Agenda packet — South Lake Tahoe City Council, August 9, 2022 (part 2 of 4)

4. Please describe the expected outcomes of your project. Outcomes are the observable effects of your activities on the beneficiaries of the project.

Community members who attend the quarterly presentation/meetings will be more aware of substance use issues and services available in the community.

Students who participate in prevention program will be less likely to use drugs, including alcohol.

Those who enroll in treatment will complete their treatment and remain clean and sober for at least six months.
377
EXHIBIT C:

BUDGET
378
Organization Name:

Project Title:

Contact Name at Organization:

Estimated
Expenditures Description/Explanation of Expense
Salaries and wages $ 37,004.40 Subtance Abuse Counselor salary (9 mos July 1, 2022 - March 31, 2023) and C Fringe Benefits $ 11,600.88 Agency benefit percententage of 31.35% Subtotal $ 48,605.28
Equipment 0
Travel $394.72 1500 Mileage @ .625 for outreach, presentation, etc. $542.78 from co Materials and Supplies/Training $1,000.00 Program supplies as needed, training as necessary Contractual 0
Other 0
Subtotal $ 1,394.72
Indirect costs
TOTAL $ 50,000.00
Tahoe Youth and Family Services
CSLT Cannabis Revenue Grant
City of South Lake Tahoe
Cannabis Revenue Grant Program, Individual Project Budget 379
EXHIBIT D:

MID-YEAR REPORT TEMPLATE
380
City of South Lake Tahoe

CANNABIS REVENUE GRANT PROGRAM

MID-YEAR REPORT
Due each November 31 and April 31 during the Grant Term until within six months of Closeout Date, when a Closeout Report will be due.

Project Name:

Grant Recipient Organization:

Amount Awarded:

Amount Expensed to date:

Year Awarded:

Closeout Date:

Primary Contact Name:

Primary Contact Title/Role:

Primary Contact Email Address:

Date of Submission of Report:

1. What percent of funds have been expended?

2. Please provide a narrative description of where you are at in expending the grant award.

3. Please list any challenges you are encountering with the project as originally described in the Application, Scope of Work and Budget line item descriptions.

4. If possible, please provide digital photos of the project, which can be used in city promotional or outreach opportunities, with descriptive captions and attributions.

Email your report to [email protected]
Or send to:

City of South Lake Tahoe City Hall
Attn: Grant Program
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Or bring to the Finance drop box at the above address.
381
EXHIBIT E:

CLOSEOUT REPORT TEMPLATE
382
City of South Lake Tahoe

CANNABIS REVENUE GRANT PROGRAM

CLOSEOUT REPORT
Due one month after Closeout Date, specified on the Scope of Work OR
Due by March 31 following a previous year’s award if seeking a new grant.

Project Name:

Grant Recipient Organization:

Amount Awarded:

Amount Expensed:

Year Awarded:

Closeout Date:

Primary Contact Name:

Primary Contact Title/Role:

Primary Contact Email Address:

Date of Submission of Report:

1. Please describe how your project was impactful to our community (up to about half a page, single spaced).

2. Please provide a narrative description of how the previous year’s award was spent by your organization and if cost share or match was used to complete the project. In addition, please provide an Excel spreadsheet with your original budget and actual expenses, and provide backup documentation of listed expenses as one PDF attachment to this report (e.g. copies of receipts, timecards, etc.).

3. Please list any changes to the project as approved by the Grant Manager, with dates.
383

4. Please summarize how the project was successful at mitigating the potential negative impacts of the cannabis industry. Include numerical metrics/measurable impacts where possible.

5. Please describe how the project was able to advance one or more of the City’s Strategic Priorities. Include numerical metrics/measurable impacts where possible.
https://www.cityofslt.us/DocumentCenter/View/15828/City-of-SLT- Strategic-Planweb-version

6. If possible, please provide digital photos of the project, which can be used in city promotional or outreach opportunities, with descriptive captions and attributions.

Submission Checklist:
 Closeout Report in MS Word
 Budget and Actual Expenses in MS Excel
 Backup documentation of expenses in one PDF
 Individual photos files, or photos pasted into an MS Word doc, with descriptive captions and attributions
Email your report to [email protected]
Or send to:

City of South Lake Tahoe City Hall
Attn: Grant Program
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Or bring to the Finance drop box at the above address.
384

GRANT AGREEMENT BETWEEN THE CITY OF SOUTH LAKE TAHOE

AND TAHOE COALITION FOR THE HOMELESS
Cannabis Revenue Grant Program
This Grant Agreement (“Agreement”) is dated for reference this [_____] of [_________], 2022, by and between the CITY OF SOUTH LAKE TAHOE, a municipal corporation, hereinafter referred to as “City” and Tahoe Coalition for the Homeless a California 501(c)(3) organization hereinafter referred to as “Grantee,” who agree as follows:

1. Grant Funds. The City agrees to provide Grantee with a sum not to exceed Fifty Thousand Dollars ($50,000) (“Grant Funds”) to be used solely for the services described in Grantee’s application, attached hereto as Exhibit A, and Scope of Work, attached hereto as Exhibit B (“Grant Services”) in accordance with the terms and conditions set forth in this Agreement. Grantee shall expend the Grant Funds in accordance with the Budget, attached hereto as Exhibit C, by the Closing Date specified on the Scope of Work, and shall obtain the written approval of City at least fifteen (15) days before transferring expenditures from one line item to another within the Budget. At the termination of the Agreement, Grantee must return to City any unexpended Grant Funds.

2. Disbursement Procedures. Grant Funds shall be disbursed to Grantee as follows:

A. The City shall make all disbursements of Grant Funds pursuant to this Section by check payable to Grantee, sent via U.S. mail. The City shall make disbursements of the first 90 percent (90%) of Grant Funds upon receipt of this executed Agreement.

B. Ten percent (10%) of Grant Funds will be withheld until completion of Grant Services and receipt, review, and approval by City of the Closeout Report, due by Closing Date. The City will disburse the remaining ten percent (10%) of Grant Funds within 30 days of receipt of a Closeout Report meeting the requirements of this Agreement.

3. Grant Services.

A. Grantee shall perform the services described in the Grant Application, and the Scope of Work. Grantee shall obtain the written approval of City at least fifteen (15) days before making changes to the services to be provided pursuant to this Agreement.

B. Grantee shall provide a project Budget, Exhibit C, detailing the proposed use of Grant Funds that will support the performance of the project.

C. Grantee shall use Grant Funds only to provide the Grant Services authorized by this Agreement and any Grant Funds used for any other purpose must be returned 385
to the City.

D. Any costs incurred by Grantee in excess of the authorized Grant Funds shall be at its sole cost and expense.

4. Grant Term. This Agreement shall commence on the date it is fully executed and shall continue in full force and effect for a term as defined in the Scope of Work.

5. Termination. In event of Grantee’s noncompliance with any provisions of this Agreement, the City may cancel, terminate, or suspend this Agreement and withhold any disbursement of remaining Grant Funds.

6. Hold Harmless: Grantee hereby irrevocably and unconditionally agrees to defend, indemnify, and hold harmless the City and its officials, employees, agents, and volunteers from and against any and all claims, losses, damages, expenses (including reasonable attorneys’ fees and costs), and liabilities directly, indirectly, wholly, or partially arising from or related to any act or omission of Grantee or its officers, directors, trustees, employees, or agents in applying for or accepting the Grant, in expending or applying the Grant, in furtherance of the Grant Services, or in carrying out the program to be funded or financed by this Grant. This provision shall survive termination of this Agreement.

7. Official Notices. All notices or instruments required to be given or delivered by law or this Agreement shall be in writing and shall be effective upon receipt thereof and shall be by personal service or delivered by depositing the same in any United States Post Office, registered or certified mail, postage prepaid, addressed to:

If to City:

City Manager
1901 Lisa Maloff Way
South Lake Tahoe, CA 96150
If to Grantee:

Cheyenne Purrington
Executive Director
Tahoe Coalition for the Homeless
1137 Emerald Bay Road
South Lake Tahoe, CA 96150
Either party may change its address for receiving notices by giving written notice of such change to the other party in accordance with this section.

8. Mid-Year Report. Starting November 31, 2022, Grantee shall provide the City with a MidYear report summarizing all expenditures of the Grant Funds to date, including any deviations from the Scope of Work and Budget, and a concise narrative report stating accomplishments to date. Every six months thereafter, Grantee shall submit a Mid-Year Report. Mid-Year Report Template is provided in Exhibit D.

9. Closeout Report. Grantee shall provide the City with a Closeout Report summarizing all expenditures of the Grant Funds during the entirety of the grant term, including any deviations from the Scope of Work and Budget and a detailed narrative report stating what was accomplished with the Grant Funds. The Closeout Report should include copies of 386
proof of expenditures as attachments. Closeout Report Template is provided in Exhibit E.

10. Record Retention and Access. The City, or any of its duly authorized representatives, shall have access to any books, documents, papers, and records of Grantee that are directly pertinent to this Agreement for undertaking an audit and/or examination, and/or for preparing excerpts, and/or transcriptions. Grantee shall maintain all required records for five (5) years after City makes final payments and all other pending matters are closed.

11. Relationship of the Parties. It is understood that this is an Agreement by and between independent entities and is not intended to and shall not be construed to create the relationship of agent, servant, employee, partnership, joint venture or association, or any other relationship whatsoever.

12. Conflict of Interest. Grantee warrants and represents that no persons under its employ who presently exercise any functions or responsibilities in connection to this Agreement have any personal financial interests with the City and will not enter into any contract or agreement during the performance of this Agreement that will create a conflict of interest with Grantee’s duties to City under this Agreement.

13. Non-discrimination. Grantee will provide its services without regard to race, religion, color, national origin, ancestry, disability, medical status, age, sex or sexual orientation of any person.

14. Acknowledgement of City. Grantee shall acknowledge the support of City, where appropriate, in written documents, outreach materials, and informational materials regarding the receipt of funds under this Agreement.

15. Successors and Assigns. Grantee shall not, either directly or indirectly assign, transfer, subcontract or delegate all or any portion of this Agreement or any rights, duties or obligations of Grantee hereunder without the prior written consent of City. This Agreement shall not, nor shall any interest herein, be assignable as to the interest of Grantee involuntarily or by operation of law without the prior written consent of City. A change of ownership or control of Grantee or a sale or transfer of substantially all of the assets of Grantee shall be deemed an assignment for purposes of this Agreement.

16. Law Governing. This Agreement shall in all respects be governed by the law of the State of California without regard to its conflicts of law rules. Litigation arising out of or connected with this Agreement shall be instituted and maintained in the courts of El Dorado County, South Lake Tahoe Division, in the State of California, and the parties consent to jurisdiction over their person and over the subject matter of any such litigation in such courts, and consent to service of process issued by such courts.

17. Waiver. Waiver by either party of any default, breach or condition precedent shall not be construed as a waiver of any other default, breach or condition precedent or any other right hereunder.
387

18. Compliance with Laws. Grantee will comply with all statutes, regulations and ordinances in the performance of all services under this Agreement.

19. Entire Agreement. This Agreement, including all Exhibits, constitutes the sole agreement of the parties hereto with regard to the matters covered in this Agreement, and correctly states the rights, duties and obligations of each party as of the date of this Agreement. Any prior agreements, promises, negotiations or representations between the parties not expressly stated in this Agreement are not binding.

20. Severability Clause. Should any provision of this Agreement ever be deemed to be legally void or unenforceable, all remaining provisions shall survive and be enforceable.

21. Ambiguity. The parties acknowledge that this is a negotiated agreement, that they have had the opportunity to have this Agreement reviewed by their respective legal counsels and that the terms and conditions of this Agreement are not to be construed against any party on the basis of such party's draftsmanship thereof.

22. Organization Authorization. Grantee is a nonprofit grantee, duly organized and validly existing and in good standing under the laws of the jurisdiction in which it was formed.

Grantee has established and maintains valid nonprofit status under Section 501(c) (3) of the United States Internal Revenue Code of 1986, as amended, and all rules and regulations promulgated under such section. Grantee has been duly authorized by all necessary action the execution, delivery and performance of this Agreement. Grantee has duly executed and delivered this Agreement and this Agreement constitutes a legal, valid and binding obligation of Grantee, enforceable against Grantee in accordance with the terms of this Agreement.

23. California Public Records Act. Grantee acknowledges and agrees that this Agreement, including any attachments and/or exhibits thereto, is a public record and subject to the disclosure requirements of the California Public Records Act, California Government Code Section 6250 et. seq.

24. Exhibits. The following exhibits are attached hereto and incorporated herein by reference:

Exhibit A, “Grant Application”
Exhibit B, “Scope of Work”
Exhibit C, “Budget”
Exhibit D, “Mid-Year Report Template”
Exhibit E, “Closeout Report Template”.
[Signatures on Next Page]
388
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year shown below the name of each of the parties.

CITY OF SOUTH LAKE TAHOE, TAHOE COALITION FOR THE

HOMELESS
a municipal corporation
By: By:

Joe Irvin Cheyenne Purrington
City Manager Executive Director
Date: Date:

APPROVED AS TO FORM:

Heather L. Stroud
City Attorney
ATTEST:

Susan Blankenship
City Clerk
389
EXHIBIT A:

GRANT APPLICATION
390
Page | 1

CANNABIS REVENUE GRANT PROGRAM
Application
Funded by City of South Lake Tahoe’s Cannabis Community Benefit Fee Revenue Applicant Organization’s Legal
Name:

Check one: (note: opportunity is not open to forprofit businesses) ☐Nonprofit organization
☐Local School
☐Government Agency
☐Other: __________________________________
Applicant Principal Place of Business: Physical Location within the city of South Lake Tahoe:

Primary Contact Name: Primary Contact Email Address:

Primary Contact Title/Role: Primary Contact Phone Number:

City of South Lake Tahoe Strategic
Priority Addressed by the Project:
☐Built Environment
☐Recreation & Equitable Access
☐Economic Development
☐Continuous Improvement
☐Community For All
Grant Amounts. The City of South Lake Tahoe
Cannabis Revenue Grant Program will offer grants
of $1,000 to $50,000. Awarded grant amounts may
depend on the number of applications received
and the total grant amounts requested.

I am seeking a grant in the amount of $
391
Page | 2
Application Questions:

Please refer to the City of South Lake Tahoe Cannabis Revenue Grant Program Process & Guidelines for additional details.

1. Please provide a description of how this funding would be used. (up to 500 characters)

2. The City’s Strategic Priorities are Built Environment, Recreation and Equitable Access, Community for All, Economic Development and Continuous Improvement. Please describe how funding could help the City advance one or more of its strategic priorities (mark N/A for priorities that not applicable). The Strategic Plan can be found here:
https://www.cityofslt.us/DocumentCenter/View/15828/City-of-SLTStrategic-Plan-web-version. a. Built Environment (up to 1000 characters)
392
Page | 3
b. Recreation and Equitable Access(up to 1000 characters) c. Community for All (up to 1000 characters)
393
Page | 4
d. Economic Development (up to 1000 characters)
e. Continuous Improvement (up to 1000 characters)
394
Page | 5

3. Please describe how this funding could be used to help mitigate the potential impacts of the cannabis industry. (up to 1250 characters)
Certifications and Authorizations: Applicant must certify in good faith to all the below by initialing the box next to each one. By initialing the box to the left of the statement, I certify that:

I have read the statementsincluded in this form, together with the document titled City of South Lake Tahoe Cannabis Revenue Grant Program Process & Guidelines, and I understand them.

My organization is a localschool, non-profit organization, or government agency that conducts activities within South Lake Tahoe city limits and/or that directly serves the South Lake Tahoe community.

I will be using the Cannabis Revenue Grant Funds for projects/initiatives focused on mitigating the potential impacts of the cannabis industry in South Lake Tahoe and promoting the priorities of the City’s Strategic Plan.

I recognize that I may be required to provide additional documentation.

I accept that, in the interest of transparency, the City of South Lake Tahoe will post a list on the City’s website showing all grant recipients and the amount received. 395
Page | 6
Program Compliance:

Is your organization a past year recipient of this funding? If yes, have you complied with the annual reporting requirement? Supporting Documentation: Please check the box to indicate if you have attached:
☐ An IRS Form W-9 showing your taxpayer ID?
☐ An IRS letter showing tax exempt status?
☐ A screen shot of the Secretary of State Business Search Website showing ACTIVE status (not required for public agencies)?
By Signing Below, You Make the Following Representations:
• I have read the statements included in this form and in the Process & Guidelines, and I understand them.
• I am not engaged in any activity that is illegal under federal, state or local law. • I further certify that the information provided in this application and the information provided in all supporting documents and forms is true and accurate in all material respects.

Name of Applicant (Print Name) Signature of Applicant
Title of Applicant Date Signed
Additional Information:

Please print, sign, scan, upload and email the application form with the supporting documentation, to:

[email protected]
OR
Bring to the Finance drop-box at the City Hall building or mail to the listed address:

City of South Lake Tahoe City Hall
Attn: Grant Program
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
To be considered in the annual round of Grant Applications, your materials must be in by 5:00 p.m. on May 15. Please know that the City’s intent is to consider grants for as many businesses as possible who provided a complete packet before the submittal deadline. The grant committee will make recommendations to the City Council no later than June 30th annually.

Funding for the City of South Lake Tahoe Cannabis Revenue Grant Program was approved by the City of South Lake Tahoe City Council on March 15th, 2022. The purpose of the Cannabis Revenue Grant Program is to support South Lake Tahoe-based organizations who work to mitigate potential impacts of the cannabis industry in South Lake Tahoe and to promote the priorities of the City Strategic Plan. 396
Certificate Of Completion
Envelope Id: B6E8A1D19B1545EC8890F1F6622D4478 Status: Completed Subject: Cannabis Revenue Grant Application - TCH.pdf
Source Envelope:

Document Pages: 6 Signatures: 1 Envelope Originator:

Certificate Pages: 1 Initials: 0 Cheyenne Purrington
AutoNav: Enabled
EnvelopeId Stamping: Disabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
[email protected]
IP Address: 20.84.212.79
Record Tracking
Status: Original
5/15/2022 10:10:40 AM
Holder: Cheyenne Purrington
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Cheyenne Purrington
[email protected]
Executive Director
Tahoe Coalition for the Homeles
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Signed by link sent to
[email protected]
Using IP Address: 184.53.49.31
Sent: 5/15/2022 10:10:40 AM
Viewed: 5/15/2022 10:11:04 AM
Signed: 5/15/2022 10:12:05 AM
Freeform Signing
Electronic Record and Signature Disclosure:

Not Offered via DocuSign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 5/15/2022 10:10:40 AM
Certified Delivered Security Checked 5/15/2022 10:11:04 AM Signing Complete Security Checked 5/15/2022 10:12:05 AM Completed Security Checked 5/15/2022 10:12:05 AM
Payment Events Status Timestamps
397
Certificate Of Completion
Envelope Id: 363B1A7D72A940A3A470404969146119 Status: Completed Subject: fw9.pdf
Source Envelope:

Document Pages: 6 Signatures: 1 Envelope Originator:

Certificate Pages: 1 Initials: 0 Cheyenne Purrington
AutoNav: Enabled
EnvelopeId Stamping: Disabled
Time Zone: (UTC-08:00) Pacific Time (US & Canada)
[email protected]
IP Address: 20.99.133.47
Record Tracking
Status: Original
5/15/2022 10:22:56 AM
Holder: Cheyenne Purrington
[email protected]
Location: DocuSign
Signer Events Signature Timestamp
Cheyenne Purrington
[email protected]
Executive Director
Tahoe Coalition for the Homeles
Security Level: Email, Account Authentication
(None)
Signature Adoption: Pre-selected Style
Signed by link sent to
[email protected]
Using IP Address: 184.53.49.31
Sent: 5/15/2022 10:22:57 AM
Viewed: 5/15/2022 10:23:14 AM
Signed: 5/15/2022 10:23:35 AM
Freeform Signing
Electronic Record and Signature Disclosure:

Not Offered via DocuSign
In Person Signer Events Signature Timestamp
Editor Delivery Events Status Timestamp
Agent Delivery Events Status Timestamp
Intermediary Delivery Events Status Timestamp
Certified Delivery Events Status Timestamp
Carbon Copy Events Status Timestamp
Witness Events Signature Timestamp
Notary Events Signature Timestamp
Envelope Summary Events Status Timestamps
Envelope Sent Hashed/Encrypted 5/15/2022 10:22:57 AM
Certified Delivered Security Checked 5/15/2022 10:23:14 AM Signing Complete Security Checked 5/15/2022 10:23:35 AM Completed Security Checked 5/15/2022 10:23:35 AM
Payment Events Status Timestamps
398
EXHIBIT B:

SCOPE OF WORK
399
City of South Lake Tahoe

CANNABIS REVENUE GRANT PROGRAM
AWARDEE SCOPE OF WORK - Revision #2
Please submit this Scope of Work detailing the timeline and tasks as described in the Grant Application, providing additional detail as appropriate. Please be concise.

Project Title:

Awardee Organization: Tahoe Coalition for the Homeless (TCH) Award Date: June 2022
Closing Date: February 1, 2023

1. Please provide a description of the project, in alignment with the project as described in the Grant Application. (Complexity will vary among projects. Please keep to around one page).

TCH will use ~50% of our direct costs (~$20,833) to support the activities outlined in our MOU and Operating Agreement with the City of South Lake Tahoe, as referenced in Housing Action Item #6. These activities include provision of street outreach, navigation, and supportive services to unhoused clients and on-site services to tenants in our supportive housing properties.

Our team coordinates closely with City staff members in order to comply with the expectations outlined in the Operating Agreement and MOU. We completed a major renovation at Bird’s Nest, and passed the SRO inspections standards for Bird’s Nest and Red Lodge. These activities require significant resources in order for TCH to fulfill and are currently unfunded by the City. Grant funding from the Cannabis Revenue program will offset about 5% of our expenses associated with the City’s Operating Agreement expectations.

TCH will use ~25% of our direct funds (~$10,416) to support activities outlined in Mental Health and Homelessness Action Items #2 and #3. These include TCH’s participation in the Continuum of Care (CoC) and our ongoing partnership in the STACS program, which are all currently unfunded by the City.

TCH is the primary provider of shelter, housing, and services in South Lake Tahoe, and is actively developing a robust system of coordination among local partners addressing mental health crises, substance use disorders, and homelessness. We work closely with SLT Police, Fire, and Medical responders, and the County’s Behavioral Health team to prevent and resolve mental health crises experienced by vulnerable unhoused community members.
2022 Cannabis Revenue Grant Program of the City of South Lake Tahoe 1 of 3 400
TCH will utilize ~25% of our direct funds (~$10,416) to help fulfill Public Safety Action Item #2. We will conduct annual wildfire safety inspections and cleanups at our Homekey properties, and prepare evacuation plans for our tenants and clients, in coordination with local emergency personnel. We’ll also train local partners to develop their own plans, in order to strengthen our community’s overall resilience to emergencies.

2. Please insert a project implementation schedule by month, noting activities and relevant milestones. This may be a table or a bulleted list. ● August: Conduct wildfire cleanups at all three (3) TCH properties ● September: Develop emergency evacuation plans for vulnerable residents ● October: Develop partner training schedule, begin trainings ● November: Ongoing coordination with partners in as outlined in grant application ● December: Ongoing coordination, outreach, and trainings ● January: Ongoing coordination, outreach, and trainings ● February: Final project activities completed, reporting prepared ● March: Final reporting completed and submitted to City

3. Please describe up to five high-level tasks necessary for completing the project. ● Staff participation in key partnerships, including STACS, CoC, MDT, etc. ○ Administrative staff attendance at major partner meetings. ○ Follow up on any specific action items, assignments, reporting, etc. ○ Staff time to schedule and conduct trainings, respond to questions, follow up ● Conducting street outreach, providing referrals and navigation services, etc. ○ Staff time spent on outreach, assessment, navigation, supportive services, etc. ● Develop Emergency Evacuation Plan and Guidelines for Vulnerable Residents ○ Administrative staff time to develop Emergency Evacuations plans/guidelines ○ Staff time training local partners and agencies on the plans/guidelines ● Conduct annual wildfire safety debris clean ups at all three (3) TCH properties ○ Administrative staff time to coordinate volunteers from local partners ○ Maintenance staff time to clear debris, landscaping, dump run, etc.

4. Please describe the expected outcomes of your project. Outcomes are the observable effects of your activities on the beneficiaries of the project.

The City and its residents will experience several positive outcomes from our projects:
● Our ongoing coordination interventions have reduced overall homelessness, emergency calls for service, and avoidable hospitalizations, which significantly lowers the City’s costs associated with homelessness.
● Our harm reduction interventions improve overall health and reduce impacts to the emergency health system, including reducing overdoses, emergency calls, hospitalizations, and deaths.
2022 Cannabis Revenue Grant Program of the City of South Lake Tahoe 2 of 3 401
● Our street outreach work positively impacts the environment. We have helped place more than 70 individuals in supportive housing, which reduced homelessness by nearly 80%. These efforts result in fewer encampments in sensitive areas, less outdoor waste accumulation and contamination, and lower wildfire risk to the entire community.
● Through our emergency planning efforts, we expect to reduce the likelihood of emergencies occurring, decrease the cost of emergency response efforts, increase operational capacity of emergency responders during emergencies, and prevent negative outcomes such as injury, illness and death.
● Our fire prevention cleanups will reduce the risk of fire or other wildfire at our properties.
2022 Cannabis Revenue Grant Program of the City of South Lake Tahoe 3 of 3 402
EXHIBIT C:

BUDGET
403
City of South Lake Tahoe
Cannabis Revenue Grant Program, Individual Project Budget Organization Name: Tahoe Coalition for the Homeless (TCH) Project Title: Connections and Care
Contact Name at Organization: Cheyenne Purrington, Executive Director Estimated
Expenditures Description/Explanation of Expense Directions Salaries and wages 33,333
Portion of salaries and wages for paid TCH staff to support the activities outlined in our application. Does not include overtime.

Total base wages of all employees that may bill to this grant. Not to include overtime without approval from City's Grant Manager. Add rows as necessary.

Fringe Benefits 8,333 Fringe benefits calculated at 25%, based on actuals.

Total compensation based on percent fringe benefits offered by the organization, based on actuals. Note the percent in the description.

Subtotal $41,666.66
An item of non-expendable, tangible personal property, having a useful life of more than one year and an acquisition cost which equals or exceeds the lesser of the capitalization level established by the recipient organization for financial statement purposes, or $5,000.

Equipment N/a
Add rows as necessary to describe purchases in reasonable detail that can be matched to backup documentation.

Travel N/a
Use federally reimburseable mileage rates ($0.625/mile effective July 1, 2022).

Add rows as necessary to describe purchases in reasonable detail that can be matched to backup documentation.

Materials and Supplies N/a
Add rows as necessary to describe purchases in reasonable detail that can be matched to backup documentation.

Contractual N/a
Add rows as necessary to describe purchases in reasonable detail that can be matched to backup documentation.

Other N/a
Add rows as necessary to describe purchases in reasonable detail that can be matched to backup documentation.

Subtotal 0
Indirect costs $8,333.33
Calculated as 20% of direct. Used for administrative costs of supporting and managing the grant, including timekeeping, payroll, bookkeeping, compliance, reporting, insurance, etc.

Please use this box (or an attachment) to further explain how your total indirect costs were calculated. If the total indirect costs are a cumulative amount of more than one calculation or rate application, the explanation and calculations should identify all rates used, along with the base they were applied to (and how the base was derived), and a total for each (along with grand total).

TOTAL $50,000.00
404
EXHIBIT D:

MID-YEAR REPORT TEMPLATE
405
City of South Lake Tahoe

CANNABIS REVENUE GRANT PROGRAM

MID-YEAR REPORT
Due each November 31 and April 31 during the Grant Term until within six months of Closeout Date, when a Closeout Report will be due.

Project Name:

Grant Recipient Organization:

Amount Awarded:

Amount Expensed to date:

Year Awarded:

Closeout Date:

Primary Contact Name:

Primary Contact Title/Role:

Primary Contact Email Address:

Date of Submission of Report:

1. What percent of funds have been expended?

2. Please provide a narrative description of where you are at in expending the grant award.

3. Please list any challenges you are encountering with the project as originally described in the Application, Scope of Work and Budget line item descriptions.

4. If possible, please provide digital photos of the project, which can be used in city promotional or outreach opportunities, with descriptive captions and attributions.

Email your report to [email protected]
Or send to:

City of South Lake Tahoe City Hall
Attn: Grant Program
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Or bring to the Finance drop box at the above address.
406
EXHIBIT E:

CLOSEOUT REPORT TEMPLATE
407
City of South Lake Tahoe

CANNABIS REVENUE GRANT PROGRAM

CLOSEOUT REPORT
Due one month after Closeout Date, specified on the Scope of Work OR
Due by March 31 following a previous year’s award if seeking a new grant.

Project Name:

Grant Recipient Organization:

Amount Awarded:

Amount Expensed:

Year Awarded:

Closeout Date:

Primary Contact Name:

Primary Contact Title/Role:

Primary Contact Email Address:

Date of Submission of Report:

1. Please describe how your project was impactful to our community (up to about half a page, single spaced).

3. Please list any changes to the project as approved by the Grant Manager, with dates.
408

4. Please summarize how the project was successful at mitigating the potential negative impacts of the cannabis industry. Include numerical metrics/measurable impacts where possible.

6. If possible, please provide digital photos of the project, which can be used in city promotional or outreach opportunities, with descriptive captions and attributions.

City of South Lake Tahoe City Hall
Attn: Grant Program
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Or bring to the Finance drop box at the above address.
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: August 9, 2022
Agenda Item #: 12
Agenda Item: Grant Application to California Public Utilities Commission for Broadband Technical Assistance Program
Executive Summary: The Local Agency Technical Assistance (LATA) grant program provides funding to assist California’s local agencies and tribes in their efforts to provide high-speed broadband to unserved Californians. Grantees may receive up to 100 percent of technical assistance project costs of up to $500,000 per local agency or tribe per fiscal year. The program has a budget of $50 million.

Requested Action / Suggested Motions: Pass a Resolution authorizing submittal of a grant application to the California Public Utilities Commission for pre-construction expenses related to broadband deployment for an amount of $500,000.

Responsible Staff Members: Anush Nejad, Director of Public Works Responsible Staff Member: Anush Nejad, Director of Public Works (530) 542-6031 Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Director of Finance
Heather Stroud, City Attorney
Attachments:
01-Staff Report Broadband Grant Application.docx
02-Resolution for Broadband Grant Application.doc
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City of South Lake Tahoe
Report to City Council
Meeting Date: August 9, 2022
Title: Authorization to Submit a Grant Application to California Public Utilities Commission for Broadband Technical Assistance Program
Location: Citywide
Responsible Staff Member: Anush Nejad, Director of Public Works (530) 542-6031 Background: The City Council approved a Professional Services Agreement to begin the Broadband Feasibility Study on May 3, 2022. Neo-Connect was selected for the Feasibility Study and the study is underway. It is expected the study wi ll be completed by November 2022 with a set of recommendations for the future direction of Broadband deployment. The funding for the Feasibility Study was through the American Rescue Plan Act (ARPA) funding .

On February 24, 2022, the California Public Utilities Commission (PUC) approved Decision (D.) 22-02-0261 which established The Local Agency Technical Assistance (LATA) grant program. The purpose of the LATA is to provide technical assistance grants to agencies for pre-construction expenses related to Broadband deployment.

In accordance with City policies, the Public Works staff is requesting authorization to pursue the grant mentioned above.

Issue and Discussion: Local Agency Technical Assistance grants provide reimbursement for Tribes and local agencies for pre-construction expenses that facilitate the development of broadband network deployment projects to areas in need.

Grants may be used to reimburse eligible costs such as environmental, feasibility, and engineering design studies or reports; needs assessments, market studies, broadband strategic plans, and business plans; forming a joint powers authority; and consultant and community-based organization services.

Grantees may receive up to 100 percent of technical assistance project costs of up to $500,000 per local agency or tribe per fiscal year. The program has a budget of $50 million and is available on a first-come-first-served basis. Requests up to $500,000 will be handled at an administrative level.

Staff is planning to submit a request for $500,000 for follow-up actions including environmental clearance, design, community outreach, and staff support costs.

Council Agenda Report Aug ust 9, 2022 Page 1 of 2
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Financial Implications: The Technical Assistance Program requires no matching funds. If awarded , the City will engage appropriate consultants for follow-up work and also use some of the funding for staff time and effort.

Environmental Considerations: The appropriation of funds for the projects mentioned above is categorically exempt from the California Environmental Quality Act (CEQA) under Section 15301 of the CEQA Guidelines (existing facilities).

Policy Implications: This project advances the City Council Strategic Priorities and Goals, specifically:
• Action Item 1.1 (Broadband For All) to connect the community via high-speed internet to serve the needs of local businesses, and residents, and attract remote workers to the Region. Develop a broadband infrastructure deployment plan that identifies fiber hubs, last-mile transit, relay points, and redundancy. The city should explore innovative broadband models and funding opportunities to implement projects.

Council Agenda Report August 9, 2022 Page 2 of 2
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Resolution 2022-XXX August 9, 2022 Page 1 of 1
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe City Council
August 9, 2022
Approval of Grant Application for California Public Utilities Commission Local Agency Technical Assistance (LATA) Program

BACKGROUND
A. On February 24, 2022, the California Public Utilities Commission (PUC) approved Decision (D.) 22-02-0261 which established The Local Agency Technical Assistance (LATA) grant program; and
B. The purpose of the LATA is to provide technical assistance grants to agencies for preconstruction expenses related to Broadband deployment; and C. Grantees may receive up to 100 percent of technical assistance project costs of up to $500,000 per local agency or tribe per fiscal year; and D. The City of South Lake Tahoe has embarked on a Feasibility Study and upon the completion of this study, additional funds will be required to complete environmental studies, design, public outreach, preparation of construction grants, and staff time to advance the project.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:

1. Authorizes and Directs the Director of Public Works to file with the PUC a LATA grant application for $500,000.

2. If awarded, authorizes acceptance of grant funds up to $500,000 into Broadband Infrastructure project revenue and expense accounts 301-60076-33229 Other State Grants and 301-60076-42020 Professional Services.

3. Appoints the Director of Public Works as an agent to submit all documents, including but not limited to Applications, agreements, amendments, payment requests, and so on, which may be necessary to complete the Project.

4. Agrees to comply with all applicable federal, state, and local laws, ordinances, rules, regulations, and guidelines.

Adopted by the City Council of the City of South Lake Tahoe on August 9, 2022, by the following vote:

Yes:

No:

Absent:

Abstain:
_______________________________ Date: _______________
Devin Middlebrook, Mayor
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Resolution 2022-XXX August 9, 2022 Page 1 of 1
Attest:
_______________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council
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City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: August 9, 2022
Agenda Item #: 13
Agenda Item: Ordinance - Ballot Measure to Convert Existing Community Benefit Fee to Comparable Cannabis Business and Professions Tax (Second Reading)
Executive Summary: On June 21, 2022, City Council adopted a resolution placing a measure on the ballot for November 8, 2022, to convert the existing community benefit fee to a comparable business and professions tax. City Council is asked to hold a second reading of the ordinance that would, if approved by voters, implement this administrative change. The proposed measure would maintain the current rates in the development agreements of 6 percent of gross receipts for cannabis businesses and $20 per square foot of canopy for commercial cultivation. The proposed measure would reduce the administrative burden of implementing the development agreements on staff and cannabis businesses, and would create certainty for the businesses by setting the tax at a rate that could be lowered, but not raised, but the City without voter approval.

Requested Action / Suggested Motions: Pass an Ordinance Amending Chapter 3.35 of Title 3 of the South Lake Tahoe City Code to Add Article III to Impose a Cannabis Business and Professions Tax Upon Approval By Voters.

Responsible Staff Member: Heather Stroud, City Attorney Responsible Staff Member: Heather Stroud, City Attorney (530) 542-6046 Reviewed and Approved By:

Susan Blankenship, City Clerk
Olga Tikhomirova, Finance Director
Attachments:
01 - Staff Report.docx
02 - Ordinance.docx
03-Proof of Publication
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Council Agenda Report- August 9, 2022 Page 1 of 2
City of South Lake Tahoe
Report to City Council
Meeting Date: August 9, 2022
Title: Ordinance - Ballot Measure to Convert Existing Community Benefit Fee to Comparable Cannabis Business and Professions Tax (Second Reading) Location: Citywide
Responsible Staff Member: Heather L. Stroud, City Attorney (530) 542-6046 Background:

In 2019, the City Council adopted its Cannabis Ordinance, which provided regulation on businesses and established parameters of operation. As part of the Cannabis Ordinance, the City entered into development agreements with businesses to collect community benefit fees, inclusive of funding set aside for community grants. These development agreements have a limited term and are required under state law to undergo an annual review.

The City’s cannabis regulations have been working. Since the first new business opened in 2020, several retail stores with delivery and one microbusiness with a large indoor cultivation operation have been operating legally in South Lake Tahoe, in addition to the existing medical dispensary that had been operating previously. These businesses have not attracted crime and there have been very few problems for residents.

Additionally, cannabis businesses have generated funding for the local economy and grants for local non-profit organizations. Over the past year, the City has formalized a community grant funding process which are funded by, but administratively separate from, the development agreements themselves.

While the regulations have been working, the annual review of the development agreements has been identified as time-intensive for both businesses and City staff, and alternate solutions which would allow for the same cost to businesses, without this annual administrative need, have been explored. There is also a desire on the part of the City to provide stability to local cannabis businesses, setting a tax that cannot be increased without voter approval, but which could be adjusted downward if City needs and economic conditions warrant. An administrative conversion from a community benefit fee under a development agreement to a comparable business and professions tax for cannabis business has been identified as a potential solution that could meet these goals.

On May 18, 2021, the Cannabis Subcommittee presented its recommendations for amendments to the Cannabis Ordinance and for establishing a cannabis tax, which would take the place of the community benefit fee, to City Council. Since then, staff has been outreaching stakeholder organizations for their input, and preparing documents for City Council to consider placing on the 416
Council Agenda Report- August 9, 2022 Page 2 of 2
ballot on November 8, 2022. The cannabis business and professions tax would be an excise tax on cannabis products and would eventually take the place of the community benefit fees provided under development agreements with the cannabis businesses, when the current terms in the development agreements expire. Establishing a tax is an administrative change be more streamlined and efficient than keeping the development agreements in place indefinitely and would reduce the staff resources necessary to oversee and manage the development agreements including collection of the community benefit fee.

On June 21, 2022, City Council adopted a resolution placing a measure on the ballot for November 8, 2022, to convert the existing community benefit fee to a comparable business and professions tax. City Council is asked to hold a second reading of the ordinance that would, if approved by voters, implement this administrative change.

Issue and Discussion:

This measure requires a majority vote of the electorate to pass. The revenue collected from the tax would be available for general City expenditures, including the service priorities that residents have identified as important, including maintaining fire protection and fast emergency response, reducing the threat of wildfires, repairing streets and potholes, and maintaining snow removal, as well as nonprofit community benefit grants and other services that are critical to our neighborhoods and residents’ health and safety. Under the development agreements currently in place, if the voters pass a cannabis tax, the community benefit fees due would be offset by the amount of the tax, and the development agreements would expire at the end of their initial term.

Based on community outreach done earlier in 2022, staff recommends keeping the tax rate the same as the community benefit fees currently being paid under the development agreements, which is six percent of gross receipts on retail, distribution, and manufacturing, and $20 per square foot of canopy for cultivation. If adopted by the voters of the City of South Lake Tahoe, this tax rate would be a maximum rate that could be adjusted lower, but not higher, by a resolution of City Council.

Financial Implications:

If a cannabis tax is adopted by voters at the current community benefit fee rate set forth in the development agreements, staff anticipates it would generate approximately $950,000 per year. If adopted, the cannabis tax will replace the business and professions tax collected under Article II of Chapter 3.35 of Title 3 of the South Lake Tahoe City Code for businesses engaged in commercial cannabis activity – an estimated reduction of $26,000 per year.

Environmental Considerations:

This Ordinance is exempt from the California Environmental Quality Act (CEQA), Public Resources Code Section 21000 et seq., because it can be seen with certainty that there is no possibility that its enactment would have a significant effect on the environment (Pub. Resources Code 21065, CEQA Guidelines 15378(b)(4), 15061(b)(3) and because the Ordinance involves the approval of government revenues to fund existing services (Pub. Resources Code 21080, subd. (b)(8); CEQA Guidelines 15273(a)(4). It does not make any commercial activity lawful nor commit the City to fund any particular activity.

Policy Implications:

This action is consistent with City Council Strategic Plan 2021-2026 Priority 5 (Continuous Improvement), Goal 5.5 (Fiscal Sustainability and Resiliency). 417
Ordinance 2022-XXX August 9, 2022 Page 1 of 8
Ordinance 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
August 9, 2022
An Ordinance Amending Chapter 3.35 of Title 3 of the South Lake Tahoe City Code to Add Article III to Impose a Cannabis Business and Professions Tax

FINDINGS
A. The City of South Lake Tahoe imposes business and profession taxes upon businesses in the City, which are imposed to raise revenue and not for regulation.

B. Currently, the City enters into development agreements with permitted local cannabis businesses, under which businesses pay a community benefit fee. These development agreements are required to undergo an annual review under state law and create an administrative burden on local businesses and City staff.

C. This Ordinance would impose a business and professions tax on persons engaged in commercial activity in the City involving cannabis products (the “Measure”). This business and professions tax would apply to persons engaged in commercial cannabis activity instead of the business and professions tax rates set forth in Article II of Chapter 3.35 of Title 3 of the South Lake Tahoe City Code. All other regulations, which have been working, would be unaffected.

D. Since the first new business opened in 2020, several retail stores with delivery and a microbusiness with a large indoor cultivation operation have been operating legally in South Lake Tahoe, in addition to the existing medical dispensary that had been operating previously. These businesses have not attracted crime, there have been very few problems for residents, and the businesses have generated funding for the local economy and grants for local non-profit organizations.

E. The Measure would allow the City to continue to address the service priorities that residents have identified as important, including maintaining fire protection and fast emergency response, reducing the threat of wildfires, repairing streets and potholes, and maintaining snow removal, as well as nonprofit community benefit grants and other services that are critical to our neighborhoods and residents’ health and safety.

F. South Lake Tahoe residents benefit from the hundreds of thousands of dollars paid by visitors to our community who shop at local cannabis businesses. This Measure ensures that we continue to make sure visitors are contributing to the local services they use and impacts they have on residents.

G. The Measure includes fiscal accountability provisions including an annual independent financial audit to enhance accountability and transparency. No Measure funds could be taken 418
Ordinance 2022-XXX August 9, 2022 Page 2 of 8
by the county, state, or federal government and funds must be used exclusively in South Lake Tahoe to address local needs.

H. The City Council may submit the Ordinance directly to the voters pursuant to Section 9222 of the California Elections Code.

I. The tax must be approved by a majority of the electorate to be effective.

J. At a properly noticed meeting on June 21, 2022, the City Council adopted a resolution to call a general election for November 8, 2022.

K. On the general election on November 8, 2022, the City will submit to the qualified voters of the City the Ordinance to impose a general tax on commercial cannabis activity in the City.

Now, Therefore, the City Council of City of South Lake Tahoe does ordain as follows:

SECTION 1. Article III of Chapter 3.35 of Title 3 of the South Lake Tahoe City Code is hereby adopted to read as follows:

Article III. Cannabis Business and Professions Tax

3.35.350 - Title.

This article shall be referenced as the “South Lake Tahoe Cannabis Business and Professions Tax.”

3.35.360 - Purpose.

This article is adopted for the following purposes and shall be interpreted to accomplish them:

A. To impose a tax on the privilege of conducting cannabis business in the city, under the state Medicinal and Adult-Use Cannabis Regulation and Safety Act, California Business and Professions Code section 26000, Proposition 64, approved by the voters in November 2016 and as amended to date (“MAUCRSA”), which legalized and regulates adult use of cannabis in California, and other applicable law as it now exists or may hereafter be adopted; B. To impose a general tax to generate revenues which may be used in the discretion of the city council for any lawful purpose of the city;
C. To specify the type of tax and rate of tax to be levied and the method of collection; and D. To comply with all requirements for imposition of a general tax.

This article is enacted solely to raise revenue, not for regulation. It shall apply to all persons engaged in cannabis business in the City. The tax imposed by this article is a general tax under Article XIII C of the California Constitution.
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Ordinance 2022-XXX August 9, 2022 Page 3 of 8

3.35.370 - Definitions.

For the purposes of this article, the following words shall have the meanings ascribed to them by this section unless the context makes apparent another meaning was intended. “Cannabis” has the meaning stated in section 6.55.710 of this code. “Cannabis business“ means the activity of any natural or legal person, business, or collective in the City relating to cannabis, including but not limited to cultivation (including nurseries), transportation, distribution, manufacture, compounding, conversion, processing, preparation, testing, storage, packaging, delivery and sales (including both wholesale and retail sales) of cannabis, cannabis products, or cannabis accessories, whether or not carried on for gain or profit, whether for medical or adult use, and whether or not such business is licensed by the State. A cannabis business does not include any business the only relationship of which to cannabis or cannabis products is the production or sale of cannabis accessories.
“Cannabis product” has the meaning stated in section 6.55.710 of this code. “Canopy” has the meaning stated in section 6.55.710 of this code. The city manager may, but is not required, to determine canopy from the area described in a cultivation license issued by the city whether or not the licensee actually cultivates that entire area. “City manager” means the city manager or designee.
“Collector” means the city manager or a person charged by the city manager to administer this article. “Commercial cannabis cultivation” means cultivation conducted by, for, or as part of a cannabis business. Commercial cannabis cultivation does not include personal medical cannabis cultivation, or cultivation for personal adult use as authorized by the MAUCRSA, including Health & Safety Code section 11362.1 et seq., for which the individual receives no compensation whatsoever. “Cultivation” has the meaning stated in section 6.55.710 of this code. “Delivery” has the meaning stated in section 6.55.710 of this code. “Retailer” has the meaning stated in section 6.55.710 of this code. “Distributor’’ has the meaning stated in section 6.55.710 of this code. “Gross receipts,” except as otherwise specifically provided in this article or by regulation authorized by this article, has the meaning stated in section 3.00.010 of this code. “Manufacturer” has the meaning stated in section 6.55.710 of this code. 420
Ordinance 2022-XXX August 9, 2022 Page 4 of 8
“Person” means any individual, firm, partnership, corporation, company, association, joint stock association; city, county, state, or district; and includes any trustee, receiver, assignee, or other similar representative thereof.

3.35.380 - Cannabis Business and Professions Tax.

A. There is hereby imposed on every person who engages in cannabis business in the city an annual cannabis business and professions tax in the amounts stated in this section or such lesser amounts as the City Council may from time to time establish by resolution.

B. Section 3.35.280 notwithstanding, the initial rate of the cannabis business and professions tax shall be as follows:

1. For every cannabis business engaged in commercial cannabis cultivation in the city:
a. Twenty dollars ($20.00) annually per square foot of canopy.

2. For every cannabis business that engages in any other cannabis business in the City whether or not that cannabis business is lawful under this code or other law:
a. Six percent (6%) of gross receipts annually.

Should a city cannabis use permit be issued to a business which cultivates only for certain months of the year, the collector shall prorate the tax as to sufficiently reflect the time in which cultivation occurs. In no case shall any portion of the canopy authorized by a city cannabis use permit but not used for cultivation be deducted from the tax base unless the taxpayer informs the collector in writing before the canopy or portion thereof is disused and the collector provides written evidence of relief from tax.

C. The city council may, by resolution, implement a tax rate lower than the maximum rate established in subsection (B) of this section for all persons engaged in cannabis business, or establish differing tax rates for different categories of cannabis business. The city council may, by resolution, decrease or increase such tax rates without further voter approval provided the tax rate is not above the maximum tax rate established in subsection (B) of this section.

3.35.390 - Payment obligations.

Each person subject to a tax under this article shall pay that tax regardless of any rebate, exemption, incentive, or other reduction elsewhere in this code, except as required by state or federal law. Failure to pay such a tax shall be subject to penalties, fines and interest charges established under section

3.35.200 of this code, and the city may resort to any or all other remedies available at law or in equity to enforce this article. No provision of this article shall be interpreted to reduce a tax rate established under this article or otherwise reduce the taxes paid hereunder unless the provision specifically requires that reduction.
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Ordinance 2022-XXX August 9, 2022 Page 5 of 8

3.35.400 - Tax payment does not authorize activity.

The payment of a tax imposed under this article does not authorize the conduct or continuance of any illegal business or of a legal business in an illegal manner. Nothing in this article authorizes or implies the lawfulness of any activity connected with the distribution or possession of cannabis unless otherwise authorized and allowed in strict and full conformance with this code. Nothing in this article is intended to authorize commercial cannabis activity.

3.35.410 - Cannabis tax is not a sales tax.

The tax imposed by this article is upon the privilege of doing business in the city. It is not a sales or use tax.

3.35.420 - Returns and remittances.

The tax imposed by this article shall be due and payable as follows:

A. Each person owing tax under this article shall provide a tax return to the city manager on or before the last business day of each month stating the tax owed for the preceding month and the basis of its calculation. The taxpayer shall remit the tax owed to the city manager when the return is due.

B. The city manager may establish a form for tax returns submitted under this section and, if so, use of that form shall be mandatory.

C. Tax returns and payments for all outstanding taxes, penalties and interest owed the city are immediately due upon cessation of business for any reason.

D. Postmarks are not accepted and payments, statements, reports, requests, or other communications must be physically in the office of the collector when due. If the due date falls on a day when city offices are not open for business, the due date shall be the next following business day.

E. Unless otherwise provided by this article, the tax imposed by this article is delinquent if not paid by the due date specified in subsection (A) of this section.

F. The city manager need not send a bill or delinquency or other notice to any person subject to a tax imposed by this article and failure to send such bill or notice shall not affect the validity of any tax, interest or penalty due under this article.
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Ordinance 2022-XXX August 9, 2022 Page 6 of 8

3.35.430 - Audits.

The city manager shall arrange for an annual independent audit of the receipts and expenditures of the taxes imposed by this article. He or she shall share that audit report with the city council and make it available for public inspection.

3.35.440 - Refunds.

A. No refund shall be made of any tax collected pursuant to this article, except as provided in this section.

B. No refund of any tax collected pursuant to this article shall be made because of the discontinuation, dissolution, or other termination of a cannabis business.

C. If a tax, penalty, or interest imposed under this article has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the city, such amount shall be refunded to the person who paid it upon a written claim for refund filed with the collector within one year of the payment sought to be refunded, and all such claims for refund of the amount of overpayment must be filed with the collector on forms furnished by the collector.

D. Any person entitled to a refund of sums paid under this article may ask the city to apply it as a credit against future obligations under this article.

E. The collector may examine and audit all the books and business records of a refund claimant to determine entitlement to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of the claimant’s books and business records.

3.35.450 - Tax administration.

A. It shall be the duty of the city manager to collect the taxes, penalties, and interests, and perform the duties this article requires.

B. The city manager may from time to time promulgate such administrative rules and procedures consistent with the purpose, intent, and terms of this article as the city manager deems necessary to implement or clarify it or to aid in its enforcement. The city manager shall give notice of those regulations as required for ordinances of the city council and such regulations shall take effect upon such notice unless a particular regulation provides otherwise.

C. The city manager may take such administrative actions as needed to administer the tax, including but not limited to:

1. Provide information about this article to any taxpayer;

2. Receive and record all taxes remitted to the city under this article;

3. Maintain records of taxpayer reports and taxes collected under this article; 423
Ordinance 2022-XXX August 9, 2022 Page 7 of 8

4. Assess penalties, fines and interest charges to taxpayers under this article;

5. Determine amounts owed and enforce collection under this article; and

6. Take such other reasonable steps as he or she deems appropriate to enforce this article.

D. The penalties, fines, and interest for delinquent payments in section 3.35.200 of this code shall apply to this article. The city council may establish by ordinance or resolution additional penalties, fines and interest charges related to this article.

3.35.460 - Appeals.

Any person aggrieved by any decision of the city manager or collector under this article may appeal to the city council pursuant to the procedures described in Section 2.35 of this code.

3.35.470 - Consistency with business license tax.

The city council intends this article to be enforced consistently with the balance of chapter 3.35 of this code and any rule or regulation promulgated under chapter 3.35 except as this article expressly requires to the contrary.

3.35.480 - Constitutionality and legality.

A. The tax imposed under this article is intended to be applied consistently with the United States and California Constitutions and applicable law. The tax shall not be applied to cause an undue burden upon interstate or inter-city commerce, a violation of the equal protection or due process clauses of those Constitutions, to constitute a special tax, or to violate any other provision of applicable law.

B. Notwithstanding section 3.35.410 of this article, a cannabis business may separately identify the tax on invoices, receipts and other evidences of transactions.

SECTION 2. To the extent Article XIII C of the California Constitution allows, the City Council may amend this Ordinance without a vote of the people, except that voter approval shall be required for any amendment that would increase, within the meaning of Government Code section 53750, subdivision (h), the tax rate beyond the maximum rates this Ordinance authorizes.

SECTION 3. This Ordinance is exempt from the California Environmental Quality Act (CEQA), Public Resources Code Section 21000 et seq., because it can be seen with certainty that there is no possibility that its enactment would have a significant effect on the environment (Pub. Resources Code 21065, CEQA Guidelines 15378(b)(4), 15061(b)(3) and because the Ordinance involves the approval of government revenues to fund existing services (Pub. Resources Code 21080, subd. (b)(8); CEQA Guidelines 15273(a)(4). It does not make any commercial activity lawful nor commit the City to fund any particular activity.
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Ordinance 2022-XXX August 9, 2022 Page 8 of 8
SECTION 4. If any section, subsection, sentence, clause, phrase or portion of this Ordinance is held to be invalid or unconstitutional by the final decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The People of the City of South Lake Tahoe declare that they would have adopted this Ordinance, and each section, subsection, sentence, clause, phrase or portion of it, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or portions might be declared invalid or unconstitutional.

SECTION 5. This ordinance shall take effect, under Elections Code sections 9217 and 9122, 10 days after certification of its approval by a majority of those voting on the measure at the November 8, 2022 general municipal election.

SECTION 6. Upon approval by the voters, the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause it to be published according to law.

Adopted by the City of South Lake Tahoe City Council on August 9, 2022 by the following vote:

Yes:

No:

Abstain:

Absent:
________________________ Date:_________
Devin Middlebrook, Mayor
Attest:
________________________
Susan Blankenship, City Clerk
First Reading:

Published:

Second Reading:

Effective:

The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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LEGAL PUBLICATION

CITY OF SOUTH LAKE TAHOE

SUMMARY OF PROPOSED ORDINANCE
NOTICE IS HEREBY GIVEN that on June 21, 2022,
the City of South Lake Tahoe City Council waived first
reading, read by title and referred to second reading
and adoption at the August 9, 2022, City Council
meeting the following ordinance:
“An Ordinance Amending Chapter 3.35 of Title 3 of
the South Lake Tahoe City Code to Add Article III
to Impose a Cannabis Business and Professions
Tax”
City Attorney’s Summary of Ordinance:
“This ordinance, if passed by voters of South Lake
Tahoe my majority vote at the election on November 8,
2022, would amend the South Lake Tahoe City Code
to establish a cannabis business and professions tax.

This tax would replace the existing community benefit
fee collected under agreements with the cannabis
businesses. The ordinance would set the tax rate at
six percent of gross receipts for retail, distribution, and manufacturing, and $20 per square foot of canopy
for cultivation, which is the same rate as the current
community benefit fees. If adopted by voters, this tax
rate would be a maximum rate that could be adjusted
lower, but not higher, by a resolution of City Council.

The revenue collected from the tax would be available
for general City expenditures, including maintaining
fire protection and fast emergency response, reducing
the threat of wildfires, repairing streets and potholes, and maintaining snow removal, as well as nonprofit
community benefit grants.”
A copy of the proposed ordinance in its entirety is
available for review in the City Clerk’s Office located at 1901 Lisa Maloff Way, South Lake Tahoe, California.

Susan Blankenship, City Clerk
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 206
South Lake Tahoe, CA 96150
(530) 542-6005
[email protected]
Published: July 1, 2022
426
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
Meeting Date: August 9, 2022
Agenda Item #: 14
Agenda Item: Issuance of 2022 Lease Revenue Bonds Series A for the Multigenerational Recreation and Aquatic Center Construction Financing in a Principal Amount Not to Exceed $52 Million Executive Summary: The City contemplates a bond financing to help fund the proposed construction of the Multigenerational Recreation and Aquatic Center ("Recreation Center Complex"), currently estimated to be approximately $60 million. The bonds will be issued by the South Tahoe Joint Powers Financing Authority. Pursuant to Government Code Section 6586.5, the City must make a finding of significant benefit before the Authority’s issuance of the bonds, after the noticed public hearing. Notice of the public hearing was published on July 29th, 2022. Staff recommends that the City Council hold the public hearing and adopt a resolution to make a finding of significant benefit, approve the issuance of the bonds and authorize the execution of related documents. Pursuant to the resolution to be adopted by the Authority, the principal amount of the bonds will not exceed $52 million, and the true interest cost will not exceed 6.0 percent.

Requested Action / Suggested Motions: 1) Hold a Public Hearing with the respect to the proposed issuance of bonds by the South Tahoe Joint Powers Financing Authority (Authority) to assist the City with financing the construction of the Recreation Center Complex; 2) Acting as the City Council, Pass a Resolution approving the issuance of the Authority Lease Revenue Bonds, 2022 Series A, and authorizing the City’s execution and delivery of related documents and taking related actions; and, 3) Acting as the Authority, Pass a Resolution authorizing the sale, issuance and delivery of Lease Revenue Bonds, 2022 Series A, and authorizing the execution and delivery of an indenture and other documents and taking related actions.

Responsible Staff Member: Olga Tikhomirova, Director of Finance Responsible Staff Member: Joe Irvin, City Manager and Authority Executive Director Olga Tikhomirova, Finance Director and Authority Treasurer Reviewed and Approved By:

Susan Blankenship, City Clerk
Heather Stroud, City Attorney
Attachments:
01-Staff Report - 2022 Lease Revenue Bonds for Rec Center.docx 02 - Resolution - 2022 Lease Revenue Bonds Rec Center.docx 03-STJPFA Resolution - 2022 Lease Revenue Bonds Rec Center.docx 04-Lease Agreement SLT 2022 Lease Revenue Bonds.DOCX
05-Sublease Agreement SLT 2022 Lease Revenue Bonds.DOCX 06-Assignment Agreement SLT 2022 Lease Revenue Bonds.DOCX 07-Continuing Disclosure Certificate SLT 2022 Lease Revenue Bonds.pdf 08-Preliminary Official Statement (POS) SLT 2022 LRBs.pdf 427
09-Bond Purchase Agreement SLT 2022 LRBs.pdf
10-Indenture SLT 2022 Lease Revenue Bonds.DOCX
11-Notice of Public Hearing Proof 2022 LRBs.pdf
12-Presentation.pdf
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Council Agenda Report August 9, 2022 Page 1 of 5
City of South Lake Tahoe
Report to City Council and
South Tahoe Joint Powers Financing Authority
Meeting Date: August 9, 2022
Title: Proposed Issuance of 2022 Lease Revenue Bonds Series A for the Recreation Center Construction Financing
Location: Citywide
Responsible Staff Member: Joe Irvin, City Manager and Authority Executive Director (530) 542-6043; Olga Tikhomirova, Director of Finance and Authority Treasurer, (530) 542-7431
Background: The City contemplates a bond financing to help fund the proposed construction of a new Recreation Center Complex (currently estimated to be approximately $60.8 million).

The Bonds will be issued by the South Tahoe Joint Powers Financing Authority (“Authority”). Pursuant to Government Code Section 6585.5, the City must make a finding of significant benefit before the Authority’s issuance of the Bonds, after the noticed public hearing. Notice of the public hearing was published on July 29, 2022.

Staff recommends that the Council hold the public hearing and adopt a Resolution (attachment #2) to make a finding of significant benefit, approve the issuance of the Bonds and authorize the execution of related documents. Pursuant to the resolution to be adopted by the Authority, the principal amount of the Bonds will not exceed $52 million, and the true interest cost will not exceed 6.0 percent.

Issue and Discussion: The City is undertaking to build a new Recreation Center Complex. The current estimated cost is approximately $60.8 million. A bond financing is proposed to fund the project. A portion of the project will be financed by the Bonds and the City will finance the rest of the project.

The Bonds will be in the form of “lease revenue bonds” to be issued by the Authority.

Based on market estimates as of July 27, 2022, the principal amount of the Bonds will be approximately $43.2 million. The principal and interest payments, together, on the bonds will be approximately $2.8 million each fiscal year until final maturity for the 30-year term of the Bonds. The City anticipates paying 100% of debt service on the Bonds from Measure P revenues; however, if Measure P revenues are insufficient for such purpose in a particular year, the City may use any other legally available sources, including General Fund revenues, for such payments. For Fiscal Years 2016-17 through 2020-21, Measure P revenues were $2,507,719, $3,307,933, $3,435,411, $2,764,825, and $3,234,866, respectively. There is no sunset date for Measure P. 429
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Financing Structure
The proposed financing will involve a “lease-lease back” arrangement. The Bonds will be issued pursuant to an Indenture (the “Indenture”), between the Authority and The Bank of New York Mellon Trust Company, N.A., as bond trustee (the “Trustee”). The Bonds will be payable from “Revenues” of the Authority which primarily consist of lease payments (the “Lease Payments”) to be made by the City to the Authority pursuant to the Sublease for the leasing the following properties (collectively, the “Leased Properties”):
(1) 1252 Ski Run Boulevard - Fire Station #1; (2) 1352 Johnson Boulevard - Police Station; (3)1176 Rufus Allen - Skating Rink; (4) 1201 Al Tahoe - Bijou Park; and (5) 1176 Rufus Allen - the Recreation Center Complex Property. It is contemplated that once the Recreation Center Complex is completed, the other Leased Properties may be released pursuant to the terms of the Lease and Sublease. The City will agree to annually appropriate sufficient moneys to satisfy the Lease Payments.

Financing Documents
City Council Resolution: By adopting the Resolution (attachment #2), the City Council will authorize the issuance of the Bonds and approve the execution and delivery of the following documents. Each of the documents are presented in substantial final form and will be completed after the Bonds are priced (i.e., when the principal amount of the Bonds, the interest rates and the original issue premium or discount will be determined). (i) Lease Agreement (the “Lease”),
(ii) Sublease Agreement,
(iii) Continuing Disclosure Certificate,
(iv) Preliminary Official Statement, and
(v) Bond Purchase Agreement.

Authority Resolution: By adopting the Resolution (attachment #3), the Authority Board will authorize the issuance of the Bonds and approve the execution and delivery of the following documents. Each of the documents are presented in substantial final form and will be completed after the Bonds are priced (i.e., when the principal amount of the Bonds, the interest rates and the original issue premium or discount will be determined). (i) Indenture,
(ii) Lease Agreement,
(iii) Sublease Agreement,
(iv) Assignment Agreement,
(v) Preliminary Official Statement, and
(vi) Bond Purchase Agreement.

Below are brief descriptions of these documents:
(i) Lease Agreement: (Attachment 4)
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Under the Lease Agreement, the City will lease the Leased Properties to the Authority in consideration for the application of the bond proceeds for the project.
(ii) Sublease Agreement: (Attachment 5)
Under the Sublease, the Authority will sublease the Leased Properties to the City and the City will pay the Lease Payments. The scheduled Lease Payments will correspond, in amounts and due dates, to the scheduled principal and interest payments of the Bonds. The City will also covenant to maintain certain insurance coverage with respect to the Leased Properties. (iii) Assignment Agreement: (Attachment 6)
Under this agreement, the Authority will assign its right to receive the Lease Payments from the City pursuant to the Sublease and certain other rights under the Lease and Sublease to the Trustee, for the benefit of the owners of the Bonds.
(iv) Continuing Disclosure Certificate: (Attachment 7)
Under the Continuing Disclosure Certificate, the City will agree to provide a copy of its audited financial statements and a report of other information relevant to the security of the Bonds for filing each year, to make this information available to the investors. The City will also agree to disclose and make filings upon the occurrence of certain enumerated events (such as material default by the City on its financial obligations). (iv) Preliminary Official Statement:( Attachment 8)
In connection with a public offering, the Preliminary Official Statement (the “POS”) will be distributed by the underwriter to potential investors. The POS provides a summary of the proposed terms of the Bonds, the sources of repayment and certain risks relating to the investment in the Bonds. As permitted by federal securities laws, some of the terms relating to the Bonds (such as interest rates and redemption schedule), will appear as blanks or be footnoted as “preliminary; subject to change” in the POS and will not be determined until the pricing of the Bonds. After the pricing of the Bonds, these terms will be inserted, and the POS will be converted into a final Official Statement. The underwriter will then distribute the Official Statement to buyers of the Bonds and cause it to be uploaded onto the Electronic Municipal Market Access website (known as EMMA), the official repository for information pertaining municipal securities issued in the United States.

The Official Statement is the “offering document” for the Bonds, required to be made available to investors pursuant to federal securities laws. The Official Statement must include all information that would be material to a prospective investor’s decision whether to purchase the Bonds. While the various members of the financing team have contributed to the preparation of the POS 431
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and the Official Statement, the City and the Authority are ultimately responsible for ensuring that the POS is accurate, contains no misleading information and does not omit any information necessary to make the POS not misleading to investors.
(v) Bond Purchase Agreement: (Attachment 9)
In connection with a public offering, this agreement will be executed on the day that the Bonds are priced (i.e., when the principal amount of the Bonds, the interest rates and the original issue premium or discount will be determined, a few weeks before the closing date). Under this agreement, the underwriter will agree to buy the Bonds from the Authority on the issuance date of the Bonds upon satisfaction of the closing conditions specified in the Bond Purchase Agreement, including the execution and delivery of applicable documents by the Authority and the City.
(vi) Indenture: (Attachment 10)
The Indenture contains provisions pertaining to the terms of the Bonds, including maturity schedule, interest rates and redemption provisions. It also provides for the establishment and maintenance of certain funds and accounts (including a debt service reserve account) and the rights and duties of the Trustee. Under the Indenture, the Authority will pledge “Revenues” derived from the City’s Lease Payments under the Sublease to pay debt service on the Bonds.

Financing Team
PFM Financial Advisors LLC is the City’s Municipal Advisor, Richards, Watson & Gershon, A Professional Corporation, serves as Bond Counsel, Jones Hall, A Professional Law Corporation, serves as Disclosure Counsel, and Stifel is the Underwriter.

RECOMMENDED ACTION
 Hold a public hearing pursuant to Government Code Section 6586.5 with respect to the proposed issuance of the Bonds and the financing of the Recreation Center Complex project.
 Adopt Resolution of the City Council of the City of South Lake Tahoe Approving the Issuance of the South Tahoe Joint Powers Financing Authority Lease Revenue Bonds, 2022 Series A, Authorizing the City’s Execution and Delivery of Related Documents and Taking Related Actions
 Adopt Resolution of the South Tahoe Joint Powers Financing Authority Authorizing the Sale, Issuance and Delivery of Lease Revenue Bonds, 2022 Series A, Authorizing the Execution and Delivery of an Indenture and Other Documents and Taking Related Actions
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Financial Implications: Stifel, Nicolaus & Company, Incorporated (“Stifel”), the Underwriter, has provided estimates regarding certain financial aspects of the proposed financing based on market conditions as of July 27, 2022, which estimates have been reviewed by PFM Financial Advisors LLC, the Municipal Advisor.

The estimates indicate that the principal amount of the Bonds will be approximately $43.2 million. The principal and interest payments, together, on the Bonds will be approximately $2.8 million each fiscal year until final maturity. The term of the Bonds will be 30 years.

Pursuant to Government Code Section 5852.1, the following good faith estimates (obtained from the Underwriter and the Municipal Advisor) must be disclosed at a public meeting before the authorization of the Bonds. The estimates are based on market estimates as of July 27, 2022:

Information to be disclosed per Government Code Section 5852.1:

Estimates as of
July 27, 2022*
True interest cost of the Bonds (the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the new issue of Bonds)

4.602%
Finance charge of the Bonds (the sum of fees and charges paid to third parties):
$254,664
Amount of proceeds received by the public body from the sale of the Bonds, less the finance charge of the bonds and any reserves or capitalized interest paid or funded with proceeds of the Bonds $45,000,000
The total payment amount (the sum total of all debt service payments on the Bonds, plus the finance charge of the Bonds not paid from bond proceeds)
$84,149,715
* These are good faith estimates only. Final results will likely differ based on market conditions as of the actual sale date and other factors.

Environmental Considerations:An Initial Study/Mitigated Negative Declaration (IS/MND) under the California Environmental Quality Act (CEQA) for the 56 Acres Master Plan and Recreation Center Complex was adopted by the City Council on January 18, 2022, and the Notice of Determination was filed with the El Dorado County Clerk on January 19, 2022. The issuance of bonds for the Recreation Center Complex is within the scope of the IS/MND and no further environmental review is required under CEQA Guidelines section 15162.

Policy Implications: Consistent with City’s Financial Policies and City Council Strategic Priority 1 – Built Environment, Goal 1.2 Mid-Town Revitalization. 433
Resolution 2022-XXX August 9, 2022 Page 1 of 3
Resolution 2022-XXX
Adopted by the City of South Lake Tahoe
City Council
August 9, 2022
Approving the Issuance of the South Tahoe Joint Powers Financing Authority Lease Revenue Bonds, 2022 Series A, Authorizing the City’s Execution and Delivery of Related Documents and Taking Related Actions

BACKGROUND
A. The South Tahoe Joint Powers Financing Authority (the “Authority”) is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022, by and between the City of South Lake Tahoe (the “City”) and the Parking Authority of the City of South Lake Tahoe, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to issue bonds to provide financing for public capital improvements.

B. The Authority proposes to issue and sell lease revenue bonds (the “Bonds”), to be secured pursuant to an Indenture (the “Indenture”), to be entered into by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

C. Proceeds of the Bonds will used to assist the City with financing the cost of construction of a new recreation center (the “Project”).

D. In connection with the issuance of the Bonds, it is proposed that the Authority will enter into a Lease Agreement (the “Lease”), under which the Authority will lease certain real properties, including the land and the improvements thereon (collectively, the “Leased Properties”) from the City, and a Sublease (the “Sublease”), under which the City will sublease the Leased Properties from the Authority and make base rental payments, calculated to be sufficient to allow the Authority to pay principal and interest payments on the Bonds.

E. For the benefit of the holders of the Bonds, the Authority will enter into the Assignment Agreement (defined below) under which the Authority will assign its right to receive the base rent and certain other rights of the Authority under the Lease and Sublease to the trustee for the Bonds.

F. There has been presented to the Authority and the City a Bond Purchase Agreement (the “Bond Purchase Agreement”), to be entered into by and among the Authority, the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), pursuant to which the Underwriter will purchase the Bonds, upon their issuance, from the Authority G. Pursuant to Section 6586.5 of the California Government Code, after notice duly published in accordance with law, the City Council held a public hearing on this date with respect to the 434
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proposed issuance of the Bonds and the related financing and received evidence concerning the public benefits therefrom.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe hereby finds, determines, resolves and orders as follows:

1. Recitals. The above recitals are true and correct and are a substantive part of this Resolution.

2. Finding of Public Benefit; Approval of Bond Issuance. The City Council hereby finds that the Authority's issuance of the Bonds to finance the Project will result in significant public benefit to the constituents of the City, including more efficient delivery of local agency services to residential and commercial development. The City Council hereby approves the issuance of the Bonds.

3. Lease. The Lease Agreement (the “Lease”), proposed to be entered into by and between the City, as lessor, and the Authority, as lessee, in the form on file with the City Clerk, is hereby approved.

Each of the Mayor (or in the Mayor’s absence, the Mayor Pro Tem) and the City Manager (together, the “Authorized Officers”), acting singly, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Lease in substantially said form, with such changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

4. Sublease. The Sublease (the “Sublease”), proposed to be entered into by and between the Authority, as sublessor, and the City, as sublessee, in the form on file with the City Clerk, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the City, to execute and deliver the Sublease in substantially said form, with such changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

5. Bond Purchase Agreement. The Bond Purchase Agreement, in the form on file with the City Clerk, is hereby approved. Subject to the satisfaction of the parameters set forth in the resolution of the Authority authorizing the issuance of the Bonds (the “Authority Resolution”), each Authorized Officer, acting individually, is hereby authorized, for and in the name and on behalf of the City, execute and deliver the Bond Purchase Agreement in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

6. Preliminary Official Statement. The Preliminary Official Statement relating to the Bonds (the “Preliminary Official Statement”), in the form on file with the City Clerk, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the City, to cause the Preliminary Official Statement in substantially said form, with such additions or changes therein as such Authorized Officer may approve, to be deemed final for the purposes of Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934. The distribution by the Underwriter of copies of the Preliminary Official Statement to potential purchasers of the Bonds is hereby approved.

7. Official Statement. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the City, to cause the Preliminary Official Statement to be brought into the form of a final Official Statement (the “Official Statement”), and to execute the same for and in the name and on behalf of the City, with such additions or changes therein as such Authorized Officer may approve (such approval to be conclusively evidenced by such Authorized Officer’s 435
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execution and delivery thereof). The distribution and use of the Official Statement by the Underwriter in connection with the sale of the Bonds are hereby approved.

8. Continuing Disclosure Certificate. The Continuing Disclosure Certificate, in the form attached as Appendix D to the form of Preliminary Official Statement on file with the City Clerk, is hereby approved. Each Authorized Officer, acting individually, is hereby authorized, for and in the name and on behalf of the City, to execute and deliver the Continuing Disclosure Certificate in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

9. In connection with the issuance of the 2022 Bonds, the appointment of the following firms is hereby approved: (i) PFM Financial Advisors LLC, as municipal advisor, (ii) Richards, Watson & Gershon, A Professional Corporation, as bond counsel, and (iii) Jones Hall, a Professional Law Corporation, as disclosure counsel.

10.In accordance with Government Code Section 5852.1, there has been presented to this City Council in the Staff Report accompanying this Resolution certain good faith estimates provided to the City by its municipal advisor with respect to the Bonds. The City Council hereby finds that the requirements of Government Code Section 5852.1 have been satisfied.

11.The Authorized Officers and all other officers of City, are hereby authorized, jointly and severally, to execute and deliver any and all necessary instruments and to do all things which they may deem necessary or proper to effectuate the purposes of this Resolution, the documents approved hereby, and to assist the Authority with respect to the issuance, sale and delivery of the Bonds (including, but not limited to, obtaining reserve fund surety bonds, bond insurance policies or other types of credit enhancement, as necessary or appropriate) and any such actions previously taken by such officers are hereby ratified and confirmed.

Adopted by the City of South Lake Tahoe City Council at a duly noticed regular meeting of the City Council held on August 9, 2022, by the following vote:

Yes:

No:

Absent:

Abstain:
___________________________ Date:___________
Devin Middlebrook, Mayor
Attest:
____________________________
Susan Blankenship, City Clerk
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Lake Tahoe City Council.
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Resolution 2022-XXX
Adopted by the South Tahoe Joint Powers Financing Authority August 9, 2022
Authorizing the Sale, Issuance and Delivery of Lease Revenue Bonds, 2022 Series A, Authorizing the Execution and Delivery of an Indenture and Other Documents and Taking Related Actions

C. Proceeds of the Bonds will used to assist the City with financing the cost of construction of a new recreation center (the “Project”).

F. There has been presented to the Authority and the City a Bond Purchase Agreement (the “Bond Purchase Agreement”), to be entered into by and among 437
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the Authority, the City and Stifel, Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), pursuant to which the Underwriter will purchase the Bonds, upon their issuance, from the Authority.

G. The City Council of the City, has made a finding, after a duly noticed public hearing pursuant to Section 6586.5 of the Government Code, that the issuance of the Bonds will result in significant public benefit.

BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the Governing Board of the South Tahoe Joint Powers Financing Authority hereby finds, determines, resolves and orders as follows:

1. The above recitals are true and correct and are a substantive part of this Resolution.

2. Acknowledgement of City Finding; Authorization of Bond Issuance. The Authority hereby acknowledges and concurs with the City Council’s finding of significant public benefit. The Authority hereby authorizes the issuance and sale of the Bonds, subject to the parameters set forth below.

3. Indenture. Subject to the parameters set forth below, the issuance of the Bonds is hereby approved and authorized. The Indenture (the “Indenture”), proposed to be entered into by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee for the Bonds (the “Trustee”), in the form on file with the Authority Secretary, is hereby approved. Each of the Chairperson, the Vice Chairperson and the Executive Director of the Authority, and any officer of the Authority designated by any of them in writing (each, an “Authorized Officer”), acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Indenture in substantially said form, with such changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

4. Lease. The Lease Agreement (the “Lease”), proposed to be entered into by and between the City, as lessor, and the Authority, as lessee, in the form on file with the Authority Secretary, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Lease in substantially said form, with such changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

5. Sublease. The Sublease (the “Sublease”), proposed to be entered into by and between the Authority, as sublessor, and the City, as sublessee, in the form on file with the Authority Secretary, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Sublease in substantially said form, with such 438
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changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

6. Assignment Agreement. The Assignment Agreement (the “Assignment Agreement”), proposed to be entered into by and between the Authority and the Trustee, in the form on file with the Authority Secretary, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to execute and deliver the Assignment Agreement in substantially said form, with such changes therein as such Authorized Officer may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

7. Bond Purchase Agreement. The Bond Purchase Agreement, in the form on file with the Authority Secretary, is hereby approved. Subject to the parameters set forth below, each Authorized Officer, acting individually, is hereby authorized, for and in the name and on behalf of the Authority, execute and deliver the Bond Purchase Agreement in substantially said form, with such changes therein as the Authorized Officer executing the same may require or approve (such approval to be conclusively evidenced by the execution and delivery thereof).

8. Bonds. The Executive Director is hereby authorized to act on behalf of the Authority to establish and determine: (i) the aggregate principal amount of the Bonds, which shall not exceed $52,000,000; (ii) the purchase price of the Bonds and the interest rates thereon, provided that the true interest cost shall not exceed

6.0%; and (iii) the Underwriter’s compensation (discount) which shall not exceed one percent of the principal amount of the Bonds, exclusive of any original issue discount.

9. Preliminary Official Statement. The Preliminary Official Statement relating to the Bonds (the “Preliminary Official Statement”), in the form on file with the Authority Secretary, is hereby approved. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to cause the Preliminary Official Statement in substantially said form, with such additions or changes therein as such Authorized Officer may approve, to be deemed final for the purposes of Rule 15c2-12 promulgated pursuant to the Securities and Exchange Act of 1934. The distribution by the Underwriter of copies of the Preliminary Official Statement to potential purchasers of the Bonds is hereby approved.

10.Official Statement. Each Authorized Officer, acting singly, is hereby authorized and directed, for and in the name and on behalf of the Authority, to cause the Preliminary Official Statement to be brought into the form of a final Official Statement (the “Official Statement”), and to execute the same for and in the name and on behalf of the Authority, with such additions or changes therein as such Authorized Officer may approve (such approval to be conclusively evidenced by such Authorized Officer’s execution and delivery thereof). The distribution and use 439
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of the Official Statement by the Underwriter in connection with the sale of the Bonds are hereby approved.

11.In connection with the issuance of the 2022A Bonds, the appointment of the following firms is hereby approved: (i) PFM Financial Advisors LLC, as municipal advisor, (ii) Richards, Watson & Gershon, A Professional Corporation, as bond counsel, and (iii) Jones Hall, a Professional Law Corporation, as disclosure counsel.

12.In accordance with Government Code Section 5852.1, there has been presented to this Board of Directors in the Staff Report accompanying this Resolution certain good faith estimates provided to the Authority by its municipal advisor with respect to the Bonds. The Board of Directors hereby finds that the requirements of Government Code Section 5852.1 have been satisfied.

13.The Authorized Officers, the Assistant to the City Manager of the City (who is hereby appointed the Assistant Executive Director of the Authority) and all other officers of Authority, are hereby authorized, jointly and severally, to execute and deliver any and all necessary instruments and to do all things which they may deem necessary or proper to effectuate the purposes of this Resolution, the documents approved hereby, and the issuance, sale and delivery of the Bonds (including, but not limited to, obtaining reserve fund surety bonds, bond insurance policies or other types of credit enhancement, as necessary or appropriate) and any such actions previously taken by such officers are hereby ratified and confirmed.

Adopted by the South Tahoe Joint Powers Financing Authority at a duly noticed regular meeting of the Governing Board held on August 9, 2022, by the following vote:

Yes:

No:

Absent:

Abstain:
___________________________ Date:___________
Devin Middlebrook, Chair
Attest:
____________________________
Susan Blankenship, Authority Secretary
The presence of electronic signature certifies that the foregoing is a true and correct copy as approved by the South Tahoe Joint Powers Financing Authority. 440
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Recording requested by and when
recorded mail to:

City of South Lake Tahoe
c/o Richards, Watson & Gershon,
A Professional Corporation
350 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Attention: Lolly Enriquez, Esq.

RWG Draft 7/25/22
This Document is recorded for the benefit of the City of South Lake Tahoe and is exempt from California documentary transfer tax pursuant to Section 11928 of the California Revenue and Taxation Code and from recording fees pursuant to Sections 6103, 27383 and 27388.1 of the California Government Code.
====================================================================

LEASE AGREEMENT
by and between
the

CITY OF SOUTH LAKE TAHOE,
as lessor
and the

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY,
as lessee
Dated as of October 1, 2022
==================================================================== 441

TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS..............................................................................................1 SECTION 2. LEASE OF LEASED PROPERTY ....................................................................2 SECTION 3. TERM .........................................................................................................2 SECTION 4. RENTAL......................................................................................................2 SECTION 5. TITLE ..........................................................................................................3 SECTION 6. DEFAULT....................................................................................................3 SECTION 7. EMINENT DOMAIN....................................................................................4 SECTION 8. RIGHT OF ENTRY .......................................................................................4 SECTION 9. SURRENDER OF PROPERTIES UPON TERMINATION .................................4 SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY...................................................4 SECTION 11. ASSIGNMENTS AND SUBLEASES ...............................................................4 SECTION 12. WAIVER OF PERSONAL LIABILITY ..............................................................5 SECTION 13. TAXES ........................................................................................................5 SECTION 14. GOVERNING LAW......................................................................................5 SECTION 15. NOTICES ....................................................................................................5 SECTION 16. VALIDITY AND SEVERABILITY ....................................................................5 SECTION 17. PURPOSE OF LEASE ...................................................................................5 SECTION 18. WAIVER OF DEFAULT ................................................................................5 SECTION 19. SECTION HEADINGS ..................................................................................6 SECTION 20. AMENDMENTS ..........................................................................................6 SECTION 21. EXECUTION................................................................................................6

EXHIBIT A DESCRIPTION OF LEASED PROPERTY
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LEASE AGREEMENT
This Lease Agreement, dated as of October 1, 2022 (this “Lease”), is made by and between the CITY OF SOUTH LAKE TAHOE, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), as lessor, and the SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly formed and existing under the laws of the State of California (the “Authority”), as lessee.

RECITALS:

A. The Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022, by and between the City of South Lake Tahoe (the “City”) and the Parking Authority of the City of South Lake Tahoe, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to issue bonds to provide financing for public capital improvements; and B. The Authority is issuing its Lease Revenue Bonds, Series 2022A (the “Bonds”), pursuant to the Indenture, dated as of October 1, 2022 (the “Indenture”), by and between the Authority and [Name of Trustee], as trustee.

C. Proceeds from the sale of the Bonds will be used to (i) finance the cost of construction of the City’s new recreation center, and (ii) pay cost of issuance.

D. In connection with the issuance of the Bonds, the City and the Authority desire to enter into this Lease, whereby the Authority will lease certain real property from the City (the “Leased Property”).

E. Pursuant to the Sublease, dated as of even date herewith, by and between the City and the Authority, the Authority will sublease the Leased Property to the City.

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:

SECTION 1. DEFINITIONS.

SECTION 2. LEASE OF LEASED PROPERTY.

The City hereby leases the Leased Property to the Authority and the Authority hereby leases the Leased Property from the City, on the terms and conditions hereinafter set forth.

SECTION 3. TERM.

The term of this Lease shall commence on the Commencement Date and shall end on the last day of the term of the Sublease; which is the earliest of: (i) the Expiration Date; (ii) the date on which the Base Rental payments are paid (or prepaid) in full under the provisions of the Sublease; or (iii) the date of discharge of the Indenture.

SECTION 4. RENTAL.

The Authority agrees to pay to the Trustee on the Closing Date the proceeds of the Bonds as advance rental for the use and right to possession of the Leased Property for the term of this Lease. The rental shall be applied by the Trustee as provided in the Indenture. 444
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SECTION 5. TITLE.

In accordance with the Sublease, the City shall obtain one or more CLTA (or at the City’s sole discretion, ALTA) policies of title insurance at the time of and dated as of the Commencement Date in an amount not less than the aggregate principal amount of the Outstanding Bonds, payable to the Trustee, insuring the respective interests of the City and the Authority in the Leased Property, and insuring the validity of this Lease and the Sublease, issued by a title insurance company qualified to do business in the State of California and acceptable to the Authority. To the extent permitted under the Indenture, the costs of obtaining such title insurance policy or policies may be paid out of the sale proceeds of the Bonds.

SECTION 6. DEFAULT.

If -
(a) the Authority shall fail to keep, observe or perform any term, covenant or condition contained herein to be kept or performed by the Authority, or (b) the Authority’s interest in this Lease or any part thereof is assigned or transferred without the written consent of the City, either voluntarily or by operation of law or otherwise, except as provided in Section 11 hereof, or
(c) any proceeding under the United States Bankruptcy Code or any federal or state bankruptcy, insolvency or similar law or any law providing for the appointment of a receiver, liquidator, trustee or similar official of the Authority or of all or substantially all of its assets is instituted by or with the consent of the Authority, or is instituted without its consent and is not permanently stayed or dismissed within 30 days, or (d) the Authority offers to the Authority’s creditors to effect a composition or extension of time to pay the Authority’s debts, or asks, seeks or prays for a reorganization or to effect a plan of reorganization or for readjustment of the Authority’s debts, or (e) the Authority shall make, in connection with any proceedings related to bankruptcy, insolvency, liquidation, winding up or similar events a general assignment or any assignment for the benefit of the Authority’s creditors, then the Authority shall be deemed to be in default hereunder and it shall be lawful for the City to exercise any and all rights and remedies available pursuant to law; provided, however, that:
(i) no merger of this Lease and the Sublease shall be deemed to occur as a result thereof and (ii) so long as any Bonds remain outstanding, the City shall have no power to terminate this Lease by reason of any default on the part of the Authority.

Neither the City nor the Authority shall in any event be in default in the performance of any of its obligations hereunder or imposed by law unless and until the City or the Authority (as the case may be) shall have failed to perform such obligation within 30 days 445
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after notice by the Authority or the City (as the case may be) to the nonperforming party properly specifying wherein such party has failed to perform any such obligation.

SECTION 7. EMINENT DOMAIN.

If the whole or any part of the Leased Property shall be taken under the power of eminent domain, the interest of the Authority shall be recognized and any condemnation award shall be applied as provided in Section 9 of the Sublease.

SECTION 8. RIGHT OF ENTRY.

The City and its assignees shall have the right to enter any of the Leased Property during reasonable business hours (and in emergencies at all times) (a) to inspect the same, (b) for any purpose connected with the City’s or the Authority’s rights or obligations under this Lease and (c) for all other lawful purposes.

SECTION 9. SURRENDER OF PROPERTIES UPON TERMINATION.

The Authority agrees upon the termination of this Lease to quit and surrender the Leased Property in the same good order and condition as the same were in at the time of commencement of the term hereunder, reasonable wear and tear excepted, and the Authority and the City agree that any permanent improvements and structures existing upon the Leased Property at the time of the termination of this Lease shall remain thereon and title thereto shall be vested in the City.

SECTION 10. QUIET ENJOYMENT BY THE AUTHORITY.

The Authority shall at all times during the term of this Lease peaceably and quietly have, hold and enjoy the real property leased hereunder without suit, trouble or hindrance from the City, subject to the rights granted to the City under the Sublease, and subject to the Authority’s compliance with the terms and provisions hereof.

SECTION 11. ASSIGNMENTS AND SUBLEASES.

The parties understand that this Lease and the rights of the Authority hereunder (except the Authority’s rights to give approvals and consents hereunder and to indemnification and payment or reimbursement for any costs or expenses of the Authority hereunder) will be assigned to the Trustee pursuant to the Assignment Agreement for the benefit of the Owners of the Bonds. Except as provided in the foregoing sentence, the Authority shall not assign, mortgage, hypothecate or otherwise encumber this Lease or any rights hereunder or the leasehold created hereby by trust agreement, indenture or deed of trust or otherwise or sublet the Leased Properties without the written consent of the City except as provided by the Sublease and as security for the Bonds.
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SECTION 12. WAIVER OF PERSONAL LIABILITY.

All liabilities hereunder on the part of the Authority shall be solely liabilities of the Authority as a separate legal entity, and no member, officer or employee of the Authority shall at any time or under any circumstances be individually or personally liable hereunder for anything done or omitted to be done by the Authority under this Lease.

SECTION 13. TAXES.

The City shall be responsible for the payment of any and all assessments of any kind or character and also all taxes, including possessory interest taxes, levied or assessed upon the Leased Property.

SECTION 14. GOVERNING LAW.

This Lease shall be governed exclusively by the provisions hereof and by the laws of the State of California.

SECTION 15. NOTICES.

Any notice, request, demand, or other communication under this Lease shall be governed by Section 9.14 of the Indenture, which is hereby incorporated.

SECTION 16. VALIDITY AND SEVERABILITY.

If for any reason this Lease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the City or by the Authority, or if for any reason it is held by such a court that any of the covenants and conditions of the Authority hereunder is unenforceable for the full term hereof, then and in such event this Lease is and shall be deemed to be a lease from year to year and all of the rental and other terms, provisions and conditions of this Lease, 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.

SECTION 17. PURPOSE OF LEASE.

The Authority covenants that during the term of this Lease, except to the extent that other uses may be permitted under the Sublease, it will use, or cause the use of, the Leased Property to be consistent with the descriptions set forth in the Sublease or related public purposes.

SECTION 18. WAIVER OF DEFAULT.

Failure of the City to take advantage of any default on the part of the Authority shall not be, or be construed as, a waiver thereof, nor shall any custom or practice which may grow up between the parties in the course of administering this Lease be construed to waive or to lessen the right of the City to insist upon performance by the Authority of any term, covenant 447
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or condition hereof, or to exercise any rights given the City on account of such default. A waiver of a particular default shall not be deemed to be a waiver of the same or any subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Lease.

SECTION 19. SECTION HEADINGS.

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

SECTION 20. AMENDMENTS.

This Lease may not be amended unless such amendment is agreed upon in writing by the parties hereof; provided that, no such amendment shall materially affect the interests and rights of the Owners of the Bonds under the Indenture or the Sublease unless: (i) there shall have been delivered to the Trustee an opinion of Bond Counsel that such amendment will not adversely affect the tax-exempt status of any Bonds, or (ii) the Trustee shall have obtained written consent of the Owners of at least a majority in aggregate principal amount of the affected Bonds then Outstanding to such amendment. A substitution or release of any portion of the Leased Properties under this Lease and the Sublease, or an amendment to delete of a portion of the Leased Properties in connection with a partial prepayment of Base Rental under the Sublease from insurance or condemnation proceeds, shall not be considered as materially affecting the interests and rights of the Owners of the Bonds if such substitution, release or deletion complies with the provisions of the Sublease. The Authority shall provide copies of all amendments to the Trustee promptly after execution of any such amendment.

SECTION 21. EXECUTION.

This Lease may be executed in any number of counterparts, each of which shall be deemed to an original, but all together shall constitute but one and the same instrument. 448
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IN WITNESS WHEREOF, the City and the Authority have caused this Lease to be executed by their respective officers thereunto duly authorized, all as of the day and year first above written.

CITY OF SOUTH LAKE TAHOE
By:

Devin Middlebrook, Mayor
Attest:

Susan Blankenship, City Clerk

SOUTH TAHOE JOINT POWERS FINANCING

AUTHORITY
By:

Joe Irvin, Executive Director
Attest:

Susan Blankenship, Secretary
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EXHIBIT A

DESCRIPTION OF LEASED PROPERTY

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH LAKE TAHOE, COUNTY

OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS, TOGETHER WITH IMPROVEMENTS THEREON:

PARCEL 1 - 1252 Ski Run Boulevard - Fire Station #1: (APN: 027-323-17-100) Lot 41, as shown on the Official Map of Keller Park Subdivision, filed in the Office of the County Recorder of said County on July 19, 1951 in Map Book A, Map No. 202.

Excepting therefrom the following: Beginning at the most Northerly corner of Lot 41 as shown and so delineated on that certain Map of Keller Park Subdivision, recorded in Map Book “A” at Page 102, Official Records of El Dorado County, California; thence from said point of beginning South 29°45’ East along the Northeasterly line of said Lot 41, 125.03 feet; thence leaving said line South 60°15’ West, 336.18 feet to a point on the Southwesterly line of said Lot 41; thence North 40°49’ West along said line 127.40 feet to the most Westerly corner of said Lot 41; thence North 60°15’ East along the Northwesterly line of said Lot 41; 360.63 feet to the point of beginning.

Also excepting therefrom that portion conveyed to Margaret R. Keller, in the instrument recorded October 6, 1972 in Book 1151 of Official Records, Page 262.

Also excepting therefrom that portion conveyed to the City of South Lake Tahoe, in the instrument Recorded March 20, 1974 in Book 1252 of Official Records, Page 185.

PARCEL 2 - 1352 Johnson Boulevard - Police Station: (APN: 025-010-21-100) All that portion of Section 3, Township 12 North, Range 18 East, M.D.M., more particularly described as follows:

Beginning at the corner common to Lots 1, 2 and 14 of said Section 3; thence along the lot line common to Lot 2 and Lot 14 South 89°26’11” West, 695.04 feet to a point of cap at a non-tangent curve from which the center bears South 30°11’22” West, 640.00 feet; thence Southeasterly along said curve through a central angle of 25°42’14” an arc distance 287.12 feet; thence tangent to said curve South 34°06’24” East, 108.00 feet; thence North 89°26’11” East, 617.42 feet; thence North 18°37’15” East, 303.22 feet to a point on the lot line common to Lot 1 and Lot 14; thence South 89°26’11” West, 287.86 feet to the point of beginning.

PARCEL 3 - 1201 Al Tahoe - Bijou Park (APNs: 025-010-051, 025-041-009) [legal description to come]
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PARCEL 4 - 1176 Rufus Allen - Skating Rink (APN: 026-050-004) [APN may change with land swap but a new one has not been assigned yet]
All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Thence from said Point of Commencement, along the Easterly line of said Section 32, North 00°20'03" West a distance of 780.10 feet;
Thence leaving said Easterly Section Line, North 88°56'42" West a distance of 60.02 feet to the True Point of Beginning:

Thence, from said True Point of Beginning, leaving the aforementioned proposed westerly Rightof-Way line, North 88°56'42" West a distance of 576.88 feet; Thence South 01'36'54" West a distance of 311.27 feet;
Thence South 89°02'41" East a distance of 97.32 feet;
Thence South 00°20'03" East a distance 42.68 feet;
Thence North 88°44'16" East a distance of 486.53 feet to a point of non-tangent curvature; Thence from a radial line which bears South 83°56'49" East, northerly 65.77 feet along the arc of a 590.00 foot radius non-tangent curve to the left through a central angle of 06°23'14"; Thence North 00°20'03" West a distance of 289.90 feet to the Point of Beginning; EXCEPTING THEREFROM the following parcel of land presently vested in the County of El Dorado:

Commencing at the 1-1/2 inch capped iron pipe stamped "LS 2403" set in a fence line on the West side of Rufus Allen Boulevard, and from which the Southeast corner of said Section 32, a brass capped 2 inch iron pipe stamped Section 32 and B.L.M., bears South 7° 07' East 547.63 feet distant; thence South 0° 49' East 60.92 feet to the Southwest corner, a point on the West side of Rufus Allen Boulevard; thence South 85° 58' West 240.00 feet to the Southwest corner; thence North 0° 50' West 207.59 feet to the Northeast corner, a point; thence South 87° 48' East 240.00 feet to the Northeast corner, a 1 inch capped iron pipe stamped "LS 2403 1972" set on the West side of Rufus Allen Boulevard; thence along the West side of Rufus Allen Boulevard South 0° 49' East 120.58 feet to the point of commencement.
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Said Proposed Parcel 1 contains 3.820 acres of land, more or less.

PARCEL 5 - 1176 Rufus Allen - Recreation Center Complex (APN: ___) All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Thence from said Point of Commencement, along the Easterly line of said Section 32, North 00°20'03" West a distance of 1321.81 feet;
Thence continuing along said Easterly Section Line, North 00°15'50" West a distance of 775.91 feet to a point situate on the southerly Right-of-Way line of U.S. 50; Thence leaving said Section Line, along the aforementioned southerly Right-of-Way line, South 73°47'02" West a distance of 314.14 feet to the True Point of Beginning:

Thence from said True Point of Beginning, continuing along said southerly Right-of-Way line of U.S.

Highway 50, South 73°47'02" West a distance of 210.75 feet to a point of curvature; Thence continuing along said southerly Right-of-Way line, southerly end westerly 572.08 feet along the arc of a 990.00 foot radius tangent curve to the left through a central angle of 33°06'32"; Thence leaving said southerly Right-of-Way line, South 34°27' 10" East a distance of 514.27 feet to a point situate on the northerly line of a proposed 60.00 foot Right-of-Way as yet unnamed; Thence along the said northerly proposed unnamed Right-of-Way line, South 88°31'49" East a distance of 631.90 feet to a point on the proposed westerly Right-of-Way line of Rufus Allen Boulevard, Thence leaving the said northerly proposed unnamed Right-of-Way line and proceeding along said proposed westerly Right-of-Way line of Rufus Allen Boulevard, North 00°20'03" West a distance of 116.04 feet;
Thence continuing along said proposed westerly Right-of-Way line, North 00° 15' 50" West a distance of 140.25 feet;
Thence leaving said proposed westerly Right-of-Way line, North 89° 54' 15" West a distance of 245.35 feet;
Thence North 00°04'52" East a distance of 547.79 feet to the Point of Beginning and containing 10.211 acres of land, more or less.

The Basis of Bearings for this description is the aforementioned Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder.
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See Exhibit "K-1", Plat to Accompany Description, attached hereto and made a part hereof.

State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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)
State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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.

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. 453
12463-0017\2636604
Recording requested by and when
recorded mail to:

City of South Lake Tahoe
c/o Richards, Watson & Gershon,
A Professional Corporation
350 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Attention: Lolly Enriquez, Esq.

RWG Draft 7/2__/22
This Document is recorded for the benefit of the City of South Lake Tahoe and is exempt from California documentary transfer tax pursuant to Section 11928 of the California Revenue and Taxation Code and from recording fees pursuant to Sections 6103, 27383 and 27388.1of the California Government Code.
====================================================================

SUBLEASE
by and between
the

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY,
as lessor,
and the

CITY OF SOUTH LAKE TAHOE,
as lessee
Dated as of October 1, 2022
==================================================================== 454

TABLE OF CONTENTS
Page
12463-0017\2636604 -iSECTION 1. DEFINITIONS..........................................................................................................1 SECTION 2. TERM ...................................................................................................................3 SECTION 3. RENTAL..................................................................................................................3 SECTION 4. USE OF PROCEEDS.................................................................................................5 SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS ........................................5 SECTION 6. CHANGES TO THE LEASED PROPERTY...................................................................5 SECTION 7. TITLE INSURANCE..................................................................................................6 SECTION 8. OTHER INSURANCE ...............................................................................................6 SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION.................................................8 SECTION 10. DEFAULT................................................................................................................9 SECTION 11. PREPAYMENT AND CREDITS ...............................................................................10 SECTION 12. RIGHT OF ENTRY .................................................................................................11 SECTION 13. MECHANICS’ LIENS..............................................................................................11 SECTION 14. QUIET ENJOYMENT .............................................................................................12 SECTION 15. INDEMNIFICATION..............................................................................................12 SECTION 16. ASSIGNMENT TO TRUSTEE..................................................................................12 SECTION 17. ABATEMENT OF RENTAL .....................................................................................13 SECTION 18. ADDITIONAL COVENANTS REGARDING TAX-EXEMPT BONDS............................13 SECTION 19. SUBSTITUTION OR RELEASE OF PROPERTY.........................................................14 SECTION 20. WAIVER ...............................................................................................................15 SECTION 21. NET LEASE ...........................................................................................................15 SECTION 22. AMENDMENTS ....................................................................................................15 SECTION 23. GOVERNING LAW................................................................................................15 455
TABLE OF CONTENTS (cont.)
Page
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SECTION 24. NOTICES ..............................................................................................................15 SECTION 25. VALIDITY AND SEVERABILITY ..............................................................................15 SECTION 26. SECTION HEADINGS ............................................................................................16 SECTION 27. EXECUTION..........................................................................................................16

EXHIBIT A DESCRIPTION OF LEASED PROPERTY

EXHIBIT B BASE RENTAL PAYMENT SCHEDULE
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SUBLEASE
This Sublease, dated as of October 1, 2022 (this “Sublease”), is made by and between the SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY, a joint powers authority duly formed and existing pursuant to the laws of the State of California (the “Authority”), as lessor, and the CITY OF SOUTH LAKE TAHOE, a municipal corporation duly organized and existing under the laws of the State of California (the “City”), as lessee.

RECITALS:

C. Proceeds from the sale of the Bonds will be used to assist the City with the financing the cost of construction of a new recreation center complex.

D. In connection with the issuance of the Bonds, the City and the Authority are entering into the Lease Agreement, dated as of October 1, 2022 (the “Lease”), whereby the Authority will lease certain properties from the City (the “Leased Property”).

E. Pursuant to this Sublease, the Authority will sublease the Leased Property to the City.

NOW, THEREFORE, in consideration of the above premises and of the mutual covenants hereinafter contained and for other good and valuable consideration, the parties hereto agree as follows:

SECTION 1. DEFINITIONS.

Terms used and not otherwise defined herein but which are defined in the Indenture shall have the meanings ascribed to them in the Indenture. Unless the context otherwise requires, the terms defined in this Section shall, for all purposes of this Sublease, have the meanings specified in this Section (the following definitions to be equally applicable to both the singular and plural forms of any of such defined terms):
“Additional Rental” has the meaning assigned to that term in Section 3(b) hereof. 457
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“Assignment Agreement” means the Assignment Agreement, dated as of October 1, 2022, by and between the Authority and the Trustee, as the same may be amended, supplemented or otherwise modified from time to time.
“Base Rental” has the meaning assigned to that term in Section 3(a) hereof. “Bonds” means the Authority’s Lease Revenue Bonds, Series 2022A. “Commencement Date” means the Closing Date with respect to the Bonds. “Expiration Date” means October 1, 2052; provided, however, if on such date, the City is in default with respect to any Base Rental payment or an abatement event has occurred such that all Base Rental payments have not been made, then the Expiration Date shall be automatically extended to October 1, 2062.
“Leased Property” means the real property in the City described in Exhibit A of this Sublease, and incorporated herein by reference, including improvements thereon, including the following: (1) 1252 Ski Run Boulevard - Fire Station #1; (2) 1352 Johnson Boulevard - Police Station; (3) 1176 Rufus Allen - Skating Rink; (4) 1201 Al Tahoe - Bijou Park; and (5) 1176 Rufus Allen - the Recreation Center Complex Property
“Indenture” means the Indenture, dated as October 1, 2022, by and between the Authority and the Trustee relating to the Bonds, as the same may be amended and supplemented from time to time in accordance with the terms thereof. “Net Proceeds” means any insurance or condemnation proceeds, paid with respect to the Leased Property remaining after payment therefrom of all expenses in the collection thereof.
“Payment Date” means, with respect to a Base Rental payment, the date listed as its related “Payment Date” in Exhibit B of this Sublease.
“Permitted Encumbrances” means (a) liens for general ad valorem taxes, special taxes and assessments, if any, not then delinquent, or which the City may, pursuant to this Sublease, permit to remain unpaid; (b) liens created pursuant to or permitted under the Lease or this Sublease; (c) easements, right of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions which exist of record as of the Commencement Date; (d) utility, access and other easements and rights of way, restrictions and exceptions that do not interfere with or impair the use intended to be made of the relevant Leased Property; (e) the City’s right to access and exclusive right to use and maintain facilities essential to the City’s utilities systems; (f) any right or claim of any mechanic, laborer, materialman, supplier or vendor filed or perfected in the manner prescribed by law after the Commencement Date; (g) such minor defects, irregularities, encumbrances and clouds on title as normally exist with respect to property similar in character to the relevant Leased Property and as do not materially impair the use intended to be made of property affected thereby; and 458
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(h) easements, right of way, mineral rights, drilling rights and other rights, reservations, covenants, conditions or restrictions established following the Commencement Date which do not materially impair the City’s use of the Leased Property and to which the Authority and the City consent in writing.
“Recreation Center Project” means the project to construct the City’s new recreation center, to be located at 1176 Rufus Allen Boulevard, South Lake Tahoe, California together with improvements thereon.
“Rental Payments” means, together, Base Rental and Additional Rental. “Sublease” means this Sublease, as the same may be amended and supplemented from time to time in accordance with the terms hereof.

SECTION 2. TERM.
(a) The Authority hereby subleases to the City and the City hereby leases from the Authority, the Leased Property on the terms and conditions set forth in this Sublease. (b) The term of this Sublease shall commence on the Commencement Date, and shall end on the earliest of: (i) the Expiration Date; (ii) the date on which the Base Rental payments are paid (or prepaid) in full under the provisions the Sublease; or (iii) the date of discharge of the Indenture.
(c) Throughout the term of this Sublease, fee title to the Leased Property shall remain in the City. While any Bonds remain Outstanding under the Indenture, there shall be no merger of the subleasehold estate in the Leased Property created by this Sublease, the leasehold estate in the Leased Property created by the Lease, and the fee estate in the Leased Property merely because such estates, or any of them, have been acquired or become vested in the same person or entity.

SECTION 3. RENTAL.

Subject to the provisions of Sections 8(c) and 17 hereof, the City agrees to pay to the Authority, its successors or assigns, as rental for the use and possession of the Leased Property, the following amounts at the following times:
(a) The City shall pay as “Base Rental” to the Authority or to the Trustee, as hereinafter provided, semiannually, the rental payments in accordance with the Base Rental payment Schedule attached hereto as Exhibit B, less any amount credited against Base Rental pursuant to Section 4.02(d) of the Indenture. Each Base Rental payment shall be payable in arrears five days before its Payment Date, and shall be made in consideration for the City’s use and possession of the Leased Property for the six month period preceding the Payment Date of such payment.
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(b) The City shall also pay, as “Additional Rental” hereunder, in addition to the Base Rental, to the Authority or to the Trustee, as hereinafter provided, such amounts in each year as shall be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of this Sublease or the assignment hereof, the Indenture, or the Authority’s or the Trustee’s respective interests in the Leased Property, including, but not limited to, all fees, costs and expenses, all administrative costs of the Authority relating to the Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture), [amount (if any) required to be deposited by the Trustee under the Indenture to restore the balance in the Reserve Account to the full amount of the Reserve Requirement]. fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or of the Indenture. The Authority or the Trustee shall bill such Additional Rental to the City from time to time. The City shall pay amounts so billed within 30 days after receipt of the bill by the City. (c) Such payments of Base Rental and Additional Rental for each rental payment period shall constitute the total rental for said rental payment period, and shall be paid by the City in each rental payment period for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said rental is to be paid. The parties hereto have agreed and determined that such total rental does not exceed the fair rental value of the Leased Property for each such period. In making such determination, consideration has been given to other obligations of the parties under this Sublease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public. The determination of fair rental value of the Leased Property pursuant to this paragraph shall not be deemed to be controlling in connection with a determination of fair value of the Leased Property by the parties hereto for any other purpose. (d) Each installment of Base Rental payable hereunder shall be paid in lawful money of the United States of America to the order of the Trustee at the corporate trust office of the Trustee in Los Angeles, California, or such other place as the Trustee may designate. (e) Notwithstanding any dispute between the City and the Authority, 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 any 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, at the option of the City, shall be credited against subsequent Rental Payments due hereunder or be refunded at the time of such determination.
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(f) The City covenants to take such action as may be necessary to include all such Rental Payments due hereunder in its annual budget and to make the necessary annual appropriations for all such Rental Payments. If the City’s adopted annual budget for any fiscal year fails to include sufficient appropriation for the scheduled Rental Payments for the such fiscal year, the City shall give written notice to the Authority and the Trustee of such failure as soon as practical, but in any event within ten Business Days of the adoption of such annual budget. The covenants on the part of the City contained in this Sublease 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 Sublease agreed to be carried out and performed by the City; provided, the obligation of the City to make Base Rental or Additional Rental payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental or Additional Rental payments constitutes an indebtedness of the City, the State or any of its political subdivisions in contravention of any constitutional or statutory debt limitation or restriction.

SECTION 4. USE OF PROCEEDS.

The Authority and the City agree that the proceeds of the Bonds will be used to:
(i) finance the Projects, and (ii) pay the costs of issuing the Bonds and incidental and related expenses, as more fully set forth in the Indenture.

SECTION 5. MAINTENANCE, UTILITIES, TAXES AND ASSESSMENTS. (a) During such time as the City or any assignee or sublessee thereof is in possession of the Leased Property, all maintenance and repair, ordinary or extraordinary, of the Leased Property shall be the responsibility of the City, and the City shall pay for or otherwise arrange for the payment of: (i) all utility services supplied to the Leased Property, (ii) the cost of operation of the Leased Property, and (iii) the costs of maintenance of and repair to the Leased Property resulting from ordinary wear and tear or want of care on the part of the City.

The City shall, at the City’s sole cost and expense, keep and maintain the Leased Property clean and in a safe and good condition and repair. The Authority shall have no obligation to alter, remodel, improve, repair, decorate, or paint the Leased Property or any part thereof, and the parties hereto affirm that the Authority has made no representations or warranties to the City respecting the condition of the Leased Property.
(b) The City shall comply with all statutes, ordinances, regulations, and other requirements of all governmental entities that pertain to the occupancy or use of the Leased Property. The Authority has no responsibility or obligation whatsoever to construct any improvements, modifications or alterations to the Leased Property. (c) The parties hereto contemplate that the City will use the Leased Property for public purposes and, therefore, that the Leased Property will be exempt from all taxes 461
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presently assessed and levied with respect to real and personal property, respectively. In the event that the use, possession or acquisition by the Authority or the City of any of the Leased Property is found to be subject to taxation in any form, the City will pay during the term hereof, as the same respectively become due, all taxes and governmental charges of any kind whatsoever that may at any time be lawfully assessed or levied against or with respect to such Leased Property and any other property acquired by the City in substitution for, as a renewal or replacement of, or a modification, improvement or addition to such Leased Property; provided, that with respect to any governmental charges or taxes that may lawfully be paid in installments over a period of years, the City shall be obligated to pay only such installments as are accrued during such time as this Sublease is in effect.

SECTION 6. CHANGES TO THE LEASED PROPERTY.
(a) The City shall have the right during the term of this Sublease to acquire and construct improvements or to attach fixtures, structures or signs to any of the Leased Property if the improvements, fixtures, structures or signs are necessary or beneficial for the use of such Leased Property by the City; provided, however, that no such acquisition or construction shall result in a material reduction in the aggregate value of the Leased Property or reduce the aggregate fair rental value thereof or result in an abatement of the Rental Payments.
(b) Upon termination of this Sublease, the City may remove any fixture, structure or sign added by the City, but such removal shall be accomplished so as to leave the Leased Property, except for ordinary wear and tear and damage by casualty, in substantially the same condition as they were in before the fixture, structure or sign was attached.

SECTION 7. TITLE INSURANCE.

The City shall obtain one or more California Land Title Association insurance policies (or, at the City’s sole discretion, American Land Title Association insurance policies) at the time of and dated as of the Commencement Date in an aggregate amount not less than the aggregate principal amount of the Bonds, payable to the Trustee, insuring the respective interests of the City and the Authority in the Leased Property, and insuring the validity of this Sublease, subject only to Permitted Encumbrances, naming the Trustee as an insured thereunder, issued by a title insurance company qualified to do business in the State of California and acceptable to the Trustee. To the extent permitted under the Indenture, the costs of obtaining such title insurance policy or policies may be paid out of the sale proceeds of the Bonds.

SECTION 8. OTHER INSURANCE.
(a) Fire and Extended Coverage Insurance. The City shall maintain or cause to be maintained fire, lightning and extended coverage insurance on the Leased Property in an amount equal to (i) 100 percent of the then current replacement cost of the Leased Property, excluding the then fair market value of the land as unimproved or (ii) the principal amount of all 462
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outstanding Bonds, whichever is less (except that such insurance may be subject to a deductible clause not to exceed 10 percent of the amount of such policy). Earthquake insurance shall be maintained on the Leased Property only if available on the open market from reputable insurance companies at a reasonable cost. The extended coverage endorsement shall, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke, vandalism, malicious mischief, dumping or other deposit of any pollutant or other debris and such other hazards as are normally covered by such endorsement. Each such policy of insurance shall be in form reasonably satisfactory to the Authority, and shall contain a clause naming the Trustee as an additional insured and making all losses payable to the Trustee, and all proceeds thereof shall be paid over to the party contractually responsible for making repairs of casualty damage.

In the event of any damage to or destruction of the Leased Property caused by the perils covered by such insurance, the proceeds of such insurance shall be utilized to repair, reconstruct or replace the Leased Property to the end that the project shall be restored to at least the same condition that it was in prior to such damage or destruction. Any balance of such proceeds not required for such repair, reconstruction or replacement shall be transferred to the Authority and treated as Revenues and applied in the manner provided in the Indenture.
(b) Liability Insurance. The City shall maintain or cause to be maintained public liability insurance with limits of not less than $3,000,000 for one person and $5,000,000 for more than one person involved in one accident to protect the Authority and the Trustee from all direct or contingent loss or liability for damages for bodily injury or death occasioned by reason of the construction, condition or operation of the Leased Property. The City will also maintain or cause to be maintained insurance against liability for property damage resulting from any casualty attributable to the operation of the project in an amount not less than $1,000,000 for each accident. The public liability insurance and property damage insurance may be subject to a deductible clause for anyone accident of not to exceed $250,000. The insurance coverage required by this subsection may be effected by blanket policies covering the Leased Property issued to the party contractually responsible for the maintenance and operation of the project and such insurance policy or policies shall name the Trustee as an additional insured.
(c) Rental Interruption Insurance. The City will maintain or cause to be maintained rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of the Leased Property as a result of any of the hazards covered by the insurance required by subsection (a) of this section in an amount not less than the greatest of the aggregate Base Rental payable by the City under this Sublease for a period of any future 24 months. Any such insurance policy shall be in form satisfactory to the Authority and shall contain a clause naming the Trustee as an additional insured and making any loss thereunder payable to the Trustee as its interests may appear. Any proceeds of such insurance shall be used by the Trustee to pay Annual Debt Service on the Outstanding Bonds for the period during which the payment of rental under the Sublease is abated, and any proceeds of such insurance 463
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not so used shall be applied as provided in the Indenture to the extent required to pay administrative costs of the Authority in connection with the Leased Property. (d) Self-Insurance; Alternative Plan of Protection. As an alternative to providing the insurance required by paragraph (b) above, the City may provide or cause to be provided a self-insurance method or plan of protection if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the City and the Authority, and their directors, officers, agents and employees and the Trustee, its directors, officers, agents and employees in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the City; provided that the obligation of the Authority or City to make payments under such self-insurance shall be limited to money in a designated fund balance established by the Authority or City and that the Authority or City shall not be obligated to replenish such designated fund balance from the General Fund or be otherwise obligated to make payments except from such designated fund balance. After the Commencement Date, before any substitute method or plan may be provided by the City, there shall be filed with the Trustee a certificate of an actuary, independent insurance consultant or other qualified person, stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford adequate protection to the City and the Authority, and their directors, officers, agents and employees and the Trustee and its directors, officers, agents and employees against loss and damage from the hazards and risks covered thereby; provided, however, that in the event the City provides a self-insurance method or plan of protection for the insurance required by paragraph (c) above, the designated fund balance established by the City shall be funded in an amount at least equal to the greatest of the aggregate Base Rental payable by the City under this Sublease for a period of any future 24 months.

Moreover, as an alternative to providing the insurance required by paragraph (b) above, the City may provide a self-insurance method or plan of protection through the California Insurance Pool Authority (or another insurance risk sharing pool joint powers authority formed in the State) or any successor entity as the City may reasonably determine.
(e) Evidence of Insurance. The City shall deliver to the Trustee each year a Certificate of the City stating that all requirements of this Sublease related to insurance have been complied with. Each such insurance policy shall require that the Trustee be given 30 days’ notice of any intended cancellation thereof or reduction of the coverage provided thereby. The Trustee shall have no responsibility as to the sufficiency of coverage or amounts of such policies. If so requested in writing by the Trustee, the City shall also deliver to the Trustee duplicate originals or certified copies of each insurance policy described in such schedule. (f) Advances. If the City shall fail to perform any of its obligations under this Section, then the Authority may, but shall not be obligated to, take such action as may be necessary to cure such failure, including the advancement of money on behalf of the City, and 464
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the City shall be obligated to repay all such advances as soon as possible, as Additional Rental under Section 3(b).
(g) Waivers of Subrogation. Each of the parties hereby waives any and all rights to recovery against the other or against any other tenant or occupant of the Leased Property, or against the officers, employees, agents, representatives, customers, and business visitors of such other party or of such other tenant or occupant of the Leased Property, for loss or damage to such waiving party or its property or the property of others under its control, arising from any cause insured against under the standard form of property damage insurance policy with all permissible extensions and endorsements covering extended perils or under any other policy of insurance carried by such waiving party in lieu thereof, to the extent such policies then in force permit such waiver.

SECTION 9. DAMAGE, DESTRUCTION AND CONDEMNATION; APPLICATION OF NET PROCEEDS.

If: (i) the whole, or any portion, of the Leased Property is destroyed (in whole or in part) or is damaged by fire of other casualty or taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain), or (ii) the leasehold title in all or a portion of the Leased Property is materially impaired by reason of a defect in title, then (a) the City, but only to the extent permitted by law, shall substitute other property for the portion of the Leased Property that has been destroyed, or taken, or affected by the defective title in accordance with Section 19 hereof; or (b) the City shall require the Net Proceeds of any insurance payment (other than the Net Proceeds of rental interruption insurance which shall be applied pursuant to Section 8(c)) or any condemnation award to be held by the Trustee in a special trust fund to be applied and disbursed by the Trustee as follows:
(i) If less than all of the Leased Property shall have been so destroyed or taken or affected by defective title and the remainder is usable, then this Sublease shall continue in full force and effect as to such remainder and (A) if the portion taken or destroyed is replaced by one or more properties of equal or greater fair market value (as demonstrated by an MAI fair market appraisal), the Trustee upon written direction of the City shall disburse such proceeds to the party that incurred the expense of making such replacement and there shall not be any abatement of the Base Rental under this Sublease; or (B) failing the making of such replacement, there shall be a partial abatement of the Base Rental under this Sublease (in accordance with Section 17) and the Trustee shall apply such Net Proceeds, together with any other money then available to it for such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds in accordance with Sections 4.03 and 2.03(a) of the Indenture.
(ii) If less than all of the Leased Property shall have been so destroyed or taken or affected by defective title and the remainder is not usable, or if all of the 465
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Leased Property shall have been so destroyed or taken or affected by the defective title, then the term of this Sublease shall cease as of the day that possession shall be so taken; and the Trustee shall apply such Net Proceeds, together with any other money then available to it for such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds in accordance with Sections 4.03 and 2.03(a) of the Indenture.

SECTION 10. DEFAULT.
(a) If default shall be made by the City in the observance or performance of any agreement, condition, covenant or term contained herein required to be observed or performed by it (including, without limitation, the payment of any Base Rental or Additional Rental due hereunder), subject to the provisions of subsection (c) below, the Authority may at any time thereafter (with or without notice and demand and without limiting any other rights or remedies the Authority may have) recover rent and other monetary charges as they become due hereunder without terminating the City’s right to possession of the Leased Property (regardless of whether or not the City has abandoned the Leased Property). Furthermore, upon the occurrence of such a default, the Authority shall have the right, and the City hereby irrevocably appoints the Authority as its agent and attorney-in-fact for such purpose, to attempt to relet the Leased Property at such rent, upon such conditions and for such term (subject to then existing Permitted Encumbrances, including but not limited to the City’s right to access and exclusive right to maintain and use facilities essential to the City’s utilities systems), and to do all other acts to maintain or preserve the Leased Property, including the removal of persons or property therefrom or taking possession thereof, as the Authority deems desirable or necessary. The City hereby waives any and all claims for any damages that may result to the Leased Property upon any action taken by the Authority under this Section 10(a).

No action taken by the Authority under this Section 10(a) shall be deemed to terminate the Lease or the Sublease and the City shall continue to remain liable for any deficiency that may arise out of such reletting, taking into account expenses incurred by the Authority due to such reletting, payable at the same time and manner as provided for Base Rental in Section 3(a).

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.

Each and all of the remedies given to the Authority hereunder or by any law now existing or hereafter enacted are cumulative and the exercise of any one remedy shall not impair the right of the Authority to any or all other remedies. (b) In addition to any default resulting from breach by the City of any agreement, condition, covenant or term hereof, if –
(i) the City’s interest herein or any part thereof is assigned or transferred, either voluntarily or by operation of law, except as provided in Section 16; or (ii) the City 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 466
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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 in connection with any proceedings related to bankruptcy, insolvency, liquidation, winding up or similar event; or (iii) the City shall abandon the Leased Property or any portion thereof, then in each and every such case the City shall be deemed to be in default hereunder. (c) Neither the Authority nor the City shall be in default in the performance of any of its obligations hereunder (except for the obligation of the City to pay Base Rental when due pursuant to Section 3(a)) unless and until it shall have failed to perform such obligation within 30 days after notice by the Authority or the City, as the case may be, to the other party properly specifying wherein it has failed to perform such obligation.

SECTION 11. PREPAYMENT AND CREDITS.
(a) In the event that, pursuant to Section 9, the City determines that Base Rental shall be abated and Net Proceeds from insurance or any condemnation award shall be used to redeem Bonds, the City shall provide the Authority and the Trustee an amended Exhibit B reflecting the new schedule of Base Rental payments. (b) The City may, at its option, prepay from any source of available moneys, Base Rental then unpaid, in whole or in part, for the redemption of Bonds, which redemption date(s) shall be on or after [October 1, 2032]. In such event, the Bonds shall be redeemed pursuant to Section 2.03(b) of the Indenture. A prepayment under this Section 11(b) shall be deemed made upon the occurrence of either of the following:
(i) The City shall have deposited with the Trustee an amount equal to the sum of (A) the principal components of Base Rental being so prepaid, plus (B) the interest components with respect thereto accrued to the related redemption date(s) of the Bonds, plus (C) a premium, if any, in an amount equal to the redemption premium applicable to the Bonds being so redeemed; or
(ii) There shall have been deposited, on behalf of the Authority, with the Trustee or another fiduciary, Federal Securities in a sufficient amount to satisfy the requirements of Section 9.03 of the Indenture to discharge the Bonds to be redeemed in connection with such prepayment.

Except in the case of a prepayment of Base Rental to redeem all of the then Outstanding Bonds, a prepayment of principal components of Base Rental pursuant to this Section 11(b) shall: (1) apply only to Base Rental previously unpaid and not yet due, and (2) be 467
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applied to reduce Base Rental so that, after such prepayment (and the related redemption of Bonds), (A) each annual installment of principal components of Base Rental due hereunder shall be an integral multiple of $5,000 and (B) the principal components of Base Rental due in any year shall correspond with the principal amount of Bonds due and payable in such year. (c) Before making any prepayment pursuant to this Section 11, the City shall give written notice to the Trustee specifying the date on which the prepayment will be made.

Such notice by the City shall be given at least 45 days before the prepayment date; provided, that the Trustee may accept a shorter notice period or waive such notice requirement at the Trustee’s sole discretion. The City shall have the right to rescind an optional prepayment (exercised under Section 11(b)) by written notice to the Authority and the Trustee prior to the corresponding redemption date of the Bonds, and the Trustee, upon receipt of such notice, shall promptly send notices of rescission of such optional redemption of the Bonds pursuant to Section 2.03(e) of the Indenture.
(d) In the event of a partial prepayment of Base Rental under this Section 11, the City shall provide the Trustee with an amended Exhibit B reflecting the new schedule of Base Rental payments. A prepayment made pursuant to this Section 11 shall not cause a defeasance of Bonds unless the requirements of Section 9.03 of the Indenture are satisfied. (e) In the event of a prepayment in full of the principal component of Base Rental under this Section 11, such that this Sublease shall be terminated by its terms as provided in Section 2, all amounts then on deposit under the Indenture which are to be credited to the City’s obligations to make Base Rental payments shall be credited towards the amounts then required to be so prepaid.

SECTION 12. RIGHT OF ENTRY.

The Authority and its assignees shall have the right to enter any of the Leased Property during reasonable business hours (and in emergencies at all times), subject to the City’s reasonable security measures, (a) to inspect the same, (b) for any purpose connected with the City’s or the Authority’s rights or obligations under this Sublease, and (c) for all other lawful purposes.

SECTION 13. MECHANICS’ LIENS.

In the event the City shall at any time before or during the term of this Sublease cause any improvements or other work to be done or performed or materials to be supplied, in or upon the Leased 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 Leased Property and which may be secured by any mechanics’, materialmen’s or other liens against the Leased Property or the Authority’s interest therein, and will cause any 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. If any such 468
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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 promptly pay and discharge said judgment.

SECTION 14. QUIET ENJOYMENT.

The parties hereto mutually covenant that the City, so long as it keeps and performs the covenants and agreements herein contained, shall at all times during the term of this Sublease peaceably and quietly have, hold and enjoy the Leased Property without suit, trouble or hindrance from the Authority.

SECTION 15. INDEMNIFICATION.

The City shall, to the full extent then permitted by law, indemnify, defend, protect and hold harmless the Authority and its members, officers and employees and the Trustee and its officers, directors or employees from and against any and all liabilities, obligations, losses, claims and damages whatsoever, regardless of the cause thereof (except for any liability, obligation, loss, claim or damage arising out of the negligent or intentional act or omission of the Trustee, its officers, directors or employees), and expenses in connection therewith, including, without limitation, counsel fees and expenses, penalties and interest arising out of or as the result of the entering into of this Sublease and the Indenture, or the payment of costs of (including any accident in connection with) the operation, use, condition or possession of the Leased Property or any portion thereof resulting in damage to property or injury to or death to any person. The indemnification arising under this section shall continue in full force and effect notwithstanding the full payment of all rent obligations hereunder or the termination hereof for any reason, and with regard to the Trustee, the resignation or removal of the Trustee. The City agrees not to withhold or abate any portion of the payments required pursuant hereto by reason of any defects, malfunctions, breakdowns or infirmities of the Leased Property. The Authority and the City mutually agree to promptly give notice to each other of any claim or liability hereby indemnified against following either’s learning thereof.

SECTION 16. ASSIGNMENT TO TRUSTEE; SUBLETTING BY CITY.
(a) The parties understand that this Sublease and the rights of the Authority hereunder (except for the Authority’s rights with respect to approvals or consents hereunder, and indemnification and payment or reimbursement for any costs or expenses of the Authority hereunder) will be assigned to the Trustee pursuant to the Assignment Agreement and the Indenture, and accordingly, the City agrees to make all Rental Payments due to the Authority hereunder directly to the Trustee, notwithstanding any claim, defense, setoff or counterclaim whatsoever (whether arising from a breach hereof or otherwise) that the City may have from time to time against the Authority, except as provided in Section 17. (b) Neither this Sublease nor any interest of the City hereunder shall be mortgaged, pledged, assigned or transferred by the City by voluntary act or by operation of law or otherwise; provided, subject to Section 18, that the City may sublease all or any portion of 469
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the Leased Property, and may grant concessions to others involving the use of any portion of the Leased Property, whether such concessions purport to convey a leasehold interest or a license to use a portion of the Leased Property. The City shall at all times remain liable for the performance of the covenants and conditions on its part to be performed under this Sublease, notwithstanding any subletting or granting of concessions which may be made. Nothing contained herein shall be construed to relieve the City from its obligation to pay Base Rental and Additional Rental as provided in this Sublease or to relieve the City from any other obligations contained herein.
(c) Without limiting the foregoing, to the extent that this Sublease or the Assignment Agreement confer upon or grants the Trustee any right, remedy or claim under or by reason of this Sublease, the Trustee is hereby further recognized as being a third party beneficiary hereunder and may enforce such right, remedy or claim conferred, given or granted hereunder.

SECTION 17. ABATEMENT OF RENTAL.
(a) The obligation of the City to pay Base Rental and Additional Rental shall be abated during any period in which, by reason of any damage, destruction, condemnation or impairment of leasehold interest, there is substantial interference with the use and occupancy of the Leased Property or any portion thereof by the City. Such abatement shall be in an amount agreed upon by the City and the Authority such that the resulting Base Rental in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or impairment do not substantially interfere with the City’s use and right of possession. Such abatement shall continue for the period commencing with the date of such interference and ending with the restoration of the relevant Leased Property to tenantable condition. For clarification purposes, to the extent that any Base Rental is to be paid or prepaid from insurance or condemnation proceeds deposited with the Trustee pursuant to Section 8(c) of this Sublease, such Base Rental shall not be reduced or abated pursuant to this Section. (b) Upon the cessation of the occurrence of any abatement event during the term of this Sublease, the City and the Authority shall, in good faith, determine the current fair rental value of the Leased Property. If such fair rental value is greater than the fair rental value of the Leased Property determined under Section 3 as of the Commencement Date, the Base Rental shall be increased by the lesser of (i) such incremental value or (ii) the amount needed to recoup all amounts abated during the remaining term of this Sublease. (c) Except as set forth herein, in the event of any damage, destruction of condemnation, this Sublease shall continue in full force and effect and the City hereby waives any right to terminate this Sublease by virtue of such damage, destruction or condemnation.

The City further waives the benefit of Sections 1932(1), 1932(2), 1933(4), 1941 and 1942 of the California Civil Code.
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SECTION 18. ADDITIONAL COVENANTS REGARDING TAX-EXEMPT BONDS.

The City covenants that during the term of this Sublease it shall not use or permit the use of the Leased Property or any proceeds of the Bonds, directly or indirectly, in any manner, and shall not take or omit to take any action, that would cause any of the Bonds to be treated as an obligation not described in Section 103(a) of the Code. The City shall comply with the provisions of the Tax Certificate, which is incorporated in this Sublease.

SECTION 19. SUBSTITUTION OR RELEASE OF PROPERTY.
(a) Notwithstanding anything herein to the contrary, the Leased Property may be substituted, in whole or in part, by other properties, or a portion of the Leased Property may be released from this Sublease, at the option of the City; provided, that the following conditions shall have been satisfied:
(i) such substitution or release does not, in the opinion of Bond Counsel, adversely affect the Tax-Exempt status of the Bonds; (ii) The City shall have provided certification to the Authority and the Trustee that the fair market value of the Leased Property, after the proposed substitution or release, shall be equal to or greater than the aggregate amount of the principal component of the Base Rental (i.e., the principal amount of the Outstanding Bonds); (iii) the City certifies to the Authority and the Trustee that, based on the City’s determination, the annual fair rental value of the Leased Property, after such substitution or release, is at least equal to the maximum annual Base Rental remaining unpaid under the terms of this Sublease, and the expected useful life of the Leased Property, after such substitution or release, extends at least to the Expiration Date; (iv) Except as provided in Section 19(b), the City shall notify the rating agency (or agencies) then rating the Bonds regarding such substitution or release; (v) in the event that the substituted property consists in whole or in part of real property, a California Land Title Association insurance policy (or, at the City’s sole discretion, an American Land Title Association insurance policy) on the substituted real property has been obtained, along with evidence that, other than Permitted Encumbrances, no prior liens exist as to the substituted property;
(vi) the City shall provide to the Authority and the Trustee evidence that any existing title insurance with respect to the portion of the Leased Property remaining after such substitution or release is not affected; and (vii) the parties hereto shall amend this Sublease to properly reflect such substitution or release.
471
12463-0017\2636604 -16-
(b) In addition to the release and substitution of property pursuant to Section 19 hereof, upon completion of the Recreation Center Project, the portions of the Leased Property other than the Recreation Center Project and the related real property upon which the Recreation Center Project is located (all as described in Exhibit A to this Sublease) may be released from the Lease and this Sublease; provided, however, that no such release shall occur until there is delivered to the Trustee a Written Certificate of the City that the conditions set forth in Section 19(a)(v), (vi) and (vii) have been satisfied and that the City has received a certificate of occupancy for, and has beneficial use and occupancy of, the Recreation Center Project.

SECTION 20. 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 which may be established between the parties in the course of administering this Sublease 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 the same or any subsequent default. The acceptance of rent hereunder shall not be, nor be construed to be, a waiver of any term, covenant or condition of this Sublease.

SECTION 21. NET LEASE.

Subject to the provisions of Section 17 (“Abatement of Rental”), this Sublease shall be deemed and construed to be a “Triple Net Lease” and the City hereby agrees that rental provided for herein shall be an absolute net return to the Authority, free and clear of any expenses, charges or setoffs whatsoever.

SECTION 22. AMENDMENTS.

This Sublease may only be amended to the extent permitted by Section 5.07 of the Indenture.

SECTION 23. GOVERNING LAW.

This Sublease shall be governed exclusively by the provisions hereof and by the laws of the State of California.

SECTION 24. NOTICES.

Any notice, request, demand, or other communication under this Sublease shall be governed by Section [9.14] of the Indenture, which is hereby incorporated. 472
12463-0017\2636604 -17-
SECTION 25. VALIDITY AND SEVERABILITY.

If for any reason this Sublease shall be held by a court of competent jurisdiction to be void, voidable, or unenforceable by the Authority or by the City, or if for any reason it is held by such a court that any of the covenants of the City hereunder, including the covenant to pay rentals hereunder, is unenforceable for the full term hereof, then and in such event this Sublease is and shall be deemed to be a lease from year to year under which the rentals are to be paid by the City monthly in consideration of the right of the City to possess, occupy and use the Leased Property, and all of the rental and other terms, provisions and conditions of this Sublease, 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.

SECTION 26. SECTION HEADINGS.

All section headings contained are for convenience of reference only and are not intended to define or limit the scope of any provision of this Sublease. [Remainder of this page intentionally left blank.]
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SECTION 27. EXECUTION; RECORDATION.

This Sublease may be executed in any number of counterparts, each of which shall be deemed to be an original, but all together shall constitute but one and the same instrument.

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

SOUTH TAHOE JOINT POWERS FINANCING

AUTHORITY
By:

Joe Irvin, Executive Director
ATTEST:

Susan Blankenship, Secretary

CITY OF SOUTH LAKE TAHOE
By:

Devin Middlebrook, Mayor
ATTEST:

Susan Blankenship, City Clerk
474
12463-0017\2636604 A-1

EXHIBIT A
Description of Leased Property

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH LAKE TAHOE, COUNTY

OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS, TOGETHER WITH IMPROVEMENTS THEREON:

Also excepting therefrom that portion conveyed to Margaret R. Keller, in the instrument recorded October 6, 1972 in Book 1151 of Official Records, Page 262.

Also excepting therefrom that portion conveyed to the City of South Lake Tahoe, in the instrument Recorded March 20, 1974 in Book 1252 of Official Records, Page 185.

PARCEL 2 - 1352 Johnson Boulevard - Police Station: (APN: 025-010-21-100) All that portion of Section 3, Township 12 North, Range 18 East, M.D.M., more particularly described as follows:

PARCEL 3 - 1201 Al Tahoe - Bijou Park (APNs: 025-010-051, 025-041-009) [legal description to come]
475
A-2
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PARCEL 4 - 1176 Rufus Allen - Skating Rink (APN: 026-050-004) [APN may change with land swap but a new one has not been assigned yet]
All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Thence, from said True Point of Beginning, leaving the aforementioned proposed westerly Right-ofWay line, North 88°56'42" West a distance of 576.88 feet; Thence South 01'36'54" West a distance of 311.27 feet;
Thence South 89°02'41" East a distance of 97.32 feet;
Thence South 00°20'03" East a distance 42.68 feet;
Thence North 88°44'16" East a distance of 486.53 feet to a point of non-tangent curvature; Thence from a radial line which bears South 83°56'49" East, northerly 65.77 feet along the arc of a 590.00 foot radius non-tangent curve to the left through a central angle of 06°23'14"; Thence North 00°20'03" West a distance of 289.90 feet to the Point of Beginning; EXCEPTING THEREFROM the following parcel of land presently vested in the County of El Dorado:

Said Proposed Parcel 1 contains 3.820 acres of land, more or less. 476
A-3
12463-0017\2636604
PARCEL 5 - 1176 Rufus Allen - Recreation Center Complex (APN: ___) All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Thence from said True Point of Beginning, continuing along said southerly Right-of-Way line of U.S.

See Exhibit "K-1", Plat to Accompany Description, attached hereto and made a part hereof. 477
12463-0017\2636604 B-1

EXHIBIT B
Base Rental Payment Schedule
Payment Date Principal Component Interest Component Total 4/1/2021
10/1/2021
4/1/2022
10/1/2022
4/1/2023
10/1/2023
4/1/2024
10/1/2024
TOTAL

 Payable five days before each payment date.
478
12463-0017\2636604 B-2
State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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)
State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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.

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. 479
12463-0017\2678944
Recording requested by and when
recorded mail to:

City of South Lake Tahoe
c/o Richards, Watson & Gershon,
A Professional Corporation
350 South Grand Avenue, 37th Floor
Los Angeles, California 90071
Attention: Lolly Enriquez, Esq.

RWG Draft 7/25/22
This Document is recorded for the benefit of the City of South Lake Tahoe and is exempt from California documentary transfer tax pursuant to Section 11928 of the California Revenue and Taxation Code and from recording fees pursuant to Sections 6103, 27383 and 27388.1of the California Government Code.
====================================================================

ASSIGNMENT AGREEMENT
by and between the

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as Trustee
Dated as of October 1, 2022
==================================================================== 480
-1-
12463-0017\2678944

ASSIGNMENT AGREEMENT
This Assignment Agreement (this “Agreement”), dated as of October 1, 2022, is made by and between the SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY, a joint powers agency duly organized and existing pursuant to the laws of the State of California (the “Authority”), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national banking association, duly organized and existing under and by virtue of the laws of the United States of America, as Trustee (the “Trustee”).

RECITALS:

A. The Authority is issuing its $[principal amount] in aggregate principal amount of its Lease Revenue Bonds, Series 2022A (the “Bonds”) pursuant to an Indenture, dated as of October 1, 2022 (the “Indenture”), by and between the Authority and the Trustee.

B. In connection with the Bonds, the Authority and the City of South Lake Tahoe, California (the “City”), are entering into a Lease Agreement, dated as of October 1, 2022 (the “Lease”), whereby the City leases to the Authority leases certain real property, including improvements thereon, described in Exhibit A, attached hereto and incorporated by reference, and improvements thereon (collectively, the “Leased Property”).

C. The Authority and the City are also entering into a Sublease Agreement, dated as of October 1, 2022 (the “Sublease”), whereby the Authority subleases to the City the Leased Property.

D. Pursuant to the Sublease, the City is obligated to make certain rental payments to the Authority for the subleasing of the Leased Property.

E. The Authority desires to assign to the Trustee, without recourse, all of the Authority’s rights to receive “Base Rental” payments scheduled or required to be paid by the City under and pursuant to the Sublease.

F. The Authority has determined that 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 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 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:

Section 1. Definitions.

Unless context clearly requires otherwise, all capitalized terms used but not defined herein shall have the meanings given to them in the Indenture. 481
-2-
12463-0017\2678944
Section 2. Assignment.

The Authority hereby transfers in trust and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the right, title and interest of the Authority in (but not of its obligations under) the Lease and the Sublease (except the Authority’s rights to give approvals and consents under the Lease and the Sublease and to indemnification and payment or reimbursement for any costs or expenses thereunder), including the Authority’s rights to receive the Base Rental Payments scheduled to be paid by the City under and pursuant to the Sublease, and any and all of the other rights of the Authority under the Lease and the Sublease as may be necessary to enforce payment of such Base Rental Payments when due or otherwise to protect the interest of the Owners of the Bonds.

Section 3. Acceptance.

The Trustee hereby accepts the foregoing assignment for the benefit of the Bond Owners, subject to the conditions and terms of the Indenture, and all such Base Rental Payments shall be applied and all such rights so assigned shall be exercised by the Trustee under and pursuant to the Indenture. Excepting only the assignment and transfer of rights to the Trustee pursuant to Section 2 hereof, this Agreement shall confer no rights and shall impose no obligations upon the Trustee beyond those expressly provided in the Indenture. In executing and performing under this Agreement, the Trustee shall be entitled to all of the rights, protections, immunities and indemnities granted to it under the Indenture.

Section 4. Miscellaneous.
(a) This Agreement shall be governed by and construed in accordance with the laws of the State of California.
(b) This Agreement shall be binding on and inure to the benefit of the parties hereto, and their successors and assigns.
(c) This Agreement may be executed in counterparts, and all such executed counterparts shall constitute the same instrument. It shall be necessary to account for only one set of such counterparts in proving this Agreement.
[Remainder of Page Intentionally Left Blank]
482
-3-
12463-0017\2678944
IN WITNESS WHEREOF, the parties hereto have executed and entered into this Agreement by their authorized signatories thereunto duly authorized as of the day and year first above written.

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
By: ______
Joe Irvin
Executive Director
ATTEST:

Susan Blankenship, Secretary
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
By:

Name: ___________________________________
Title: _____________________________________
483
12463-0017\2678944

EXHIBIT A
Description of Leased Property

THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SOUTH LAKE TAHOE, COUNTY

OF EL DORADO, STATE OF CALIFORNIA AND IS DESCRIBED AS FOLLOWS, TOGETHER WITH IMPROVEMENTS THEREON:

Also excepting therefrom that portion conveyed to Margaret R. Keller, in the instrument recorded October 6, 1972 in Book 1151 of Official Records, Page 262.

Also excepting therefrom that portion conveyed to the City of South Lake Tahoe, in the instrument Recorded March 20, 1974 in Book 1252 of Official Records, Page 185.

PARCEL 2 - 1352 Johnson Boulevard - Police Station: (APN: 025-010-21-100) All that portion of Section 3, Township 12 North, Range 18 East, M.D.M., more particularly described as follows:

PARCEL 3 - 1201 Al Tahoe - Bijou Park (APNs: 025-010-051, 025-041-009) [legal description to come]
484
-5-
12463-0017\2678944
PARCEL 4 - 1176 Rufus Allen - Skating Rink (APN: 026-050-004) [APN may change with land swap but a new one has not been assigned yet]
All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Said Proposed Parcel 1 contains 3.820 acres of land, more or less. 485
-6-
12463-0017\2678944
PARCEL 5 - 1176 Rufus Allen - Recreation Center Complex (APN: ___) All that certain real property situate in Lot 1 of Section 32, Township 13 North, Range 18 East, Mount Diablo Meridian, County of El Dorado, City of South Lake Tahoe, State of California, and being a portion of Tract A as said Tract shown and delineated on that certain Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder and being more particularly described as follows:

Commencing at the Southeast Corner of said Section 32:

Thence from said True Point of Beginning, continuing along said southerly Right-of-Way line of U.S. Highway 50, South 73°47'02" West a distance of 210.75 feet to a point of curvature; Thence continuing along said southerly Right-of-Way line, southerly end westerly 572.08 feet along the arc of a 990.00 foot radius tangent curve to the left through a central angle of 33°06'32"; Thence leaving said southerly Right-of-Way line, South 34°27' 10" East a distance of 514.27 feet to a point situate on the northerly line of a proposed 60.00 foot Right-of-Way as yet unnamed; Thence along the said northerly proposed unnamed Right-of-Way line, South 88°31'49" East a distance of 631.90 feet to a point on the proposed westerly Right-of-Way line of Rufus Allen Boulevard,
Thence leaving the said northerly proposed unnamed Right-of-Way line and proceeding along said proposed westerly Right-of-Way line of Rufus Allen Boulevard, North 00°20'03" West a distance of 116.04 feet;
Thence continuing along said proposed westerly Right-of-Way line, North 00° 15' 50" West a distance of 140.25 feet;
Thence leaving said proposed westerly Right-of-Way line, North 89° 54' 15" West a distance of 245.35 feet;
Thence North 00°04'52" East a distance of 547.79 feet to the Point of Beginning and containing

10.211 acres of land, more or less.
486
-7-
12463-0017\2678944
The Basis of Bearings for this description is the aforementioned Record of Survey filed for record on November 16, 1988 in Book 16 of Records of Surveys at Page 30 in the office of the El Dorado County Recorder.

See Exhibit "K-1", Plat to Accompany Description, attached hereto and made a part hereof. 487
-8-
12463-0017\2678944
State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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)
State of California )
County of El Dorado )
On _________________________, before me, ,
(insert name and title of the officer)
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.

APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE
$____________

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2022A
This Continuing Disclosure Certificate (this “Disclosure Certificate”) is executed and delivered by the City of South Lake Tahoe (the “City”) in connection with the issuance by the Authority of the bonds captioned above (the “Bonds”). The Bonds are being issued under an Indenture of Trust dated as of October 1, 2022 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The City hereby covenants and agrees as follows:

Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the holders and beneficial owners of the Bonds and in order to assist the Participating Underwriter in complying with S.E.C. Rule 15c2- 12(b)(5).

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means June 1 of each year.
“Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement, executed by the City and the Authority in connection with the issuance of the Bonds. “Participating Underwriter” means Stifel Nicolaus & Company, Incorporated, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means 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. 489
D-2
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing June 1, 2023, with the report for Fiscal Year 2021-22 (which ends on September 30, 2022), provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, 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(b). The City shall provide a written certificate with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

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 prepared in accordance with Generally Accepted Accounting Principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, 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) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement:
490
D-3
(1) The following tables in substantially the format displayed in the Official Statement: General Fund Balance Sheet (Table 11), Statement of General Fund Revenues, Expenditures and Balances (Table 10), and General Fund Revenues by Revenue Source (Table 2).
(2) Assessed valuation of all taxable property (Table 6). (3) Statement of Teeter Plan applicability to property tax revenues received by the City.
(4) Statement or table setting forth outstanding balance of long-term obligations payable from the General Fund, showing information similar to that set forth in the Official Statement.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) 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 are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
491
D-4
(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for definition of “financial obligation,” see clause (f)). (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for definition of “financial obligation,” see clause (f)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.

The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. (d) For the purposes of the event identified in (a)(12) above, 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 obligated person, 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 obligated person.
492
D-5
(e) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States 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 governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(f) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Section 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.

Section 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).

Section 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent.

Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or 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 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 either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. 493
D-6
If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

If an amendment is made to the undertaking specifying the accounting principles to be followed in preparing financial statements, the annual financial information for the year in which the change is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.

Section 11. Default. In the event of a failure of the City to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, 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 Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. 494
D-7
(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.

Section 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument.

Section 15. Governing Law. This Disclosure Certificate shall be governed by the laws of the state of California.

Date: ________________, 2022

CITY OF SOUTH LAKE TAHOE
By
Name:_____________
Title:_____________
495
Jones Hall Draft 8.2.22
PRELIMINARY OFFICIAL STATEMENT DATED _________, 2022
NEW ISSUE - FULL BOOK-ENTRY RATING: S&P: “AA”
See “RATING”
In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law (i) assuming continuing compliance with certain covenants and the accuracy of certain representations, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax, and (ii) interest on the Bonds is exempt from State of California personal income taxes. Interest on the Bonds may be subject to certain federal income taxes imposed only on certain corporations. Bond Counsel expresses no opinion as to any other tax consequences regarding the Bonds. For a more complete discussion of the tax aspects, see “TAX MATTERS” herein.
$______________*

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2022A
Dated: Date of Delivery Due: October 1, as shown on inside cover Authority for Issuance. The bonds captioned above (the “Bonds”) are being issued by the South Tahoe Joint Powers Financing Authority (the “Authority”) pursuant to an Indenture of Trust dated as of October 1, 2022 (the “Indenture”) by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) and a resolution adopted by the Board of Directors of the Authority. See “THE BONDS – Authority for Issuance.” Use of Proceeds. The Bonds are being issued to finance the construction and acquisition of a recreation center, establish a debt service reserve account and pay issuance costs. See “FINANCING PLAN.” Security for the Bonds. Under the Indenture, the Bonds are payable from and secured by a first pledge of and lien on revenues (“Revenues”) (as defined in this Official Statement) received by the Authority under a Sublease, dated as of October 1, 2022, by and between the Authority, as lessor, and the City, as lessee (the “Sublease”), consisting primarily of semi-annual lease payments (the “Base Rental”) made by the City under the Sublease with respect to the lease of certain real property, as further described in this Official Statement.

The Bonds are also secured by certain funds on deposit under the Indenture. See “SECURITY FOR THE BONDS.” Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on April 1 and October 1 of each year, commencing on April 1, 2023, and will be issued in fully registered form without coupons in the denomination of $5,000 or any integral multiple of $5,000. The Bonds will be issued in book-entry only form, initially registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). Purchasers of the Bonds will not receive certificates representing their interests in the Bonds. Payments of the principal of, premium, if any, and interest on the Bonds will be made to DTC, which is obligated in turn to remit such principal, premium, if any, and interest to its DTC Participants for subsequent disbursement to the beneficial owners of the Bonds. See “THE BONDS – General Provisions.”
[Reserve Account. The Authority will establish a debt service reserve account for the Bonds from proceeds of the Bonds, as described herein. See “SECURITY FOR THE BONDS.”]
[Bond Insurance For; Reserve Account Surety. The Authority has applied for municipal bond insurance; a determination regarding the use of bond insurance will be made at the time of pricing of the Bonds. If bond insurance is purchased, the Authority may also purchase a reserve surety policy in lieu of making a cash deposit to the Reserve Account.] Redemption. The Bonds are subject to redemption prior to maturity. See “THE BONDS – Redemption.”

NEITHER THE BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON, NOR

THE OBLIGATION OF THE CITY TO MAKE THE BASE RENTAL PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE

AUTHORITY, THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.

MATURITY SCHEDULE
(see inside cover)
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR GENERAL REFERENCE ONLY. IT IS NOT A SUMMARY OF THIS ISSUE OF BONDS. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAIN INFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION WITH RESPECT TO THE PURCHASE OF THE BONDS.

The Bonds are offered when, as and if issued and received by the Underwriter and subject to the approval as to their legality by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, as Bond Counsel. Certain legal matters will also be passed upon for the Authority and the City by Jones Hall, A Professional Law Corporation, San Francisco, California, as Disclosure Counsel.

Certain legal matters will be passed upon for the City by the City Attorney. Certain legal matters will be passed upon for the Underwriter by its counsel, Quint & Thimming LLP, Larkspur, California. It is anticipated that the Bonds will be delivered in book-entry form through the facilities of DTC on or about October [18], 2022.
[Stifel logo]
The date of this Official Statement is: ______, 2022.

This Preliminary Official Statement and the information contained herein are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances will this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor will there be any sale of these securities in any jurisdiction in which such offer solicitation or sale would be unlawful. 496

MATURITY SCHEDULE
$_________ Serial Bonds
(Base CUSIP†: ______)
Maturity Principal Interest
(October 1) Amount Rate Yield Price CUSIP†
$___________ ____% Term Bonds due October 1, 20___; Price: _____%; Yield: ______; CUSIP†: _______
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (CGS) is managed on behalf of the American Bankers Association by FactSet Research Systems Inc. Copyright (c) 2022 CUSIP Global Services.

All rights reserved. CUSIP® data herein is provided by CUSIP Global Services. This data is not intended to create a database and does not serve in any way as a substitute for the CGS database. CUSIP® numbers are provided for convenience of reference only. None of the Authority, the City, the Underwriter or their agents or counsel take any responsibility for the accuracy of such numbers.
497

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
South Lake Tahoe, California
_______________________

AUTHORITY BOARD / CITY COUNCIL
Devin Middlebrook, Chair/Mayor
Cristi Creegan, Vice Chair/Vice Mayor
Cody Bass, Authority Member/Councilmember
John Friedrich, Authority Member/Councilmember
Tamara Wallace, Authority Member/Councilmember

CITY / AUTHORITY STAFF
Joe Irvin, City Manager/Executive Director
David Olivo, City Treasurer
Olga Tikhomirova, Finance Director/Authority Treasurer
Susan Blankenship, City Clerk/Secretary
Heather Stroud, City Attorney/Authority Counsel

PROFESSIONAL SERVICES
Bond Counsel
Richards, Watson & Gershon, A Professional Corporation
Los Angeles, California
Disclosure Counsel
Jones Hall, A Professional Law Corporation
San Francisco, California
Municipal Advisor
Public Financial Management, Inc.

San Francisco, California
Trustee
The Bank of New York Mellon Trust Company, N.A.

Los Angeles, California
498

GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No dealer, broker, salesperson or other person has been authorized to give any information or to make any representations with respect to the Bonds other than as contained in this Official Statement, and if given or made, such other information or representation must not be relied upon as having been authorized.

This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or solicitation.

This Official Statement speaks only as of its date, and the information and expressions of opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of the City or any other parties described in this Official Statement, or in the condition of the security for the Bonds since the date of this Official Statement.

This Official Statement is submitted in connection with the sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other purpose. This Official Statement is not a contract with the purchasers of the Bonds. Prospective investors should not construe the contents of this Official Statement as legal, tax or investment advice.

The information contained in this Official Statement has been obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.

The Underwriter has submitted the following statement for inclusion in this Official Statement: The Underwriter has reviewed the information in this Official Statement in accordance with, and as a part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.

All references to and summaries of the Indenture or other documents contained in this Official Statement are subject to the provisions of those documents and do not purport to be complete statements of those documents.

The Bonds have not been registered under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, in reliance upon exemptions for the issuance and sale of municipal securities provided under Section 3(a)(2) of the Securities Act of 1933 and Section 3(a)(12) of the Securities Exchange Act of 1934.

Certain statements included or incorporated by reference in this Official Statement constitute forward-looking statements. Such statements are generally identifiable by the terminology used such as “plan,” “expect,” “estimate,” “project,” “budget” or other similar words. The achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. No assurance is given that actual results will meet the forecasts of the City in any way, regardless of the level of optimism communicated in the information. The City is not obligated to issue any updates or revisions to the forward-looking statements if or when its expectations, or events, conditions or circumstances on which such statements are based occur.

The references to internet websites in this Official Statement are shown for reference and convenience only; unless explicitly stated to the contrary, the information contained within the websites and any links contained within those websites are not incorporated herein by reference and do not constitute part of this Official Statement. 499
i

TABLE OF CONTENTS
INTRODUCTION........................................ 1
FINANCING PLAN ..................................... 3
The Project.............................................. 3 2% TOT (Measure P) Funding Source ... 5
Estimated Sources and Uses.................. 5
THE LEASED PROPERTY ........................ 6
General ................................................... 6 Changes to Leased Property .................. 6
Substitution or Release of Property ........ 7
DEBT SERVICE SCHEDULE..................... 8
THE BONDS............................................... 9 Authority for Issuance ............................. 9
General Provisions.................................. 9
Transfer, Registration and Exchange ... 10
Redemption........................................... 10 Book-Entry Only System....................... 13
SECURITY FOR THE BONDS................. 13
Revenues; Pledge of Revenues ........... 13
Allocation of Revenues by Trustee;
Application of Funds.......................... 14
Base Rental .......................................... 15 Additional Rental................................... 16 Fair Rental Value .................................. 16 Limited Obligation ................................. 17 Source of Payments; Covenant to
Appropriate Funds for Base Rental... 17
Abatement............................................. 17 Additional Obligations ........................... 18
Default; Remedies ................................ 18
Covenants to Maintain Insurance ......... 19
Damage, Destruction and
Condemnation; Net Proceeds ........... 21
THE AUTHORITY..................................... 22
THE CITY ................................................. 22 General ................................................. 22 City Government................................... 23
Labor Relations..................................... 24 CITY FINANCIAL INFORMATION ........... 25
Accounting and Financial Reporting ..... 25
COVID-19 Pandemic ............................ 26
General Fund, the Budget Process and
Information ........................................ 26 Transient Occupancy Tax ..................... 30
Sales and Use Taxes............................ 32
Property Taxes ......................................34 Other Sources of Revenues ..................39
Financial Statements.............................39
General Fund Historical Financial Data.40
Relevant Fiscal Policies.........................41
Employee Retirement System;
CalPERS............................................43
General Fund Long-Term Obligations...45
OVERLAPPING DEBT OF THE CITY ......48
Direct and Overlapping Bonded Debt....48

CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND
APPROPRIATIONS...............................49
Article XIIIA of the State Constitution ....49
Article XIIIB of the State Constitution ....49
Articles XIIIC and XIIID of the State
Constitution........................................50
Proposition 1A; Proposition 22 ..............51
Unitary Property.....................................52 Possible Future Initiatives......................52
BOND OWNERS’ RISKS..........................52
No Pledge of Taxes...............................52
Abatement .............................................53 Limited Recourse under Sublease ........54
Limitations on Remedies for
Bondholders.......................................54
Additional Obligations of the City...........55
Transient Occupancy Taxes..................55
Sales Taxes...........................................56 Property Taxes ......................................56 Natural Calamities .................................57
COVID-19 Pandemic.............................58
Cyber Security.......................................59 Secondary Market for Bonds.................59
TAX MATTERS.........................................59
CERTAIN LEGAL MATTERS ...................62
LITIGATION ..............................................62 RATING ....................................................62 CONTINUING DISCLOSURE...................63
MUNICIPAL ADVISOR .............................63
UNDERWRITING......................................63
PROFESSIONAL SERVICES...................64
EXECUTION .............................................64 APPENDIX A: AUDITED FINANCIAL STATEMENTS OF THE CITY FOR FISCAL YEAR ENDED SEPTEMBER 30, 2021 APPENDIX B: GENERAL INFORMATION ABOUT THE CITY OF SOUTH LAKE TAHOE AND THE COUNTY OF EL DORADO APPENDIX C: SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
APPENDIX D: FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX E: FORM OF OPINION OF BOND COUNSEL
APPENDIX F: DTC AND THE BOOK-ENTRY ONLY SYSTEM
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__________________________________

OFFICIAL STATEMENT
__________________________________
$____________*

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2022A

INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description of and guide to, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page and appendices hereto, and the documents summarized or described herein. A full review should be made of the entire Official Statement.

The offering of the Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used but not defined in this Official Statement have the meanings set forth in the Indenture (as defined below). See “APPENDIX C – SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.”
Authority for Issuance. The South Tahoe Joint Powers Financing Authority (the “Authority”) is issuing the bonds captioned above (the “Bonds”) under the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5, Division 7, Title 1 of the California Government Code (the “Bond Law”), resolutions adopted by the Board of Directors (the “Board”) of the Authority on August 9, 2022 (the “Authority Resolution”), and by the City Council (the “City Council”) of the City of South Lake Tahoe (the “City”) on August 9, 2022 (the “City Resolution”), and an Indenture of Trust (the “Indenture”) dated as of October 1, 2022, by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).

Purpose of the Bonds. The Bonds are being issued to finance the construction and acquisition of a recreation center, establish a debt service reserve account, and to pay issuance costs. See “FINANCING PLAN.”
The Authority and the City. The Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022, by and between the City and the Parking Authority of the City of South Lake Tahoe. The City Council serves as the Governing Board of the Authority. See “THE AUTHORITY” herein.

The City is located at the South Shore of Lake Tahoe, which is the country’s largest alpine lake, in El Dorado County, California (the “County”), and adjacent to Stateline/Zephyr Cove, Nevada, in the Sierra Nevada Mountains. The population was 21,199 as of January 1, 2022.

According to the United States Census Bureau, the City has a total area of 16.5 square miles, of which 10.1 square miles is land and 6.4 square miles is water. Elevation is 6260 ft. As the only * Preliminary; subject to change.
501
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incorporated community in the Lake Tahoe Basin, the City takes great pride in being a central hub of one of the country’s most popular tourism destinations. The east end of the City, on the California-Nevada state line, is mainly geared towards tourism, with shops, restaurants, hotels, and the Heavenly Ski Resort, with the Nevada casinos just across the State line. The western end of town is mainly residential. For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B.

Bond Terms; Book-Entry Only. The Bonds will bear interest at the rates shown on the inside cover page, payable semiannually on April 1 and October 1 of each year, commencing on April 1, 2023. The Bonds will be issued in fully registered form, registered in the name of The Depository Trust Company (“DTC”), or its nominee, which will act as securities depository for the Bonds. Purchasers of the Bonds will not receive certificates representing the Bonds that are purchased. See “THE BONDS – Book-Entry Only System” and “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM.”
Security for the Bonds. The City and the Authority will enter into a Lease Agreement, dated as of October 1, 2022 (the “Lease”), under which the City will lease certain real property to the Authority, consisting of (1) the Police Station, (2) Fire Station #1, (3) South Lake Tahoe Ice Arena, (4) Bijou Park and (5) the Recreation Center Property (described herein) and improvements to be built thereon (collectively, the “Leased Property”), to the Authority as further described herein under the caption “THE LEASED PROPERTY.” Proceeds of the Bonds are used by the Authority to fund the payment obligation under the Lease.

In order to secure the payments of principal of and interest on the Bonds, the Authority proposes to lease the Leased Property back to the City under a Sublease, dated as of October 1, 2022 (the “Sublease”), under which the City is obligated to pay semi-annual lease payments (the “Base Rental”) as rental for the Leased Property, and the Authority will assign substantially all of its rights under the Sublease to The Bank of New York Mellon Trust Company, N.A. as trustee for the Bonds. The Bonds are payable from and secured by a first pledge of and lien on the Revenues (defined herein), consisting primarily of the Base Rental. To provide an additional source of funds for payment of the Bonds, the Authority will establish a debt service reserve account for the Bonds from proceeds of the Bonds, as described herein. See “SECURITY FOR THE BONDS.” Base Rental payments are payable from any legally available sources of funds of the City, and are anticipated to be paid by the City from a 2% Transient Occupancy Tax revenue measure (Measure P). See “FINANCING PLAN – 2% TOT (Measure P) Funding Source” and “CITY FINANCIAL INFORMATION – Transient Occupancy Taxes.”
Abatement. The Base 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 use and possession of the Leased Property or any portion thereof. If the Base Rental payments are abated under the Sublease, the Bond Owners may receive less than the full amount of principal of and interest on the Bonds. See “SECURITY FOR THE BONDS – Abatement” and “BOND OWNERS’ RISKS – Abatement.”
Additional Obligations. Under the Indenture, the Authority may from time to time issue one or more series of Additional Bonds payable from and secured by Revenues on parity with all other Outstanding Bonds. In addition, the City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Bonds.

See “SECURITY FOR THE BONDS – Additional Obligations.”
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[Bond Insurance; Reserve Surety. The Authority has applied for municipal bond insurance; a determination regarding the use of bond insurance will be made at the time of pricing of the Bonds. If bond insurance is purchased, the Authority may also purchase a reserve surety policy in lieu of making a cash deposit to the Reserve Account.] Redemption. The Bonds are subject to redemption prior to their stated maturity dates.

See “THE BONDS – Redemption.”
Risks of Investment. Debt service on the Bonds is payable only from Base Rental Payments and other amounts payable by the City to the Authority under the Sublease. The Base Rental payments are payable from revenues available in the City’s General Fund, which revenues may be materially adversely affected by numerous factors outside the City’s control, including the ongoing COVID-19 pandemic and the governmental responses to the pandemic. For a discussion of some of the risks associated with the purchase of the Bonds, see “BOND OWNERS’ RISKS.”

NEITHER THE BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL

OF OR INTEREST THEREON, NOR THE OBLIGATION OF THE CITY TO MAKE THE BASE

RENTAL PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE

CITY, THE STATE OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF

ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER OF THE CITY.

FINANCING PLAN
The Project
The Bonds are being issued to finance various capital improvement projects being undertaken in the City known as the “Multigenerational Center Project,” including the construction of a new South Lake Tahoe Recreation and Aquatics Center – A Multigenerational Center. The project is a collaboration between the City and County.

The project is located in the vicinity of the City’s existing Recreation and Swim Complex (which will be removed), South Lake Tahoe Ice Arena, Campground by the Lake, and Lakeview Commons. US 50 is located in the northern portion of the project area and separates Lakeview Commons and Champions Plaza from the rest of the project area. The project site comprises eight parcels totaling approximately 56 acres; approximately 42 acres is owned by the County and controlled by the City pursuant to a long-term lease, the remainder is owed by the City. Part of the City owned portion (the “Recreation Center Property”) is the site of the new Recreation and Aquatic Center Complex and comprises a portion of the Leased Property.

Existing features in the area that would be upgraded or reconfigured as part of the project include:
• Recreation and Swim Complex, which is being removed and replaced with the new Multigenerational Center
• Campground by the Lake, a 22.5-acre campground with 172 campsites for RV and tent camping and seven tent cabins
• Lakeview Commons/El Dorado Beach
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• New additional parking (321 parking stalls)
The new Multigenerational Center would be the first facility to be built as part of the project, and would replace the existing Recreation and Swim Complex (constructed in 1971), although at a location in the northern part of the plan area west of the existing library. The new location will provide a closer connection to the main highway and Lakeview Commons and offer views of the lake. The approximately 64,220-square-foot Multigenerational Center is designed to include a variety of recreational and community uses described below and would be designed to meet Leadership in Energy and Environmental Design (LEED) standards. Design of the building will be characteristic of mountain modern style and use a mixture of metal, wood, stone, and concrete.

The building height is anticipated to be up to 38 feet, and offer space and services for all ages, including a commercial kitchen and dining space for the purpose of accommodating the County Senior Nutrition Program.

The new aquatic facilities are designed to include a lap pool and activity pool. The 2,500- square-foot activity pool could include spray features and a lazy river. The six-lane, 25-yard lap pool would accommodate swim meets and a variety of recreation and fitness uses. The deck around the pool would include space to accommodate tip-and-roll bleachers for approximately 80 spectators.

The proposed multi-purpose gymnasium space is planned to include two high schoolsized courts and four middle school-sized courts. Court striping would also include two volleyball courts and four pickleball/badminton courts. Circulation around the courts would be appropriately sized to accommodate tip-and-roll bleachers for approximately 320 spectators. A three-lane suspended walk/jog track located above the circulation area of the gym would be sized at approximately 12 laps per mile. An aerobics/dance studio would be provided as well as outside spaces for fitness and small group events.

As a community facility, the Multigenerational Center is anticipated to provide an arts and crafts classroom, wet classroom by the pools, rooftop event space, rooftop outdoor patio, and a commercial kitchen for community use, including for the County Senior Nutrition Program. Senior programs are anticipated to be provided at the Multigenerational Center, including both active recreation uses as well as passive, social spaces. The spaces programmed for senior activities would also be made available to other user groups to maximize facility use in the multi-purpose design. The existing senior center located at 3050 Lake Tahoe Blvd would remain accessible to senior groups. Additional services for senior patrons beyond the lunch program include arts and craft classes, gardening (which seniors may teach), as well as various recreational exercise activities. A child watch service is being considered for this facility as part of the flexible space design. Specifically, the party room may serve as a location for children requiring supervision while their parents participate in fitness programs. Other multi-use spaces may also be activated for child watch as identified through the final design process. The Multigenerational Center would include several offices to support the various uses, including the commercial kitchen, aquatics, and fitness uses.

The Multigenerational Center is anticipated to be constructed by late 2024 at a total cost of $60.8 million for both Phases (I and II). Of this amount, $48 million will be financed through the Bonds. Other portions of the project will follow later and will have separate funding. Final timing and amounts related to the project will not be known until a construction bid is awarded, which is anticipated to occur in late September 2022.
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2% TOT (Measure P) Funding Source
In November 2016, voters in the City approved Measure P, which increased the Transient Occupancy Tax (TOT) levied on room nights in the City by an additional 2%. Measure P was approved as a special tax measure, which means the revenues must be used solely for the construction, operation and maintenance of the Multigenerational Center Project. The City anticipates paying 100% of the Base Rental payments due under the Sublease from Measure P revenues; however, if Measure P revenues are insufficient for such purpose in a particular year, the City may use any other legally available sources, including General Fund revenues, for such payments.

Measure P is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund, not the General Fund. For Fiscal Years 2016-17 through 2020-21, Measure P revenues were $2,507,719, $3,307,933, $3,435,411, $2,764,825, and $3,234,866, respectively.

There is no sunset date for Measure P. For additional information on Measure P and the City’s General Fund revenues sources, see “CITY FINANCIAL INFORMATION.” Estimated Sources and Uses
The estimated sources and uses of funds relating to the Bonds are as follows:

Sources:

Principal Amount of Bonds $
TOTAL SOURCES $
Uses:

Deposit to Project Fund
Deposit to Reserve Account(1)
Costs of Issuance(2)
TOTAL USES $
(1) Represents the initial Reserve Requirement for the Bonds. (2) Represents funds to be used to pay Costs of Issuance, which include rating agency fees, bond counsel, disclosure counsel, Trustee fees, Underwriter’s discount and other costs of issuing the Bonds. 505
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THE LEASED PROPERTY
General
Base Rental payments will be made by the City under the Sublease for the use and occupancy of the Leased Property. The Leased Property consists of the following:

Fire Station #1, 1252 Ski Run Boulevard. Fire Station #1 is approximately 5,216 square feet and was built in 1994. The insured value for Fiscal Year 2022-23, not including the land on which the building sits, was $2,258,595.

Police Station, 1352 Johnson Boulevard. The Police Station is approximately 17,500 square feet and was built in 1972. The insured value for Fiscal Year 2022-23, not including the land on which the building sits, was $5,139,388.

Lake Tahoe Ice Arena, 1176 Rufus Allen. The Lake Tahoe Ice Arena, is approximately 37,000 square feet and was built in 2022. Lake Tahoe Ice Arena is owned by the City and managed by Tahoe Sports Entertainment. The arena is the only indoor, year-round ice arena in the region. Offering comprehensive programming, the arena facilitates the recreation and exercise of local athletes. The insured value for Fiscal Year 2022-23, not including the land on which the building sits, was $11,463,023. The land value of the skating rink is estimated at $2,880,000.

Bijou Park, 1201 Al Tahoe. Bijou Community Park is South Lake Tahoe’s only true community park. Constructed in 1992, the park offers diverse recreation opportunities to both residents and visitors alike. Some highlights include a basketball court, bike park, fenced dog park, historic railroad exhibit, disc golf course, open meadow, restroom / concession facility, skateboard park, two covered gazebos with barbecue pits, and volleyball courts. The land value of Bijou Park is $33,903,000. The insured value for the structures in the park (including restrooms and picnic gazebo) for Fiscal Year 2022-23, not including the land on which the building sits, was $543,871. The land value of Bijou Park is estimated at $33,903,000.

Multigenerational Center Project, 1176 Rufus Allen. The property underlying the planned Multigenerational Center, including the Multigenerational Center and certain other improvements planned to be built thereon, will be part of the Leased Property. Only the land owned by the City, and the improvements thereon, will be part of the Leased Property. For more details on the planned improvements, see “FINANCING PLAN – The Project.” Because it has not yet been built, the City does not have an insured value for the Multigenerational Center.

Changes to Leased Property
The City will have the right during the term of the Sublease to acquire and construct improvements or to attach fixtures, structures or signs to any of the Leased Property if the improvements, fixtures, structures or signs are necessary or beneficial for the use of such Leased Property by the City; provided, however, that such acquisition or construction must not result in a material reduction in the aggregate value of the Leased Property or reduce the aggregate fair rental value thereof.
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Substitution or Release of Property
Pursuant to the Sublease, the Leased Property may be substituted, in whole or in part, by other properties, or a portion of the Leased Property may be released from the Sublease, at the option of the City; provided, that the following conditions have been satisfied:
• Such substitution or release does not, in the opinion of Bond Counsel, adversely affect the tax-exempt status of the Bonds;
• the City shall have provided certification to the Authority and the Trustee that the fair market value of the Leased Property, after the proposed substitution or release, shall be equal to or greater than the aggregate amount of the principal component of the Base Rental (i.e., the principal amount of the Outstanding Bonds); • the City certifies to the Authority and the Trustee that, based on the City’s determination, the annual fair rental value of the Leased Property, after such substitution or release, is at least equal to the maximum annual Base Rental remaining unpaid under the terms of the Sublease, and the expected useful life of the Leased Property, after such substitution or release, extends at least to the Expiration Date, as such term is defined in the Sublease; • the City will notify any rating agency then rating the Bonds regarding such substitution or release;
• in the event that the substituted property consists in whole or in part of real property, a California Land Title Association insurance policy (or, at the City’s sole discretion, an American Land Title Association insurance policy) on the substituted property has been obtained, along with evidence that, other than Permitted Encumbrances, no prior liens exist as to the substituted property; • the City will provide to the Authority and the Trustee evidence that any existing title insurance with respect to the portion of the Leased Property remaining after such substitution or release is not affected;
• the Authority and the City will amend the Sublease to properly reflect such substitution or release.

In the Sublease, it is recognized that after the completion of the project (described above under “FINANCING PLAN,” the City may choose to release a portion of the Leased Property under the Lease and the Sublease; and in that connection, so long as the Recreation Center Property (as defined in the Sublease) will remain as among the Leased Property after such release, then the City will not be required to provide notice to any rating agency pursuant to the foregoing.

See “APPENDIX C − SUMMARY OF PRINCIPAL LEGAL DOCUMENTS.” 507
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DEBT SERVICE SCHEDULE
The table below shows annual debt service payments on the Bonds.

Year Ending
October 1 Principal Interest
Total
Debt Service
Total:
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THE BONDS
This section provides summaries of the Bonds and certain provisions of the Indenture.

See APPENDIX C for a more complete summary of the Indenture. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.

Authority for Issuance
The Bonds are being issued under the Bond Law, the Indenture, the Authority Resolution adopted by the Board of the Authority on August 9, 2022, and the City Resolution adopted by the City Council on August 9, 2022.

General Provisions
Bond Terms. The Bonds will be dated their date of delivery and issued in fully registered form, numbered from one upwards in consecutive numerical order (with such alphabetical prefix as the Trustee shall determine), without coupons in denominations of $5,000 or any integral multiple of $5,000. The Bonds will mature in the amounts and on the dates, and bear interest at the annual rates, set forth on the inside cover page of this Official Statement.

Payments of Principal and Interest. Interest on the Bonds will be payable on April 1 and October 1 in each year, beginning April 1, 2023 (each an “Interest Payment Date”). Principal on the Bonds will be payable on October 1 in the amounts and in the years set forth on the inside front cover of this Official Statement.

While the Bonds are subject to the book-entry system, the principal, interest and any prepayment premium with respect to the Bonds will be paid by the Trustee to DTC for subsequent disbursement to beneficial owners of the Bonds. See “− Book-Entry Only System” below.

Interest with respect to any Bond will be payable on each Interest Payment Date to the Owner thereof as of the close of business on the Record Date, such interest to be paid by check or draft of the Trustee, mailed by first-class mail, no later than the Interest Payment Date to the Owner at such Owner’s address as it appears on the registration book maintained by the Trustee; provided however that at the written request of the Owner of at least $1,000,000 in aggregate principal amount of Outstanding Bonds filed with the Trustee prior to any Record Date, interest on such Bonds will be paid to such Owner on each succeeding Interest Payment Date (unless such request has been revoked in writing), by wire transfer in immediately available funds to an account in the United States of America designated by written request. Payments of defaulted interest will be paid by check or draft to the Owners as of a special record date to be fixed by the Trustee, notice of which special record date will be given to the Owners of the Bonds not less than 10 days prior thereto.

The principal of and premium, if any, and interest on the Bonds are payable by check when due upon surrender thereof at the Trust Office in lawful money of the United States of America.

Calculation of Interest. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless: (i) it is authenticated during the period from the day after the Record Date for an Interest Payment Date to and including such Interest Payment Date, in which event it will bear interest from such Interest Payment Date, or (ii) it is authenticated on or prior to the Record Date for the first Interest Payment Date, in which event it 509
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will bear interest from its dated date, provided however, that if at the time of registration of any Bond, interest with respect to such Bond is in default, such Bond will bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Bond.

Notwithstanding the foregoing, if, at the time of registration of any Bond, interest with respect to such Bond is in default, such Bond will bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Bond.

Transfer, Registration and Exchange
See “APPENDIX C − SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” for a description of the provisions of the Indenture relating to the transfer, registration and exchange of the Bonds.

Redemption*
Optional Redemption. The Bonds maturing on or after October 1, [2032], shall be subject to redemption prior to their respective maturity dates, as a whole or in part, from prepayments of Base Rental made at the option of the City under the Sublease on any date with respect to which such prepayment have been made (which shall be on or after October 1, [2031]). The Bonds called for optional redemption shall be redeemed at a redemption price equal to 100 percent of the principal amount of the Bonds to be redeemed, without premium, plus accrued interest thereon to the date of redemption.

Mandatory Sinking Fund Redemption. The Bonds maturing on October 1, 20__ and October 1, 20__ (the “Term Bonds”) shall be subject to redemption in part by lot from sinking account payments made by the Authority, at a redemption price equal to the principal amount thereof to be redeemed with accrued interest thereon to the redemption date, without premium, in the aggregate respective principal amounts and on the respective dates as set forth in the following tables; provided, however, if some but not all of the Term Bonds of a maturity have been redeemed pursuant to the optional and extraordinary redemption provisions of the Indenture, each future sinking account payment with respect to such Term Bonds will be reduced on a pro rata basis (as nearly as practicable) in integral multiples of $5,000, so that the total amount of sinking account payments with respect to such Term Bonds to be made subsequent to the optional and extraordinary redemption provisions of the Indenture shall be reduced by an amount equal to the principal amount of the Term Bonds so redeemed, all as shall be designated pursuant to written notice filed by the Authority with the Trustee:

Bonds Maturing on October 1, 20__
Redemption
Date
(October 1)
Principal
Amount
to be Redeemed
______________
* maturity
* Preliminary; subject to change.
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Bonds Maturing on October 1, 20__
Redemption
Date
(October 1)
Principal
Amount
to be Redeemed
______________
* maturity
Extraordinary Redemption from Insurance and Condemnation Proceeds. The Bonds are subject to redemption prior to their respective maturity dates, upon notice as provided below, as a whole or in part on a pro rata basis (as much as practicable) among the maturities, on any date, from amounts on deposit in the Redemption Fund pursuant the Sublease (from Net Proceeds received by the City from insurance payments or condemnation awards with respect to the Leased Property or any portion thereof under the circumstances and upon the conditions and terms prescribed in the Sublease, together with additional money, if any, transferred by the City at its discretion for such purpose). Extraordinary redemption will be made at a redemption price equal to the sum of the principal of the Bonds to be redeemed plus accrued interest thereon to the date fixed for redemption, without premium.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all the Bonds, the Trustee will select the Bonds to be redeemed from the all Outstanding Bonds or such given portion thereof not previously called for redemption, on a pro rata basis among the maturities (unless the maturity or maturities are otherwise specified in the Indenture or in writing by the Authority, but with such selection being subject to the prior approval of the Bond Insurer) and by lot within a maturity in any manner which the Trustee in its discretion deems appropriate. For purposes of such selection, all Bonds will be deemed to be comprised of separate $5,000 portions and such portions will be treated as separate Bonds, which may be separately redeemed.

Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond 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 maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond being redeemed. A partial redemption will be valid upon payment of the amount required to be paid to the Owner, and the Authority and the Trustee will be released and discharged from all liability to the extent of such payment.

Notice of Redemption. The Authority will give written notice of its intention to redeem Bonds under the optional or extraordinary redemption provisions of the Indenture to the Trustee at least 45 days before the proposed redemption date; provided, that the Trustee may accept a shorter notice period or waive such notice requirement at the Trustee’s sole discretion. The Trustee, on behalf and at the expense of the Authority, will send by first class mail (or if the Owner of such Bonds is a depository, by such method as acceptable to such depository) notice of any redemption to (i) the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, (ii) to the Securities Depositories and (iii) to one or more Information Services by such manner of delivery as then acceptable to such entities, at least 30 but not more than 60 days prior to the date fixed for redemption; provided, however, that neither failure to receive any such notice so sent nor any defect therein will affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon.
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Such notice of redemption will state the date of the notice, the redemption date, the redemption place, the redemption price and will specify the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and will require that such Bonds be then surrendered at the Trust 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 redemption date.

Neither the Authority nor the Trustee will have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee will be liable for any inaccuracy in such numbers.

Right to Rescind Optional Redemption. The Authority (upon direction by the City, at the City’s option) may rescind any optional redemption by written notice to the Trustee on or prior to the date fixed for redemption. In addition, any notice of optional redemption shall be cancelled and annulled if for any reason funds will not be or are not available on the date fixed for redemption for the payment in full of the Bonds then called for redemption, and such cancellation shall not constitute an Event of Default hereunder. The Authority, the City and the Trustee shall have no liability to the Owners or any other party related to or arising from such rescission.

Selection of Bonds for Redemption. Whenever provision is made in the Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all Outstanding Bonds or such given portion thereof not previously called for redemption, on a pro rata basis among the maturities (unless the maturity or maturities are otherwise specified in this Indenture or in writing by the Authority) and by lot within a maturity in any manner which the Trustee in its discretion shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate Bonds, which may be separately redeemed.

Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond 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 maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond being redeemed. A partial redemption shall be valid upon payment of the amount required to be paid to the Owner, and the Authority and the Trustee shall be released and discharged from all liability to the extent of such payment.

Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption have been duly provided, such Bonds so called will cease to be entitled to any benefit under the Indenture other than the right to receive payment of the redemption price, and no interest will accrue thereon from and after the redemption date. All Bonds redeemed pursuant to the Indenture will be canceled by the Trustee. All moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium on Bonds, whether at redemption or maturity, will be held in trust for the account of the Owners thereof and the Trustee will not be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held. 512
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Book-Entry Only System
The Bonds will be issued as fully registered bonds in book-entry only form, registered in the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in the denomination of $5,000 or any integral multiple of $5,000, under the book-entry system maintained by DTC. While the Bonds are subject to the book-entry system, the principal, interest and any redemption premium with respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the Bonds. Purchasers of the Bonds will not receive certificates representing their interests therein, which will be held at DTC.

See “APPENDIX F – DTC AND THE BOOK-ENTRY ONLY SYSTEM” for further information regarding DTC and the book-entry system.

SECURITY FOR THE BONDS
The principal of and interest on the Bonds are not a debt of the Authority or the City, nor a legal or equitable pledge, charge, lien or encumbrance, upon any of their respective property, or upon any of their income, receipts, or revenues except the Revenues and other amounts pledged under the Indenture.

This section provides summaries of the security for the Bonds and certain provisions of the Indenture, the Sublease and the Lease. See “APPENDIX C – Summary of Principal Legal Documents” for a more complete summary of the Indenture, the Sublease, the Lease and the Assignment Agreement. Capitalized terms used but not defined in this section have the meanings given in APPENDIX C.

Revenues; Pledge of Revenues
Pledge of Revenues and Other Amounts. Under the Indenture, subject to the lien in favor of the trustee for certain fees and costs, the Bonds will be secured by a first lien on and pledge (which shall be effected in the manner and to the extent provided in the Indenture) of all of the Revenues and a pledge of all the moneys in the Lease Revenue Fund, including all amounts derived from the investments of such moneys.

The Bonds will be equally secured by a pledge, charge and lien upon the Revenues and such moneys without priority for number, date of the Bonds, date of execution or date of delivery; and the payment of the interest on and principal of the Bonds and any premiums upon the redemption of any portion thereof will be and are secured by an exclusive pledge, charge and lien upon the Revenues and such moneys.

So long as any of the Bonds remain Outstanding, the Revenues will not be used for any other purpose; except that out of the Revenues and such moneys there may be apportioned such sums in the Lease Revenue Fund, for such purposes, as are expressly permitted under the Indenture.

Definition of Revenues. “Revenues” are defined in the Indenture as (a) all Base Rental Payments payable by the City pursuant to the Sublease (including prepayments); (b) any proceeds of Bonds originally deposited with the Trustee and held by the Trustee in the Lease Revenue Fund and the accounts thereof; (c) investment income with respect to any moneys held 513
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by the Trustee in the Lease Revenue Fund and the accounts thereof (other than amounts payable to the United States of America pursuant to tax-exemption law requirements); and (d) any insurance proceeds or condemnation awards received by or payable to the Trustee with respect to the Leased Properties, including rental interruption insurance.

Revenues Held in Trust. Except as otherwise provided in the provisions of the Indenture concerning the investment of moneys in funds, all Revenues to which the Authority may at any time be entitled will be paid directly to the Trustee and all of the Revenues collected or received by the Authority will be deemed to be held in trust and to have been collected or received by the Authority as the agent of the Trustee, and if received by the Authority at any time will be deposited by the Authority with the Trustee.

Allocation of Revenues by Trustee; Application of Funds Transfers from the Lease Revenue Fund. All Base Rental Payments will be deposited by the Trustee in a special fund designated as the Lease Revenue Fund (the “Lease Revenue Fund”), which the Trustee will establish, maintain and hold in trust under the Indenture.

Under the Indenture, on or before each Interest Payment Date, the Trustee will transfer from the Lease Revenue Fund and deposit into the following respective accounts, each of which the Trustee will establish and maintain within the Lease Revenue Fund, and the moneys in each of which will be disbursed and applied only as authorized in the Indenture. Revenues will be deposited in the following order of priority, the requirements of each such account (including the making up of any deficiencies in any such account resulting from lack of Revenues sufficient to make any earlier required deposit) at the time of deposit to be satisfied before any transfer is made to any fund subsequent in priority:

Interest Account. On or before each Interest Payment Date, the Trustee will deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to equal the amount of interest becoming due and payable on such Interest Payment Date on all Outstanding Bonds. No deposit need be made into the Interest Account if the amount contained therein is at least equal to the interest becoming due and payable upon all Outstanding Bonds on each succeeding Interest Payment Date within the then current Bond Year.

All moneys in the Interest Account will be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it becomes due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the Indenture).

Principal Account. On or before each Interest Payment Date, the Trustee will deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds maturing on such Interest Payment Date. All moneys in the Principal Account will be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds.

Reserve Account. On or before each Interest Payment Date, the Trustee will deposit in the Reserve Account such amount as may be necessary to maintain a balance therein equal to the Reserve Requirement. The “Reserve Requirement” is defined in the Indenture, as of any calculation date, an amount equal to the least of: (i) ten percent of the proceeds (within the meaning of Section 148 of the Code) of the Bonds upon issuance; 514
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(ii) 125 percent of Average Annual Debt Service of the Bonds; or (iii) Maximum Annual Debt Service of the Bonds. The amount of the Reserve Requirement on any date is subject to confirmation by the Authority to the Trustee upon the Trustee’s request.

No deposit need be made in the Reserve Account so long as there will be on deposit an amount equal to the Reserve Requirement. Except as otherwise provided in the Indenture, money in (or available to) the Reserve Account will be used and withdrawn by the Trustee solely for the purpose of replenishing the Interest Account or the Principal Account in such order, in the event of any deficiency at any time in either of such accounts, or for the purpose of paying the interest on or principal of the Bonds, or for the retirement of all Bonds then Outstanding. Any amount in the Reserve Account in excess of the Reserve Requirement will be determined and transferred in accordance with the Indenture, to the Interest Account to be applied toward the interest payment of the Bonds, unless otherwise directed by a Request of the City pursuant to the Indenture.

The Reserve Requirement may be satisfied by crediting to the Reserve Account moneys or one or more Qualified Reserve Account Credit Instruments or any combination thereof, which in the aggregate make funds available in the Reserve Account in an amount equal to the Reserve Requirement. Upon the deposit with the Trustee of such Qualified Reserve Account Credit Instrument, the Trustee will release moneys then on hand in the Reserve Account to the City, to be used for any lawful purpose, in an amount equal to the face amount of the Qualified Reserve Account Credit Instrument.

Surplus. On or promptly after each Interest Payment Date, Trustee will determine the amount, if any, remaining in the Lease Revenue Fund after making the deposits required by the paragraphs above and the transfers of investment earnings pursuant to the Indenture, and shall notify the City of the amount so determined. The Trustee will apply such amount as a credit against the next following Base Rental Payment; provided however, if directed in a Request of the City, the Trustee will, with respect to all or any portion of such amount, pay, or set an amount aside for the payment of, any rebate requirement in accordance with a computation made by the City pursuant to the Code, or if no such rebate requirement is then due, release to the City for use for any lawful purpose.

Base Rental
Requirement to Make Base Rental. Under the Sublease, the City agrees to pay to the Authority, its successors or assigns, as rental for the use and possession of the Leased Property (subject to the provisions of the Sublease concerning the rental interruption insurance and rental abatement), the amounts at the times specified in and in accordance with the Base Rental Payment Schedule set forth in the Sublease, less any amount credited against Base Rental Payments pursuant to the Indenture.

Base Rental Payments will be payable in 5 days before each Interest Payment Date during the term of the Sublease, and will be made in consideration for the City’s use and possession of the Leased Property for the six month period preceding the date of such payment. The Authority has assigned its right to receive Base Rental Payments to the Trustee.

Payment in Installments. Each installment of Base Rental payable under the Sublease and each installment of Additional Rental (as described under the heading “− Additional Rental”) payable under the Sublease will be paid in lawful money of the United States of America to the 515
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order of the Trustee at the corporate trust office of the Trustee in Los Angeles, California, or such other place as the Trustee designates.

Offsets and Credits. Notwithstanding any dispute between the City and the Authority, the City is obligated to make all rental payments when due under the Sublease, without deduction or offset of any kind and will 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, the payments or excess of payments, as the case may be, at the option of the City, will be credited against subsequent rental payments due under the Sublease or be refunded at the time of such determination.

Additional Rental
Under the Sublease, the City will also pay as Additional Rental, in addition to the Base Rental, to the Authority or to the Trustee, such amounts in each year as will be required for the payment of all costs and expenses (not otherwise paid for or provided for out of the proceeds of sale of the Bonds) incurred by the Authority or the Trustee in connection with the execution, performance or enforcement of the Sublease or the assignment thereof, the Indenture, or the Authority’s or the Trustee’s respective interests in the Leased Property, including, but not limited to:
(i) All fees, costs and expenses.
(ii) All administrative costs of the Authority relating to the Leased Property (including, without limiting the generality of the foregoing, salaries and wages of employees, overhead, insurance premiums, taxes and assessments (if any), expenses, compensation and indemnification of the Trustee payable by the Authority under the Indenture).
(iii) Fees of auditors, accountants, attorneys or engineers, and all other reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or of the Indenture.

Fair Rental Value
The payments of the Base Rental and Additional Rental for each rental payment period during the term of the Sublease will constitute the total rental for said rental payment period, and will be paid by the City in each rental payment period for and in consideration of the right of the use and possession of, and the continued quiet use and enjoyment of, the Leased Property during each such period for which said rental is to be paid.

The City and the Authority have agreed and determined that such total rental does not exceed the fair rental value of the Leased Property for each such period. In making such determination, consideration has been given to other obligations of the parties under the Sublease, the uses and purposes which may be served by the Leased Property and the benefits therefrom which will accrue to the City and the general public.

Notwithstanding any other provision of the Sublease, if rental payments are abated for any period of time, the resulting Base Rental in any year during which such interference continues will not exceed the fair rental value of the portions of the Leased Property as to which such damage, 516
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destruction, taking or impairment do not substantially interfere with the City’s use and right of possession. See “– Abatement” below.

Limited Obligation
The Bonds are special obligations of the Authority, payable solely from and secured by a pledge of the Revenues as specified herein and in the Indenture. Neither the payment of the principal of the Bonds, nor any interest thereon, constitutes a debt, liability or obligation of the City, Authority or State of California. The obligation of the City to pay the Base Rental or Additional Rental does not constitute an indebtedness within the meaning of any constitutional or statutory debt limitation or restriction.

Source of Payments; Covenant to Appropriate Funds for Base Rental Under the Sublease, the City covenants to take such action as may be necessary to include all Base Rental and Additional Rental payments due under the Sublease in its annual budget and to make necessary annual appropriations for all such rental payments. The City will furnish to the Authority and the Trustee annually, as soon as practicable after the beginning of each fiscal year of the City, a certificate stating that it has complied with the covenant set forth in this paragraph.

Such covenants will be deemed to be and will be construed to be duties imposed by law and it will 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 agreed to be carried out and performed by the City in the Sublease; provided, the obligation of the City to make Base Rental or Additional Rental payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation.

Abatement
General. The obligation of the City to pay Base Rental and Additional Rental will be abated during any period in which, by reason of any damage, destruction, condemnation or impairment of leasehold interest, there is substantial interference with the use and occupancy of the Leased Property or any portion thereof by the City.

Except as set forth therein, in the event of any damage, destruction of condemnation, the Sublease will continue in full force and effect and the City waives any right to terminate the Sublease by virtue of such damage, destruction or condemnation. Under the Sublease, the City waives the benefits of California Civil Code Sections 1932(1), 1932(2), 1933(4), 1941, and 1942.

The abatement will be in an amount agreed upon by the City and the Authority such that the resulting Base Rental in any year during which such interference continues does not exceed the fair rental value of the portions of the Leased Property as to which such damage, destruction, taking or impairment do not substantially interfere with the City’s use and right of possession.

Such abatement will continue for the period commencing with the date of such interference and ending with the restoration of the relevant Leased Property to tenantable condition.

Proceeds of Rental Interruption Insurance. Under the Sublease, the City acknowledges and agrees that during any period of abatement with respect to all or any part of the Leased 517
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Property, proceeds of rental interruption insurance maintained under the Sublease will be used to pay Annual Debt Service on the Bonds, or to be deposited in the Reserve Account to the extent necessary to restore the balance therein to the Reserve Requirement, and any proceeds of such insurance not so used shall be applied as provided in the Indenture to the extent required to pay administrative costs of the Authority in connection with the Leased Property. See “– Covenants to Maintain Insurance − Rental Interruption Insurance.” Additional Obligations
Under the Indenture, the Authority may from time to time issue one or more series of Additional Bonds payable from and secured by Revenues on parity with all other Outstanding Bonds. In addition, the City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Bonds.

Additional Bonds may be issued pursuant to a Supplemental Indenture, which shall specify: (i) the maturity date or dates of such Additional Bonds, which shall be October 1 in any given year; (ii) the interest payment dates, which shall be April 1 and October 1; (iii) the terms, if any, for call and redemption of such Additional Bonds prior to maturity; and (iv) the interest rate or rates on such Additional Bonds and any other matters deemed appropriate or necessary and not inconsistent with the provisions of the Indenture.

In addition, there shall be provided a Certificate of the Authority: (i) certifying that the Authority is in compliance in all material respects with all agreement and covenants contained in the Indenture and that no Event of Default has occurred or is continuing; (ii) stating that the Authority and the City have entered into an amendment to the Sublease pursuant to which the City is obligated to make Base Rental Payments at times and in amounts sufficient to provide for payment of the principal of and interest on the Bonds (including such Additional Bonds) which will be Outstanding following the sale and delivery of such Additional Bonds; and (iii) containing such additional statements as may be reasonably necessary to show compliance with the requirements of the Indenture.

Default; Remedies
City Default and Remedies. The City will be deemed to be in default under the Sublease if the following occurs: default in the observance or performance of any agreement, condition, covenant or term contained in the Sublease required to be observed or performed by the City (including, without limitation, the payment of any Base Rental or Additional Rental due under the Sublease; provided that non-payment of Base Rental or Additional Rental during any period of abatement under the Sublease will not be deemed a default), subject to the provisions of the Sublease.

The Trustee, as assignee of the Authority, may at any time after default by the City (with or without notice and demand and without limiting any other rights or remedies the Authority may have), recover rent and other monetary charges as they become due under the Sublease without terminating the City’s right to possession of the Leased Property (regardless of whether or not the City has abandoned the Leased Property).

Furthermore, upon the occurrence of such a default by the City, the Trustee, as assignee of the Authority, will have the right, and the City irrevocably appoints the Authority as its agent and attorney-in-fact for such purpose, to attempt to relet the Leased Property at such rent, upon such conditions and for such term, and to do all other acts to maintain or preserve the Leased 518
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Property, including the removal of persons or property therefrom or taking possession thereof, as the Authority deems desirable or necessary. Under the Sublease, the City waives any and all claims for any damages that may result to the Leased Property upon any action taken by the Authority in event of default.

No such action taken by the Trustee, as assignee of the Authority, upon the City’s default under the Sublease (as described above) will be deemed to terminate the Lease or the Sublease and the City will continue to remain liable for any deficiency that may arise out of such reletting, taking into account expenses incurred by the Authority due to such reletting, payable at the same time and manner as provided for Base Rental in the Sublease.

Authority Default and Remedies. The Authority will be deemed to be in default under the Indenture if the following occurs:
(i) Default in the due and punctual payment of the principal of or premium on any Bond when and as the same shall become due and payable, whether at maturity as therein expressed, or by proceedings for redemption.
(ii) Default in the due and punctual payment of any installment of interest on any Bond when and as such interest installment shall become due and payable. (ii) Upon the happening of any of certain other events specified in the Indenture.

The Trustee under the Indenture, and as assignee of the Authority under the Sublease and the Indenture, may exercise any and all remedies available pursuant to law (other than those specifically waived in the Indenture, the Lease, and the Sublease) upon the occurrence of any default and will have the right to do any of the following:
(i) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or any member, officer or employee thereof, in order to compel the Authority or any such member, officer or employee to perform and 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 in the Indenture;
(ii) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or
(iii) by suit in equity upon the happening of an Event of Default to require the Authority and its members, officers and employees to account as the trustee of an express trust.

Covenants to Maintain Insurance
Title Insurance. Under the Sublease, the City is required to obtain one or more California Land Title Association insurance policies (or, at the City’s sole discretion, American Land Title Association insurance policies) at the time of and dated as of the Closing Date in an aggregate amount not less than the aggregate principal amount of the Bonds, payable to the Trustee, insuring the respective interests of the City and the Authority in the Leased Property, and insuring the validity of the Sublease, subject only to Permitted Encumbrances, naming the Trustee as an insured thereunder, issued by a title insurance company qualified to do business in the State of California and acceptable to the Trustee.
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Fire and Extended Coverage Insurance. Under the Sublease, the City is required to maintain or cause to be maintained fire, lightning and extended coverage insurance on the Leased Property in an amount equal to:
(i) 100 percent of the then current replacement cost of the Leased Property, excluding the then fair market value of the land as unimproved; or (ii) the principal amount of all outstanding Bonds, whichever is less (except that such insurance may be subject to a deductible clause not to exceed 10 percent of the amount of such policy).

Earthquake insurance will be maintained on the Leased Property only if available on the open market from reputable insurance companies at a reasonable cost. The City does not currently maintain earthquake insurance on the Leased Property and does not expect to purchase earthquake insurance at this time.

The extended coverage endorsement will, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft, vehicle damage, smoke, vandalism, malicious mischief, dumping or other deposit of any pollutant or other debris and such other hazards as are normally covered by such endorsement. Each such policy of insurance will be in form reasonably satisfactory to the Authority, and will contain a clause naming the Trustee as an additional insured and making all losses payable to the Trustee, and all proceeds thereof shall be paid over to the party contractually responsible for making repairs of casualty damage.

In the event of any damage to or destruction of the Leased Property caused by the perils covered by such insurance, the proceeds of such insurance will be utilized to repair, reconstruct or replace the Leased Property to the end that the project will be restored to at least the same condition that it was in prior to such damage or destruction. Any balance of such proceeds not required for such repair, reconstruction or replacement will be transferred to the Authority and treated as Revenues and applied in the manner provided in the Indenture.

Liability Insurance. Under the Sublease, the City is required to maintain or cause to be maintained public liability insurance with limits of not less than $3,000,000 for one person and $5,000,000 for more than one person involved in one accident to protect the Authority and the Trustee from all direct or contingent loss or liability for damages for bodily injury or death occasioned by reason of the construction, condition or operation of the Leased Property. The City will also maintain or cause to be maintained insurance against liability for property damage resulting from any casualty attributable to the operation of the project in an amount not less than $1,000,000 for each accident. The public liability insurance and property damage insurance may be subject to a deductible clause for any one accident of not to exceed $250,000. The insurance coverage required by the Sublease may be effected by blanket policies covering the Leased Property issued to the party contractually responsible for the maintenance and operation of the project and such insurance policy or policies shall name the Trustee as an additional insured.

Rental Interruption Insurance. The City is required under the Sublease to maintain or cause to be maintained or use and occupancy insurance to cover loss, total or partial, of the use of the Leased Property as a result of any of the hazards covered by the insurance required by the Fire and Extended Coverage Insurance section above, in an amount not less than the total rent payable by the City under this Sublease for a period of any future 24 months. 520
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Any such insurance policy will be in form satisfactory to the Authority and will contain a clause naming the Trustee as an additional insured and making any loss thereunder payable to the Trustee as its interests may appear. Any proceeds of such insurance will be used by the Trustee to pay Annual Debt Service on the Outstanding Bonds for the period during which the payment of rental under the Sublease is abated, and any proceeds of such insurance not so used will be applied as provided in the Indenture to the extent required to pay administrative costs of the Authority in connection with the Leased Property.

Self-Insurance. As an alternative to providing the insurance required by the “Liability Insurance” description above, the City may provide or cause to be provided a self-insurance method or plan of protection if and to the extent such self-insurance method or plan of protection shall afford reasonable protection to the City and the Authority, and their directors, officers, agents and employees and the Trustee, its directors, officers, agents and employees in light of all circumstances, giving consideration to cost, availability and similar plans or methods of protection adopted by public entities in the State of California other than the City; provided that the obligation of the Authority or City to make payments under such self-insurance shall be limited to money in a designated fund balance established by the Authority or City and that the Authority or City shall not be obligated to replenish such designated fund balance from the General Fund or be otherwise obligated to make payments except from such designated fund balance. After the Commencement Date, before any substitute method or plan may be provided by the City, there shall be filed with the Trustee a certificate of an actuary, independent insurance consultant or other qualified person, stating that, in the opinion of the signer, the substitute method or plan of protection is in accordance with the requirements of this Section and, when effective, would afford adequate protection to the City and the Authority, and their directors, officers, agents and employees and the Trustee and its directors, officers, agents and employees against loss and damage from the hazards and risks covered thereby; provided, however, that in the event the City provides a self-insurance method or plan of protection for the insurance required by the “Rental Interruption Insurance” description above, the designated fund balance established by the City shall be funded in an amount at least equal to the greatest of the aggregate Base Rental payable by the City under the Sublease for a period of any future 24 months.

Moreover, as an alternative to providing the insurance required by the “Rental Interruption Insurance” description above, the City may provide a self-insurance method or plan of protection through the California Insurance Pool Authority (or another insurance risk sharing pool joint powers authority formed in the State) or any successor entity as the City may reasonably determine.

Damage, Destruction and Condemnation; Net Proceeds
If the whole, or any portion, of the Leased Property is destroyed (in whole or in part) or is damaged by fire of other casualty or taken by eminent domain proceedings (or sold to a government threatening to exercise the power of eminent domain), or the leasehold title in all or a portion of the Leased Property is materially impaired by reason of a defect in title, then (a) the City, but only to the extent permitted by law, shall substitute other property for the portion of the Leased Property that has been destroyed, or taken, or affected by the defective title in accordance with the Sublease; or (b) the City shall require the Net Proceeds of any insurance payment (other than the Net Proceeds of rental interruption insurance which shall be applied pursuant to 521
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the Sublease) or any condemnation award to be held by the Trustee in a special trust fund to be applied and disbursed by the Trustee as follows:
(i) If less than all of the Leased Property shall have been so destroyed or taken or affected by defective title and the remainder is usable, then the Sublease shall continue in full force and effect as to such remainder and (A) if the portion taken or destroyed is replaced by one or more properties of equal or greater fair market value (as demonstrated by an MAI fair market appraisal), the Trustee upon written direction of the City shall disburse such proceeds to the party that incurred the expense of making such replacement and there shall not be any abatement of the Base Rental under this Sublease; or (B) failing the making of such replacement, there shall be a partial abatement of the Base Rental under the Sublease and the Trustee shall apply such Net Proceeds, together with any other money then available to it for such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds.
(ii) If less than all of the Leased Property shall have been so destroyed or taken or affected by defective title and the remainder is not usable, or if all of the Leased Property shall have been so destroyed or taken or affected by the defective title, then the term of the Sublease shall cease as of the day that possession shall be so taken; and the Trustee shall apply such Net Proceeds, together with any other money then available to it for such purpose, to the Redemption Fund under the Indenture for the redemption of outstanding Bonds.

See “THE BONDS – Redemption – Extraordinary Redemption.”

THE AUTHORITY
The Authority is a joint powers authority duly organized and existing under and pursuant to that certain Joint Exercise of Powers Agreement, dated January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022, by and between the City and the Parking Authority of the City of South Lake Tahoe, and under the provisions of Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”). The Authority is a separate legal entity and is authorized pursuant to Article 4 of the Act to issue bonds to provide financing for public capital improvements.

THE CITY
General
The City is located at the South Shore of Lake Tahoe, the country’s largest alpine lake, in El Dorado County, California (the “County”), and adjacent to Stateline/Zephyr Cove, Nevada, in the Sierra Nevada Mountains. The population was 21,199 as of January 1, 2022. According to the United States Census Bureau, the City has a total area of 16.5 square miles, of which 10.1 square miles is land and 6.4 square miles is water. Elevation is 6,260 ft. As the only incorporated community in the Lake Tahoe Basin, the City takes great pride in being a central hub of one of the country’s most popular tourism destinations. The east end of the City, on the California522 -23-
Nevada State line, is mainly geared towards tourism, with shops, restaurants, hotels, and the Heavenly Ski Resort, with the Nevada casinos just across the State line. The western end of town is mainly residential.

For additional background, and certain demographic and economic information regarding the City and the County, see APPENDIX B. Historical information set forth in this Official Statement, including APPENDIX B hereto, is not intended to be predictive of future results.

City Government
The City was incorporated on November 30, 1965 under the general laws of the State of California. The City provides a wide range of services, including police and fire, street maintenance, airport, planning and building and parks and recreation.

The City has a Council-Manager form of government made up of five council members elected to four-year, overlapping terms. The Mayor and Council appoint a City Manager who is responsible for daily administration of City affairs, including preparation and submission of the annual budget, which is done under the direction of the Mayor and the City Council for the Mayor’s submission to the City Council. The City Treasurer, an elected position, invests public funds in a prudent manner that provides maximum security while meeting daily cash flow demands and conforming to all statutes governing the investment of public funds.

The City Attorney, directly appointed by the City Council, and the assistant city attorney are responsible for administration of all legal affairs of the City, including the City Council, the various city commissions, as well as all city departments and officers.

Member Position Term Expires
Devin Middlebrook Mayor November 2022
Cristi Creegan Mayor Pro Tem November 2024
Cody Bass Council Member November 2022
John Friedrich Council Member November 2024
Tamara Wallace Council Member November 2022
Following are short biographies of the City Manager and Finance Director:

Joe Irvin, City Manager. Joe Irvin is the City Manager for the City of South Lake Tahoe.

Before joining the City in May 2020, he served as Assistant City Manager for Healdsburg, California, since August 2018. He was with the City of Sequim, Washington from 2014-2018, where he was first Special Projects Manager, then Assistant to the City Manager, then Assistant City Manager. He also served the City of Sequim from 2005-2011 as a City Planner. Mr. Irvin was also with the City of Marco Island, Florida, from 2011-2014 where he was Zoning Administrator.

Mr. Irvin is a member of the International City/County Managers Association (ICMA) and a certified planner (AICP) from the American Planning Association. He has a bachelor’s degree in Environmental Science from California State University Channel Islands and a master’s degree in Public Administration from The Evergreen State College.

Olga Tikhomirova, Finance Director. Olga Tikhomirova has worked for the City of South Lake Tahoe since March 2002 in multiple finance and leadership roles, including Accountant, Financial Services Supervisor, and Financial Services Manager. Ms. Tikhomirova was appointed as Finance Director in June 2021. She leads the City’s finance and information technology teams and develops and oversees the City’s $110 million annual budget in collaboration with various 523
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City departments. For the last 14 years during Ms. Tikhomirova’s tenure in various leadership positions, the City has been receiving yearly a Certificate of Achievement for Excellence in Financial Reporting and a Distinguished Budget Presentation Award from the Government Finance Officers Association (GFOA).

Ms. Tikhomirova is a Certified Public Accountant (CPA), has a master’s degree in economics with a major in finance and credit from the Finance Academy of Moscow, Russia. She has been a part of the South Lake Tahoe community for the past 25 years. Prior to joining the City, she worked for private accounting firms and banks in the United States and abroad.

Labor Relations
As of March 15, 2022 the City employed 203 full-time equivalent employees. There are six employee bargaining unions as shown below. In addition, the City employs approximately 17 management employees who are not represented by a union or other collective bargaining agent.

Labor Organization
No. of
Employees
Current Contract
Expiration Date
Police Employee Association 20 September 30, 2023
Police Officers Association 32 September 30, 2023
Police Supervisors Association 13 September 30, 2023
General and Public Works 69 September 30, 2023
Admin & Confidential Employees 18 September 30, 2023
Firefighter’s Association 34 September 30, 2023
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CITY FINANCIAL INFORMATION
Accounting and Financial Reporting
The City maintains its accounting records in accordance with Generally Accepted Accounting Principles (“GAAP”) and the standards established by the Governmental Accounting Standards Board (“GASB”).

The Governmental Accounting Standards Board published its Statement No. 34, Basic Financial Statements – and Management’s Discussion and Analysis – for State and Local Governments, on June 30, 1999 (“GASB Statement No. 34”). GASB Statement No. 34 provides guidelines to auditors, state and local governments and special purpose governments such as school districts and public utilities, on new requirements for financial reporting for all governmental agencies in the United States. Generally, the basic financial statements and required supplementary information should include (i) Management’s Discussion and Analysis; (ii) government-wide financial statements prepared using the economic measurement focus and the accrual basis of accounting and fund financial statements prepared using both the current financial resources measurement focus and the modified accrual method of accounting (governmental funds) and funds using the economic measurement focus and the accrual basis of accounting (proprietary funds) and (iii) required supplementary information. The City’s financial statements are prepared in conformance with the requirements of GASB Statement No. 34.

In the government-wide Statement of Net Position and Statement of Activities in the City’s audited financial statements for the Fiscal Year ending September 30, 2021, both governmental and proprietary activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset is used.

Revenues, expenses, gains, losses, assets and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place.

In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or soon enough thereafter to pay current liabilities. The City defines available to be within 60 days of yearend. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for principal and interest on long-term liabilities, claims and judgments, and compensated absences, which are reported when due. Governmental capital asset acquisitions are reported as expenditures in governmental funds. Proceeds for governmental long-term liabilities and acquisitions under capital leases are reported as other financing sources.

Those revenues susceptible to accrual include taxes and intergovernmental revenues. All other revenue items are considered to be measurable and available only when cash is received by the government. Impact fees are received and recognized as revenue upon project completion and inspection. Certain indirect costs are included in program expenses reported for individual functions and activities.

Grant revenues are recognized in the Fiscal Year in which all eligibility requirements are met. Under the terms of grant agreements, the City may fund certain programs with a combination of cost-reimbursement grants, categorical block grants, and general revenues. Thus, both 525
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restricted and unrestricted net position are available to finance program expenditures. The City’s policy is to first apply restricted grant resources to such programs, followed by general revenues if necessary.

All proprietary funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset is used. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary funds’ principal operations. The principal operating revenues of the enterprise and internal service funds are charges for services. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources as they are needed.

The City’s fiduciary funds consist of a private-purpose trust fund, which is reported using the economic resources measurement focus, and agency funds, which have no measurement focus, but utilizes the accrual basis for reporting assets and liabilities.

The City Council employs, at the beginning of each Fiscal Year, an independent certified public accounting firm which, at such time or times as specified by the City Council, at least annually, at such other times as such firm shall determine, examines the books, records, inventories and reports of all officers and employees who receive, control, handle or disburse public funds and of all such other officers, employees or departments as the City Council may direct. As soon as practicable after the end of the Fiscal Year, a final audit and report is submitted by such firm to the City Council and a copy of the financial statements as of the close of the Fiscal Year is published.

COVID-19 Pandemic
The City continues to monitor the spread of COVID-19 and is working with local, state, and national agencies to address the potential impact of the pandemic upon the City. There can be no assurances that the spread of COVID-19 and/or responses intended to slow the spread of COVID-19 such as declining business and travel activity, will not materially adversely impact the state and national economies and, accordingly, materially adversely impact the financial condition of the City and the City’s General Fund. In addition, the City may experience increased personnel costs and/or reduced revenues due to the COVID-19 situation and the related impact on economic and other activity in and around the City. See “BOND OWNERS’ RISKS – COVID-19 Pandemic.” General Fund, the Budget Process and Information
The City’s General Fund is its primary operating fund, and is where the City accounts for all its general-purpose revenues. It is distinguished from the City’s other governmental funds that are used to account for special purpose revenues, capital projects, debt service activities, and monies held for the benefit of others.

The City operates on a fiscal year basis that begins on the first day of October of each year and ends on the thirtieth day of September the following year. The annual budget adopted by the City Council provides for the general operation of the City. Development of the City’s annual budget is a process which generally begins in April and continues until the budget is adopted by 526
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the City Council by September. The General City Budget includes programs which are provided on a largely City-wide basis. The programs and services are financed primarily by the City’s share of sales tax, property tax, transient occupancy tax, revenues from the State and/or federal government, and charges for services provided.

The City Council approves total budgeted appropriations and any amendments to appropriations throughout the Fiscal Year. Appropriations lapse at fiscal year-end. The City Council generally reauthorizes appropriations for continuing projects and activities. The City Council has the legal authority to amend the budget of any fund at any time during the Fiscal Year. The budgetary level of control (the level on which expenditures may not legally exceed appropriations) is generally at the fund level. The City Manager is authorized to transfer budgeted amounts within departments within any fund; however, any revisions that alter the total expenditures of any fund must be approved by the City Council.

Long-Term Financial Planning. The City incorporates long-term financial planning into its budget process in several ways.

First, the City has established a set of financial policies that establish goals for the allocation of public resources in the manner best suited to the efficient provision of City services to citizens and visitors present within the City. Some of these policies call for maintaining adequate cash reserves and providing on-going maintenance of infrastructure and buildings, which are vital to sound fiscal management.

Second, the Council undertakes a strategic planning process to establish goals and priorities for the organization after taking into account public input. Specifically, the Council engaged the community at a public hearing and by soliciting ideas and input through a variety of means. Based on this input, the City Council adopts goals, objectives, and resources permit objectives.

Third, the City maintains a long-range capital planning process that helps drive annual capital funding decisions as well as periodic bond issues for larger investments.

Finally, all Governmental Accounting Standards Board pronouncements are monitored and implemented into the City’s financial statements.

Budgetary Control Policy. The City maintains budgetary controls. The objective of these budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by the City Council. Activities of the general fund, special revenue funds, debt service funds, capital projects funds, enterprise funds, and internal service funds are included in the annual appropriated budget. The level of budgetary control (the level at which expenditures cannot legally exceed the appropriated amount) is established by function and activity within an individual fund.

The City’s budgetary records are maintained on a modified accrual basis. Revenues are recorded when measurable and available and expenditures are recorded when goods or services are received and the liability incurred. Based on the City’s financial management policies, the City is required to maintain a balanced operating budget, which is adopted by resolution on or before September 30th for the ensuing Fiscal Year.

Following the adoption of the budget, it is sometimes necessary to amend the budget.

Appropriations in the budget may be adjusted by recommendation of the Finance Director and 527
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approval by the City Manager when the budget is not increased in total amount. Savings from appropriations in one section of a department budget may be used to fund another section of a department budget. Any increase in appropriations that increases the total adopted budget must be approved by the City Council. The City Council formally reviews the City’s fiscal condition and amends appropriations, if necessary, six months after the beginning of each fiscal year.

Economic Conditions. The adopted budget for fiscal year 2021-22 was approved on August 17, 2021 (the “Adopted Budget”). The total Fiscal Year 2021-22 budget appropriations are $114.2 million, with general fund appropriations totaling $54.4 million, including Measure S Sales Tax general fund appropriations of $6.2 million. The main General Fund’s total unassigned fund balance, which refers to the difference between a fund’s assets and liabilities, is conservatively projected at $20.8 million at the end of the current fiscal year and includes $12.0 million for 25% designated reserve per the City’s financial policy, to be able to continue operations, pay debt service and provide public services for at least 90 days in the event of a natural or economic disaster. The unassigned undesignated fund balance at September 30, 2021 was at $8.8 million resulting from higher than budgeted revenues which exceeded the budget by $9.5 million. The reserve is a source of funds that can only be spent once, and thus should be used only for one-time expenditures, not for funding on-going or maintenance needs, employee costs, utilities costs, rental costs, etc.

General Fund Revenues. Fiscal Year 2021-22 General Fund revenues are projected to be approximately $6.9 million higher than the Fiscal Year 2020-21 total budget that was built based on COVID-19 pandemic related economic uncertainty, and $1.6 million above Fiscal Year 2020 actuals. Total General Fund revenues budgeted equal $48.2 million. The top three revenue sources, Transient Occupancy Tax (excluding Project Area TOT), Sales Tax (including Measure Q), and Property Tax comprise approximately 60% of the total General Fund revenues projected in the budget for Fiscal Year 2022.

General Fund Expenditures. General Fund expenditures are approximately $1.4 million or 2.8% below the Fiscal Year 2021 total budget. Year-over-year changes that account for the majority of expenditure decreases are in Transfers out ($2.0 million) and Non-Departmental ($0.6 million) categories. A decrease of $0.7 million in Public Works is offset by an increase of $0.9 million in Parks and Recreation due to a reorganization of the Recreation division into Parks and Recreation department. An increase of $1.0 million in General Government is due to a transfer of HR division under City Manager’s department ($474,000) resulting from a reorganization of the Administrative Services Department into Finance department during Fiscal Year 2021 mid-year budget process, a transfer of one position from Public Works Department ($139,000), a projected increase in general liability insurance cost ($205,000), and an increase in professional services for ADA program ($280,000) supported by a corresponding increase in revenues expected from the general liability insurance provider.
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Current and Proposed Fiscal Year Budget Information. Set forth in Table 1 is the General Fund budget for Fiscal Year 2021-22 and the proposed budget for Fiscal Year 2022-23.

The City’s fiscal year ends on September 30 of each year.

TABLE 1
City of South Lake Tahoe General Fund Budget Summary
Fiscal Years 2021-22 and 2022-23
2021-22
Adopted Budget
2022-23
Proposed Budget
Revenues
Property tax $9,175,180 $9,650,000
Transient occupancy-City 10,227,113 10,551,270
Transient occupancy-Project Area 6,742,177 6,740,000
Sales tax (Statewide) 6,300,650 7,100,000
Measure Q (Local sales tax) 3,192,325 3,500,000
Motor vehicle license fees 2,285,000 2,515,000
Franchise taxes 1,540,000 1,540,000
Business license tax 1,647,000 1,732,000
Transfers in 680,887 1,520,764
Other revenue 6,378,928 6,074,431
Total Revenues(1) 48,169,260 50,923,465
Expenditures
Current:

General government(2) 4,235,455 5,161,256
Finance(3) 2,402,934 2,539,419
Non-departmental 4,080,930 4,308,038
Police 12,383,177 13,220,803
Fire 9,247,604 9,981,351
Public works 3,852,111 4,476,081
Development services 2,035,142 1,843,648
Parks and recreation 3,137,589 3,237,749
Transfers-out 6,794,318 6,155,120
Total Current 48,169,260 50,923,465
____________________
(1) Excludes 2% TOT Revenues (Measure P), which is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund, not the General Fund. For Fiscal Years 2021-22 and 2022-23, Measure P revenues were budgeted at $3,000,000, and $3,200,000, respectively.
(2) Includes City Council, City Clerk, City Manager’s Office, City Attorney, City Treasurer. (3) Includes information technology.

Source: City of South Lake Tahoe Adopted Budget for Fiscal Year 2021-22 and Proposed Budget for Fiscal Year 2022-23. 529
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General Fund Key Revenue Sources. The key tax sources major general fund revenue sources of the City (collectively, the “Key Revenue Sources”), are Transient Occupancy Tax (approximately 37% of total general fund revenues), Sales Tax (approximately 27% of total general fund revenue), and Property Tax (approximately 18% of total general fund revenue). The City’s receipt of taxes and other revenue will likely be impacted by the ongoing COVID-19 pandemic.

The following table sets forth the audited revenues received by the City for the total of Key Revenue Sources and total of Other General Fund Revenue Sources for Fiscal Years 2018-19 through 2020-21.

TABLE 2
City of South Lake Tahoe
General Fund Revenues by Revenue Source
Fiscal Years 2018-19 through 2020-21
2018-19 2019-20 2020-21
Category Revenues
% of
Total Revenues
% of
Total Revenues
% of
Total
Property tax $8,113,063 16.86% $8,632,710 18.53% $9,135,477 18.22% Transient Occupancy Tax 11,267,069 23.41% 9,538,728 20.47% 11,166,045 22.26% Transient Occupancy Tax
(Redevelopment area) 6,978,997 14.50% 4,982,523 10.69% 5,952,873 11.87% Sales Tax 5,671,451 11.78% 5,460,038 11.72% 7,152,233 14.26% Measure Q 2,908,030 6.04% 2,915,365 6.26% 3,695,854 7.37% Vehicle License Fees 2,176,432 4.52% 2,284,264 4.90% 2,409,143 4.80% Franchise Tax 1,589,655 3.30% 1,593,143 3.42% 1,627,041 3.24% Business License Tax 1,737,109 3.61% 1,694,822 3.64% 1,717,401 3.42% Recreation 1,237,441 2.57% 380,845 0.82% 272,917 0.54%
Public Safety 2,743,784 5.70% 1,842,947 3.95% 2,608,954 5.20% Public Services 2,218,340 4.61% 2,664,320 5.72% 2,331,402 4.65% Transfers In 142,069 0.30% 2,926,445 6.28% 966,568 1.93% All Other Revenue 1,349,101 2.80% 1,683,398 3.61% 1,115,338 2.22% Total Revenues(1) $48,132,541 100.00% $46,599,548 100.00% $50,151,246 100.00% ________________
(1) Totals may not add due to rounding. Excludes Program Revenues, such as Charges for Services, Operating Grants and Contributions, and Capital Grants and Contributions. Excludes 2% TOT Revenues (Measure P), which is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund, not the General Fund. For Fiscal Years 2018-19 through 2020-21, Measure P revenues were $3,435,411, $2,764,825, and $3,234,866, respectively.

Source: City of South Lake Tahoe audited financial statements 2018-19 through 2020-21.

Transient Occupancy Tax
General. Transient occupancy tax (“TOT”) revenues are typically the largest source of General Fund revenues to the City. The City collects TOT from visitors staying for 30 days or less in a lodging facility, including vacation home rentals (“VHRs”). The City TOT rate is 10% except specific redevelopment properties where the rate is 12%. An additional 2% TOT approved by City voters in November 2016 (Measure P) is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund, not the General Fund. Measure P does not have a sunset date.

The City currently collects TOT revenues from 120 hotels/motels, 33 property management companies, and over 100 vacation homes rented by individual property owners or agents. Following the passage of Measure T in 2018 (described below), the TOT revenues from 530
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VHRs are projected to significantly decline. For Fiscal Year 2020-21, 611,570 guestrooms were rented, which includes both hotel guestrooms, plus private homes used as VHRs.

TOT revenues have seasonal characteristics and also tend to be volatile and subject to economic conditions and weather, including closure of Highway 50, which is the main route into the City. A lack of snow, for example, can significantly reduce the number of visitors to the City during the winter season, and virus outbreaks, like COVID-19, can shut down lodging industry completely for several months.

Despite the volatility, tourism continues to be a primary economic driver for the City. In most fiscal years since Fiscal Year 2013-14, TOT has been the top source of revenue for the General Fund. In spite of several months of health-mandated shutdown in 2020 and continued uncertainty, this revenue source was not significantly impacted as was originally expected in the budget projections with the actual TOT outperforming the Property Tax revenue in 2019-20 and again 2020-21 according to preliminary results. As part of the budget for Fiscal Year 2021-22, the City noted that the hospitality industry surged back up as soon as operational restrictions were lifted in February 2021 with domestic travel being the vacation of choice during spring and summer 2021. The City budgeted for Fiscal Year 2021-22 $2.4 million above Fiscal Year 2020-21 budget but $0.9 million below Fiscal Year 2018-19 (pre-COVID actuals) due to an anticipated full 9-month impact of Measure T.

Top Ten Payers of TOT. The following table shows the top payers of TOT to the City in Fiscal Year 2020-21.

TABLE 3
City of South Lake Tahoe
Top Payers of Transient Occupancy Tax
Fiscal Year 2020-21
No. TOT Payer Type
Effective
TOT
Rate(1)
FY 2020-21
Taxable
Rents
% of Total
Taxable
Rents(2)
1 Lake Tahoe Resort Hotel Hotel 12% $10,711,484 9.79%
2 Marriott’s Timber Lodge Hotel 12 9,479,432 8.66
3 Marriott’s Grand Residence Club Hotel 12 8,369,420 7.65 4 Beach Retreat & Lodge at Tahoe Hotel 10 8,216,519 7.51 5 The Landing Resort and Spa Hotel 10 7,477,345 6.81
6 Diamond Resorts Management, Inc. Agent 12 4,673,745 4.27 7 Hotel Azure Hotel 10 4,658,361 4.26
8 Forest Suites Resort Hotel 10 4,314,016 3.94
9 Hotel Becket Hotel 10 3,732,347 3.41
10 Holiday Inn Express – South Lake Tahoe Hotel 10 3,185,977 2.91 Totals $64,788,644 59.21%
(1) The City TOT rate is 10% except specific redevelopment properties where the rate is 12%. An additional 2% TOT approved by voters of South Lake Tahoe in November 2016 (Measure P) is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund. Information on the additional 2% TOT is not included on this schedule. (2) 2020-21 Total Taxable Rents: $109,414,803.

Source: City of South Lake Tahoe Revenue Division.

Measure T (2018). Measure T was a citizen-initiated ballot measure that amended City regulations on VHRs. It was approved by the voters in the City on November 6, 2018 and went into effect on December 20, 2018. Measure T requires the phase-out of all VHR permits in 531
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residential areas and for all multi-family properties over a three-year period, with full implementation of these provisions having been completed by December 31, 2021.

Measure T prohibits the issuance of new VHR permits in residential areas. Accordingly, no new permits for VHRs in residential areas have been issued since December 20, 2018. In 2021, existing VHR permits in residential zones and all VHR permits issued to multi-family properties, regardless of location, automatically expired on the last day of the month for which a VHR permit would otherwise be eligible for renewal. For example, if a permit had an annual renewal date in May, the VHR permit expired on May 31, 2021. By the end of December 2021, all VHR permits in residential areas and all multi-family VHR permits expired.

Measure T does not affect existing or future VHR permits in non-residential areas of the City (i.e., tourist core, commercial, and recreation zones), except for multi-family properties, for which VHR permits are no longer allowed anywhere in the City. New VHR permits, in compliance with City regulations, will continue to be issued in non-residential areas. In addition, Measure T allows for properties within a residential zone, whose owner is a permanent resident of the City, to vacation rent the entire dwelling for up to 30 (consecutive or non-consecutive) days total per one-year permit period. A Qualified Vacation Home Rental Permit application and proof of a primary residence property tax exemption is required. On November 17, 2020, the City Council adopted a hosted rental ordinance establishing regulations allowing a qualified homeowner or tenant to rent a portion of their home.

Litigation Related to Measure T. A group called the South Lake Tahoe Property Owners Group challenged Measure T in a lawsuit filed in December 2018, arguing that Measure T violates constitutional rights of property owners. On September 29, 2020, the court issued an order finding most of the constitutional claims to be without merit and eliminating most of the issues from the case. The South Lake Tahoe Property Owners Group has appealed the trial court’s order and also requested that the Court of Appeal issue a stay of Measure T while the appeal is pending.

The court of appeal denied the request for a stay on April 7, 2021. Thus, the City has continued to implement the requirements of Measure T, including the non-renewal of VHR permits in residential areas as described above. The City expects a ruling from the court of appeal on the merits of the case in late 2022 or early 2023.

Sales and Use Taxes
Sales & Use Taxes typically represents the second largest source of tax revenues to the City’s General Fund. Like Transient Occupancy Taxes, Sales & Uses Taxes can be a less stable source of revenues to the City, given that they are based on consumer spending within the City which is impacted by a variety of factors including the overall economy and other factors.

Measure Q (2004). In November 2004, voters in the City approved ballot Measure Q, a

0.5% transactions and use tax that went into effect on April 1, 2005. There is no sunset date for Measure Q. In 2021-22, Measure Q revenue was budgeted at $3.2 million, representing approximately 6% of total General Fund revenues, an increase of 22.9% over the prior year’s total budget that was created to account for potential COVID-19 impacts.

Measure S (2020). In November 2020, voters in the City approved ballot Measure S, an additional 1.0% transactions and use tax that went into effect on April 1, 2021. There is no sunset date for Measure S. In 2021-22, Measure S revenue was budgeted at approximately $6.4 million, representing 12% of total General Fund revenues.
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State-Wide Sales Tax Law. Taxable transactions in the City are currently subject to the following sales and use tax, of which the City’s share is only a portion. The City collects a percentage of taxable sales in the City (minus certain administrative costs) pursuant to the Bradley-Burns Uniform Local Sales and Use Tax (the “Sales Tax Law”). The State collects and administers the sales tax under the Sales Tax Law, and makes distributions on taxes collected within the City, as shown in the following table.

TABLE 4
City of South Lake Tahoe
Sales Tax Rate
Effective July 1, 2022
Statewide Rate 7.25%
City Transactions and Use Tax (Measure Q) 0.50
City Transactions and Use Tax (Measure S) 1.00
Total 8.75%
____________
Source: California Department of Tax and Fee Administration (CDTFA).

Sales and use taxes are complementary taxes; when one applies, the other does not. In general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible personal property in the State. The use tax is imposed on the purchase, for storage, use or other consumption in the State of tangible personal property from any retailer. The use tax generally applies to purchases of personal property from a retailer outside the State where the use will occur within the State. The sales tax is imposed upon the same transactions and items as the statewide sales tax and the statewide use tax.

Certain transactions are exempt from the State sales tax, including sales of the following products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and • gas, electricity and water when delivered to consumers through mains, lines and pipes.

This is not an exhaustive list of exempt transactions. A comprehensive list can be found in the State Board of Equalization’s Publication No. 61 (February 2017) entitled “Sales and Use Taxes: Exemptions and Exclusions,” which can be found on the State Board of Equalization’s website at http://www.boe.ca.gov/. The reference to this Internet website is provided for reference and convenience only. The information contained within the website may not be current, has not been reviewed by the City and is not incorporated in this Official Statement by reference.

Sales Tax Collection Procedures. Collection of the sales and use tax is administered by the California Department of Tax and Fee Administration (the “CDTFA”). This process was formerly administered by the State Board of Equalization. The Taxpayer Transparency and Fairness Act of 2017, which took effect July 1, 2017, restructured the State Board of Equalization and separated its functions among three separate entities: the State Board of Equalization, the CDTFA and the Office of Tax Appeals. The State Board of Equalization will continue to perform 533
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the duties assigned to it by the State Constitution, while all other duties will be transferred to the newly established CDTFA and the Office of Tax Appeals. CDTFA will handle most of the taxes and fees previously collected by the State Board of Equalization, including sales and use tax.

Under the Sales and Use Tax Law, all sales and use taxes collected by the CDTFA under a contract with any city, city and county, or county are required to be transmitted by the CDTFA to such city, city and county, or county periodically as promptly as feasible. These transmittals are required to be made at least twice in each calendar quarter.

Under its procedures, the CDTFA projects receipts of the sales and use tax on a quarterly basis and remits an advance of the receipts of the sales and use tax to the City on a monthly basis. The amount of each monthly advance is based upon the CDTFA’s quarterly projection.

During the last month of each quarter, the CDTFA adjusts the amount remitted to reflect the actual receipts of the sales and use tax for the previous quarter.

The CDTFA receives an administrative fee based on the cost of services provided by the Board to the City in administering the City’s sales tax, which is deducted from revenue generated by the sales and use tax before it is distributed to the City.

As part of the State government’s response to the COVID-19 pandemic, certain businesses were able to defer the payment of their sales taxes due to the City.

Historic Taxable Transactions. The following table shows historical taxable transactions in the City for the most recent five years available.

TABLE 5
City of South Lake Tahoe
Taxable Transactions
Fiscal Years 2017 through 2021
2017 2018 2019 2020 2021
Motor Vehicle and Parts Dealers $22,732 $20,507 $20,654 $22,300 $25,404 Home Furnishings and Appliances 6,189 8,091 5,755 4,199 3,929 Building Materials 22,791 23,764 24,104 24,600 24,555
Food and beverage stores 68,138 71,817 56,570 63,143 61,775 Gasoline stations 25,016 27,486 40,912 29,701 36,654
Apparel stores 31,889 33,992 34,904 30,352 40,673
General merchandise stores 9,577 9,259 7,541 6,982 6,739 Food services and drinking places 124,215 130,781 136,687 115,077 142,382 Other retail stores 48,709 45,778 53,446 60,851 74,353
All other outlets 67,487 72,550 73,332 61,410 72,544
Total All Outlets $426,743 $444,026 $453,905 $418,616 $489,008 ____________________
Source: California Department of Tax and Fee Administration (CDTFA).

Property Taxes
Property Taxes typically represents the third-largest source of taxes to the City’s General Fund. Property taxes represent a very stable source of revenue to the City, and are based in large part on assessed valuations of property located in the City.

Property Tax Delinquencies; Teeter Plan. Certain counties in the State of California, including El Dorado, offer a statutory program entitled Alternate Method of Distribution of Tax 534
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Levies and Collections and of Tax Sale Proceeds (the “Teeter Plan”). Under the Teeter Plan local taxing entities receive 100% of their tax levies net of delinquencies, but do not receive interest or penalties on delinquent taxes collected by the county. The County includes the City’s property tax collections in its Teeter Plan. Consequently, the City’s receipt of property taxes is equal to 100% of the amount levied. There is no assurance that the County will continue the Teeter Plan or that the City will continue to participate in the Teeter Plan. Delinquencies in the payment of property taxes could have an adverse effect on the ability of the City to make Base Rental should the County discontinue the Teeter Plan or the City withdraw from or not be able to continue in the Teeter Plan.

General Method of Property Tax Calculations. Proposition 13, passed in 1978, established the current property tax regime for local agencies, including the City, throughout the State. Under Proposition 13, subject to voter-approved debt and certain other exceptions, the base property tax rate on a parcel is limited to 1% of its assessed value and the property tax collected by this 1% County-wide rate is shared by the local agencies eligible to receive property taxes within the applicable County pursuant to applicable State law. Under Proposition 13, the 1975-76 fiscal year serves as the original base year used in determining the assessment for real property. Thereafter, annual increases to the base year value are limited to the inflation rate, as measured by the California Consumer Price Index, or 2%, whichever is less. A new base year value, however, is also established whenever a property, or portion thereof, has had a change in ownership or has been newly constructed. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS – Article XIIIA of the State Constitution” for additional information.

Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when a property suffers a “decline-in-value.” As of the January 1st (lien date) each year, the Assessor must enroll either a property’s Proposition 13 value (adjusted annually for inflation by no more than 2%) or its current market value, whichever is less. When the current market value replaces the higher Proposition 13 value, the lower value is commonly referred to as a “Proposition 8 Value.” “Proposition 8 values” are temporary and, once enrolled, must be reviewed annually by the assessor until the Proposition 13 adjusted base year value is enrolled.

Levy and Collection of Property Taxes. Property taxes are levied for each fiscal year on taxable real and personal property as of the preceding January 1. For assessment and collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of the assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property the taxes on which have a viable tax lien, in the opinion of the County Assessor, to secure payment of the taxes. Other property is assessed on the “unsecured roll.” Property taxes on the secured roll are due in two installments, on November 1 and February 1 of each fiscal year, and become delinquent on December 10 and April 10, respectively.

A penalty of 10% attaches immediately to all delinquent payments. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on or about June 30 of the fiscal year. Such property may thereafter be redeemed by payment of a penalty of 1% per month to the time of redemption, plus costs and a redemption fee. If taxes are unpaid for a period of five years or more, the property is deeded to the State and may be sold at public auction.

Property taxes on the unsecured roll are due as of the January 1 lien dates and become delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured 535
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personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxpayer; (3) filing a certificate of delinquency for record in the County Recorder’s office in order to obtain a lien on certain property of the taxpayer; and (4) seizure and sale of personal property, improvements or possessory interests belonging or assessed to the assessee.

Beginning in 1978-79, Proposition 13 and its implementing legislation shifted the function of property tax allocation to the counties, except for levies to support prior voted debt, and prescribed how levies on county-wide property values are to be shared with local taxing entities within each county.

Historical Assessed Valuations. The table below presents the assessed valuation of taxable property in the City for Fiscal Year 2012-13 through 2021-22.

TABLE 6
City of South Lake Tahoe
Assessed Valuations of All Taxable Property
Fiscal Years 2012-13 through 2021-22
Fiscal Year Local Secured Utility Unsecured Total
%
Change
2012-13 $3,686,469,851 $0 488,299,118 $3,774,768,969 --% 2013-14 3,719,613,139 0 94,426,393 3,814,039,532 1.0
2014-15 3,826,850,451 0 93,750,130 3,920,600,581 2.8
2015-16 4,012,840,871 0 90,397,095 4,088,193,301 4.3
2016-17 4,195,441,787 0 91,432,001 4,286,873,788 4.9
2017-18 4,466,533,482 0 94,195,752 4,560,729,234 6.4
2018-19 4,768,126,346 0 114,917,413 4,883,043,759 7.1
2019-20 4,993,100,046 0 116,098,828 5,109,198,874 4.6
2020-21 5,270,054,725 0 124,077,949 5,394,132,674 5.6
2021-22 5,522,533,805 0 131,594,675 5,654,128,480 4.8
Source: California Municipal Statistics Inc.
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Assessed Valuations and Parcels by Land Use. The following table shows secured assessed valuations and parcels by land use for Fiscal Year 2021-22. As shown in the table, there are approximately 12,350 residential parcels in the City, representing over 78% of the assessed valuation in the City, has residential uses.

TABLE 7
City of South Lake Tahoe
Secured Assessed Valuation and Parcels by Land Use
Fiscal Year 2021-22
2021-22 % of No. of % of
Non-Residential: Assessed Valuation(1) Total Parcels Total Commercial $399,422,052 7.23% 255 0.58%
Vacant Commercial 12,975,318 0.23 101 0.23
Resort/Timeshare Interests 235,718,480 4.27 30,398 69.69 Hotel/Motel 325,013,664 5.89 120 0.28
Industrial 142,829,989 2.59 203 0.47
Vacant Industrial 2,992,506 0.05 30 0.07
Recreational 82,432,753 1.49 55 0.13
Government/Social/Institutional 3,365,804 0.06 97 0.22
Subtotal Non-Residential $1,204,750,566 21.82% 31,259 71.67% Residential:

Single Family Residence $3,808,561,775 68.96% 9,825 22.53% Mobile Home 7,091,202 0.13 272 0.62
Mobile Home Park 38,609,771 0.70 17 0.04
2-3 Residential Units 239,116,637 4.33 860 1.97
4+ Residential Units/Apartments 166,315,029 3.01 297 0.68 Miscellaneous Residential Improvements 7,094,056 0.13 65 0.15 Vacant Residential 50,994,769 0.92 1,021 2.34
Subtotal Residential $4,317,783,239 78.18% 12,357 28.33% Total $5,522,533,805 100.00% 43,616 100.00%
_________________
(1) Local Secured Assessed Valuation, excluding tax exempt property.

Source: California Municipal Statistics, Inc.
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Principal Property Taxpayers. The top twenty largest local secured property taxpayers in the City, as shown on the 2021-22 secured tax roll, are listed in the table below. For Fiscal Year 2021-22, the total assessed valuation of the twenty largest local secured taxpayers is 9.61% of the total City Fiscal Year 2021-22 assessed valuation.

TABLE 8
City of South Lake Tahoe
Principal Property Taxpayers (Secured Roll)
Fiscal Year 2021-22
2021-22 % of
Property Owner Primary Land Use Assessed Valuation Total (1)

1. First American Trust FSB Resort/Timeshare $ 73,613,739 1.33%

2. Roppongi-Tahoe LP Hotel 57,543,258 1.04

3. Tahoe Chateau Land Holding LLC Planned Residential Development 43,242,111 0.78

4. Trans Sierra Investments Shopping Center 34,757,997 0.63

5. Diamondrock Tahoe Owner LLC Hotel 33,703,080 0.61

6. Gondola Vista Development Company LLCResidential Properties 29,327,443 0.53

7. LCOF Lake Tahoe Invest LLC Hotel 27,463,891 0.50

8. Tahoe Crescent LLC Commercial 26,959,097 0.49

9. Heavenly Valley LP Ski Resort 25,001,017 0.45

10. South Tahoe Refuse Co. Industrial 21,040,029 0.38

11. Tahoe Verde Partnership Mobile Home Park 19,449,734 0.35

12. Azure Tahoe Resorts LLC Hotel 19,084,770 0.35

13. Kuldeep Singh & Deepak Mand Hotel 16,000,896 0.29

14. Marriott Ownership Resorts Inc. Resort/Timeshare 15,836,809 0.29

15. Sierra Vista Evergreen SPE LLC Apartments 15,818,288 0.29

16. Tahoe Keys Marina & Yacht Club LLC Marina 15,430,467 0.28

17. Seven Springs LP Commercial 15,000,000 0.27

18. Second Bay Holdings Tahoe LLC Commercial 14,953,328 0.27

19. Rialto Stanton Tahoe LP Commercial 13,453,953 0.24

20. Zalanta Resort at the Village LLC Condominiums 13,177,741 0.24 $530,857,648 9.61%
_________________________________
(1) The total City secured assessed valuation for fiscal year 2021-22 is $5,522,533,805.

Source: California Municipal Statistics, Inc.
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Other Sources of Revenues
Franchise Fees. The City collects franchise fees for the use of streets and rights-of-way from a number of utility services provided by private parties including natural gas, cable services, and electricity. Solid waste collection services are provided by a contracted private party that also pays a franchise fee to the City. Franchise fee revenue is budgeted at $1.5 million representing

2.8% of total General Fund revenues in the 2021-22 budget, an increase of 4.4% to the prior year total budget.

Vehicle License Fees. Vehicle license fees (“VLF”) are paid on the ownership of a registered motor vehicle in place of taxing vehicles as personal property. This fee is paid annually upon vehicle registration in addition to other fees such as the registration fee, air quality fees and commercial vehicle weight fees that fund state programs. In 2004, the State of California permanently reduced the VLF from 2% to 0.65% and entered into an arrangement with cities and counties to backfill the amount of the fee eliminated with property taxes. Thus, the growth or decline in VLF is also tied to the growth or decline in property taxes.

Business and Professions Tax. The City charges a Business and Professions tax on persons or entities conducting business within the City. The tax is based on the gross receipts of the business. Business taxes for 2021-22 are budgeted at $1.6 million, or 3.0% of total General Fund revenues. This amount represents an increase in business tax revenues of 17.1% over the prior years budget due to COVID-19 business closures and reduced gross receipts in the previous fiscal year. Business tax revenues are expected to increase at a rate of 1.0% annually thereafter.

Financial Statements
The City’s accounting policies conform to generally accepted accounting principles and reporting standards set forth by the State Controller. The audited financial statements also conform to the principles and standards for public financial reporting established by GASB.

Basis of Accounting and Financial Statement Presentation. The government-wide financial statements are reported using the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.

Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures are recorded only when payment is due.

Audited Financial Statements. Set forth in the following tables is the City’s General Fund balance sheets and statements of revenues, expenditures and changes in General Fund Balance for fiscal years 2016-17 through 2020-21, which are based on the City’s audited financial statements. The balance sheets and statements presented in this Official Statement are subject to the various notes attached to the City’s financial statements for the respective years. The City’s Annual Comprehensive Financial Report (“ACFR”) for Fiscal Year 2020-21, including the City’s audited financial statements, is set forth in APPENDIX A. 539
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General Fund Historical Financial Data
The following Tables 10 and 11 provide a five-year history of (i) the City’s General Fund revenues, expenditures, and changes in fund balances for Fiscal Years 2016-17 through 2020- 21 and (ii) the City’s Comparative Balance Sheet for Fiscal Years 2016-17 through 2020-21.

TABLE 9
City of South Lake Tahoe
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2016-17 through 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Revenues
Taxes and assessments $34,029,206 $36,288,798 $37,011,629 $33,662,711 $42,597,200 Licenses, permits and impact fees 1,607,311 1,718,645 1,786,359 1,728,392 1,763,093 Fines and penalties 31,295 130,204 85,963 78,433 96,556 Use of money and property 359,202 542,840 777,230 442,873 105,111 Intergovernmental revenue 2,178,724 2,355,954 2,475,758 3,385,405 3,393,370 Charges for current services 4,009,334 4,130,233 3,850,649 3,852,064 3,281,080 Other revenue 234,278 285,999 1,609,464 404,246 658,085 Loss on investment in land held for resale -- (2,157,647) -- -- -- Total Revenues(1) 42,449,350 43,295,026 47,597,052 43,554,124 51,894,495 Expenditures
Current:

General Government 6,967,874 10,910,495 9,335,325 9,428,305 9,753,308 Public safety 14,042,563 15,571,856 18,199,843 18,315,577 19,921,546 Public works 5,523,717 5,675,760 6,339,496 6,294,092 5,850,205 Parks and recreation 1,780,597 1,751,749 1,913,163 1,531,608 1,438,655 Capital outlay 354,224 236,414 75,475 702,997 231,032
Debt Service:

Principal 47,300 -- -- -- --
Interest and fiscal charges 74 -- -- -- --
Total expenditures 28,716,349 34,146,274 35,863,302 36,272,579 37,194,746 Excess (deficiency) of revenues over (under)
expenditures 13,733,001 9,148,752 11,733,750 7,281,545 14,699,749 Other financing sources(uses)
Sale of property 300,000 -- -- -- --
Transfers in 405,064 343,493 94,070 2,875,293 372,846
Transfers out(2)(3) (9,415,848) (9,820,181) (17,815,033) (6,554,584) (10,859,767) Proceeds from sale of capital assets -- -- -- -- 41
Total other financing sources (8,710,784) (9,476,688) (17,720,963) (3,679,291) (10,486,880) Net Change in fund balances 5,022,217 (327,936) (5,987,213) 3,602,254 4,212,869 Beginning of year 26,114,213 31,136,430 30,808,494 24,821,281 28,423,535 End of year $31,136,430 $30,808,494 $24,821,281 $28,423,535 $32,636,404 ____________
(1) Excludes 2% TOT Revenues (Measure P), which is dedicated for the Multigenerational Center Project and is accounted for in a special revenue fund, not the General Fund. For Fiscal Years 2016-17 through 2020-21, Measure P revenues were $2,507,719, $3,307,933, $3,435,411, $2,764,825, and $3,234,866, respectively. (2) Transfers out consist of transfers from the General Fund to other City funds. The City typically transfers annually approximately $3 million to the debt service fund, between $1 to $2 million annually to the streets and snow removal funds, and smaller amounts annually to the airport, storm water management program and long-term capital improvement funds, as well as other funds. (3) Large transfers out in 2018-19 included several one-time amounts, including approximately $5 million to the capital improvement funds, $4 million to debt service fund (compared to typical $3 million) to pay-off certain then-outstanding capital lease obligations, $3 million for the purchase of four pieces of snow removal equipment, and $1.8 million for fire apparatuses.

Source: City of South Lake Tahoe audited financial statements for fiscal years 2016-17 through 2020-21. 540
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TABLE 10
City of South Lake Tahoe
General Fund Balance Sheets
Fiscal Years 2016-17 through 2020-21
2016-17 2017-18 2018-19 2019-20 2020-21
Assets
Cash and investments $22,009,349 $24,695,057 $17,636,497 $20,471,033 $25,657,208 Accounts receivables - net 3,014,449 3,755,830 3,683,783 4,479,512 3,732,545 Interest receivable 104,709 232,007 310,118 116,516 42,555 Due from other funds 358,371 156,412 288,753 63,840 481,513 Prepaid items 184,911 138,389 121,406 137,094 114,910
Inventory 234,078 222,455 211,010 230,159 238,298
Land hand for resale 3,957,647 1,000,000 1,000,000 1,225,000 1,225,000 Loans receivable -- -- -- -- 382,361
Advance to RDA successor agency 4,638,627 4,638,627 4,638,627 4,638,627 4,638,627 Total Assets 34,502,141 34,838,777 27,890,194 31,361,781 36,513,017 Liabilities
Accounts payable 860,603 1,479,061 968,762 961,483 1,334,556 Accrued expenditures 899,191 987,781 548,453 366,439 253,890 Deposits 1,344,297 1,449,002 1,403,299 1,385,122 1,733,268 Due to developers 261,620 114,439 148,399 225,202 465,255 Unearned revenue -- -- -- -- 89,644
Total Liabilities 3,365,711 4,030,283 3,068,913 2,938,246 3,876,613 Fund Balances
Nonspendable 9,015,263 5,999,471 5,971,043 6,230,880 6,216,835 Restricted -- 750,000 750,000 750,000 750,000
Assigned 199,173 448,767 607,125 350,876 788,610
Unassigned 21,921,994 23,610,256 17,493,113 21,091,779 24,880,959 Total Fund Balance 31,136,430 30,808,494 24,821,281 28,423,535 32,636,404 Total Liabilities & Fund Balance $34,502,141 $34,838,777 $27,890,194 $31,361,781 $36,513,017 _____________
Source: City of South Lake Tahoe audited Financial Statements for fiscal years 2016-17 through 2020-21.

Relevant Fiscal Policies
The City has adopted a comprehensive set of fiscal policies to provide guidance for all fiscal activities and resource allocation decisions as defined in the Adopted Budget. The policies set forth guidelines for both current activities and long-range planning. In addition, the City Council approved or adopted several other fiscal policies including:
• Investment Policy.
• Debt Management Policy.
• Reserve Policy
The following are certain highlighted aspects of the adopted policies.

Investment Policy. The City manages its temporarily pooled idle cash investments under the prudent person rule. To afford the City a broad spectrum of investment opportunities as long as the investment is deemed prudent and is allowable under current legislation of the State of California (Government Code § 53600. et. seq.). Investments are selected based in order of priority on: (i) safety, (ii) liquidity and (iii) yield. 541
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Debt Management Policy. The City’s Debt Management Policy provides operating guidelines for all major debt transactions of the City and related entities. The City manages its debt to ensure high credit quality, access to credit markets and financial flexibility. Debt is issued only in those cases where public policy, equity and economic efficiency favor debt over cash financing. Whenever possible, the debt shall be self-supporting. Debt is used primarily to finance long-term capital projects, paying for facilities or equipment over their useful lives and concurrent with the stream of benefits from these facilities. The City maintains a central system for all debtrelated records adheres to all continuing disclosure requirements, and strives to maintain positive relationships with members of the investment community.

Reserve Policy. The City’s Reserve Policy requires that the City strive to maintain an Unassigned General Fund balance, of twenty-five percent (25%) of budgeted General Fund operating expenditures. The reserve represents one-time revenues available to provide temporary financing for extraordinary cash needs such as costs related to a natural disaster, an economic recession, or an unexpected liability. Funds may be appropriated from this operations reserve upon demonstration to the City Council that the remaining balance is sufficient to offset potential downturns in revenue sources and to provide adequate cash for daily financial needs.

Funds must be allocated each year in the budget process to replace any use of the reserve during the preceding fiscal year. To the extent that funds accumulate in excess of the required reserve, these one-time funds may be transferred to the Capital Projects Fund upon completion of the annual audit.

Risk Management. The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; and natural disasters for which the City participates The City is a member of the California Intergovernmental Risk Authority (“CIRA”) (formerly Public Agency Risk Sharing Authority of California (PARSAC)), a joint powers authority which provides annual general liability coverage up to $35,000,000 in the aggregate. The City retains the risk for the first $250,000 in general liability claims.

The City is a member of Local Agency Workers’ Compensation Excess Joint Powers Authority (“LAWCX”), which provides workers’ compensation insurance coverage up to $45,000,000. The City retains the risk of the first $500,000 in losses for each accident and employee under this policy.

CIRA and LAWCX were established for the purpose of providing general liability and excess workers’ compensation protection for their members. Each entity is governed by a board consisting of representatives from member municipalities. The board controls the operations of each entity, including selection of management and approval of the annual budget.

The City is part of the public entity pool comprised of approximately fifty California cities and one fire district. CIRA is organized under a Joint Powers Agreement pursuant to the California Government Code. The purpose of CIRA is to arrange and administer programs of insurance for the pooling of self-insured losses and to purchase excess insurance coverage. The City pays an annual premium to CIRA for its general liability and property coverage.

See Note 11 to the City’s audited financial statements (included as APPENDIX A) for additional details regarding the City’s Risk Management. 542
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Employee Retirement System; CalPERS
This caption contains certain information relating to California Public Employees’ Retirement System (“CalPERS”). The information is primarily derived from information produced by CalPERS, its independent accountants and actuaries. The City has not independently verified the information provided by CalPERS and makes no representations and expresses no opinion as to the accuracy of the information provided by CalPERS.

The comprehensive annual financial reports of CalPERS are available on its Internet website at www.calpers.ca.gov. The CalPERS website also contains CalPERS’ most recent actuarial valuation reports and other information concerning benefits and other matters. Such information is not incorporated by reference in this Official Statement. None of the Authority, City or Underwriter can guarantee the accuracy of such information. Actuarial assessments are “forward-looking” statements that reflect the judgment of the fiduciaries of the pension plans, and are based upon a variety of assumptions, one or more of which may not materialize or may be changed in the future. Actuarial assessments will change with the future experience of the pension plans.

General Information about the Pension Plans. Substantially all full-time City employees are eligible to participate in pension plans offered by CalPERS. The City’s employees participate in separate Safety (police and fire) or Miscellaneous (all other) Employee Plans.

Additional information about CalPERS and its Plans can be obtained directly from CalPERS.

PEPRA. On September 12, 2012, the California Governor signed AB 340, a bill that enacted the California Public Employees’ Pension Reform Act of 2012 (“PEPRA”) and that also amended various sections of the California Education and Government Codes, including the County Employees Retirement Law of 1937. Effective January 1, 2013, PEPRA: (i) requires public retirement systems and their participating employers to share equally with employees the normal cost rate for such retirement systems; (ii) prohibits employers from paying employer paid member contributions to such retirement systems for employees hired after January 1, 2013; (iii) establishes a compulsory maximum non safety benefit formula of 2.5% at age 67; (iv) defines final compensation as the highest average annual pensionable compensation earned during a 36 month period; and (v) caps pensionable income at $110,100 ($132,120 for employees not enrolled in Social Security) subject to Consumer Price Index increases. Other provisions reduce the risk of the City incurring additional unfunded liabilities, including prohibiting retroactive benefits increases, generally prohibiting contribution holidays, and prohibiting purchases of additional nonqualified service credit.

Benefits Provided. The Plans’ provide service retirement and disability benefits, annual cost of living adjustments and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time employment. All members are eligible for non-duty disability benefits after 10 years of service.

Benefit provisions and all other requirements are established by State statute and may be amended by City contracts with employee bargaining groups.

The Miscellaneous Plans’ provisions and benefits in effect at September 30, 2021 are summarized as follows:
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Miscellaneous Plans
Classic Miscellaneous PEPRA Miscellaneous
Benefit Formula 2.0% @ 55 / 2.7% @ 55 2.0% @ 62
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 55 62
Monthly Benefits, As a % of Eligible Comp 2.00% to 2.70% 2.00% Required Employee Contribution Rates 7.00 - 8.00% 8.00% Required Employer Contributions Rates:

Oct 1, 2020 - September 30, 2021 11.401% 11.401%
July 1, 2021 - September 30, 2021 10.670% 10.670%
The Safety Plans’ provisions and benefits in effect at September 30, 2021 are summarized as follows:

Safety Plan
Classic Safety PEPRA Safety
Benefit Vesting Schedule 5 years of service 5 years of service Benefit Payments Monthly for life Monthly for life
Retirement Age 50 - 55 57
Monthly Benefits, As a % of Eligible Comp 3.00% 2.70%
Oct 1, 2020 - Sept. 30, 2021 Sept. 30, 2021
Required Employee Contribution Rates:

Classic 9.000% 9.000%
PEPRA 13.750% 13.570%
Required Employer Contributions Rates:

Classic:

Police Tier 1 25.540% 25.590%
Police Tier 2 24.303% 24.360%
Police Tier 3 22.397% 22.470%
Fire Tier 1 25.540% 25.590%
Fire Tier 2 24.303% 24.360%
Fire Tier 3 22.397% 22.470%
PEPRA:

Safety Police 13.884% 13.980%
Safety Fire 13.884% 13.980%
_____________
Source: City of South Lake Tahoe Audit Fiscal Year ended September 30, 2021.

Contributions. Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers be determined on an annual basis by the CalPERS actuary and shall be effective on the July 1 following notice of a change in the rate. Contribution rates for the employer rate plans are determined through the CalPERS’ annual actuarial valuation process. Each employer rate plan’s actuarially determined rate is based on the estimated amount necessary to pay the employer rate plan’s allocated share of the cost of benefits earned by employees during the year, and any unfunded accrued liability. The City of South Lake Tahoe is required to contribute the difference between the actuarially determined rate and the contribution rate of employees. Total contributions made by the City to the Miscellaneous Plan during Fiscal Year 2021 were $3,785,869. Total contributions made by the City to the Safety Plan during Fiscal Year 2021 were $4,610,711.

Pension Expense and Net Pension Liability. For the measurement period ended June 30, 2021, the City recognized pension expense of $1,551,542 to the Miscellaneous Plan. For the year ended September 30, 2021, the City recognized a pension expense of $2,352,992 to the 544
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Safety Plan. In addition, the City reported net pension liability, as of September 30, 2021, with respect to its Miscellaneous Plan of $27,299,042 and with respect to its Safety Plan of $28,415,935, respectively. The City estimates its combined funded ratio will increase to 74.3% in the 2021 valuation. See Note 10 to the City’s audited financial statements (included as APPENDIX A) for additional details regarding the City’s pensions plans.

Actions Taken by CalPERS Related to Discount Rate and Other Assumptions. In July 2021, CalPERS reported a preliminary 21.3% net return on investments for the 12-month period that ended June 30, 2021. Under the Funding Risk Mitigation Policy, approved by the CalPERS Board of Administration in 2015, the 21.3% net return will trigger a reduction in the discount rate used to calculate employer and PEPRA member contributions. The Funding Risk Mitigation Policy seeks to reduce CalPERS funding risk over time, in which CalPERS investment performance that significantly outperforms the discount rate will trigger adjustments to the discount rate, expected investment return, and strategic asset allocation targets. This is the first time it has been triggered, and the strategic asset allocation now includes more leverage in the CalPERS portfolio. The discount rate, or assumed rate of return, has dropped from 7.0% to 6.8%.

In November 2021, the CalPERS Board of Administration selected a new asset allocation mix that will guide the fund’s investment portfolio for the next four years, while at the same time retaining the current 6.8% target it assumes those investments will earn over the long term. The board also approved adding 5% leverage to increase diversification. The decision concludes a nearly yearlong comprehensive review of the pension system’s investment portfolio and actuarial liabilities. Known as the Asset Liability Management process (ALM), the board conducts the evaluation every four years. The ALM process included a review of demographic assumptions, including life expectancy, retirement and disability rates, and potential changes in job growth and salaries. The most recent findings show that life expectancies of healthy members at age 55 increased slightly from the last study in 2017. Notable changes for employers include a decrease in median total employer contribution rates, which includes both normal and unfunded actuarial liability costs, from less than 1% in miscellaneous plans to a decrease of more than 2% in some safety plans. Employees hired on or after January 1, 2013, following the implementation of the Public Employees’ Pension Reform Act (PEPRA), also will be affected. Most PEPRA employees will see median increases ranging from 1.2% in miscellaneous plans to 1.5% in safety plans in their total normal cost.

No assurance can be given that the Board of Administration will not make further changes to the methods used to determine pension liability of CalPERS members, including the City.

Deferred Compensation Plan. City employees may defer a portion of their compensation under a City sponsored Deferred Compensation Plan created in accordance with Internal Revenue Code Section 457. Under this plan, participants are not taxed on the deferred portion of their compensation until distributed to them; distributions may be made only at termination, retirement, death or in an emergency defined by the plan. The laws governing deferred compensation plan assets require plan assets to be held by a trust for the exclusive benefit of plan participants and their beneficiaries. Since the assets held under these plans are not the City’s property and are not subject to City control, they are excluded from the City’s financial statements.

General Fund Long-Term Obligations
The City generally incurs long-term debt to finance projects or purchase assets which have useful lives equal to or greater than the related debt. The following table shows the outstanding debt of the City payable from the General Fund as of September 30, 2021. 545
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TABLE 11
City of South Lake Tahoe
General Fund Long-Term Obligations
As of July 1, 2022
Series Purpose Debt Type Final Maturity
Initial
Par
Outstanding
Par
2010 New Money Direct Placement [__]/22/2026 $657,461 $276,834 2012 New Money COP 9/1/2042 5,765,000 4,710,000
2014 Refunding Direct Placement 10/1/2029 2,110,000 1,242,000 2014 New Money POB 6/1/2027 6,950,000 6,950,000
2016A Refunding Lease Revenue 10/1/2025 10,055,000 4,870,000 2021 New Money Direct Placement 08/01/2025 2,700,000 2,159,938 Totals $28,237,461 $20,208,772
___________
Source: City of South Lake Tahoe.
2010 California Energy Commission Loan. During Fiscal Year 2011-12, the City entered in an agreement with the California State Department of Energy Resources Conservation and Development Commission for a loan amount of $657,461. Principal and interest payments are payable semi-annually on December 22 and June 22 of each year until 2026, commencing December 22, 2012. The loan is repayable from savings made from energy costs and the City’s General Fund. The outstanding balance on the loan as of September 30, 2021 was $276,834. 2012 Certificates of Participation. On July 1, 2012, the City entered into an agreement with the South Tahoe Joint Powers Financing Authority for a lease amount of $5,765,000.

Proceeds from the Certificates were used to finance street and other capital improvements within the City benefitting parks and recreation. Principal and interest payments are payable semiannually on March 1 and September 1 of each year until 2042, commencing September 1, 2012.

The total principal remaining to be repaid on the loan was $4,710,000 as of September 30, 2021. 2014 Financing Lease. During the Fiscal Year 2013-14, the City entered into a lease agreement with STJPFA for a lease amount of $2,110,000 for road improvements. Principal and interest payments are payable semi-annually on April 1 and October 1 of each year until 2029, commencing October 1, 2014. The outstanding balance on the loan as of September 30, 2021 was $1,380,000.
2014 Taxable Pension Obligation Bonds. On December 1, 2014, the City issued $11,905,000 in Taxable Pension Obligation Bonds, Series 2014 to refund the outstanding “side fund” obligations of the City to CalPERS with respect to the City’s Safety Plan. The City paid off its Safety Plan Side Fund balance (lump sum payment of $11,447,671 as of December 18, 2014) with proceeds of the bonds. The bonds bear interest rates ranging from 1.785 percent to 4.000 percent, payable on June 1 and December 1 of each year, commencing June 1, 2018 until maturity year of 2027. The total principal remaining on the bonds as of September 30, 2021 is $8,070,000.

Refunding Lease Revenue Bonds, 2016 Series A. On July 28, 2016, the South Tahoe Joint Powers Financing Authority issues the Refunding Lease Revenue Bonds 2016 Series A, in the amount of $10,055,000, the proceeds of which were used to refund the Lease Revenue Bonds, 2006 Series A. Interest on the Refunding Lease Revenue Bonds Series A is payable semi-annually on April 1 and October 1 of each year until 2025. Principal matures annually on 546
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October 1. The total principal remaining to be repaid on the bonds at September 30, 2021 was $5,990,000.
2021 Financing Lease. On February 1, 2021, the City entered into an agreement in the amount of $2,700,00 with the U.S. Bancorp Government Leasing Finance, Inc., for a lease financing arrangement for the purchase of a Walker Telecomm Communications System. The outstanding balance on September 30, 2021 was $2,159,938.

See Note 7 to the City’s audited financial statements for the fiscal year ending September 30, 2021 attached hereto as APPENDIX A for more information. 547
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OVERLAPPING DEBT OF THE CITY
Direct and Overlapping Bonded Debt
Set forth on the following page is a direct and overlapping debt report for the City (the “Debt Report”) prepared by California Municipal Statistics, Inc. and dated as of June1, 2022. The Debt Report is included for general information purposes only. The City has not reviewed the Debt Report for completeness or accuracy and makes no representations in connection therewith.

The Debt Report generally includes long term obligations sold in the public credit markets by public agencies whose boundaries overlap the boundaries of the City in whole or in part. Such long-term obligations generally are not payable from revenues of the City (except as indicated) nor are they necessarily obligations secured by land within the City. In many cases long-term obligations issued by a public agency are payable from the general fund or other revenues of such public agency. The total 2021-22 assessed valuation of $5,654,128,480 reflected in the Debt Report is provided by California Municipal Statistics, Inc. Neither the City, the Authority nor the Underwriter has verified this information.

TABLE 12
City of South Lake Tahoe
Direct and Overlapping Debt Statement
(as of June 1, 2022)
2021-22 Assessed Valuation: $5,654,128,480
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable (1) Debt Lake Tahoe Community College District 64.667% $27,046,973 Lake Tahoe Unified School District 64.667 40,974,163
South Lake Tahoe Recreational Facilities Community Facilities District No. 2000-1 64.667 1,671,161 South Tahoe Redevelopment Agency Community Facilities District No. 2001-1 100.000 4,200,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $73,892,297
DIRECT AND OVERLAPPING GENERAL FUND DEBT:

El Dorado County General Fund Obligations 14.883% $8,363,948 City of South Lake Tahoe General Fund Obligations 100.000 10,821,000(1) City of South Lake Tahoe Pension Obligation Bonds 100.000 6,950,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $26,134,948 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100.000% $60,655,000 COMBINED TOTAL DEBT $160,682,245 (2)
Ratios to 2021-22 Assessed Valuation:

Total Overlapping Tax and Assessment Debt ........................1.31% Total Direct Debt ($17,771,000)...........................................0.31% Combined Total Debt..............................................................2.84% Ratios to Redevelopment Successor Agency Incremental Valuation ($513,069,194):

Total Overlapping Tax Increment Debt.................................11.82% ____________________________________
(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.

Source: California Municipal Statistics, Inc.
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CONSTITUTIONAL AND STATUTORY

LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to affect the ability of the City to levy taxes and spend tax proceeds for operating and other purposes.

Article XIIIA of the State Constitution
Section 1(a) of Article XIIIA of the State Constitution limits the maximum ad valorem tax on real property to 1% of full cash value (as defined in Section 2 of Article XIIIA), to be collected by counties and apportioned according to law. Section 1(b) of Article XIIIA provides that the 1% limitation does not apply to ad valorem taxes to pay interest or redemption charges on (1) indebtedness approved by the voters prior to June 1, 1978 or (2) any bonded indebtedness for the acquisition or improvement of real property approved on or after June 1, 1978, by two thirds of the votes cast by the voters voting on 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 tax bill under ‘full cash value’ or, thereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment.” The full cash value may be adjusted annually to reflect inflation at a rate not to exceed 2% per year, or to reflect a reduction in the consumer price index or comparable data for the area under taxing jurisdiction or reduced in the event of declining property value caused by substantial damage, destruction or other factors. Legislation enacted by the State Legislature to implement Article XIIIA provides that notwithstanding any other law, local agencies may not levy any ad valorem property tax except to pay debt service on indebtedness approved by the voters as described above.

The voters of the State subsequently approved various measures that further amended Article XIIIA. One such amendment generally provides that the purchase or transfer of (i) real property between spouses or (ii) the principal residence and the first $1,000,000 of the full cash value of other real property between parents and children, does not constitute a “purchase” or “change of ownership” triggering reassessment under Article XIIIA. This amendment could serve to reduce the property-tax revenues of the City. Other amendments permitted the State Legislature to allow persons over 55 or “severely disabled homeowners” who sell their residences and buy or build another of equal or lesser value within two years in the same county, to transfer the old residence’s assessed value to the new residence.

In the November 1990 election, the voters approved the amendment of Article XIIIA to permit the State Legislature to exclude from the definition of “newly constructed” the construction or installation of seismic retrofitting improvements or improvements utilizing earthquake hazard mitigation technologies constructed or installed in existing buildings after November 6, 1990.

Article XIIIA has also been amended to permit reduction of the “full cash value” base in the event of declining property values caused by damage, destruction or other factors, provided that there would be no increase in the “full cash value” base in the event of reconstruction of property damaged or destroyed in a disaster.

Article XIIIB of the State Constitution
Article XIIIB of the State Constitution limits the annual appropriations of the State and of any city, county, school district, special district, authority or other political subdivision of the State to the appropriations limit for the prior Fiscal Year, as adjusted for changes in the cost of living, population and services for which the fiscal responsibility is shifted to or from the governmental 549
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entity. The “base year” for establishing this appropriations limit is the 1978–79 Fiscal Year. The appropriations limit may also be adjusted in emergency circumstances, subject to limitations.

Appropriations of an entity of local government subject to Article XIIIB generally include authorizations to expend during a Fiscal Year the “proceeds of taxes” levied by or for the entity, exclusive of certain State subventions, refunds of taxes, and benefit payments from retirement, unemployment insurance and disability insurance funds. “Proceeds of taxes” include but are not limited to, all tax revenues, certain State subventions received by the local governmental entity and the proceeds to the local governmental entity from (1) regulatory licenses, user charges, and user fees (to the extent that such proceeds exceed the cost of providing the service or regulation) and (2) the investment of tax revenues. Article XIIIB provides that if a governmental entity’s revenues in any year exceed the amounts permitted to be spent, the excess must be returned by revising tax rates or fee schedules over the subsequent two fiscal years.

Article XIIIB does not limit the appropriation of moneys to pay debt service on indebtedness existing or authorized as of January 1, 1979, or for bonded indebtedness approved thereafter by a vote of the electors of the issuing entity at an election held for that purpose, or appropriations for certain other limited purposes. Furthermore, Article XIIIB was amended in 1990 to exclude from the appropriations limit “all qualified capital outlay projects, as defined by the Legislature” from proceeds of taxes. The Legislature has defined “qualified capital outlay project” to mean a fixed asset (including land and construction) with a useful life of 10 or more years and a value which equals or exceeds $100,000. As a result of this amendment, the appropriations to pay the lease payments on the City’s long term General Fund lease obligations are generally excluded from the City’s appropriations limit. The City has never exceeded its appropriations limit.

Articles XIIIC and XIIID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218, known as the “Right to Vote on Taxes Act.” Proposition 218 adds Articles XIIIC and XIIID to the California Constitution and contains a number of interrelated provisions affecting the ability of the City to levy and collect both existing and future taxes, assessments, fees and charges.

On November 2, 2010, California voters approved Proposition 26, entitled the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is intended to limit the ability of the State Legislature and local government to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as “fees.” Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to Article XIIIC define “taxes” that are subject to voter approval as “any levy, charge, or exaction of any kind imposed by a local government,” with certain exceptions.

Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate before they become effective. Taxes for general governmental purposes of the City (“general taxes”) require a majority vote; taxes for specific purposes (“special taxes”), even if deposited in the City’s General Fund, require a two-thirds vote.

Property-Related Fees and Charges. Article XIIID also adds several provisions making it generally more difficult for local agencies to levy and maintain property-related fees, charges, and assessments for municipal services and programs. These provisions include, among other things, (i) a prohibition against assessments which exceed the reasonable cost of the proportional 550
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special benefit conferred on a parcel, (ii) a requirement that assessments must confer a “special benefit,” as defined in Article XIIID, over and above any general benefits conferred, (iii) a majority protest procedure for assessments which involves the mailing of notice and a ballot to the record owner of each affected parcel, a public hearing and the tabulation of ballots weighted according to the proportional financial obligation of the affected party, and (iv) a prohibition against fees and charges which are used for general governmental services, including police, fire or library services, where the service is available to the public at large in substantially the same manner as it is to property owners.

Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also removes limitations on the initiative power in matters of reducing or repealing local taxes, assessments, fees or charges. No assurance can be given that the voters of the City will not, in the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments, fees or charges currently comprising a substantial part of the City’s General Fund. If such repeal or reduction occurs, the City’s ability to pay debt service on the Bonds could be adversely affected.

Burden of Proof. Article XIIIC provides that local government “bears the burden of proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax, that the amount is no more than necessary to cover the reasonable costs of the governmental activity, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the payor’s burdens on, or benefits received from, the governmental activity.” Similarly, Article XIIID provides that in “any legal action contesting the validity of a fee or charge, the burden shall be on the agency to demonstrate compliance” with Article XIIID.

Judicial Interpretation of Proposition 218. The interpretation and application of Articles XIIIC and XIIID will ultimately be determined by the courts, and it is not possible at this time to predict with certainty the outcome of such determination.

Impact on City’s General Fund. The City does not believe that any material source of General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.

The approval requirements of Articles XIIIC and XIIID reduce the flexibility of the City to raise revenues for the General Fund, and no assurance can be given that the City will be able to impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to meet increased expenditure needs.

Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the State’s Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate, limit existing local government authority to levy a sales tax rate or change the allocation of local sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State from shifting to schools or community colleges any share of property tax revenues allocated to local governments for any Fiscal Year, as set forth under the laws in effect as of November 3, 2004. Any change in the allocation of property tax revenues among local governments within a county had to be approved by two-thirds of both houses of the Legislature.

Proposition 22. Proposition 22, entitled “The Local Taxpayer, Public Safety and Transportation Protection Act,” was approved by the voters of the State in November 2010.

Proposition 22 eliminates or reduces the State’s authority to (i) temporarily shift property taxes 551
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from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to reimburse local governments for State-mandated costs (the State will have to use other revenues to reimburse local governments), (iii) redirect property tax increment from redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel tax revenues.

Unitary Property
AB 454 (Chapter 921, Statutes of 1986) provides that revenues derived from most utility property assessed by the State Board of Equalization (“Unitary Property”), commencing with the 1988–89 Fiscal Year, are allocated as follows: (i) each jurisdiction will receive up to 102% of its prior year State–assessed revenue; and (ii) if county–wide revenues generated from Unitary Property are less than the previous year’s revenues or greater than 102% of the previous year’s revenues, each jurisdiction will share the burden of the shortfall or benefit of the excess revenues by a specified formula. This provision applies to all Unitary Property except railroads, whose valuation will continue to be allocated to individual tax rate areas.

The provisions of AB 454 do not constitute an elimination of the assessment of any State– assessed properties nor a revision of the methods of assessing utilities by the State Board of Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be shared by all jurisdictions in a county.

Possible Future Initiatives
Article XIIIA, Article XIIIB and Propositions 218, 26, IA and 22 were each adopted as measures that qualified for the ballot pursuant to the State’s initiative process. From time to time, other initiative measures could be adopted, further affecting the City’s revenues or its ability to expend revenues.

BOND OWNERS’ RISKS
The following describes certain special considerations and risk factors affecting the payment of and security for the Bonds. The following discussion is not meant to be an exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily reflect the relative importance of the various risks. Potential investors in the Bonds are advised to consider the following special factors along with all other information in this Official Statement in evaluating the Bonds. There can be no assurance that other considerations will not materialize in the future.

No Pledge of Taxes
General. The obligation of the City to pay the Base Rental and Additional Rental payments does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. The obligation of the City to pay Base Rental and Additional Rental payments does not constitute a debt or indebtedness of the City, the State of California or any of its political subdivisions within the meaning of any constitutional or statutory debt limitation or restriction.

The City is currently liable on other obligations payable from general revenues, which are described above under “CITY FINANCIAL INFORMATION – General Fund Long-Term Obligations.”
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Limitations on Taxes and Fees. Certain taxes, assessments, fees and charges presently imposed by the City could be subject to the voter approval requirements of Article XIIIC and Article XIIID of the State Constitution. Based upon the outcome of an election by the voters, such fees, charges, assessments and taxes might no longer be permitted to be imposed, or may be reduced or eliminated and new taxes, assessments fees and charges may not be approved.

The City has assessed the potential impact on its financial condition of the provisions of Article XIIIC and Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees, charges and assessments and does not believe that an election by the voters to reduce or eliminate the imposition of certain existing fees, charges, assessments and taxes would substantially affect its financial condition. However, the City believes that if the initiative power was exercised so that all local taxes, assessments, fees and charges that may be subject to Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced, the financial condition of the City, including its General Fund, could be materially adversely affected.

Although the City does not currently anticipate that the provisions of Article XIIIC and Article XIIID of the State Constitution would adversely affect its ability to pay Base Rental and its other obligations payable from the General Fund, no assurance can be given regarding the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on the City’s finances. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.”
Abatement
In the event of loss or substantial interference in the use and possession by the City of all or any portion of the Leased Property caused by material damage, title defect, destruction to or condemnation of the Leased Property, Base Rental payments will be subject to abatement. See “SECURITY FOR THE BONDS – Abatement” above. In the event that such component of the Leased Property, if damaged or destroyed by an insured casualty, could not be replaced during the period of in which proceeds of rental interruption insurance, if any, will be available in lieu of Base Rental, or in the event that casualty insurance proceeds or condemnation proceeds are insufficient to provide for complete repair or replacement of such component of the Leased Property or prepayment of the Bonds, there could be insufficient funds to make payments to Owners in full. It is not always possible to predict the circumstances under which abatement of rental may occur. In addition, there is no statute, case or other law specifying how such an abatement of rental should be measured. For example, it is not clear whether fair rental value is established as of commencement of the lease or at the time of the abatement. If the latter, it may be that the value of the Leased Property is substantially higher or lower than its value at the time of issuance of the Bonds. Abatement, therefore, could have an uncertain and material adverse effect on the security for and payment of the Bonds.

If damage, destruction, title defect or eminent domain proceedings with respect to the Leased Property results in abatement of the Base Rental payments related to such Leased Property and if such abated Base Rental payments, if any, together with moneys from rental interruption or use and occupancy insurance, if any, (in the event of any insured loss due to damage or destruction), and eminent domain proceeds, if any, are insufficient to make all payments of principal and interest with respect to the Bonds during the period that the Leased Property is being replaced, repaired or reconstructed, then all or a portion of such payments of principal and interest may not be made. Reduction in Base Rental payments due to abatement as provided in the Sublease does not constitute a default thereunder, and no remedy is available to the Bond Owners under the Sublease or the Indenture for nonpayment under such circumstances. See APPENDIX C.
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Limited Recourse under Sublease
The ability of the City to comply with its covenants under the Sublease may be adversely affected by actions and events outside of the control of the City, and may be adversely affected by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments, fees and charges. See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS” above.

Failure by the City to make Base Rental payments, or failure to pay Additional Rental Payments or to observe and perform any other terms, covenants or conditions contained in the Sublease or in the Indenture for a period of 30 days after written notice of such failure and request that it be remedied has been given to the City by the Authority or the Trustee, constitute Events of Default under the Sublease. Such events permit the Trustee or the Authority to pursue any and all remedies available. However, notwithstanding anything in the Sublease or in the Indenture to the contrary, there is no right under any circumstances to accelerate the Base Rental payments or otherwise declare any Base Rental payments that are not then in default to be immediately due and payable. The Trustee is not empowered to sell the Leased Property and use the proceeds of such sale to prepay the Bonds or pay debt service on the Bonds.

Following an event of default, the Authority or the Trustee may elect either to terminate the Sublease and seek to collect damages from the City or to maintain the Sublease in effect and seek to collect the Base Rental payments as they become due. See APPENDIX C.

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. The City will be liable only for Base Rental payments on an annual basis and, in the event of a default, the Authority or Trustee would be required to seek a separate judgment each year for that year’s defaulted Base Rental payments. Any such suit for money damages would be subject to limitations on legal remedies against municipalities in California, including a limitation on enforcement of judgments against funds of a Fiscal Year other than the Fiscal Year in which the Base Rental payments were due and against funds needed to serve the public welfare and interest.

Limitations on Remedies for Bondholders
Remedies available to the owners of the Bonds upon the occurrence of an event of default under the Sublease or the Indenture are in many respects dependent upon judicial actions, which are often subject to discretion and delay and could prove both expensive and time consuming to obtain.

In addition to the limitations on Bondowner remedies contained in the Sublease and the Indenture, the rights and obligations under the Bonds, the Sublease and the Indenture may be subject to the following: the United States Bankruptcy Code and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement of creditors’ rights generally, now or hereafter in effect; usual equity principles which may limit the specific enforcement under State law of certain remedies; the exercise by the United States of America of the powers delegated to it by the Federal Constitution; and the reasonable and necessary exercise, in certain exceptional situations, of the police power inherent in the sovereignty of the State and its governmental bodies in the interest of serving a significant and legitimate public purpose. Bankruptcy proceedings, or the exercise of powers by the federal or state government, if initiated, could subject the Owners of the Bonds to judicial discretion and 554
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interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or modification of their rights.

The opinion to be delivered by Bond Counsel, concurrently with the issuance of the Bonds, will include a qualification that the rights of the owners of the Bonds and the enforceability of the Bonds and the Indenture, the Sublease and the Lease may be subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted and may also be subject to the exercise of judicial discretion in accordance with principles of equity or otherwise in appropriate cases. See “APPENDIX E — FORM OF OPINION OF BOND COUNSEL.”
Additional Obligations of the City
General. The City is permitted to enter into other obligations which constitute additional charges against its revenues without the consent of Owners of the Bonds, and may in the future be subject to liabilities payable from the general fund (some of which are described below). To the extent that additional obligations are incurred by (or imposed upon) the City, the funds available to pay Base Rental payments may be decreased.

The Base Rental payments and other payments due under the Sublease (including payment of costs of repair and maintenance of the Leased Property, taxes and other governmental charges levied against the Leased Property) are payable from funds lawfully available to the City. If the amounts that the City is obligated to pay in a fiscal year exceed the City’s revenues for such year, the City may choose to make some payments rather than making other payments, including Base Rental and Additional Rental payments, based on the perceived needs of the City. The same result could occur if, because of California Constitutional limits on expenditures, the City is not permitted to appropriate and spend all of its available revenues or is required to expend available revenues to preserve the public health, safety and welfare.

Litigation. The City is subject to litigation arising in the normal course of business, the costs of which may be payable from the General Fund. See “LITIGATION.” CalPERS Obligations. Many cities and other local agencies in the State have been faced with increased payments due to CalPERS in recent years. The City, like many other cities and local agencies in the State, is responsible for payments to CalPERS for its share of employee pension costs. Amounts owed to CalPERS for pension costs have increased in recent years and are expected to continue to increase, as CalPERS implements changes to its discount rate and other methodologies for calculating pension costs. See “CITY FINANCIAL INFORMATION – Employee Retirement System; CalPERS,” above, for additional information.

Transient Occupancy Taxes
Transient occupancy tax revenues are typically the biggest source of General Fund revenue to the City. Transient occupancy tax revenues are based upon hotel and motel room night occupancy rates and room-night pricing, which could be impacted by a variety of factors.

For example, before final maturity of the Bonds, the City may enter into an economic recession. In times of economic recession, overnight travel involving hotel and motels may decline and/or the pricing of hotel and motel room nights may decline, and such a decline would cause the transient occupancy tax revenues received by the City to also decline. 555
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In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues, whether implemented by State legislative action or voter initiative, could have an adverse effect on transient occupancy tax revenues received by the City. For example, in November 2018, voters in the City passed Measure T, which severely restricted the number of vacation rental homes in the City. See “CITY FINANCIAL INFORMAITON – Transient Occupancy Taxes” for additional details.

Sales Taxes
Sales tax revenues are typically the second biggest source of revenue to the City, behind transient occupancy taxes. Sales tax revenues are based upon the gross receipts of retail sales of tangible goods and products by retailers with taxable transactions in the City, which could be impacted by a variety of factors.

For example, before final maturity of the Bonds, the City may enter into an economic recession. In times of economic recession, the gross receipts of retailers often decline, and such a decline would cause the sales tax revenues received by the City to also decline.

In addition, changes or amendments in the laws applicable to the City’s receipt of sales tax revenues, whether implemented by State legislative action or voter initiative, could have an adverse effect on sales tax revenues received by the City. For example, many categories of transactions are exempt from the statewide sales tax, and additional categories could be added in the future. Currently, most sales of food products for human consumption are exempt; this exemption, however, does not apply to liquor or to restaurant meals. The rate of sales tax levied on taxable transactions in the City or the fee charged by the CDTFA for administering the City’s sales tax could also be changed.

Property Taxes
Property taxes are a significant source of General Fund revenue to the City. Certain risks associated with property tax revenues follow.

Levy and Collection. The City does not have any independent power to levy and collect property taxes. Any reduction in the tax rate or the implementation of any constitutional or legislative property tax decrease could reduce the City’s property tax revenues, and accordingly, could have an adverse impact on the ability of the City to make Base Rental payments. Likewise, delinquencies in the payment of property taxes could have an adverse effect on the City’s ability to pay principal of and interest on the Bonds when due.

Reduction in Inflationary Rate. Article XIIIA of the California Constitution provides that the full cash value base of real property used in determining assessed value may be adjusted from year to year to reflect the inflationary rate, not to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the consumer price index or comparable local data.

See “CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS.” Such measure is computed on a calendar year basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the actual inflationary rate or 2%, there have been years in which the assessed values were adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was approved, the annual adjustment for inflation has fallen below the 2% limitation a limited number of times. 556
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The City is unable to predict if any adjustments to the full cash value base of real property within the City, whether an increase or a reduction, will be realized in the future.

Appeals of Assessed Values. There are two types of appeals of assessed values that could adversely impact property tax revenues:

Proposition 8 Appeals. Most of the appeals that might be filed in the City would be based on Section 51 of the Revenue and Taxation Code, which requires that for each lien date the value of real property must be the lesser of its base year value annually adjusted by the inflation factor pursuant to Article XIIIA of the State Constitution or its full cash value, taking into account reductions in value due to damage, destruction, depreciation, obsolescence, removal of property or other factors causing a decline in value.

Under California law, property owners may apply for a reduction of their property tax assessment by filing a written application with the appropriate county board of equalization or assessment appeals board. In most cases, the appeal is filed because the applicant believes that present market conditions (such as residential home prices) cause the property to be worth less than its current assessed value. These market-driven appeals are known as Proposition 8 appeals.

Any reduction in the assessment ultimately granted as a Proposition 8 appeal applies to the year for which application is made and during which the written application was filed. These reductions are often temporary and are adjusted back to their original values when market conditions improve. Once the property has regained its prior value, adjusted for inflation, it once again is subject to the annual inflationary factor growth rate allowed under Article XIIIA.

Base Year Appeals. A second type of assessment appeal is called a base year appeal, where the property owners challenge the original (basis) value of their property.

Appeals for reduction in the “base year” value of an assessment, if successful, reduce the assessment for the year in which the appeal is taken and prospectively thereafter. The base year is determined by the completion date of new construction or the date of change of ownership. Any base year appeal must be made within four years of the change of ownership or new construction date.

No assurance can be given that property tax appeals in the future will not significantly reduce the City’s property tax revenues.

Natural Calamities
General. Natural disasters, such as seismic events, wildfires, flooding or landslides could affect economic activity in the City, and could have a negative impact on City finances. There can be no assurance that the occurrence of any natural calamity would not cause substantial interference to and costs for the City or impact the Leased Property.

Wildfires. Many areas of northern California have suffered from major wildfires in recent years, including numerous wildfires in northern California in 2020 and in 2021. The City has been impacted by two major fires in the last 20 years. The Angora Fire in 2007, which started by an illegal campfire, burned over 3,000 acres including a western area within the City, burning 317 homes and 67 commercial structures. The Caldor Fire in the fall of 2021 caused the evacuation of 50,000 residents in the City and nearby areas, burned 221,835 acres in 69 days and destroyed 557
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1,003 structures in the mountains near the City, although it did not destroy property within the City.

In addition to wildfire impacts on health and safety and property damage in California, the smoke from many of these wildfires has impacted the quality of life throughout the region, and the City and may have short-term and future impacts on commercial activity in the City. The fires have been driven in large measure by drought conditions and low humidity. Experts expect that California will continue to be subject to wildfire conditions year over year as a result in changing weather patterns due to climate change.

The developed portion of land in the City is located within a Fire Hazard Severity Zone as established by Cal Fire (https://egis.fire.ca.gov/FHSZ), which means there is increased risks of wildfire to property in the City. The City was one of the first jurisdictions in the State to implement an aggressive vegetation management program in collaboration with CalFire to reconstitute control burns, dozer fuel breaks, and shaded fuel breaks in the State responsibility areas surrounding the South Lake Tahoe Valley. An active public outreach and inspection program requiring vegetation management on private property and prevention checks of businesses is ongoing.

Seismic. Like most of the State, the City is located in a seismically active area. If there were to be an occurrence of severe seismic activity in the area of the City, such an occurrence may adversely affect economic activity in the City, and could have a negative impact on City finances. The City could be at risk from strong ground motion and secondary effects related to a seismic event, including ground failure (such as landslide, liquefaction, lateral spreading, lurching and differential settlement) and seismically induced flooding (such as flooding from a tsunami or dam failure).

Droughts. California is subject to droughts from time-to-time. In April 2015, for the first time in California’s history, Governor Brown directed the State Water Resources Control Board to implement mandatory water reductions in cities and towns across California to reduce water usage by 25%. Following a wet winter in 2016-17, most of the mandatory water reductions were lifted, only to return again in 2021 and 2022 following unusually dry years. Customers in the City are subject to certain mandatory water reductions imposed by State and local water agencies.

Climate Change. City finances may be negatively impacted by climate change. Local impacts of climate change are not definitive, but parcels in the City could experience changes to local and regional weather patterns; increased risk of flooding; and water restrictions. See, for example, the discussions above regarding wildfires and droughts.

COVID-19 Pandemic
The spread of COVID-19 has impacted governments, businesses and people in a manner that is having negative effects on global and local economies. In response to the pandemic, the City took actions to proclaim a local emergency, temporarily close all non-essential City services, introduced teleworking as and where appropriate, implemented daily screening of all employees, and abided by all state and federal guidelines and orders. The City actively monitors the COVID19 situation in the community and acts swiftly to issue executive orders to mitigate the spread of the virus. Additionally, the City has forged a strong relationship with the El Dorado County Health Department and local medical clinics to ensure timely sharing of information and coordinated responses to issues.
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Early in the pandemic, the City experienced decreased General Fund revenues due to a decrease in tourism necessitated by the shelter-in-place orders. However, tourism rebounded strongly in the City beginning in summer 2020. In addition, the City received funding from the American Rescue Plan Act of 2021 (ARPA) in the amount of $2,654,997 in each of Fiscal Year 2021-22 and Fiscal Year 2022-23.

The City continues to monitor the spread of COVID-19 and is working with local, state, and national agencies to address the potential impact of the pandemic upon the City. There can be no assurances that the spread of COVID-19 and/or responses intended to slow the spread of COVID-19 such as declining business and travel activity, will not materially adversely impact the state and national economies and, accordingly, materially adversely impact the financial condition of the City and the City’s General Fund. In addition, the City may experience increased personnel costs and/or reduced revenues due to the COVID-19 situation and the related impact on economic and other activity in and around the City.

Cyber Security
The City, like many other public and private entities, relies on computer and other digital networks and systems to conduct its operations. As a recipient and provider of personal, private or other sensitive electronic information, the City is potentially subject to multiple cyber threats, including without limitation hacking, viruses, ransomware, malware and other attacks. The City maintains insurance coverage for loss resulting from cyber security incidents, however no assurance can be given that the City’s efforts to manage cyber threats and attacks will be successful in all cases, or that any such attack will not materially impact the operations or finances of the City, or the administration of the Bonds. The City is also reliant on other entities and service providers in connection with the administration of the Bonds, including without limitation the County tax collector and other authorities for the levy and collection of taxes, and the Trustee. No assurance can be given that the City and/or the other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond owners.

Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary market exists, that any Bonds can be sold for any particular price. Occasionally, because of general market conditions or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such prices could be substantially different from the original purchase price.

TAX MATTERS
The Internal Revenue Code of 1986, as amended (the “Code”), establishes certain requirements which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes.

Noncompliance with such requirements could cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to their date of issue. These requirements include, but are not limited to, provisions which limit how the proceeds of the Bonds may be spent and invested, and generally require that certain investment earnings be rebated on a periodic basis to the United States of America. The City and the Authority have made certifications and 559
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representations and have covenanted to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes pursuant to Section 103 of the Code.

In the opinion of Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, under existing law and assuming the accuracy of such certifications and representations by, and compliance with such covenants of, the City and the Authority, (i) interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code, and (ii) the Bonds are not “specified private activity bonds” within the meaning of Section 57(a)(5) of the Code and, therefore, interest on the Bonds is not a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code. Bond Counsel is also of the opinion that, under existing law, interest on the Bonds is exempt from State of California personal income taxes. Bond counsel expresses no opinion as to any other tax consequences regarding the Bonds.

Under the Code, interest on the Bonds may be subject to a federal branch profits tax imposed on certain foreign corporations doing business in the United States and to a federal tax imposed on excess net passive income of certain S corporations. Under the Code, the exclusion of interest from gross income for federal income tax purposes may have certain adverse federal income tax consequences on items of income, deduction or credit for certain taxpayers, including financial institutions, certain insurance companies, recipients of Social Security and Railroad Retirement benefits, those deemed to incur or continue indebtedness to acquire or carry taxexempt obligations, and individuals otherwise eligible for the earned income tax credit. The applicability and extent of these and other tax consequences will depend upon the particular tax status or other tax items of the owner of the Bonds. Bond Counsel will express no opinion regarding these and other such consequences.

Bond Counsel has not undertaken to advise in the future whether any circumstances or events occurring after the date of issue of the Bonds may affect the tax status of interest on the Bonds. Legislation affecting tax-exempt obligations is regularly considered by the United States Congress and may also be considered by the California legislature. Court proceedings may also be filed, the outcome of which could modify the tax treatment of obligations such as the Bonds.

No assurance can be given that legislation enacted or proposed, or actions by a court, after the date of issue of the Bonds, will not eliminate, or directly or indirectly reduce the benefit of the exclusion of interest on the Bonds from gross income for federal income tax purposes, or have an adverse effect on the market value or marketability of the Bonds.

For example, federal tax legislation enacted on December 22, 2017, reduced corporate tax rates, modified individual tax rates, eliminated many deductions, repealed the corporate alternative minimum tax, and generally eliminated the tax-exempt advance refunding of taxexempt bonds and other tax advantaged bonds, among other things. In addition, investors in the Bonds should be aware that future legislative actions might increase, reduce, or otherwise change (including retroactively) the financial benefits and the treatment of all or a portion of the interest on the Bonds for federal income tax purposes for all or certain taxpayers. In all such events, the market value of the Bonds may be adversely affected and the ability of holders to sell their Bonds in the secondary market may be reduced. The Bonds are not subject to special mandatory redemption, and the interest rates on the Bonds are not subject to adjustment, in the event of any such change.

Investors should consult their own financial and tax advisors to analyze the importance of these risks.
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Certain requirements and procedures contained or referred to in relevant documents may be changed and certain actions may be taken, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. Bond Counsel expresses no opinion as to any Bond, or the interest thereon, if any such change occurs or action is taken upon the advice or approval of bond counsel other than Richards, Watson & Gershon, A Professional Corporation.

If the issue price of a Bond (the first price at which a substantial amount of the bonds of a maturity are sold to the public) is less than the stated redemption price at maturity of such Bond, the difference constitutes original issue discount, the accrual of which is excluded from gross income for federal income tax purposes to the same extent as interest on the Bonds. Further, such original issue discount accrues actuarially on a constant yield method over the term of each such Bond and the basis of each Bond acquired at such initial offering price by an initial purchaser thereof will be increased by the amount of such accrued original issue discount. The accrual of original issue discount may be taken into account as an increase in the amount of tax-exempt income for purposes of determining various other tax consequences of owning such Bonds.

Purchasers who acquire Bonds with original issue discount are advised that they should consult with their own independent tax advisors with respect to the state and local tax consequences of owning such Bonds.

If the issue price of a Bond is greater than the stated redemption price at maturity of such Bond, the difference constitutes original issue premium, the amortization of which is not deductible from gross income for federal income tax purposes. Original issue premium is amortized over the period to maturity of such Bond based on the yield to maturity of that Bond (or, in the case of a Bond callable prior to its stated maturity, the amortization period and yield may be required to be determined on the basis of an earlier call date that results in the lowest yield on that Bond), compounded semiannually. For purposes of determining gain or loss on the sale or other disposition of such Bond, the purchaser is required to decrease such purchaser’s adjusted basis in such Bond by the amount of premium that has amortized to the date of such sale or other disposition. As a result, a purchaser may realize taxable gain for federal income tax purposes from the sale or other disposition of such Bond for an amount equal to or less than the amount paid by the purchaser for that Bond. A purchaser of that Bond in the initial public offering at the issue price for that Bond who holds it to maturity (or, in the case of a callable Bond, to its earlier call date that results in the lowest yield on that Bond) will realize no gain or loss upon its retirement.

Payments of interest on tax-exempt obligations, including the Bonds, are generally subject to IRS Form 1099-INT information reporting requirements. If an owner of a Bond is subject to backup withholding under those requirements, then payments of interest will also be subject to backup withholding. Those requirements do not affect the exclusion of such interest from gross income for federal income tax purposes.

Prospective purchasers of the Bonds should consult their own independent tax advisers regarding pending or proposed federal and state tax legislation and court proceedings, and prospective purchasers of the Bonds at other than their original issuance at the respective prices indicated on the inside cover of this Official Statement should also consult their own tax advisers regarding other tax considerations such as the consequences of market discount, as to all of which Bond Counsel expresses no opinion.

Bond Counsel’s engagement with respect to the Bonds ends with the issuance of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the Authority or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit 561
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examination by the IRS. The IRS has a program to audit tax-exempt obligations to determine whether the interest thereon is includible in gross income for federal income tax purposes. If the IRS does audit the Bonds, under current IRS procedures, the IRS will treat the Authority as the taxpayer and the beneficial owners of the Bonds will have only limited rights, if any, to obtain and participate in judicial review of such audit. Any action of the IRS, including but not limited to selection of the Bonds for audit, or the course or result of such audit, or an audit of other obligations presenting similar tax issues, may affect the market value of the Bonds.

A copy of the proposed form of opinion of Bond Counsel is attached hereto as APPENDIX E.

CERTAIN LEGAL MATTERS
Richards, Watson & Gershon, A Professional Corporation, Bond Counsel, will render an opinion with respect to the validity of the Bonds, the form of which is set forth in “APPENDIX E — FORM OF OPINION OF BOND COUNSEL.” Certain legal matters will also be passed upon for the City and the Authority by Jones Hall, A Professional Law Corporation, as Disclosure Counsel.

Certain legal matters will be passed upon for the City by the City Attorney, and for the Underwriter by its counsel, Quint & Thimmig LLP.

LITIGATION
Except as may otherwise be set forth in this Official Statement, to the best knowledge of the City, there is no action, suit, proceeding, inquiry or investigation before or by any court or federal, state, municipal or other governmental authority pending and notice of which has been served on and received by the City or, to the knowledge of the City, threatened against or affecting the City or the assets, properties or operations of the City which, if determined adversely to the City or its interests, would have a material and adverse effect upon the consummation of the transactions contemplated by or the validity of the Sublease, the Lease or the Indenture, or upon the financial condition, assets, properties or operations of the City, and the City is not in default with respect to any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially adversely affect the consummation of the transactions contemplated by the Sublease, the Lease or the Indenture, or the financial conditions, assets, properties or operations of the City, including but not limited to the payment and performance of the City’s obligations under the Lease.

The City is subject to claims, actions, and lawsuits arising in the normal course of business. At this time, the City does not believe any of the lawsuits are likely to be resolved in a manner that would result in liability to the City in excess of its existing insurance coverage.

However, no assurance can be given that an adverse outcome in any pending or future litigation against the City would not result in a material adverse effect upon the financial condition of the City and its ability to pay the Base Rental payments securing the Bonds.

RATING
S&P Global Ratings (“S&P”), a division of Standard & Poor’s Financial Services LLC has assigned its municipal bond rating of “AA” to the Bonds. This rating reflects only the views of S&P, and an explanation of the significance of this rating, and any outlook assigned to or 562
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associated with this rating, should be obtained from S&P. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies and assumptions of its own. The City has provided certain additional information and materials to the rating agency (some of which does not appear in this Official Statement). There is no assurance that this rating will continue for any given period of time or that this rating will not be revised downward or withdrawn entirely by the rating agency, if in the judgment of the rating agency, circumstances so warrant. Any such downward revision or withdrawal of any rating on the Bonds may have an adverse effect on the market price or marketability of the Bonds.

CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial information and operating data by not later than nine months after the end of the City’s fiscal year, or June 1 of each year (based on the City’s current fiscal year-end of September 30), commencing June 1, 2023, with the report for the 2021-22 fiscal year (the “Annual Report”) and to provide notices of the occurrence of certain listed events.

These covenants have been made in order to assist the Underwriter in complying with Securities Exchange Commission Rule 15c2-12(b)(5), as amended (the “Rule”). The specific nature of the information to be contained in the Annual Report or the notices of listed events by the City is set forth in “APPENDIX D – Form of Continuing Disclosure Certificate.” A review of the City’s prior compliance with its continuing disclosure obligations under the Rule reveals that ______________ [to come from underwriter].

MUNICIPAL ADVISOR
The City and the Authority have retained Public Financial Management, Inc., San Francisco, California, as municipal advisor (the “Municipal Advisor”) in connection with the offering of the Bonds. All financial and other information presented in this Official Statement has been provided by the City and the Authority from their records, except for information expressly attributed to other sources. The Municipal Advisor takes no responsibility for the accuracy or completeness of the data provided by the City, Authority or others and has not undertaken to make an independent verification or does not assume responsibility for the accuracy, completeness, or fairness of the information contained in this Official Statement. The fee of the Municipal Advisor is contingent upon the successful closing of the Bonds.

UNDERWRITING
Stifel Nicolaus & Company, Incorporated, as underwriter (the “Underwriter”), has entered into a Bond Purchase Agreement with the Authority under which it will purchase the Bonds at a purchase price of $________________, which is equal to the par amount of the Bonds, less an Underwriter’s discount of $____________.

The Underwriter will be obligated to take and pay for all of the Bonds if any are taken. The Underwriter intends to offer the Bonds to the public at the offering prices set forth on the inside cover page of this Official Statement. After the initial public offering, the public offering price may be varied from time to time by the Underwriter.
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PROFESSIONAL SERVICES
In connection with the issuance of the Bonds, fees payable to the following professionals involved in the offering are contingent upon the issuance and delivery of the Bonds: Richards, Watson & Gershon, A Professional Corporation, as Bond Counsel; Jones Hall, A Professional Law Corporation, as Disclosure Counsel; Public Financial Management, Inc., San Francisco, California, as municipal advisor to the Authority and the City; Quint & Thimmig LLP, Larkspur California, as counsel to the Underwriter; and The Bank of New York Mellon Trust Company, N.A., as Trustee.

EXECUTION
The execution of this Official Statement and its delivery have been authorized by the Board of the Authority and the City Council of the City.

SOUTH TAHOE JOINT POWERS FINANCING

AUTHORITY
By:

Executive Director

CITY OF SOUTH LAKE TAHOE
By:

City Manager
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APPENDIX A

AUDITED FINANCIAL STATEMENTS OF THE CITY
FOR FISCAL YEAR ENDING SEPTEMBER 30, 2021
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APPENDIX B

GENERAL INFORMATION ABOUT THE CITY OF SOUTH LAKE TAHOE

AND THE COUNTY OF EL DORADO
The following information concerning the City of South Lake Tahoe (the “City”) and the County of El Dorado (the “County”) is included only for the purpose of supplying general information regarding the area. The Bonds are not a debt of the City, the County, the State of California (the “State”) or any of its political subdivisions, and neither the City, the County, the State nor any of its political subdivisions is liable therefor. None of the Authority, the City and the Underwriter take any responsibility for the accuracy or completeness of such information.

General
The City. The City is located at the South Shore of Lake Tahoe, which is the country’s largest alpine lake, and adjacent to Stateline/Zephyr Cove, Nevada, in the Sierra Nevada Mountains. The population was 21,199 as of January 1, 2022. According to the United States Census Bureau, the City has a total area of 16.5 square miles, of which 10.1 square miles is land and 6.4 square miles is water. Elevation is 6260 ft. As the only incorporated community in the Lake Tahoe Basin, the City takes great pride in being a central hub of one of the country’s most popular tourism destinations. The east end of the City, on the California-Nevada state line, is mainly geared towards tourism, with shops, restaurants, hotels, and the Heavenly Ski Resort, with the Nevada casinos just across the State line. The western end of town is mainly residential.

The County. The County was incorporated as a general law county in 1850, with the City of Placerville as the county seat. In 1994, County voters adopted a county charter by majority vote under Article XI, Section 4 of the California Constitution, and the County has been organized and operating as a charter county since that time. The legislative body is a five-member Board of Supervisors, each supervisor being elected by voters within his or her supervisorial district.

Because much of the County is comprised of unincorporated areas, the County provides a wide range of services through its departments and by special districts for these areas.

The County is comprised of 1,711.5 square miles encompassing a portion of Lake Tahoe on the east and reaching to the west within 25 miles of Sacramento, California, the State capitol.

More than half of the land in the County is owned by the federal, state or local governments. 150 miles west of the County is San Francisco, while 400 miles south is Los Angeles. Placerville is located 44 miles east of Sacramento.
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Population
The following table lists population estimates for the City, the County and the State for the last five years, as of January 1 each year.

CITY OF SOUTH LAKE TAHOE, COUNTY OF EL DORADO, STATE OF CALIFORNIA Population Estimates
Years 2018 through 2022, as of January 1
Year
City of
South Lake
Tahoe
El Dorado
County
State of
California
2018 22,641 187,940 39,519,535
2019 22,944 189,691 39,605,361
2020 21,425 191,185 39,538,223
2021 21,508 191,054 39,303,157
2022 21,199 190,465 39,185,605
Source: California Department of Finance, Demographic Research Unit.

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Industry and Employment
The City is part of the Sacramento--Roseville--Arden-Arcade MSA, which MSA had an unemployment rate of 3.7 percent in March 2022, down from a revised 4.4 percent in February 2022, and below the year-ago estimate of 7.6 percent. This compares with an unadjusted unemployment rate of 4.2 percent for California and 3.8 percent for the nation during the same period. The unemployment rate was 3.3 percent in El Dorado County, 2.8 percent in Placer County, 4.0 percent in Sacramento County, and 3.7 percent in Yolo County.

The following table shows the unemployment rate in El Dorado County for the years shown.

SACRAMENTO-ARDEN ARCADE-ROSEVILLE MSA
El Dorado, Placer, Sacramento, Yolo Counties
Civilian Labor Force, Employment and Unemployment
Calendar Years 2017 through 2021
(March 2021 benchmark)
2017 2018 2019 2020 2021
Civilian Labor Force (1) 1,074,000 1,088,300 1,100,800 1,091,700 1,099,300 Employment 1,024,800 1,046,900 1,060,300 994,000 1,028,800 Unemployment 49,200 41,500 40,500 97,700 70,500
Unemployment Rate 4.6% 3.8% 3.7% 9.0% 6.4%
Wage and Salary Employment:
(2)
Agriculture 9,800 9,100 8,700 8,300 9,000
Mining and Logging 400 500 500 600 700
Construction 58,700 64,500 69,400 70,200 74,100
Manufacturing 35,700 36,000 36,800 36,100 37,500
Wholesale Trade 26,500 28,400 28,600 26,500 26,400
Retail Trade 101,400 102,000 100,500 95,200 101,100
Transportation, Warehousing, Utilities 27,400 29,500 32,200 34,300 37,100 Information 12,600 12,400 11,900 10,200 10,000
Financial Activities 52,600 53,500 52,500 51,700 51,700 Professional and Business Services 132,400 136,000 137,200 132,500 136,700 Educational and Health Services 153,600 159,800 166,600 164,000 168,400 Leisure and Hospitality 103,300 106,200 109,600 83,900 92,800 Other Services 33,000 34,200 35,400 31,000 32,600
Federal Government 14,200 14,100 14,200 14,800 14,500
State Government 118,400 120,400 121,900 121,700 126,800 Local Government 102,600 103,500 105,300 98,900 98,000
Total all Industries (3) 982,500 1,009,900 1,031,300 979,700 1,017,200 (1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic workers, and workers on strike.
(3) Columns may not sum to totals due to rounding.

Source: State of California Employment Development Department. 568
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Principal Employers
The following table lists the principal employers within the City for Fiscal Year 2020-21.

CITY OF SOUTH LAKE TAHOE
Principal Employers
Fiscal Year 2020-21
Employer Name
No. of
Employees
Barton Memorial Hospital 881
Lake Tahoe Unified School District 413
El Dorado County 267
Lake Tahoe Community College 256
City of South Lake Tahoe 206
Marriott Corporation 197
United States Forest Service 135
Raley’s Supermarket 128
Lake Tahoe Resort Hotel 121
South Tahoe Public Utility District 117
Source: City of South Lake Tahoe.
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The following table lists, in alphabetical order, the largest manufacturing and nonmanufacturing employers within the County as of June 2022.

COUNTY OF EL DORADO
Major Employers
As of June 2022
(In Alphabetical Order)
Employer Name Location Industry
Barton Health South Lake Tahoe Hospitals
Blue Shield of California El Dorado Hills Insurance
Broadridge Financial Solutions El Dorado Hills Business Services NEC Camp Richardson Resort South Lake Tahoe Resorts
Camp Richardson Resrt Ice South Lake Tahoe Resorts
CEMEX El Dorado Hills Construction Companies
Child Development Programs Placerville Youth Organizations & Centers County of Eldorado Placerville County Government-General Offices El Dorado County Child Protctn Placerville Government Offices-County El Dorado County Sheriff Placerville Sheriff
El Dorado County Trnsprtn Placerville Government Offices-County El Dorado Irrigation District Placerville Water & Sewage Companies-Utility Lake Tahoe Community College South Lake Tahoe Junior-Community College-Tech Institutes Liberty Utilities Co South Lake Tahoe Utility Contractors Marriott-Timber Lodge South Lake Tahoe Hotels & Motels
More Placerville Rehabilitation Services
Nugget Markets El Dorado Hills Grocers-Retail
Oak Ridge High School El Dorado Hills Schools
Safeway South Lake Tahoe Grocers-Retail
Sierra-At-Tahoe Resort Twin Bridges Skiing Centers & Resorts South Lake Tahoe City Manager South Lake Tahoe City Government-Executive Offices Spare Time Inc El Dorado Hills Health Clubs Studios & Gymnasiums Top To Bottom Inside & Out Inc El Dorado Hills Home Improvements Transitional Learning Ctr High South Lake Tahoe Schools Urbana Tahoe Tc LLC South Lake Tahoe Hotels & Motels
Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2022 2nd edition.
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Effective Buying Income
“Effective Buying Income” is defined as personal income less personal tax and nontax payments, a number often referred to as “disposable” or “after-tax” income. Personal income is the aggregate of wages and salaries, other labor-related income (such as employer contributions to private pension funds), proprietor’s income, rental income (which includes imputed rental income of owner-occupants of non-farm dwellings), dividends paid by corporations, interest income from all sources, and transfer payments (such as pensions and welfare assistance).

Deducted from this total are personal taxes (federal, state and local), nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance. According to U.S. government definitions, the resultant figure is commonly known as “disposable personal income.” The following table summarizes the total effective buying income for the City, the County, the State, and the United States for the period 2018 through 2022.

CITY OF SOUTH LAKE TAHOE, EL DORADO COUNTY,

STATE OF CALIFORNIA AND UNITED STATES

EFFECTIVE BUYING INCOME
As of January 1, 2018 through 2022
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
2018 City of South Lake Tahoe $514,112 $42,707
El Dorado County 6,786,006 68,784
California 1,113,648,181 59,646
United States 8,640,770,229 50,735
2019 City of South Lake Tahoe $573,233 $45,436
El Dorado County 6,884,494 67,948
California 1,183,264,399 62,637
United States 9,017,967,563 52,841
2020 City of South Lake Tahoe $601,856 $47,973
El Dorado County 7,131,224 70,899
California 1,243,564,816 65,870
United States 9,487,165,436 55,303
2021 City of South Lake Tahoe $637,224 $48,817
El Dorado County 7,711,541 73,169
California 1,290,894,604 67,956
United States 9,809,944,764 56,790
2022 City of South Lake Tahoe $671,743 $51,604
El Dorado County 8,429,911 81,237
California 1,452,426,153 77,058
United States 11,208,582,541 64,448
Source: The Nielsen Company (US), Inc for year 2018; Claritas, LLC for 2019 through 2022. 571
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Commercial Activity
A summary of historic taxable sales within the City and the County during the past five years in which data is available is shown in the following tables.

Total taxable sales during calendar year 2021 in the City were reported to be $489,008,420, a 16.82% increase over the total taxable sales of $418,616,075 reported during calendar year 2020.

CITY OF SOUTH LAKE TAHOE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2017 through 2021 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2017 677 $359,256 1,001 $426,743
2018 668 371,475 1,024 444,026
2019 644 379,918 1,021 453,257
2020 671 350,304 1,069 410,339
2021 659 416,465 1,064 489,008
Source: State Department of Tax and Fee Administration.

Total taxable sales during calendar year 2021 in the County were reported to be $3,106,501,502, a 12.69% increase over the total taxable sales of $2,756,589,485 reported during calendar year 2020.

COUNTY OF EL DORADO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2017 through 2021 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
2017 4,331 $1,670,028 6,796 $2,307,481
2018 4,216 1,771,739 6,836 2,369,664
2019 4,183 1,876,936 6,917 2,544,004
2020 4,332 2,005,650 7,309 2,707,847
2021 3,797 2,272,978 6,547 3,106,502
Source: State Department of Tax and Fee Administration. 572
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Construction Activity
Construction activity in the City and the County for the past five years for which data is available is shown in the following tables.

CITY OF SOUTH LAKE TAHOE
Building Permit Valuation
For Calendar Years 2017 through 2021
(Dollars in Thousands)(1)
2017 2018 2019 2020 2021
Permit Valuation
New Single-family $6,690.0 $9,787.6 $6,501.5 $14,964.3 $16,685.2 New Multi-family 650.0 2,232.8 14,250.0 2,621.6 0.0
Res. Alterations/Additions 7,924.6 9,253.5 9,025.9 9,706.7 12,444.8 Total Residential 15,264.6 $21,273.9 $29,777.4 $27,292.6 $29,130.0 New Commercial 7,187.8 12,208.2 1,832.6 4,857.0 9,084.9 New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 288.8 1,358.9 273.4 603.2 788.9
Com. Alterations/Additions 5,771.2 5,474.6 7,434.0 14,113.2 8,696.4 Total Nonresidential 13,247.8 19,041.7 9,540.0 19,573.4 18,570.2 New Dwelling Units
Single Family 22 27 15 34 36
Multiple Family 6 4 18 7 0
TOTAL 28 31 33 41 36
(1) Totals may not foot due to rounding.

Source: Construction Industry Research Board, Building Permit Summary.

EL DORADO COUNTY
Building Permit Valuation
For Calendar Years 2017 through 2021
(Dollars in Thousands)(1)
2017 2018 2019 2020 2021
Permit Valuation
New Single-family $307,620.9 $221,702.9 $404,049.4 $271,705.8 $272,949.4 New Multi-family 650.0 2,458.5 14,250.0 2,621.6 0.0
Res. Alterations/Additions 35,706.8 50,395.3 39,291.3 30,270.3 42,208.2 Total Residential 343,977.8 274,556.7 457,590.7 304,597.7 315,157.6 New Commercial 15,295.6 37,141.5 42,622.0 16,917.1 37,727.2 New Industrial 0.0 1,024.1 0.0 0.0 0.0
New Other 40,288.3 48,961.4 35,357.3 28,555.7 44,229.5
Com. Alterations/Additions 22,931.0 21,186.3 27,883.6 24,950.1 23,256.9 Total Nonresidential 78,514.9 108,313.3 105,862.9 70,422.9 105,213.6 New Dwelling Units
Single Family 814 613 595 649 697
Multiple Family 6 6 18 7 0
TOTAL 820 619 613 656 697
(1) Totals may not foot due to rounding.

Source: Construction Industry Research Board, Building Permit Summary. 573
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Tourism
Tourism has long been a major component of the City’s and County’s economy. Lake Tahoe is a world-class destination attraction with a varied offering of both winter and summer sports. Marwill State Park Gold Discovery Site, Folsom Lake, Apple Hill (a ranch marketing area) and other attractions in the western part of the County provide another range of diversity to visitors. Much of the central part of the County lies in the El Dorado and Tahoe National Forests which provide hiking, camping, fishing, hunting and other outdoor recreation.

Transportation
Two major highways (U.S. 50 and U.S. 49) intersect the County while Interstate 5 and Interstate 80 are within 45 minutes of the City of Placerville. Commercial air service is provided to the western portion of the County by the Sacramento Metropolitan Airport, 50 miles west of the City of Placerville. More than 200 trucking firms serve the County area, with interstate, local and special hauling. The City and the County are also served by Greyhound Bus Lines. 574
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APPENDIX C

SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D

FORM OF CONTINUING DISCLOSURE CERTIFICATE
$____________

Section 2. Definitions. In addition to the definitions set forth above and in the Indenture, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Annual Report Date” means June 1 of each year.
“Dissemination Agent” means the City, or any successor Dissemination Agent designated in writing by the City and which has filed with the City a written acceptance of such designation. “Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future. “Official Statement” means the final official statement, executed by the City and the Authority in connection with the issuance of the Bonds. “Participating Underwriter” means Stifel Nicolaus & Company, Incorporated, the original underwriter of the Bonds required to comply with the Rule in connection with offering of the Bonds. “Rule” means 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. 576
D-2
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing June 1, 2023, with the report for Fiscal Year 2021-22 (which ends on September 30, 2022), provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, 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(b). The City shall provide a written certificate with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A. (c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.

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 prepared in accordance with Generally Accepted Accounting Principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, 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) Unless otherwise provided in the audited financial statements filed on or before the Annual Report Date, financial information and operating data with respect to the City for the preceding fiscal year, substantially similar to that provided in the corresponding tables in the Official Statement:
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(1) The following tables in substantially the format displayed in the Official Statement: General Fund Balance Sheet (Table 11), Statement of General Fund Revenues, Expenditures and Balances (Table 10), and General Fund Revenues by Revenue Source (Table 2).
(2) Assessed valuation of all taxable property (Table 6). (3) Statement of Teeter Plan applicability to property tax revenues received by the City.
(4) Statement or table setting forth outstanding balance of long-term obligations payable from the General Fund, showing information similar to that set forth in the Official Statement.
(c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
(d) 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 are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.

Section 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial difficulties. (4) Unscheduled draws on credit enhancements reflecting financial difficulties. (5) Substitution of credit or liquidity providers, or their failure to perform. (6) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security.
(7) Modifications to rights of security holders, if material. (8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the securities, if material.
(11) Rating changes.
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(12) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (14) Appointment of a successor or additional trustee or the change of name of a trustee, if material.
(15) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for definition of “financial obligation,” see clause (f)). (16) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for definition of “financial obligation,” see clause (f)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed Events described in subsection (a)(8) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7), (a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(6) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds.

The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as set forth in paragraph (b) above. (d) For the purposes of the event identified in (a)(12) above, 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 obligated person, 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 obligated person.
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(e) For purposes of this Disclosure Certificate, any event described in paragraph (a)(12) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States 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 governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(f) For purposes of Section 5(a)(15) and (16), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the Municipal Securities Rulemaking Board consistent with the Rule.

Any Dissemination Agent may resign by providing 30 days’ written notice to the City.

Section 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or 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 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 either (i) is approved by holders of the Bonds in the manner provided in the Indenture for amendments to the Indenture with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds. 580
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If the annual financial information or operating data to be provided in the Annual Report is amended pursuant to the provisions hereof, the first annual financial information filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.

A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).

Section 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, 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 Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond owners or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. 581
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(b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.

Section 15. Governing Law. This Disclosure Certificate shall be governed by the laws of the state of California.

Date: ________________, 2022

CITY OF SOUTH LAKE TAHOE
By
Name:_____________
Title:_____________
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APPENDIX E

FORM OF OPINION OF BOND COUNSEL
___, 2022
Opinion of Bond Counsel
with reference to
$[PAR]
South Tahoe Joint Powers Financing Authority
Lease Revenue Bonds
Series 2022A
Ladies and Gentlemen:

We have examined (i) a record of proceedings relating to the issuance of the abovecaptioned bonds (the “Bonds”) of the South Tahoe Joint Powers Financing Authority, a joint powers authority (the “Authority”), (ii) the Indenture, dated as of October 1, 2022 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A. as trustee (the “Trustee”), (iii) the Lease Agreement, dated as of October 1, 2022 (the “Lease”), by and between the City of South Lake Tahoe (the “City”) and the Authority, (iv) the Sublease, dated as of October 1, 2022 (the “Sublease”), by and between the Authority and the City, (v) the Assignment Agreement, dated as of October 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee; and (vi) such other matters of law as we have deemed necessary to enable us to render the opinions expressed herein. As to questions of fact material to this opinion, we have relied upon such certificates and documents without undertaking to verify the same by independent investigation. Capitalized terms used but not otherwise defined herein have the meanings ascribed to them in the Indenture.

The Bonds are issued under and pursuant to the Indenture, the provisions relating to the joint exercise of powers found in Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as amended (the “Act”), including the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act. The Bonds are issued for the purpose of assisting the City in financing the costs of acquisition, construction, rehabilitation, renovation, and furnishing of the City’s new recreation center.

Based upon such examination, we are of the opinion under existing law that:

1. The Indenture has been duly and lawfully authorized, executed and delivered by the Authority. Assuming due authorization, execution and delivery by the Trustee, the Indenture is in full force and effect in accordance with its terms and is valid and binding upon the Authority and enforceable in accordance with its terms. The Indenture creates the valid pledge which it purports to create of the Revenues and certain funds established by the Indenture (including the investments, if any, thereof), subject to the provisions of the Indenture permitting the application thereof for the purposes, and on the terms and conditions set forth in the Indenture.

2. The Authority is duly authorized and entitled to issue the Bonds. The Bonds have been duly and validly authorized and issued by the Authority in accordance with the Constitution and statutes of the State of California, including the Act, and in accordance with the 583
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Indenture. The Bonds constitute the valid and binding obligations of the Authority as provided in the Indenture, are enforceable in accordance with their terms and the terms of the Indenture and entitled to the benefits of the Act and the Indenture. The Bonds are not an obligation of the State of California, any public agency thereof (other than the Authority), or any member of the Authority and neither the faith and credit nor the taxing power of the State of California or any public agency thereof or any member of the Authority is pledged for the payment of the Bonds. The Authority has no taxing power.

3. The Authority and the City have duly authorized, executed and delivered the Lease, the Sublease, and the Assignment Agreement, as applicable. The Lease and the Sublease constitute the valid and binding agreements of the Authority and the City enforceable according to their respective terms. The obligation of the City to make Base Rental Payments during the term of the Sublease constitutes a valid and binding obligation of the City, payable from funds of the City lawfully available therefor, and does not constitute a debt of the City or of the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limit or restriction, and does not constitute an obligation for which the City or the State of California is obligated to levy or pledge any form of taxation or for which the City or the State of California has levied or pledged any form of taxation.

4. Interest on the Bonds is exempt from personal income taxes of the State of California.

5. Assuming compliance with the covenants described below, interest on the Bonds is excluded from gross income for federal income tax purposes. The Bonds are not “specified private activity bonds” within the meaning of Section 57(a)(5) of the Internal Revenue Code of 1986, as amended (the “Code”) and, therefore, interest on the Bonds will not be treated as a preference item for purposes of computing the alternative minimum tax imposed by Section 55 of the Code.

The Code sets forth certain requirements which must be met subsequent to the issuance and delivery of the Bonds for interest thereon to be and remain excluded from gross income for federal income tax purposes. Noncompliance with such requirements could cause the interest on the Bonds to be included in gross income retroactive to the date of issue of the Bonds. The City has covenanted to satisfy, or take such actions as may be necessary to cause to be satisfied, each provision of the Code necessary to maintain the exclusion of the interest on the Bonds from gross income for federal income tax purposes pursuant to Section 103(a) of the Code.

Certain requirements and procedures contained or referred to in the Indenture and other relevant documents may be changed and certain actions may be taken or omitted, under the circumstances and subject to the terms and conditions set forth in such documents, upon the advice or with the approving opinion of nationally recognized bond counsel. We express no opinion as to any Bond, or the interest thereon, if any change occurs or action is taken or omitted upon the advice or approval of any counsel other than ourselves.

Except as stated in the foregoing paragraphs numbered 4 and 5 and the paragraph immediately following paragraph 4, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds.

The opinions expressed in the paragraphs numbered 1, 2 and 3 hereof are qualified to the extent that the enforceability of the Indenture, the Bonds, the Lease and the Sublease may be limited by applicable bankruptcy, insolvency, debt adjustment, receivership, fraudulent 584
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conveyance or transfer, moratorium, reorganization, arrangements or other laws affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public entities in the State or other laws or equitable principles affecting the enforcement of creditors’ rights generally. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute a penalty), right of set-off, arbitration, judicial reference, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents. We do not express any opinion with respect to the quality of title to, or interests in, any of the real or personal property subject to the lien of the Lease or Sublease or with respect to the accuracy or sufficiency of the description of any real property contained therein and in the Indenture. Without limiting the foregoing, we have assumed compliance with all agreements and covenants contained in the Indenture.

The opinions expressed herein are based on an analysis of existing law and cover certain matters not directly addressed thereby. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof, and we have not undertaken to determine, or to inform any person, whether any such actions or events are taken or do occur. We have assumed the genuineness of all documents and signatures presented to us. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in such documents. No opinion is expressed in this letter regarding the accuracy, completeness or fairness of the Official Statement or any other offering material relating to the Bonds.

Respectfully submitted,
585
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APPENDIX F

DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company (“DTC”), the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment of principal, interest and other payments on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfer of beneficial ownership interest in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. Accordingly, no representations can be made concerning these matters and neither the DTC Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.

Neither the issuer of the Bonds (the “Issuer”) nor the trustee appointed with respect to the Bonds (the “Agent”) take any responsibility for the information contained in this Appendix.

No assurances can be given that DTC, DTC Participants or Indirect Participants will distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this Appendix. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.

1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the securities (the “Securities”). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered Security certificate will be issued for each issue of the Securities, each in the aggregate principal amount of such issue, and will be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500 million, one certificate will be issued with respect to each $500 million of principal amount, and an additional certificate will be issued with respect to any remaining principal amount of such issue.

2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates.

Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding 586
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company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information contained on this Internet site is not incorporated herein by reference.

3. Purchases of Securities under the DTC system must be made by or through Direct Participants, which will receive a credit for the Securities on DTC’s records. The ownership interest of each actual purchaser of each Security (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Securities are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Securities, except in the event that use of the book-entry system for the Securities is discontinued.

4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Securities with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Securities; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Securities are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Securities may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Securities, such as redemptions, tenders, defaults, and proposed amendments to the Security documents. For example, Beneficial Owners of Securities may wish to ascertain that the nominee holding the Securities for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.

6. Redemption notices shall be sent to DTC. If less than all of the Securities within an issue are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting 587
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rights to those Direct Participants to whose accounts Securities are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Redemption proceeds, distributions, and dividend payments on the Securities will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from Issuer or Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, Agent, or Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as depository with respect to the Securities at any time by giving reasonable notice to Issuer or Agent. Under such circumstances, in the event that a successor depository is not obtained, Security certificates are required to be printed and delivered.

10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility for the accuracy thereof.
588
Quint & Thimmig LLP 07/13/22
07/25/22
19107.19
$__________

SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, Series 2022A

BOND PURCHASE AGREEMENT
October 4, 2022
South Tahoe Joint Powers Financing Authority
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Ladies and Gentlemen:

Stifel, Nicolaus & Company, Incorporated (the “Underwriter”), hereby offers to enter into this bond purchase agreement (the “Bond Purchase Agreement”) with the South Tahoe Joint Powers Financing Authority (the “Authority”) and the City of South Lake Tahoe (the “City”). Upon the acceptance hereof by the Authority and the City, this offer will be binding upon the Authority, the City and the Underwriter. This offer is made subject to (a) the written acceptance hereof by the Authority and the City and (b) withdrawal by the Underwriter upon written notice (by telecopy or otherwise) delivered to the Authority and the City at any time prior to each of their acceptance hereof by the Authority and the City.

1. Purchase and Sale. Upon the terms and conditions and upon the basis of the representations, warranties and agreements set forth herein, the Underwriter hereby agrees to purchase on the Closing Date (as defined herein), and the Authority and the City hereby agree to sell and deliver to the Underwriter on the Closing Date, $________ principal amount of South Tahoe Joint Powers Financing Authority Lease Revenue Bonds, Series 2022A (the “Bonds). The Bonds are being issued pursuant to Article 4, Chapter 5, Division 7, Title 1 of the California Government Code, a resolution of the Authority authorizing the issuance of the Bonds, adopted on August 9, 2022 (the “Authority Resolution”), and an Indenture of Trust, dated as of October 1, 2022 (the “Indenture”), by and between the Authority and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”). The City will lease certain real property and all buildings and other improvements installed thereon (collectively, the “Leased Property”) to the Authority pursuant to a Lease Agreement, dated as of October 1, 2022 (the “Lease Agreement”).

The Leased Property will be subleased by the Authority to the City pursuant to the Sublease, dated as of October 1, 2022 (the “Sublease”), by and between the Authority and the City.

Pursuant to an Assignment Agreement, dated as of October 1, 2022 (the “Assignment Agreement”), by and between the Authority and the Trustee, the Authority will assign, for the benefit of the owners of the Bonds, its right to receive lease payments (the ”Base Rental 589
-2-
Payments”) made by the City under the Sublease and its right to exercise rights and remedies of the Authority under the Sublease. All capitalized terms not defined herein shall have the respective meaning specified in Section 1.01 of the Indenture.

Under the Sublease, the City is required to make Base Rental Payments and Additional Rental Payments from legally available funds in amounts calculated to be sufficient to pay principal of and interest on the Bonds when due. All of the Authority’s right, title and interest in and to the Sublease (except for the right to receive Additional Rental Payments to the extent payable to the Authority and certain rights to indemnification), including the right to receive Base Rental Payments under the Sublease, will be assigned to the Trustee for the benefit of the Owners of the Bonds.

The Bonds are being issued to (a) finance the costs of construction of a new recreation center, and (b) pay costs of issuance of the Bonds.

The aggregate purchase price to be paid by the Underwriter for the Bonds is hereby agreed to be $_________, which amount represents the principal amount of the Bonds of $_________, less $________, representing the Underwriter’s discount, plus $__________, representing original issue premium (such payment and delivery of the Bonds and the other actions contemplated hereby to take place at the time of such payment and delivery being herein sometimes called the “Closing”).

As an accommodation to the Authority and the City, the Underwriter will pay, from the purchase price of the Bonds, the sum of $_______ to ___________ (the “Municipal Bond Insurer”) as the premium for the Municipal Bond Insurer’s municipal bond insurance policy issued for the Bonds (the “Municipal Bond Insurance Policy”) and the sum of $__________ to the Municipal Bond Insurer as the premium for the Municipal Bond Insurer’s reserve fund municipal bond insurance policy issued for the Bonds (the “Reserve Policy”).

The Authority and the City acknowledge and agree that (i) the purchase and sale of the Bonds pursuant to this Bond Purchase Agreement is an arm’s-length commercial transaction between the Authority and the City and the Underwriter; (ii) in connection with such transaction, the Underwriter is acting solely as a principal and not as an agent or a fiduciary of the Authority or the City; (iii) the Underwriter has not assumed a fiduciary responsibility in favor of the Authority or the City with respect to the offering of the Bonds or the process leading thereto (whether or not the Underwriter, or any affiliates of the Underwriter, has advised or is currently advising the Authority or the City on other matters) nor has it assumed any other obligation to the Authority or the City except the obligations expressly set forth in this Bond Purchase Agreement, (iv) the Underwriter has financial and other interests that differ from those of the Authority and the City; and (v) the Authority and the City have consulted with their own legal and financial advisors to the extent they deemed appropriate in connection with the offering of the Bonds.

The Authority and the City hereby acknowledge receipt from the Underwriter of disclosures required by the Municipal Securities Rulemaking Board (“MSRB”) Rule G-17 (as set forth in MSRB Notice 2012-25 (May 7, 2012), relating to disclosures concerning the Underwriter’s role in the transaction, disclosures concerning the Underwriter’s compensation, conflict disclosures, if any, and disclosures concerning complex municipal securities financing, if any.

A Preliminary Official Statement of the City and the Authority, dated September 22, 2022 (together with the Appendices thereto, any documents incorporated therein by reference and any supplements or amendments thereto and as disseminated in its printed physical form 590
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or in electronic form in all respects materially consistent with such physical form, the “Preliminary Official Statement”), has been prepared for use in marketing the Bonds, and a final Official Statement relating to the Bonds, to be dated the date hereof, as amended to conform to the terms of this Purchase Contract, and with such changes and amendments as are mutually agreed to by the Authority, the City and the Underwriter, including the cover page, inside cover page, the appendices and all information incorporated therein by reference, is herein collectively referred to as the “Official Statement,” which shall be in substantially the form of the Preliminary Official Statement, with such changes and amendments thereto as may be mutually agreed upon by the Underwriter, the Authority and the City.

The Bonds shall be dated their date of delivery, and shall have the maturities, bear interest at the rates, have reoffering yields, and be subject to redemption as shown on Exhibit A hereto.

It shall be a condition to the Authority’s obligation to sell and to deliver the Bonds to the Underwriter and to the obligation of the Underwriter to purchase, to accept delivery of and to pay for the Bonds that the entire $________ principal amount of the Bonds as authorized by the Indenture shall be sold and delivered by the Authority and accepted and paid for by the Underwriter at the Closing. The Underwriter may change the offering prices (or yields) of the Bonds from time to time at any time. The Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices. The obligation of the Authority to sell and deliver the Bonds to the Underwriter shall also be conditioned upon the delivery by Richards, Watson & Gershon, A Professional Corporation, Los Angeles, California, Bond Counsel (“Bond Counsel”), of its approving legal opinion with respect to the Bonds.

The Authority and the City hereby authorizes the Underwriter to use and distribute the Lease Agreement, the Sublease, the Assignment Agreement, the Indenture and the Preliminary Official Statement, and the information contained in such documents in connection with the public offering and sale of the Bonds. The Authority and the City have authorized the use of the Preliminary Official Statement in connection with the public offering of the Bonds by the Underwriter prior to the date hereof.

The obligation of the City to make Base Rental Payments under the Sublease does not constitute an obligation of the City for which the City is obligated to levy or pledge any form of taxation or for which the City has levied or pledged any form of taxation. Neither the Bonds nor the obligation of the City to make Base Rental Payments under the Sublease constitutes a debt of the Authority, the City, the State of California or any of its political subdivisions in contravention of any constitutional or statutory debt limitation or restriction. The obligation of the City to make Base Rental Payments, as set forth in the Sublease, shall be deemed to be and shall be construed to be a ministerial duty imposed by law and it shall be the ministerial duty of each and every public official of the City to take such actions and do such things as are required by law in the performance of such duty, subject to abatement in the event of damage or destruction to, or condemnation of, the Leased Property or a portion thereof.

2. Bona Fide Public Offering. The Underwriter agrees to make a bona fide public offering of all of the Bonds, at prices not in excess of the initial public offering yields or prices set forth on the inside cover page of the Official Statement. Subject to Section 3(c), the Bonds may be offered and sold to certain dealers at prices lower than such initial public offering prices; provided, however, that the Underwriter may offer a portion of the Bonds for sale to selected dealers who are members of the Financial Industry Regulatory Authority, and the Underwriter reserves the right to change such offering prices or yields as the Underwriter shall deem necessary in connection with the marketing of the Bonds and to offer and sell the Bonds to certain dealers (including dealers depositing the Bonds into investment trusts) and others at 591
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prices lower than the initial offering prices or at yields higher than the initial yields set forth on Exhibit A attached hereto. The Underwriter also reserves the right to over-allot or effect transactions that stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market and to discontinue such stabilizing, if commenced, at any time. None of such activities shall affect the principal amounts, maturity dates, interest rates, redemption or other provision of the Bonds or the amount to be paid by the Underwriter to the Authority for the Bonds.

3. Establishment of Issue Price.
(a) The Underwriter agrees to assist the Authority and the City in establishing the issue price of the Bonds and shall execute and deliver to the Authority and the City at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Authority, the City and Bond Counsel, to accurately reflect, as applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds. All actions to be taken by the Authority and the City under this Section 3 to establish the issue price of the Bonds may be taken on behalf of the Authority and the City by the City’s municipal advisor identified herein and any notice or report to be provided to the Authority and the City may be provided to the City’s municipal advisor.
(b) The Authority and the City will treat the first price at which 10% of each maturity of the Bonds (the “10% test”) is sold to the public as the issue price of that maturity (if different interest rates apply within a maturity, each separate CUSIP number within that maturity will be subject to the 10% test). At or promptly after the execution of this Bond Purchase Agreement, the Underwriter shall report to the Authority and the City the price or prices at which it has sold to the public each maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds, the Underwriter agrees to promptly report to the Authority and the City the prices at which it sells the unsold Bonds of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date has occurred, until the 10% test has been satisfied as to the Bonds of that maturity or until all Bonds of that maturity have been sold to the public.
(c) The Underwriter confirms that any selling group agreement and any retail distribution agreement relating to the initial sale of the Bonds to the public, together with the related pricing wires, contains or will contain language obligating each dealer who is a member of the selling group and each broker-dealer that is a party to such retail distribution agreement, as applicable, to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allotted to it until it is notified by the Underwriter that either the 10% test has been satisfied as to the Bonds of that maturity or all 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 Underwriter. The Authority and the City acknowledge that, in making the representation set forth in this subsection, the Underwriter will rely on (i) in the event a selling group has been created in connection with the initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling group to comply with the hold-the-offering-price rule, if applicable, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a retail distribution agreement was employed in connection with the initial sale of the Bonds to the public, the agreement of each broker-dealer that is a party to such agreement to comply with the hold-the-offering-price rule, if applicable, as set forth in the retail distribution agreement and the related pricing wires. The Authority and the City further acknowledge that the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or of any broker-dealer that is a party to a retail 592
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distribution agreement, to comply with its corresponding agreement regarding the hold-theoffering-price rule as applicable to the Bonds. (d) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to the Underwriter shall not constitute sales to the public for purposes of this Section 3. Further, for purposes of this Section 3:
(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 and the City (or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (A) to participate in the initial sale of the Bonds to the public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the public), (iii) a purchaser of any of the Bonds is a “related party” to an underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (i) at least 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 of execution of this Bond Purchase Agreement by all parties.

4. The Bonds. The Bonds will be issued, executed and delivered pursuant to the Indenture. The City Council of the City has adopted a resolution on August 9, 2022, relating to the Bonds (the “City Resolution”). This Bond Purchase Agreement, the Lease Agreement, the Sublease and the Continuing Disclosure Certificate (hereinafter defined) are collectively referred to as the “City Documents.” This Bond Purchase Agreement, the Indenture, the Lease Agreement, the Sublease and the Assignment Agreement are collectively referred to as the “Authority Documents.”

5. Official Statement, Continuing Disclosure.
(a) The Authority and the City represent that they have deemed the Preliminary Official Statement to be final as of its date, except for either revisions or additions to the offering price(s), interest rate(s), yield(s) to maturity, selling compensation, aggregate principal amount, principal amount per maturity, delivery date, rating(s) and other terms of the Bonds which depend upon the foregoing as provided in and pursuant to Rule 15c2-12 of the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the “Rule”). (b) The Underwriter agrees that, prior to the time the final Official Statement is available, the Underwriter will send to any potential purchaser of the Bonds, upon the request of such potential purchaser, a copy of the most recent Preliminary Official Statement. Such Preliminary Official Statement shall be sent by first class mail (or other equally prompt means) not later than the second business day following the date upon which each such request is received. 593
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(c) The Authority agrees to deliver to the Underwriter, at such addresses as the Underwriter shall specify, as many copies of the final Official Statement relating to the Bonds as the Underwriter shall reasonably request as necessary to comply with paragraph (b)(4) of the Rule and with Rule G-32, Rule G-36 and all other applicable rules of the Municipal Securities Rulemaking Board. The Authority agrees to deliver such copies of the Official Statement within seven business days after the execution hereof. The Underwriter agrees to give notice to the Authority on the date after which the Underwriter shall no longer be obligated to deliver copies of the Official Statement pursuant to paragraph (b)(4) of the Rule, which date shall be no earlier than 25 days after the “end of the underwriting period,” as determined in accordance with Section 15 herein.
(d) Prior to the earlier of (i) receipt of notice from the Underwriter that no participating underwriter, as such term is defined in the Rule, remains obligated to deliver Official Statements pursuant to paragraph (b)(4) of the Rule or (ii) 25 days after the date of the Closing (as defined below), the Authority and the City shall provide the Underwriter with such information regarding the Authority and the City, each of their current financial conditions and ongoing operations as the Underwriter may reasonably request. (e) The City hereby covenants and agrees that it will, on or prior to the Closing Date, enter into an agreement for the benefit of the owners of the Bonds in which the City will undertake to provide financial information, operating data and notices of material events as required by paragraph (d)(2)(ii) of the Rule substantially in the form of Appendix E to the Official Statement (the “Continuing Disclosure Certificate”).

6. Representations, Warranties and Agreements of the City. The City represents, warrants and agrees as follows:
(a) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California. (b) The City has full legal right, power and authority (i) to enter into, execute and deliver the City Documents; and (ii) to carry out and consummate the transactions on its part contemplated by the City Documents and the Official Statement. (c) By all necessary official action, the City has duly authorized and approved the City Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations in connection with the execution and delivery of the Bonds on its part contained in the City Documents, and the consummation by it of all other transactions contemplated by the City Documents in connection with the execution and delivery of the Bonds, all pursuant to the City Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the members of the City Council was continuously present. The City Resolution has not been modified, amended or rescinded since the date of its adoption.
(d) The City is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the City Documents) or other instrument to which the City is a party which breach or default has or may have an adverse effect on the ability of the City to perform its obligations 594
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under the City Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the City Documents, and compliance with the provisions on the City’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond, note, resolution, agreement or other instrument to which the City is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the City or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the City Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations in connection with the execution and delivery of the Bonds under the City Documents or the consummation by it of all other transactions contemplated by the City Documents have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the City of its obligations under the City Documents have been duly obtained. (f) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the City, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the City executing this Bond Purchase Agreement, threatened against the City, affecting the existence of the City or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the City the validity or enforceability of the City Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the City to cause the execution and delivery or adoption by the City of the City Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the City, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the City of the City Documents. (g) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the City shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriter shall bear all costs in connection with the foregoing. 595
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(h) As of the date thereof, the Preliminary Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy, or any information provided by the Underwriters) did not, except for the omission of certain information permitted to be omitted in accordance with the Rule, contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (i) At the time of the City’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (k) of this Section 6) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy or any information provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(j) If the Official Statement is supplemented or amended pursuant to paragraph (k) of this Section 6, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein provided by the Underwriter) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (k) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 15 hereof) any event of which the officer of the City executing this Bond Purchase Agreement has knowledge shall occur affecting the City which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the City will at its expense prepare and furnish to the Underwriter a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Underwriter.
(l) Any certificate signed by any officer of the City and delivered to the Underwriter pursuant to the City Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the City to the Underwriter as to the statements made therein. (m) The City will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the City will not issue or sell, or cause to be issued or sold, any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from Base Rental Payments.
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7. Representations, Warranties and Agreements of the Authority. The Authority represents, warrants and agrees as follows:
(a) The Authority is a joint exercise of powers entity duly organized and validly existing under the laws of the State of California pursuant to a Joint Exercise of Powers Agreement between the City and the Parking Authority of the City of South Lake Tahoe, dated January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022 (the “JPA Agreement”). (b) The Authority has full legal right, power and authority (i) to enter into, execute and deliver the Authority Documents and to sell and deliver the Bonds to the Underwriter as provided herein; and (ii) to carry out and consummate the transactions on its part contemplated by the Authority Documents and the Official Statement.
(c) By all necessary official action, the Authority has duly authorized and approved the issuance of the Bonds and the Authority Documents, has duly authorized and approved the Preliminary Official Statement and the Official Statement and approved the distribution thereof (including in electronic form), has duly authorized and approved the execution and delivery of, and the performance by the Authority of the obligations in connection with the execution and delivery of the Bonds on its part contained in the Bonds and the Authority Documents, and the consummation by it of all other transactions contemplated by the Authority Documents in connection with the execution and delivery of the Bonds, all pursuant to the Authority Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws and at which a quorum of the board members of the Authority was continuously present. The Authority Resolution has not been modified, amended or rescinded since the date of its adoption and each Authority Document is or will be, when delivered, as applicable, the valid and binding obligation of the Authority. (d) The Authority is not in any material respect in breach of or default under any applicable constitutional provision, law or administrative regulation of the State of California or of the United States, or any agency or instrumentality of either, or any applicable judgment or decree, or the JPA Agreement, or any loan agreement, indenture, bond, note, resolution, agreement (including, without limitation, the Authority Documents) or other instrument to which the Authority is a party which breach or default has or may have an adverse effect on the ability of the Authority to perform its obligations under the Bonds or the Authority Documents, and no event has occurred and is continuing which with the passage of time or the giving of notice, or both, would constitute such a default or event of default under any such instrument; and the execution and delivery of the Bonds and the Authority Documents, and compliance with the provisions on the Authority’s part contained therein, will not conflict in any material way with or constitute a material breach of or a material default under any constitutional provision, law, administrative regulation, judgment, decree, loan agreement, indenture, Bond, note, resolution, agreement or other instrument to which the Authority is a party nor will any such execution, delivery, adoption or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of the property or assets of the Authority or under the terms of any such law, regulation or instrument, except as provided by the Bonds and the Authority Documents. (e) All authorizations, approvals, licenses, permits, consents and orders of any governmental authority, legislative body, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations in connection with the issuance of the Bonds under the Authority Documents or the consummation by it of all other transactions contemplated by the Authority Documents, including all filings with the California Secretary of 597
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State, have been duly obtained, except for such approvals, consents and orders as may be required under the Blue Sky or securities laws of any state in connection with the offering and sale of the Bonds; except as described in or contemplated by the Official Statement, all authorizations, approvals, licenses, permits, consents and orders of any governmental authority, board, agency or commission having jurisdiction of the matter which are required for the due authorization by, or which would constitute a condition precedent to or the absence of which would materially adversely affect the due performance by, the Authority of its obligations under the Bonds and the Authority Documents have been duly obtained. (f) The Bonds, when executed, issued, authenticated and delivered in accordance with the Indenture, and sold to the Underwriter as provided herein, will be validly executed and outstanding obligations, entitled to the benefits of the Indenture, and upon such execution and delivery, the Indenture will provide, for the benefit of the Owners from time to time of the Bonds, the legally valid and binding security interest it purports to create. (g) There is no action, suit, proceeding, inquiry or investigation, notice of which has been duly served on the Authority, at law or in equity before or by any court, government agency, public board or body, pending or to the best knowledge of the officer of the Authority executing this Bond Purchase Agreement, threatened against the Authority, affecting the existence of the Authority or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or enjoin the sale, issuance, execution or delivery of the Bonds pursuant to the Indenture, or contesting or affecting as to the Authority the validity or enforceability of the Bonds or the Authority Documents, or contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement, or contesting the powers of the Authority to cause the issuance of the Bonds, or the execution and delivery or adoption by the Authority of the Authority Documents, or in any way contesting or challenging the consummation of the transactions contemplated hereby or thereby; nor, to the best knowledge of the Authority, is there any basis for any such action, suit, proceeding, inquiry or investigation, wherein an unfavorable decision, ruling or finding would materially adversely affect the validity of the Bonds or the authorization, execution, delivery or performance by the Authority of the Bonds or the Authority Documents.
(h) The Authority will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order (i) to qualify the Bonds for offer and sale under the Blue Sky or other securities laws and regulations of such states and other jurisdictions of the United States as the Underwriter may designate and (ii) to determine the eligibility of the Bonds for investment under the laws of such states and other jurisdictions, and will use its best efforts to continue such qualifications in effect so long as required for the distribution of the Bonds; provided, however, that the Authority shall not be required to execute a general or special consent to service of process or qualify to do business in connection with any such qualification or determination in any jurisdiction, and the Underwriter shall bear all costs in connection with the foregoing. (i) As of the date thereof, the information in the Preliminary Official Statement under the caption “THE AUTHORITY” did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(j) At the time of the Authority’s acceptance hereof, and (unless an event occurs of the nature described in paragraph (l) of this Section 5) at all times subsequent thereto up to and including the Closing Date, the information under the caption “THE AUTHORITY” in the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and 598
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the Reserve Policy or any information provided by the Underwriters) did not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(k) If the Official Statement is supplemented or amended pursuant to paragraph (l) of this Section 7, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph) at all times subsequent thereto up to and including the Closing Date, the Official Statement (other than information therein regarding DTC or its book-entry system, information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy or any information provided by the Underwriters) as so supplemented or amended will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) If between the date of this Bond Purchase Agreement and that date which is 25 days after the end of the underwriting period (as determined in accordance with Section 15 hereof) any event of which the officer of the Authority executing this Bond Purchase Agreement has knowledge shall occur affecting the Authority which might adversely affect the marketability of the Bonds or the market prices thereof, or which might cause the Official Statement, as then supplemented or amended, to contain any untrue statement of a material fact or to omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the Authority shall notify the Underwriter thereof, and if in the opinion of the Underwriter such event requires the preparation and publication of a supplement or amendment to the Official Statement, the Authority will at its expense prepare and furnish to the Underwriter a reasonable number of copies of such supplement to, or amendment of, the Official Statement in a form and in a manner approved by the City, Bond Counsel, Disclosure Counsel and the Underwriter.
(m) Any certificate signed by any officer of the Authority and delivered to the Underwriter pursuant to the Authority Documents or any document contemplated thereby or required for the valid execution and delivery of the Bonds shall be deemed a representation and warranty by the Authority to the Underwriter as to the statements made therein. (n) The Authority will cause the proceeds from the sale of the Bonds to be paid to the Trustee for the purposes specified in the Indenture and the Official Statement. So long as any of the Bonds are outstanding and except as may be authorized by the Indenture, the Authority will not issue or sell any bonds or other obligations, other than the Bonds delivered thereunder, the interest on and premium, if any, or principal of which will be payable from the Revenues. (o) The Authority shall honor all other covenants on its part contained in the Indenture and the Sublease which are incorporated herein and made a part of this Bond Purchase Agreement.

8. Closing. At 8:00 A.M., Pacific Daylight time, on October 18, 2022, or on such other date time, as may be mutually agreed upon by the Authority, the City and the Underwriter (the “Closing Date”), the Authority will, subject to the terms and conditions hereof, deliver to the Underwriter, through the facilities of The Depository Trust Company (“DTC”), or at such other place as the Authority, the City and the Underwriter may mutually agree, the Bonds in definitive, fully registered form (one Bond for each maturity), duly executed and registered in the name of Cede & Co. as nominee of DTC; and, subject to the terms and conditions hereof, the Underwriter shall wire to the Trustee Federal Reserve Bank Funds in the amount of the purchase price of the Bonds.
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9. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement in reliance upon the representations and warranties of the Authority and the City contained herein, and in reliance upon the representations and warranties to be contained in the documents and instruments to be delivered at the Closing and upon the performance by the Authority and the City of its obligations hereunder, both as of the date hereof and as of the Closing Date. Accordingly, the Underwriter’s obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds shall be conditioned upon the performance by the Authority and the City of their respective obligations to be performed hereunder and under such documents and instruments at or prior to the Closing Date, shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the statements the officers and other officials of the Authority and of the City, as the Underwriter, authorized representatives of Bond Counsel, the Trustee, and the City Attorney made in any certification or other documents furnished pursuant to the provisions hereof, and shall also be subject to the following additional conditions:
(a) The respective representations and warranties of the Authority and the City contained herein shall be true, complete and correct on the date hereof and on and as of the Closing Date, as if made on the Closing Date;
(b) At the time of Closing, the City Documents and the Authority Documents shall be in full force and effect in accordance with their terms and shall not have been amended, modified or supplemented and the Official Statement shall not have been supplemented or amended, except in any such case as may have been agreed to by the Underwriter; (c) All necessary official action of the Authority, the City and of the other parties thereto relating to the City Documents and the Authority Documents shall have been taken and shall be in full force and effect and shall not have been amended, modified or supplemented in any material respect;
(d) Subsequent to the date hereof, there shall not have occurred any change in or affecting particularly the Authority, the City or the Bonds, as the foregoing is described in the Official Statement, which in the reasonable opinion of the Underwriter materially impairs the investment quality of the Bonds; and
(e) At or prior to the Closing Date, the Underwriter shall have received copies of each of the following documents:
(i) The Official Statement and each supplement or amendment, if any, thereto, executed by authorized officers of the Authority and the City; (ii) A copy of the Indenture, executed by the parties thereto; (iii) A copy of the Sublease, executed by the parties thereto; (iv) A copy of the Lease Agreement, executed by the parties thereto; (vi) A copy of the Continuing Disclosure Certificate, executed by the City; (vii) A certified copy of the JPA Agreement;
(viii) A certificate or certificates of the City, dated the Closing Date, to the effect that:
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(A) the representations and warranties of the City contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the City has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the City at or prior to the Closing Date;
(B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the City Resolution, or (iii) the execution and delivery of the City Documents and performance of its obligations thereunder, has been repealed, modified, amended, revoked or rescinded;
(C) except as described in the Official Statement, subsequent to June 30, 2021, and prior to Closing, there have been no material adverse changes in the financial position of the City;
(D) no event affecting the City has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect; and
(E) No consent is required for the inclusion of the City’s 2020-21 audited financial statements in the Official Statement.
(ix) A certificate or certificates of the Authority, dated the Closing Date, to the effect that:
(A) the representations and warranties of the Authority contained herein are true and correct in all material respects on and as of the Closing Date as if made on the Closing Date and the Authority has complied with all of the terms and conditions of this Purchase Agreement required to be complied with by the Authority at or prior to Closing Date;
(B) none of the proceedings or authority for (i) the authorization, sale, execution and delivery of the Bonds, (ii) the adoption of the Authority Resolution, or (iii) the execution and delivery of the Authority Documents, has been repealed, modified, amended, revoked or rescinded; and (C) no event affecting the Authority has occurred since the date of the Official Statement that should be disclosed in the Official Statement for the purposes for which it is to be used or which it is necessary to disclose therein in order to make the statements and information therein not misleading in any material respect.
(x) An opinion or opinions, dated the Closing Date and addressed to the Underwriter and the Trustee, of the City Attorney, to the effect that:
(A) The City is a municipal corporation and general law city duly organized and validly existing under the Constitution and laws of the State of California;
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(B) The City Documents have been duly approved by a resolution of the City adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the City Council was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption;
(C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending or to the best of such counsel’s knowledge after due inquiry, threatened, which: (1) challenges the right or title of any member or officer of the City to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the City Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the City of, or the performance by the City of its legal obligations under, the City Documents or in which a final adverse decision could materially adversely affect the operations of the City with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor;
(D) The execution and delivery by the City of, and the performance by the City of its obligations under, the City Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the City is a party or by which it is bound and of which such counsel has knowledge;
(E) As of the date hereof, the statements and information relating to the City contained in the Preliminary Official Statement and Official Statement did not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; and
(F) The City Documents have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery of the City Documents by the parties thereto other than the City, the City Documents constitute legal, valid and binding agreements of the City, enforceable against the City in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought. (G) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency within the State having jurisdiction over the City required for the issuance of the Bonds or the consummation by the City of the other financial transactions contemplated by the Official Statement and the City Documents.
(H) Based on the information made available to the City Attorney in its role as City Attorney to the City, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement, nothing has come 602
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to its attention which would lead it to believe that the Official Statement as of its date and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed and information relating to the Authority and the Depository Trust Company and its book entry system) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(xi) An opinion or opinions, dated the Closing Date and addressed to the Underwriter and the Trustee, of the City Attorney, as counsel for the Authority, to the effect that:
(A) The Authority is a joint exercise of powers authority duly organized and validly existing under the laws of the State of California pursuant to the JPA Agreement;
(B) The Authority Documents have been duly approved by the Authority Resolution adopted at a meeting duly called and held in accordance with the requirements of all applicable laws, with all public notice required by law, and at which a quorum of the members of the Board of the Authority was continuously present and such resolution has not been modified, amended or rescinded since the date of its adoption;
(C) Except as described in the Official Statement, there is no litigation, inquiry, or investigation pending to the best of such counsel’s knowledge after due inquiry, or threatened, which: (1) challenges the right or title of any Board member or officer of the Authority to hold his or her office or exercise or perform the powers and duties pertaining thereto; (2) challenges the validity or enforceability of the Bonds or the Authority Documents; (3) seeks to restrain or enjoin the sale of the Bonds or the execution and delivery by the Authority of, or the performance by the Authority of its legal obligations under, the Authority Documents or in which a final adverse decision could materially adversely affect the operations of the Authority with respect to the Leased Property; or (4) contests in any way the completeness or accuracy of the Preliminary Official Statement or the Official Statement, nor, to the best of such counsel’s knowledge, is there any basis therefor;
(D) The execution and delivery by the Authority of, and the performance by the Authority of its obligations under, the Authority Documents, do not conflict with, violate or constitute a default under any provision of any law, court order or decree or any contract, instrument or agreement to which the Authority is a party or by which it is bound and of which such counsel has knowledge; and (E) The Authority Documents have been duly authorized, executed and delivered by the Authority and, assuming due authorization, execution and delivery of the Authority Documents by the parties thereto other than the Authority, the Authority Documents constitute legal, valid and binding agreements of the Authority, enforceable against the Authority in accordance with their respective terms except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the enforcement of creditors’ rights and remedies in general, or by the application of equitable principles if equitable remedies are sought.
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(F) Except as may be required under the “blue sky” or securities laws of the United States or any state, there is no authorization, approval, consent or other order of, or filing with, or certification by, the State or any other governmental authority or agency having jurisdiction over the Authority required for the issuance of the Bonds or the consummation by the Authority of the other financial transactions contemplated by the Official Statement and the Authority Documents.
(G) Based on the information made available to such City Attorney in its role as counsel to the Authority, and without having undertaken to determine independently or assume any responsibility for the accuracy, completeness or fairness of the statements contained in the Official Statement under the captions entitled “THE AUTHORITY,” and “ABSENCE OF LITIGATION”, nothing has come to such City Attorney’s attention that would lead it to believe that the statements contained in the above-referenced captions as of the date of the Official Statement and as of the date of Closing (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion is expressed) contained or contains any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;
(xii) An opinion, dated the Closing Date and addressed to the Authority, of Bond Counsel, substantially in the form set forth in Appendix D to the Official Statement, together with a letter or letters from such counsel, dated the Closing Date and addressed to the Underwriter and the Trustee, to the effect that the foregoing opinion may be relied upon by the Underwriter and the Trustee to the same extent as if such opinion was addressed to them;
(xiii) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Bond Counsel, to the effect that:
(A) the Bonds are not subject to the registration requirements of the Securities Act of 1933, as amended, and the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; (B) the Bond Purchase Agreement has been duly executed and delivered by the Authority and the City and is a valid and binding agreement of the Authority and the City; and
(C) the statements contained in the Official Statement under the captions “THE BONDS,” “SECURITY AND SOURCE OF PAYMENT FOR THE BONDS” and “TAX MATTERS” and in APPENDIX B–”SUMMARY OF THE PRINCIPAL LEGAL DOCUMENTS” and APPENDIX D—PROPOSED FORM OF OPINION OF BOND COUNSEL,” insofar as such statements expressly summarize certain provisions of the Indenture, the Sublease, the Lease Agreement and the final opinion of Bond Counsel concerning certain tax matters relating to the Bonds, are accurate in all material respects;
(xiv) A letter, dated the Closing Date and addressed to the Authority, the City and the Underwriter of Jones Hall, A Professional Law Corporation, as disclosure counsel (“Disclosure Counsel”), to the effect that, based on among other things, 604
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(i) inquiries and discussions of various legal matters, (ii) review of and reliance on certain documents, certificates, instructions, records and opinions of counsel, and (iii) participation in meetings and telephone conferences with representatives of the Authority and the City, PFM Financial Advisors LLC, as municipal advisor to the City, and others including the City Attorney and Underwriter’s counsel, during which the content of the Preliminary Official Statement and the Official Statement and related matters were discussed, no information has come to the attention of Disclosure Counsel with respect to the issuance of the Bonds which caused Disclosure Counsel to believe that (a) the Preliminary Official Statement as of its date or as of October 4, 2022 (excluding therefrom financial, demographic and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system; information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Preliminary Official Statement, as to which we express no view) contained any untrue statement of a material fact or omitted to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, except for such information as is permitted to be excluded from the Preliminary Official Statement pursuant to Rule 15c2-12, including but not limited to information as to pricing, yields, interest rates, maturities, amortization, redemption provisions, ratings, debt service requirements, Underwriters’ discount and CUSIP numbers; or (b) the Official Statement as of its date and as of the Closing Date (excluding therefrom financial, demographic, statistical or economic or demographic data; forecasts, numbers, charts, tables, graphs, projections, estimates, assumptions and expressions of opinions; information relating to DTC and its book-entry only system or CUSIP numbers; information relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy; information under the captions “TAX MATTERS” and “UNDERWRITING”; and the Appendices to the Official Statement, as to which we express no view) contained or contains any untrue statement of a material fact or omitted 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.

However, in providing advice and assistance as Disclosure Counsel, Disclosure Counsel provided no independent diligence on the MSRB’s Electronic Municipal Market Access website, and we express no view regarding the City’s or the City’s related entities’ compliance with any obligation to file annual reports or provide notice of events, each as described in Rule 15c2-12;
(xv) the opinion of Quint & Thimmig LLP, as counsel to the Underwriter, dated the Closing Date and addressed to the Underwriter, in form and substance acceptable to the Underwriter.
(xvi) A certificate of an authorized officer of the Trustee satisfactory to the Underwriter, certifying substantially as follows:
(A) The Trustee is a national banking association duly organized and in good standing under the laws of the United States of America and has all necessary power and authority to enter into the Indenture and to perform its duties under the Indenture;
(B) The Trustee is duly authorized to enter into the Indenture and to authenticate and deliver the Bonds to the Underwriter pursuant to the terms of the Indenture and, when executed by the other parties thereto, the Indenture will 605
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constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms;
(C) The Bonds have been duly authenticated and delivered to the Underwriter pursuant to direction from the Authority;
(D) The Trustee is not in breach of or default under any law or administrative rule or regulation of the State of California or of any department, division, agency or instrumentality thereof, of any applicable court or administrative decree or order, or any other material instrument to which the Trustee is a party or is otherwise subject or bound and which would materially impair the ability of the Trustee to perform its obligations under the Indenture; (E) To its knowledge, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body, is pending or threatened in any way against the Trustee affecting the existence of the Trustee or the titles of its directors or officers to their respective offices, or seeking to restrain or enjoin the execution, sale or delivery of the Bonds, the application of the proceeds thereof in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds or the Indenture;
(F) The execution and delivery of the Indenture will not conflict with or constitute a breach of or default under the Trustee’s duties under such documents, or any law, administrative regulation, court decree, resolution, articles of association, bylaws or other material agreement to which the Trustee is subject or by which it is bound; and
(G) No consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Trustee that has not been obtained is or will be required for the authentication and delivery of the Bonds, the execution and delivery of the Indenture, the performance of the Trustee’s duties under the Indenture or the consummation by the Trustee of the other transactions contemplated by the Indenture, except as such may be required under the state securities or blue sky laws in connection with the distribution of the Bonds by the Underwriter.
(xvii) An opinion of counsel to the Trustee in form and substance acceptable to the Underwriter;
(xviii) Evidence, satisfactory to Bond Counsel and the Underwriter, of insurance, including a ALTA title insurance policy, in compliance with the Sublease; (xix) 15c2-12 certificates of City and the Authority;
(xx) Certified copies of the City Resolution and the Authority Resolution; (xxi) copies of the Municipal Bond Insurance Policy and the Reserve Policy; (xxii) an opinion of counsel to the Municipal Bond Insurer, addressed to the Authority, the City and the Underwriter to the effect that:
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(A) the descriptions of the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy included in the Official Statement are accurate;
(B) the Municipal Bond Insurance Policy and the Reserve Policy constitute the legal, valid and binding obligations of the Municipal Bond Insurer, enforceable in accordance with their respective terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditor’s rights generally and by the application of equitable principles if equitable remedies are sought, and (C) as to such other matters as the Authority, the City or the Underwriter may reasonably request;
(xxiii) a certificate of the Municipal Bond Insurer, signed by an authorized officer of the Municipal Bond Insurer, to the effect that:
(A) the information contained in the Official Statement relating to the Municipal Bond Insurer, the Municipal Bond Insurance Policy and the Reserve Policy is true and accurate and
(B) as to such other matters as the Authority, the City or the Underwriter may reasonably request;
(xxiv) Evidence, satisfactory to the Underwriter, that the Bonds have been assigned the insured rating of “AA” and an underlying rating of “___“ by S&P Global Ratings, a Standard & Poor’s Financial Services LLC business; (xxv) The Blanket Letter of Representations of the Authority to DTC, relating to the book-entry only system;
(xxvi) Such additional legal opinions, certificates, instruments and other documents as the Underwriter may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the date of the Closing, of the City’s representations and warranties contained herein and of the statements and information contained in the Official Statement and the due performance or satisfaction by the City and the Authority on or prior to the date of the Closing of all the agreements then to be performed and conditions then to be satisfied by each of them.

All the opinions, letters, certificates, instruments and other documents mentioned above or elsewhere in this Bond Purchase Agreement shall be deemed to be in compliance with the provisions hereof if, but only if, they are in form and substance satisfactory to Bond Counsel, Disclosure Counsel and the Underwriter.

If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds contained in this Bond Purchase Agreement, or if the obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and none of the Underwriter, the Authority or the City shall be under any further obligation hereunder.

10. Termination. The Underwriter shall have the right to terminate the Underwriter’s obligations under this Bond Purchase Agreement to purchase, to accept delivery of and to pay for the Bonds by notifying the Authority and the City in writing, of its election to do so, if, after the execution hereof and prior to the Closing:
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(a) the United States has become engaged in, or there has been an escalation of, hostilities which, in the reasonable opinion of the Underwriter, materially adversely affects the marketability or market price of the Bonds;
(b) there shall have occurred the declaration of a general banking moratorium by any authority of the United States or the State of New York or the State of California; (c) an event shall have occurred, or been discovered as described in paragraph (k) of Section 6 or paragraph (l) of Section 7 hereof, which in the opinion of the Underwriter requires the preparation and publication of disclosure material or a supplement or amendment to the Official Statement;
(d) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency in the State of California, or a decision by any court of competent jurisdiction within the State of California shall be rendered which, in the Underwriter’s reasonable opinion, materially adversely affects the market price of the Bonds; (e) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status by any national rating service to any of the Authority’s or the City’s obligations; (f) legislation shall be introduced, by amendment or otherwise, or be enacted by the House of Representatives or the Senate of the Congress of the United States, or a decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official statement by or on behalf of the Securities and Exchange Commission or other governmental agency having jurisdiction of the subject matter shall be made or proposed, to the effect that the execution, issuance, delivery, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement, is or would be in violation of any provision of the Securities Act of 1933, as amended and as then in effect, or the Securities Exchange Act of 1934, as amended and as then in effect, or the Trust Indenture Act of 1939, as amended and as then in effect, or with the purpose or effect of otherwise prohibiting the issuance, offering or sale of obligations of the general character of the Bonds, or the Bonds, as contemplated hereby or by the Official Statement;
(g) additional material restrictions not in force as of the date hereof shall have been imposed upon trading in securities generally by any governmental authority or by any national securities exchange;
(h) the New York Stock Exchange, or other national securities exchange or association or any governmental authority, shall impose as to the Bonds, or obligations of the general character of the Bonds, any material restrictions not now in force, or increase materially those now in force, with respect to the extension of credit by or the charge to the net capital requirements of broker-dealers;
(i) trading in securities on the New York Stock Exchange or other national securities exchange or association shall have been suspended or limited or minimum prices have been established on either such exchange;
(j) any action shall have been taken by any government in respect of its monetary affairs which, in the reasonable opinion of the Underwriter, has a material adverse effect on the United States municipal securities market; or as of the date hereof that in the Underwriter’s reasonable opinion materially adversely affects the marketability or market price of the Bonds; or 608
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(k) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets.

If this Bond Purchase Agreement shall be terminated pursuant to this Section 10, or if the purchase provided for herein is not consummated because any condition to the Underwriter’s obligations hereunder is not satisfied or because of any refusal, inability or failure on the part of the City or the Authority to comply with any of the terms or to fulfill any of the conditions of this Bond Purchase Agreement, or if for any reason the City or the Authority shall be unable to perform all of its respective obligations under this Bond Purchase Agreement, neither the City nor the Authority shall be liable to the Underwriter for damages on account of loss of anticipated profits arising out of the transactions covered by this Bond Purchase Agreement. The Underwriter may, in its sole discretion, waive any of the conditions set forth in Section 9 or this Section 10.

11. Changes in Official Statement. After the Closing, neither the Authority nor the City will adopt any amendment of or supplement to the Official Statement to which the Underwriter shall reasonably object in writing.

12. Payment of Costs and Expenses.
(a) All costs and expenses incident to the sale and delivery of the Bonds to the Underwriter shall be payable by the Authority from the proceeds of the Bonds, including, but not limited to: (i) the fees and expenses of the City, its counsel and consultants; (ii) the fees and expenses of the Authority, its counsel and consultants; (iii) the fees and expenses of Bond Counsel; (iv) the fees and expenses of Disclosure Counsel; (v) the fees and expenses of Sperry Capital Inc., the City’s municipal advisor; (vi) all expenses in connection with the preparation and printing of the Bonds; (vii) all expenses in connection with the preparation, printing, distribution and delivery of the Preliminary Official Statement, the Official Statement and any amendment or supplement thereto; (viii) the initial fees and expenses of the Trustee, including the reasonable fees and expenses of its counsel; (ix) the fees and expenses of any rating agency rating the Bonds; and (x) any credit enhancement costs for the Bonds. (b) The Underwriter shall pay all expenses incurred by it in connection with the public offering and distribution of the Bonds including, but not limited to: (i) all advertising expenses in connection with the offering of the Bonds; (ii) the fees and disbursements of Underwriter’s counsel, if any, and (iii) all out-of-pocket disbursements and expenses incurred by the Underwriter in connection with the offering and distribution of the Bonds, including, air travel and hotel accommodations in connection with the pricing of the Bonds; investor meetings, rating agency trips and meetings; the Closing; meals and transportation for the City, the Underwriter and other working group personnel during rating agency, investor meetings; pricing and Closing trips; expenses related to attending working group meetings, such as parking, meals and transportation and any other miscellaneous costs associated with the Closing; (iv) all other expenses incurred by the Underwriter in connection with the public offering and distribution of Bonds, except as provided in (a) above or as otherwise agreed to by the Underwriter and the City, and (v) the fees of the California Debt and Investment Advisory Commission.
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13. Notices. Any notice or other communication to be given under this Bond Purchase Agreement may be given by delivering the same in writing:

To the Authority: South Tahoe Joint Powers Financing Authority c/o City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Attention: Executive Director
To the City: City of South Lake Tahoe
1901 Lisa Maloff, Suite 210
South Lake Tahoe, CA 96150
Attention: City Manager
To the Underwriter: Stifel, Nicolaus & Company, Incorporated One Montgomery Street, 35th Floor
San Francisco, CA 94014
Attention: Ms. Eileen Gallagher, Managing Director

14. Parties in Interest. This Bond Purchase Agreement is made solely for the benefit of the Authority, the City and the Underwriter (including the successors or assigns of the Underwriter) and no other person shall acquire or have any right hereunder or by virtue hereof.

All of the Authority’s and the City’s representations, warranties and agreements contained in this Bond Purchase Agreement shall remain operative and in full force and effect, regardless of:
(a) any investigations made by or on behalf of the Underwriter; (b) delivery of and payment for the Bonds pursuant to this Bond Purchase Agreement; and (c) any termination of this Bond Purchase Agreement.

15. Determination of End of the Underwriting Period. For purposes of this Bond Purchase Agreement, the end of the underwriting period for the Bonds shall mean the earlier of (a) the Closing Date unless the City and the Authority have been notified in writing by the Underwriter, on or prior to the Closing Date, that the “end of the underwriting period” for the Bonds for all purposes of the Rule will not occur on the Closing Date, or (b) the date on which notice is given to the City and the Authority by the Underwriter in accordance with the following sentence. In the event that the Underwriter has given notice to the City and the Authority pursuant to clause (a) above that the “end of the underwriting period” for the Bonds will not occur on the Closing Date, the Underwriter agrees to notify the City and the Authority in writing as soon as practicable following the “end of the underwriting period” for the Bonds for all purposes of the Rule. The Underwriter agrees to file a copy of the Official Statement with each of the nationally recognized municipal securities information repositories.

16. No Assignment. This Bond Purchase Agreement is entered into between the City, the Authority and the Underwriter, and is solely for the benefit of the City, the Authority, the Underwriter and their respective successors or assigns, and no person other than the foregoing shall acquire or have any right under or by virtue of this Bond Purchase Agreement. All of the representations, warranties and agreements contained in this Bond Purchase Agreement shall survive the delivery of and payment for the Bonds and any termination thereof.

17. Effectiveness. This Bond Purchase Agreement shall become effective upon the execution of the acceptance by an authorized representative of the City and an authorized representative of the Authority and shall be valid and enforceable at the time of such acceptance.

18. Headings. The headings of the sections of this Bond Purchase Agreement are inserted for convenience only and shall not be deemed to be a part hereof. 610
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19. Governing Law. This Bond Purchase Agreement shall be interpreted, governed and enforced in accordance with the laws of the State of California.

20. Counterparts. This Bond Purchase Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute one and the same instrument.
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If the foregoing is in accordance with your understanding of this Bond Purchase Agreement please sign and return to us the enclosed duplicate copies hereof, whereupon it will become a binding agreement among the City, the Authority and the Underwriter in accordance with its terms.

South Lake Tahoe City CouncilAugust 9, 2022

South Lake Tahoe City Council
August 9, 2022