Proposition 26, a State ballot initiative aimed at restricting regulatory fees and charges, was approved by the California voters on November 2, 2010. Proposition 26 broadens the definition of “tax” in Article XIIIC of the California Constitution to include levies, charges and exactions imposed by local governments, except for charges imposed for benefits or privileges or for services or products granted to the payor (and not provided to those not charged) that do not exceed their reasonable cost; regulatory fees that do not exceed the cost of regulation; fees for the use of local governmental property; fines and penalties imposed for violations of law; real property development fees; and assessments and property-related fees imposed under Article XIIID of the California Constitution. California local taxes are subject to approval by two-thirds of the voters voting on the ballot measure for authorization. Proposition 26 applies to charges imposed or increased by local governments after the date of its approval.

Proposition 1A of 2004
City services are funded with money from local taxes, fees and user charges, State aid and other sources. Property tax, sales taxes, transient occupancy tax, utility user’s tax, business license tax, parking revenues and development-related fees constitute the majority of City revenue sources.

On November 3, 2004, the voters of the State approved Proposition 1A (“Proposition 1A of 2004”).

Proposition 1A of 2004 amended the State Constitution to, among other things, reduce the Legislature’s authority over local government revenue sources by placing restrictions on the State’s access to local governments’ property, sales, and vehicle license fee (VLF) revenues as of November 3, 2004. Pursuant to Proposition 1A of 2004, the State is able to borrow up to 8.0% of local property tax revenues but only if the Governor proclaims such action is necessary due to a severe State fiscal hardship and two-thirds of both houses of the State Legislature approve the borrowing. Any amounts borrowed are required to be repaid within three years. Proposition 1Aof 2004 also permitsthe State to borrow from local property tax revenues for no more than two fiscal years within a period of 10 fiscal years, and only if previous borrowings have been repaid. In addition, the State cannot reduce the local sales tax rate or restrict the authority of the local governments to impose or change the distribution of the Statewide local sales tax. Proposition 1A of 2004 generally prohibits the State from mandating activities on cities, counties, or special districts without providing the funding needed to comply with the mandates, and if the State does not provide funding for the activity that has been determined to be mandated, the requirement on cities, counties, or special districts to abide by the mandate is suspended. Proposition 1A of 2004 also expanded the definition of what constitutes a mandate to encompass State action that transfers to cities, counties, and special districts financial responsibility for a required program for which the State previously had partial or complete responsibility. The State mandate provisions of Proposition 1A of 2004 do not apply to schools or community colleges or to mandates relating to employee rights.

Proposition 22
On November 2, 2010, California voters approved Proposition 22 , a ballot initiative for a constitutional amendment to eliminate the State’s ability to borrow or shift local revenues and certain State revenues that fund transportation programs. (“Proposition 22”). Proposition 22 restricts the State’s authority over a broad range of tax revenues, including property taxes allocated to cities (including the City), counties, special districts and redevelopment agencies, VLF, State excise taxes on gasoline and diesel fuel, the State sales tax on diesel fuel, and the former State sales tax on gasoline. It also makes a number of significant other changes, including restricting the State’s ability to use motor vehicle fuel tax revenues to pay debt service on voter-approved transportation bonds. 33 4140-2813-5503.3
Proposition 22 supersedes certain provisions of Proposition 1A of 2004. See “—Proposition 1A of 2004” above. In addition, Proposition 22 generally eliminates the State’s authority to temporarily shift property taxes from cities, counties, and special districts to schools, temporarily increase school and community college district’s share of property tax revenues, prohibits the State from borrowing or redirecting redevelopment property tax revenues or requiring increased pass-through payments thereof, and prohibits the State from reallocating VLF revenues to pay for State imposed mandates. In addition, Proposition 22 requires a two-thirds vote of each house of the State Legislature and a public hearing process to be conducted in order to change the amount of fuel excise tax revenues shared with cities and counties.

Proposition 22 prohibits the State from borrowing sales taxes or excise taxes on motor vehicle fuels or changing the allocations of those taxes among local government except pursuant to specified procedures involving public notices and hearings. In addition, Proposition 22 requires that the State apply the formula setting forth the allocation of State fuel tax revenues to local agencies revert to the formula in effect on June 30, 2009.

Initiative, Referendum and Charter Amendments
Under the State Constitution, the voters of the State have the ability to initiate legislation and require a public vote on legislation passed by the State Legislature through the powers of initiative and referendum, respectively. For example, Article XIIIA, Article XIIIB and Articles XIIIC and XIIID and Proposition 26 were adopted pursuant to the State’s constitutional initiative process. Under the City Charter, the voters of the City can restrict or revise the powers of the City through the approval of a charter amendment. From time to time, other initiative measures could be adopted, or legislative measures could be approved by the Legislature, which may place limitations on the ability of the City to increase revenues or to increase appropriations. Such measures may further affect the City’s ability to collect taxes, assessments or fees and charges, which could have an effect on revenues. The City is unable to predict whether any such initiatives or charter amendments might be submitted to or approved by the voters, the nature of such initiatives or charter amendments, or their potential impact on the City.

THE CITY
The City of Santa Barbara (the primary government) was incorporated on August 26, 1850. The City is a charter city under the laws of the State and operates under a Council-Administrator form of government. The City Council consists of seven members, with six members elected by district (each district shall elect one member), and an at-large, elected Mayor, each of whom, including the Mayor, shall have the right to vote on all questions coming before the City Council. Terms of office for Council Members are overlapping terms of four years. The current Mayor shall continue in office for five years and until his or her successor is elected and qualified following the November 2026 election, with an election of Mayor to be held each fourth year thereafter. General Municipal Elections for the election of officers and for such other purposes as the City Council may prescribe are held in the City on the first Tuesday after the first Monday in November in each even-numbered year.

The current City Charter was adopted on May 2, 1967, and provides for the following services:
public safety (police and fire), construction and maintenance of highways and streets, sanitation, culture and recreation, public improvements, planning, zoning, and general administration. The City’s enterprise and fiduciary funds, operated in a manner similar to a private business, include water, wastewater, airport, parking, golf and waterfront. See APPENDIX A – “THE CITY OF SANTA BARBARA: ECONOMIC, DEMOGRAPHIC AND FINANCIAL INFORMATION.”
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THE AUTHORITY
The Finance Authority of the City of Santa Barbara was organized pursuant to the provisions of the Act and a Joint Exercise of Powers Agreement, dated as of November 1, 2023, by and between the City and the California Statewide Communities Development Authority, a joint exercise of powers authority organized and existing under and by virtue of the laws of the State (“CSCDA”). The Authority was organized for the purpose of providing an entity which can assist in providing financing for purposes which are authorized under the Joint Powers Act. The Authority has no financial liability to the Owners of the Series 2024 Bonds with respect to the payment the Base Rental Payments by the City or with respect to the performance by the City of the other agreements and covenants it is required to perform.

The Authority functions as an independent entity and its policies are determined by its Governing Board, which is comprised of the members of the City Council. The Authority has no employees and all staff work is done by the City staff or by consultants to the Authority. The City Administrator of the City has been designated as Executive Director of the Authority and the Finance Director of the City has been designated as Treasurer of the Authority. The Treasurer of the Authority has charge of, handles, and has access to any property of the Authority, has custody of all the money of the Authority from whatever source, and is required to perform the other functions of Treasurer of the Authority as set forth in the Act.

The Authority, the City and CSCDA are each separate and distinct legal entities, and the debts and obligations of any one such entity are not debts or obligations of the other entity.

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 AUTHORITY HAS NO TAXING POWER. NEITHER THE PAYMENT OF THE PRINCIPAL OF NOR INTEREST ON THE BONDS CONSTITUTES A DEBT, LIABILITY OR OBLIGATION OF THE CITY OR CSCDA.

As described in this Official Statement with respect to the 2019 Airport Revenue Refunding Bonds, the City is a member of an additional joint-powers authority, the Santa Barbara Financing Authority, which is the issuer of the 2019 Airport Revenue Refunding Bonds, and a joint powers authority issuer unrelated to the Authority. That financing authority remains active with respect to its obligations relating to the 2019 Airport Revenue Refunding Bonds but has otherwise ceased its operations following the dissolution of redevelopment agenciesin California, thereby limiting the powers and legal authority of one of its members.

Santa Barbara City CouncilSeptember 10, 2024

Santa Barbara City Council
September 10, 2024