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 695
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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 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
Early in the COVID-19 pandemic, the City experienced decreased General Fund revenues due to a decrease in tourism necessitated by the shelter-in-place orders. However, tourism 696
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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.
There can be no assurances that any future spread of COVID-19 and/or responses intended to slow the spread of COVID-19 or new public health emergencies 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 the future. See “BOND OWNERS’ RISKS – Public Heath Emergencies.” 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 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.
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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 that commences on October 1st.
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 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.
Fiscal Year 2022-23 Adopted Budget. The City’s budget for Fiscal Year 2022-23, which runs from October 1, 2022 through September 30, 2023, was adopted on August 23, 2022. As shown in the following table, both revenues and expenditures are budgeted to be higher than for Fiscal Year 2021-22. The increased revenues are anticipated to come primarily from higher property taxes and sales taxes, while the increased expenditures are anticipated to be due to the General Government and Police categories.
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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 (as amended) and Fiscal Year 2022-23 Adopted and Amended budgets. 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
Amended Budget
2022-23
Adopted Budget
2022-23
Amended Budget
Revenues
Property tax $9,175,180 $9,650,000 $9,860,000
Transient occupancy-City 10,227,113 10,513,562 10,413,562 Transient occupancy-Project Area(4) 6,742,177 6,740,000 7,040,000 Sales tax (Statewide) 6,300,650 7,100,000 7,100,000
Measure Q (Local sales tax) 3,192,325 3,500,000 3,500,000 Motor vehicle license fees 2,285,000 2,515,000 2,515,000 Franchise taxes 1,540,000 1,540,000 1,690,000
Business license tax 1,647,000 1,692,000 1,692,000
Transfers in 2,027,189 1,520,764 2,500,768
Other revenue 6,845,881 6,114,431 8,040,749
Total Revenues(1) $49,982,515 $50,885,757 $54,352,079
Expenditures
Current:
General government(2) 4,743,110 5,043,925 5,307,816
Finance(3) 2,505,948 2,579,750 2,636,315
Non-departmental 5,936,161 4,329,428 5,766,011
Police 13,058,509 13,223,803 13,617,368
Fire 9,945,125 9,986,351 11,474,696
Public works 4,009,353 4,478,081 4,750,338
Development services 2,176,898 1,851,549 2,120,137
Parks and recreation 3,402,639 3,237,750 3,244,195
Transfers-out
(5) 11,325,032 6,155,120 7,346,642
Total Current $57,102,775 $50,885,757 $56,263,518
____________________
(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. Also excludes Measure S (local sales tax), which is budgeted at $6,440,000 for Fiscal Year 2021-22 and $7,000,000 for Fiscal Year 2022-23. (2) Includes City Council, City Clerk, City Manager’s Office, City Attorney, City Treasurer. (3) Includes information technology.
(4) The TOT generated in the Project Area is pledged to pay bonds issued by the Successor Agency to the South Tahoe Redevelopment Agency, only the portion of these funds in excess of net debt service not otherwise paid by tax increment is available to the General Fund.
(5) Includes the portion of the Successor Agency bonds paid from TOT generated in the Project Area. See notes 15 and 16 to audited financial statements in Appendix A.
Source: City of South Lake Tahoe Adopted Budget for Fiscal Year 2021-22 and Proposed Budget for Fiscal Year 2022-23. 699
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General Fund Key Revenue Sources. The major general fund revenue sources of the City (collectively, the “Key Revenue Sources”) in Fiscal Year 2022-23 were: Transient Occupancy Tax (approximately 34% of total general fund revenues), Sales Tax (approximately 22% of total general fund revenue), and Property Tax (approximately 19% of total general fund revenue).
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 2019-20 through 2021-22.
TABLE 2
City of South Lake Tahoe
General Fund Revenues by Revenue Source
Fiscal Years 2019-20 through 2021-22
Audited
2019-20
Audited
2020-21
Audited
2021-22
Category Revenues
% of
Total Revenues
% of
Total Revenues
% of
Total
Property tax $8,632,710 19% $9,135,477 18% $9,679,822 19% Transient Occupancy Tax 9,538,728 20 11,166,045 22 10,623,784 20 Transient Occupancy Tax
(Redevelopment area)(2) 4,982,523 11 5,952,873 12 7,463,579 14 Sales Tax (Bradley Burns) 5,460,038 12 7,152,233 14 7,268,696 14 Measure Q (Local Sales Tax) 2,915,365 6 3,695,854 7 3,933,402 8 Vehicle License Fees 2,284,264 5 2,409,143 5 2,534,976 5 Franchise Tax 1,593,143 3 1,627,041 3 1,863,814 4
Business License Tax 1,694,822 4 1,717,401 3 1,874,296 4 Recreation 380,845 1 272,917 1 654,279 1
Public Safety 1,842,947 4 2,608,954 5 2,551,589 5
Public Services 2,664,320 5 2,331,402 5 2,381,131 5
Transfers In 2,926,445 6 966,568 2 806,031 2
All Other Revenue 1,683,398 4 1,115,338 2 539,506 1
Total Revenues(1) $46,599,548 100% $50,151,246 100% $52,174,904 100% ________________
(1) Totals may not add due to rounding. 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 2019-20, 2020-21 and 2021-22, Measure P revenues were $2,764,825, and $3,234,866, and $3,424,163 respectively. Also excludes Measure S (local sales tax) general revenue accounted for in a separate special revenue fund, not the General Fund. For Fiscal Years 2020-21 and 2021-22 Measure S Sales Tax revenues were $3,207,042 and $7,746,452 respectively,
(2) The TOT generated in the Project Area is pledged to pay bonds issued by the Successor Agency to the South Tahoe Redevelopment Agency, only the portion of these funds in excess of net debt service not otherwise paid by tax increment is available to the General Fund. See notes 15 and 16 to audited financial statements in Appendix A.
Source: City of South Lake Tahoe audited financial statements 2019-20 through 2021-22.
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 12% citywide and 14% on certain specific redevelopment properties. This includes the additional 2% TOT approved by City voters in November 2016 (Measure P) is dedicated for the Multigenerational Center Project, which 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 700
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VHRs were 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, could significantly reduce the number of visitors to the City, and public health emergencies, like COVID-19, could shut down lodging industry completely for several months.
Despite the volatility, tourism continues to be a primary economic driver for the City. In most recent 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 thereafter this revenue source was not as significantly impacted as was originally expected in the budget projections. Actual TOT outperformed Property Tax revenue in 2019-20 and again in 2020-21. As the hospitality industry surged back up as soon as operational restrictions were lifted. Measure T (see the subheading below “Measure T (2018)”) has not materially adversely impacted the TOT revenues received by the City – it has simply changed the types of lodging facilities contributing to TOT revenues (away from VHRs and more toward hotels).
Historical TOT Tax Revenues. The following table shows the TOT revenues to the City for the full Fiscal Years 2015-16 through 2021-22, and a portion of Fiscal Year 2022-23.
TABLE 3
City of South Lake Tahoe
Transient Occupancy Tax Revenues
Full Fiscal Years 2015-16 through 2021-22
and Partial Year 2022-23 (1)
Fiscal
Year
TOT
Collections
2015-16 $15,547,499
2016-17 16,599,913
2017-18 17,418,474
2018-19 18,120,866
2019-20 14,445,023
2020-21 16,919,132
2021-22 18,014,305
2022-23 (as of
June 2023) 8,777,540
(1) Includes both City and Successor Agency to the South Tahoe Redevelopment Agency shares of the TOT; the TOT generated in the Project Area is pledged to pay bonds issued by the Successor Agency, only the portion of these funds in excess of net debt service not otherwise paid by tax increment is available to the General Fund. See notes 15 and 16 to audited financial statements in Appendix A. Excludes Measure P TOT accounted for in a separate special revenue fund. 2022-23 TOT collections to date are through May, 2023 or 7 months into fiscal year.
Excludes TOT audits amounting to $120K on average annually.
Source: City of South Lake Tahoe
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Top Ten Payers of TOT. The following table shows the top payers of TOT to the City in Fiscal Year 2021-22.
TABLE 4
City of South Lake Tahoe
Top Payers of Transient Occupancy Tax
Fiscal Year 2021-22
No. TOT Payer Type
FY 2021-22
Taxable
Rents
% of Total
Taxable
Rents(2)
1 Lake Tahoe Resort Hotel Hotel $13,862,222 10.4%
2 Marriott’s Timber Lodge Hotel 11,578,731 8.7
3 Marriott’s Grand Residence Club Hotel 10,015,299 7.5
4 The Landing Resort and Spa Hotel 8,547,012 6.4
5 Beach Retreat & Lodge at Tahoe Hotel 8,542,357 6.4
6 Diamond Resorts Management, Inc. Agent 6,132,099 4.6
7 Forest Suites Resort Hotel 5,934,686 4.5
8 Hotel Azure Hotel 5,131,505 3.9
9 Hotel Becket Hotel 4,695,606 3.5
10 Quality Inn Hotel 3,613,438 2.7
Totals $78,052,956 58.8%
(1) TOT rate is 12% except specific redevelopment properties where the rate is 14%. Including an additional 2% TOT approved by voters of South Lake Tahoe in November 2016 (Measure P) dedicated for the Multigenerational Center Project and accounted for in a special revenue fund.
(2) 2021-22 Total Taxable Rents: $132,743,142.
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, approved by the voters in the City on November 6, 2018. Measure T required the phase-out of all VHR permits in residential areas and for all multi-family properties Citywide over a three-year period, beginning on December 20, 2018 with full implementation of these provisions completed by December 31, 2021.
Measure T has prohibited the issuance of new VHR permits or renewal of expired permits in residential areas or for multifamily properties anywhere in the City. Since December 20, 2018 properties which had been previously issued VHR permits in residential zones or multi-family properties, regardless of location, automatically expired on the last day of the month for which a VHR permit would otherwise have been 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. 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.
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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 court of appeal issued a decision on June 20, 2023, substantially upholding Measure T and remanding a narrow issue to the trial court. Both parties have filed petitions for rehearing related to the remanded issue, but Measure T is anticipated to continue to be substantially upheld irrespective of the outcome of those petitions.
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 generated nearly $3.9 million, representing 7% of total General Fund revenues. For 2022-23, Measure Q revenues have been budgeted at $3.5 million, up from the $3.2 million Fiscal Year 2021-22 budget estimate.
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, with no sunset date. Measure S Sales tax revenue is budgeted in a separate fund. In 2021-22, Measure S revenue generated over $7.7 million. For 2022-23, this revenue has been budgeted at approximately $7.0 million.
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 5
City of South Lake Tahoe
Sales Tax Rate
Statewide Rate (includes City share) 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 703
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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 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. 704
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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 6
City of South Lake Tahoe
Taxable Transactions
Fiscal Years 2018 through 2022
2018 2019 2020 2021 2022
Motor Vehicle and Parts Dealers $20,507 $20,654 $22,300 $25,451 $28,875 Home Furnishings and Appliances 8,091 5,755 4,199 4,044 4,700 Building Materials 23,764 24,104 24,600 24,557 27,752
Food and beverage stores 71,817 56,570 63,143 61,775 61,674 Gasoline stations 27,486 40,912 29,701 36,654 42,577
Apparel stores 33,992 34,904 30,352 40,707 41,554
General merchandise stores 9,259 7,541 6,982 6,739 55,425 Food services and drinking places 130,781 136,687 115,077 142,501 168,580 Other retail stores 45,778 53,446 60,851 75,524 74,976
All other outlets 72,550 73,332 61,410 72,706 87,669
Total All Outlets $444,026 $453,905 $418,616 $492,679 $595,804 ____________________
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 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 705
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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 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.
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Historical Assessed Valuations. The table below presents the assessed valuation of taxable property in the City for Fiscal Year 2012-13 through 2022-23.
TABLE 7
City of South Lake Tahoe
Assessed Valuations of All Taxable Property
Fiscal Years 2012-13 through 2022-23
Fiscal Year Local Secured Unsecured Total
%
Change
2012-13 $3,686,469,851 488,299,118 $3,774,768,969 --%
2013-14 3,719,613,139 94,426,393 3,814,039,532 1.0
2014-15 3,826,850,451 93,750,130 3,920,600,581 2.8
2015-16 4,012,840,871 90,397,095 4,088,193,301 4.3
2016-17 4,195,441,787 91,432,001 4,286,873,788 4.9
2017-18 4,466,533,482 94,195,752 4,560,729,234 6.4
2018-19 4,768,126,346 114,917,413 4,883,043,759 7.1
2019-20 4,993,100,046 116,098,828 5,109,198,874 4.6
2020-21 5,270,054,725 124,077,949 5,394,132,674 5.6
2021-22 5,522,533,805 131,594,675 5,654,128,480 4.8
2022-23 5,985,912,071 154,343,549 6,140,255,620 8.6
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 2022-23. As shown in the table, there are approximately 12,383 residential parcels in the City, representing over 78% of the assessed valuation in the City.
TABLE 8
City of South Lake Tahoe
Secured Assessed Valuation and Parcels by Land Use
Fiscal Year 2022-23
2022-23 % of No. of % of
Non-Residential: Assessed Valuation (1) Total Parcels Total Commercial/Office $ 439,525,458 7.34% 255 0.58%
Vacant Commercial 16,064,304 0.27 100 0.23
Resort-Timeshare 237,776,833 3.97 30,405 69.69
Hotel/Motel 375,710,477 6.28 120 0.28
Industrial 150,860,584 2.52 194 0.44
Vacant Industrial 3,045,838 0.05 30 0.07
Recreational 83,964,837 1.40 55 0.13
Government/Social/Institutional 2,412,612 0.04 90 0.21
Subtotal Non-Residential $1,309,360,943 21.87% 31,249 71.62% Residential:
Single Family Residence $4,112,787,319 68.71% 9,853 22.58% Mobile Home 8,172,565 0.14 284 0.65
Mobile Home Park 40,200,769 0.67 17 0.04
2-3 Residential Units 259,711,469 4.34 860 1.97
4+ Residential Units/Apartments 195,200,640 3.26 299 0.69 Miscellaneous Residential Improvements 4,617,824 0.08 60 0.14 Vacant Residential 55,860,542 0.93 1,010 2.31
Subtotal Residential $4,676,551,128 78.13% 12,383 28.38% Total $5,985,912,071 100.00% 43,632 100.00%
_________________ (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 2022-23 secured tax roll, listed in the table below, accounted for less than 10% of the total City Fiscal Year 2022-23 assessed valuation.
TABLE 9
City of South Lake Tahoe
Principal Property Taxpayers (Secured Roll)
Fiscal Year 2022-23
2022-23 % of
Property Owner Primary Land Use Assessed Valuation Total (1)
1. Sodalite Tahoe Hotel LLC Hotel $ 88,555,000 1.48%
2. First American Trust FSB Resort/Timeshare 75,300,711 1.26
3. Tahoe Chateau Land Holding LLC Planned Residential Development 44,106,934 0.74
4. Trans Sierra Investments Shopping Center 43,509,472 0.73
5. Diamondrock Tahoe Owner LLC Hotel 35,586,829 0.59
6. Imperium Blue Tahoe Holdings LLC Commercial 33,000,000 0.55
7. Gondola Vista Development Company LLCResidential Properties 29,913,981 0.50
8. LCOF Lake Tahoe Invest LLC Hotel 28,586,072 0.48
9. Tahoe Crescent LLC Commercial 27,498,277 0.46
10. Heavenly Valley LP Ski Resort 25,426,856 0.42
11. South Tahoe Refuse Co. Industrial 21,401,198 0.36
12. Tahoe Verde LLC Mobile Home Park 19,873,248 0.33
13. Azure Tahoe Resorts LLC Hotel 19,434,450 0.32
14. Kuldeep Singh & Deepak Mand Hotel 17,782,190 0.30
15. Tahoe Keys SMI LLC Marina 16,650,000 0.28
16. Marriott Ownership Resorts Inc. Resort/Timeshare 16,346,368 0.27
17. Sierra Vista Evergreen SPE LLC Apartments 16,134,052 0.27
18. Second Bay Holdings Tahoe LLC Commercial 15,252,393 0.25
19. Seven Springs LP Commercial 15,000,000 0.25
20. Rialto Stanton Tahoe LP Commercial 13,723,031 0.23
$603,081,062 10.08%
(1) 2022-23 Local Secured Assessed Valuation: $5,985,912,071 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 2017-18 through 2021-22, 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 2021-22, including the City’s audited financial statements, is set forth in APPENDIX A. 710
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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 2017-18 through 2021- 22 and (ii) the City’s Comparative Balance Sheet for Fiscal Years 2017-18 through 2021-22.
TABLE 10
City of South Lake Tahoe
Statements of Revenues, Expenditures and Changes in General Fund Balance Fiscal Years 2017-18 through 2021-22(1)
2017-18 2018-19 2019-20 2020-21 2021-22
Revenues
Taxes and assessments $36,288,798 $37,011,629 $33,662,711 $42,597,200 $49,181,475 Licenses, permits and impact fees 1,718,645 1,786,359 1,728,392 1,763,093 1,958,895 Fines and penalties 130,204 85,963 78,433 96,556 110,316 Use of money and property 542,840 777,230 442,873 105,111 (336,382) Intergovernmental revenue 2,355,954 2,475,758 3,385,405 3,393,370 3,907,412 Charges for current services 4,130,233 3,850,649 3,852,064 3,281,080 4,746,121 Other revenue 285,999 1,609,464 404,246 658,085 607,457 Loss on investment in land held for resale (2,157,647) -- -- -- -- Total Revenues(2) 43,295,026 47,597,052 43,554,124 51,894,495 60,175,294 Expenditures
Current:
General Government 10,910,495 9,335,325 9,428,305 9,753,308 11,059,117 Public safety 15,571,856 18,199,843 18,315,577 19,921,546 20,953,955 Public works 5,675,760 6,339,496 6,294,092 5,850,205 5,562,599 Parks and recreation 1,751,749 1,913,163 1,531,608 1,438,655 2,741,425 Capital outlay 236,414 75,475 702,997 231,032 348,254
Debt Service:
Principal -- -- -- -- --
Interest and fiscal charges -- -- -- -- --
Total expenditures 34,146,274 35,863,302 36,272,579 37,194,746 40,665,350 Excess (deficiency) revs over (under) expds 9,148,752 11,733,750 7,281,545 14,699,749 19,509,944 Other financing sources(uses)
Sale of property -- -- -- -- --
Transfers in 343,493 94,070 2,875,293 372,846 202,302
Transfers out(3)(4) (5) (9,820,181) (17,815,033) (6,554,584) (10,859,767) (18,475,345) Proceeds from sale of capital assets -- -- -- 41 524
Total other financing sources (9,476,688) (17,720,963) (3,679,291) (10,486,880) (18,272,519) Net Change in fund balances (327,936) (5,987,213) 3,602,254 4,212,869 1,237,425 Beginning of year 31,136,430 30,808,494 24,821,281 28,423,535 33,384,636(6) End of year $30,808,494 $24,821,281 $28,423,535 $32,636,404 $34,622,061 _____________________
(1) This table includes the City’s primary General Fund, Measure S Sales Tax general fund and certain other minor funds consolidated with the General Fund for financial statements presentation purposes. Measure S Sales Tax went into effect on April 1, 2021. (2) 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 2017-18 through 2021-22, Measure P revenues were $3,307,933, $3,435,411, $2,764,825, $3,234,866 and $3,424,163, respectively. (3) Transfers out consist of transfers from the General Fund to other City funds. The City typically transfers annually approximately $4 million to debt service funds, 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. (4) 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. (5) The increase in Transfers Out in 2021-22 is due to an additional $8.6 million transfer to the long-term capital improvement fund and $1m to vehicle replacement funds from a new dedicated revenue source, Measure S Sales Tax, that took full effect in 2021-22. 711
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(6) Beginning Fund Balance was restated for Fiscal Year 2021-22 to recognize fiscal year 2021 sales tax revenues of $748,232 collected in fiscal year 2022.
Source: City of South Lake Tahoe audited financial statements for fiscal years 2017-18 through 2021-22.
TABLE 11
City of South Lake Tahoe
General Fund Balance Sheets
Fiscal Years 2017-18 through 2021-22
2017-18 2018-19 2019-20 2020-21 2021-22
Assets
Cash and investments $24,695,057 $17,636,497 $20,471,033 $25,657,208 $28,661,611 Accounts receivables - net 3,755,830 3,683,783 4,479,512 3,732,545 6,930,189 Interest receivable 232,007 310,118 116,516 42,555 245,057 Due from other funds 156,412 288,753 63,840 481,513 414,126 Prepaid items 138,389 121,406 137,094 114,910 140,036
Inventory 222,455 211,010 230,159 238,298 253,071
Land hand for resale 1,000,000 1,000,000 1,225,000 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 34,838,777 27,890,194 31,361,781 36,513,017 42,507,717 Liabilities
Accounts payable 1,479,061 968,762 961,483 1,334,556 1,389,033 Accrued expenditures 987,781 548,453 366,439 253,890 1,157,989 Deposits 1,449,002 1,403,299 1,385,122 1,733,268 1,980,555 Due to developers 114,439 148,399 225,202 465,255 513,414 Unearned revenue -- -- -- 89,644 2,844,665
Total Liabilities 4,030,283 3,068,913 2,938,246 3,876,613 7,885,656 Fund Balances
Nonspendable 5,999,471 5,971,043 6,230,880 6,216,835 6,256,734 Restricted 750,000 750,000 750,000 750,000 --
Committed -- -- -- -- 500,000
Assigned 448,767 607,125 350,876 788,610 --
Unassigned 23,610,256 17,493,113 21,091,779 24,880,959 27,865,327 Total Fund Balance 30,808,494 24,821,281 28,423,535 32,636,404 34,622,061 Total Liabilities & Fund Balance $34,838,777 $27,890,194 $31,361,781 $36,513,017 $42,507,717 _____________
Source: City of South Lake Tahoe audited Financial Statements for fiscal years 2017-18 through 2021-22.
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 712
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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.
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. 713
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See Note 11 to the City’s audited financial statements (included as APPENDIX A) for additional details regarding the City’s Risk Management.
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, 2022 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, 2021 - June 30, 2022 10.670% 10.670%
July 1, 2022 - September 30, 2022 10.360% 10.360%
The Safety Plans’ provisions and benefits in effect at September 30, 2022 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, 2021 - June 30, 2023 July 1, 2021 - Sept. 30, 2022 Required Employee Contribution Rates:
Classic 9.000% 9.000%
PEPRA 13.750% 13.570%
Required Employer Contributions Rates:
Classic:
Police Tier 1 25.590% 25.640%
Police Tier 2 24.360% 24.360%
Police Tier 3 22.470% 22.480%
Fire Tier 1 25.590% 25.640%
Fire Tier 2 24.360% 24.360%
Fire Tier 3 22.470% 22.480%
PEPRA:
Safety Police 13.980% 13.660%
Safety Fire 13.980% 13.660%
_____________
Source: City of South Lake Tahoe Audit Fiscal Year ended September 30, 2022.
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 2022 were $4,010,750. Total contributions made by the City to the Safety Plan during Fiscal Year 2022 were $5,074,060.
Pension Expense and Net Pension Liability. For the measurement period ended June 30, 2022, the City recognized pension expense of $4,393,973 to the Miscellaneous Plan. For the year ended September 30, 2022, the City recognized a pension expense of $3,273,067 to the 715
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Safety Plan. In addition, the City reported net pension liability, as of September 30, 2022, with respect to its Miscellaneous Plan of $40,250,897 and with respect to its Safety Plan of $50,633,357, respectively. 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.
In July 2022, the CalPERS announced a preliminary net return of -6.1% on investments for the 12-month period that ended June 30, 2022. Public agencies, including the City of South Lake Tahoe, will see the impacts of the -6.1% investment performance in their employer contribution rates for fiscal year 2024-25.
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. 716
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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, 2022. See Note 7 to the City’s audited financial statements for the fiscal year ending September 30, 2022 attached hereto as APPENDIX A for more information. Additionally, the City contemplates a fire station financing will take place in 2024 in an amount currently expected to be approximately $14,000,000.
TABLE 12
City of South Lake Tahoe
General Fund Long-Term Obligations
As of September 30, 2022
Series Debt Type Final Maturity
Initial
Par
Outstanding
Par
2012 General Fund COP 9/1/2042 $5,765,000 $4,710,000
2014 General Fund Lease 10/1/2029 2,110,000 1,242,000
2014 Pension Ob. Bonds 6/1/2027 6,950,000 6,950,000
2016A General Fund Lease 10/1/2025 10,055,000 4,870,000 Totals $24,880,000 $17,772,000
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Source: City of South Lake Tahoe.
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. The total principal remaining to be repaid on the loan as of September 30, 2022 was $4,555,000. 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, 2022 was $1,241,000.
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, 2022 was $6,950,000.
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 717
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October 1. The total principal remaining to be repaid on the bonds as of September 30, 2022 was $4,870,000.
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 August 1, 2023.
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 13
City of South Lake Tahoe
Direct and Overlapping Debt Statement
(as of August 1, 2023)
2022-23 Assessed Valuation: $6,140,255,620
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 8/1/23 Lake Tahoe Community College District 65.230% $26,587,748 Lake Tahoe Unified School District 65.230 36,841,194
South Lake Tahoe Recreational Facilities CFD No. 2000-1 73.084 1,713,717 South Tahoe Redevelopment Agency CFD No. 2001-1 100. 3,845,000 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $68,987,659
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
El Dorado County General Fund Obligations 15.074% $ 8,176,891 City of South Lake Tahoe General Fund Obligations 100. 9,351,000 (1) City of South Lake Tahoe Pension Obligation Bonds 100. 5,745,000 TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $23,272,891 OVERLAPPING TAX INCREMENT DEBT (Successor Agency): 100. % $57,970,000 COMBINED TOTAL DEBT $150,230,550 (2)
(1) Excludes issue to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations.
Ratios to 2022-23 Assessed Valuation:
Total Overlapping Tax and Assessment Debt .................1.12% Total Direct Debt ($15,096,000) ...................................0.25% Combined Total Debt.......................................................2.45% Ratios to Redevelopment Successor Agency Incremental Valuation ($596,155,474):
Total Overlapping Tax Increment Debt............................9.72% 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 719
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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 720
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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 721
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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 724
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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. 725
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Natural disasters, weather and public health emergencies can also affect tourism activity in the City, which could potentially have a material adverse impact on the City’s receipt of TOT revenues. For example, fires near to the City and/or Highway 50 (the main highway into the City) have reduced TOT revenues in the past and future similar events could result in decreased TOT revenues in the future. In addition, the COVID-19 pandemic lock-down orders reduced TOT revenues, until those orders were lifted.
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 726
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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.
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. 727
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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 1,003 structures in the mountains near the City, although it did not destroy property within the City. As a result of these fires and increased wildfire activity elsewhere in California, many insurance companies no longer offer fire insurance policies for structures in the City, resulting in significant increases in premiums for available insurance.
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.
Wildfires can make hillsides unstable, leading to potential landslide risks to areas in the City and to Highway 50, which is the main highway leading into the City.
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. 728
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Public Health Emergencies
In recent years and as a result of the COVID-19 pandemic, public health authorities have warned of threats posed by outbreaks of disease and other public health threats. Pandemic diseases arising in the future could have significant adverse health and financial impacts throughout the world, leading to loss of jobs and personal financial hardships, and/or actions by federal, State and local governmental authorities to contain or mitigate the effects of an outbreak.
There can be no assurances that future public health emergencies and/or responses intended to slow the spread of disease, such as limiting 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 the future. In addition, the City may experience increased personnel costs and/or reduced revenues due to the occurrence of future disease emergencies and the related impacts 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 729
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basis to the United States of America. The City and the Authority have made certifications and 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, 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; however, for tax years beginning after December 31, 2022, interest on the Bonds included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax. 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. Investors should consult their own financial and tax advisors to analyze the importance of these risks.
For example, federal tax legislation enacted on December 22, 2017, reduced corporate tax rates, modified individual tax rates, eliminated many deductions, and generally eliminated the tax-exempt advance refunding of tax-exempt 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.
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 730
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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 City, the Authority or the owners of the Bonds regarding the tax status of interest thereon in the event of an audit 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 731
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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 participate in the audit or 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 associated with this rating, should be obtained from S&P. Generally, a rating agency bases its 732
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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 30 of each year (based on the City’s current fiscal year-end of September 30), commencing June 30, 2024, with the report for the 2022-23 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 it has complied, in all material respects, with its continuing disclosure requirements during the past five years.
MUNICIPAL ADVISOR
The City and the Authority have retained PFM Financial Advisors LLC, 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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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, 2022
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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 20,548 as of January 1, 2023. 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 2019 through 2023, as of January 1
Year
City of
South Lake
Tahoe
El Dorado
County
State of
California
2019 22,944 189,691 39,605,361
2020 23,210 193,519 39,648,938
2021 21,100 190,561 39,286,510
2022 20,727 189,816 39,078,674
2023 20,548 189,006 38,940,231
Source: California Department of Finance, Demographic Research Unit.
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Industry and Employment
The unemployment rate in the Sacramento--Roseville--Arden-Arcade MSA was 3.8 percent in April 2023, down from a revised 4.4 percent in March 2023, and above the year-ago estimate of 3.4 percent. This compares with an unadjusted unemployment rate of 4.3 percent for California and 3.1 percent for the nation during the same period. The unemployment rate was 3.6 percent in El Dorado County, 3.3 percent in Placer County, 3.9 percent in Sacramento County, and 4.3 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 2018 through 2022
(March 2022 benchmark)
2018 2019 2020 2021 2022
Civilian Labor Force (1) 1,088,500 1,101,200 1,095,600 1,107,800 1,124,500 Employment 1,047,200 1,061,100 998,400 1,036,700 1,082,500 Unemployment 41,200 40,100 97,200 71,100 42,000
Unemployment Rate 3.8% 3.6% 8.9% 6.4% 3.7%
Wage and Salary Employment:
(2)
Agriculture 9,100 8,700 8,300 9,000 8,600
Mining and Logging 400 500 500 500 500
Construction 64,500 69,400 70,200 74,900 76,800
Manufacturing 36,000 36,800 36,100 37,700 40,300
Wholesale Trade 28,400 28,600 26,600 26,900 28,300
Retail Trade 102,000 100,500 95,100 100,600 100,800
Transportation, Warehousing, Utilities 29,500 32,200 34,300 37,500 40,500 Information 12,400 11,900 10,200 10,100 10,500
Financial Activities 53,500 52,500 51,700 51,800 52,300 Professional and Business Services 136,000 137,300 133,500 140,600 147,500 Educational and Health Services 159,800 166,600 164,000 168,800 175,400 Leisure and Hospitality 106,200 109,600 83,900 93,600 108,700 Other Services 34,200 35,400 31,000 33,300 36,100
Federal Government 14,100 14,200 14,800 14,500 14,300
State Government 120,400 121,900 121,700 127,300 128,700 Local Government 103,500 105,300 98,900 98,400 102,900
Total all Industries (3) 1,009,900 1,031,300 980,700 1,025,400 1,072,300 (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. 738
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Principal Employers
The following table lists the principal employers within the City for Fiscal Year 2021-22.
CITY OF SOUTH LAKE TAHOE
Principal Employers
Fiscal Year 2021-22
Employer Name
No. of
Employees
Barton Memorial Hospital 907
Lake Tahoe Unified School District 360
El Dorado County 270
Raley’s Supermarket 241
City of South Lake Tahoe 207
Marriott Corporation 185
Lake Tahoe Community College 178
Lake Tahoe Resort Hotel 125
South Tahoe Public Utility District 119
United States Forest Service 100
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 2023.
COUNTY OF EL DORADO
Major Employers
As of June 2023
(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 Lake Tahoe 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's 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
Zephyr Cove Resort South Lake Tahoe Marinas
Source: State of California Employment Development Department, extracted from The America’s Labor Market Information System (ALMIS) Employer Database, 2023 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 2019 through 2023.
CITY OF SOUTH LAKE TAHOE, EL DORADO COUNTY,
STATE OF CALIFORNIA AND UNITED STATES
EFFECTIVE BUYING INCOME
As of January 1, 2019 through 2023
Year Area
Total Effective
Buying Income
(000’s Omitted)
Median Household
Effective
Buying Income
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
2023 City of South Lake Tahoe $760,840 $56,424
El Dorado County 8,459,722 81,743
California 1,461,799,662 77,175
United States 11,454,846,397 65,326
Source: Claritas, LLC.
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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 2022 in the City were reported to be $543,904,529 a 30.14% increase over the total taxable sales of $417,952,482 reported during calendar year 2021.
CITY OF SOUTH LAKE TAHOE
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2018 through 2022 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
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
2022 664 456,236 1,087 543,905
Source: State Department of Tax and Fee Administration.
Total taxable sales during calendar year 2022 in the County were reported to be $3,363,404,562, a 7.78% increase over the total taxable sales of $3,120,528,472 reported during calendar year 2021.
COUNTY OF EL DORADO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Calendar Years 2018 through 2022 (Dollars in Thousands) Retail Stores Total All Outlets
Number
of Permits
Taxable
Transactions
Number
of Permits
Taxable
Transactions
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 3,120,528
2022 3,821 2,422,073 6,664 3,363,405
Source: State Department of Tax and Fee Administration. 742
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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 2018 through 2022
(Dollars in Thousands)(1)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $9,787.6 $6,501.5 $14,964.3 $16,685.2 $13,155.2 New Multi-family 2,232.8 14,250.0 2,621.6 0.0 34,910.0
Res. Alterations/Additions 9,253.5 9,025.9 9,706.7 12,444.8 13,136.0 Total Residential 21,273.9 29,777.4 27,292.6 29,130.0 61,201.2 New Commercial 12,208.2 1,832.6 4,857.0 9,084.9 60.0
New Industrial 0.0 0.0 0.0 0.0 0.0
New Other 1,358.9 273.4 603.2 788.9 1,151.3
Com. Alterations/Additions 5,474.6 7,434.0 14,113.2 8,696.4 18,291.5 Total Nonresidential 19,041.7 9,540.0 19,573.4 18,570.2 19,502.8 New Dwelling Units
Single Family 27 15 34 36 26
Multiple Family 4 18 7 0 83
TOTAL 31 33 41 36 109
(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 2018 through 2022
(Dollars in Thousands)(1)
2018 2019 2020 2021 2022
Permit Valuation
New Single-family $221,702.9 $404,049.4 $271,705.8 $272,949.4 $272,193.6 New Multi-family 2,458.5 14,250.0 2,621.6 0.0 34,910.0
Res. Alterations/Additions 50,395.3 39,291.3 30,270.3 42,208.2 58,069.1 Total Residential 274,556.7 457,590.7 304,597.7 315,157.6 365,172.7 New Commercial 37,141.5 42,622.0 16,917.1 37,727.2 33,737.9 New Industrial 1,024.1 0.0 0.0 0.0 0.0
New Other 48,961.4 35,357.3 28,555.7 44,229.5 46,142.7
Com. Alterations/Additions 21,186.3 27,883.6 24,950.1 23,256.9 46,318.6 Total Nonresidential 108,313.3 105,862.9 70,422.9 105,213.6 126,199.2 New Dwelling Units
Single Family 613 595 649 697 626
Multiple Family 6 18 7 0 83
TOTAL 619 613 656 697 709
(1) Totals may not foot due to rounding.
Source: Construction Industry Research Board, Building Permit Summary. 743
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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. 744
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APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D
FORM OF CONTINUING DISCLOSURE CERTIFICATE
$____________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, 2023 Series A
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 August 1, 2023 (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. 746
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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 30, 2024, with the report for Fiscal Year 2022-23 (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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(i) Principal amount of Bonds outstanding.
(ii) Balance in each fund under the Indenture as of August 2 preceding the filing of the Annual Report.
(iii) General fund statement of General Fund revenues and expenditures and Balance Sheet for the most recent fiscal year in substantially the form of Table 10 and Table 11.
(iv) General fund budgeted revenues, sources and uses of funds in substantially the form of Table 1.
(v) General fund revenues by source in substantially the form of Table 2. (vi) Assessed valuation of property in the City in substantially the form of Table 7.
(vii) Principal secured taxpayers in substantially the form of Table 8. (ix) Actual Transient Occupancy Tax revenues received in the most recently ended fiscal year, in substantially the form of Table 3. (x) Top ten Transient Occupancy Tax generators, in substantially the form of Table 4.
(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 748
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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.
(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. 749
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(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.
(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; 750
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(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.
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.
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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. (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: ________________, 2023
CITY OF SOUTH LAKE TAHOE
By
Name:_____________
Title:_____________
AGREED AND ACCEPTED:
The Bank of New York Mellon Trust
Company, N.A., as Dissemination Agent
By: ___________________________
Name: ________________________
Title: __________________________
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APPENDIX E
FORM OF OPINION OF BOND COUNSEL
___, 2023
South Tahoe Joint Powers Financing Authority
South Lake Tahoe, California
Opinion of Bond Counsel
with reference to
$[principal amount]
South Tahoe Joint Powers Financing Authority
Lease Revenue Bonds
2023 Series A
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 August 1, 2023 (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 August 1, 2023 (the “Lease”), by and between the City of South Lake Tahoe (the “City”) and the Authority, (iv) the Sublease, dated as of August 1, 2023 (the “Sublease”), by and between the Authority and the City, (v) the Assignment Agreement, dated as of August 1, 2023 (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 multigenerational 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. 753
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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 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 an item of tax preference for purposes of the federal individual alternative minimum tax, although we observe that, for tax years beginning after December 31, 2022, such interest included in adjusted financial statement income of certain corporations is not excluded from the federal corporate alternative minimum tax.
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. 754
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Except as stated in the foregoing paragraphs numbered 4 and 5 and the paragraph immediately following paragraph 5, we express no opinion as to any federal or state tax consequences of the ownership or disposition of the Bonds.
The opinions expressed herein 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 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,
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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 756
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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 757
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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.
758
Quint & Thimmig LLP 07/13/22
07/25/22
06/30/23
07/31/23
08/01/23
19107.19
$__________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, 2023 Series A
BOND PURCHASE AGREEMENT
August 16, 2023
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, 2023 Series A (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 8, 2023 (the “Authority Resolution”), and an Indenture of Trust, dated as of August 1, 2023 (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 August 1, 2023 (the “Lease Agreement”).
The Leased Property will be subleased by the Authority to the City pursuant to the Sublease, dated as of August 1, 2023 (the “Sublease”), by and between the Authority and the City.
Pursuant to an Assignment Agreement, dated as of August 1, 2023 (the “Assignment 759
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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 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.
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A Preliminary Official Statement of the City and the Authority, dated August 9, 2023 (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 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 761
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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 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, 762
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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 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 8, 2023, 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 763
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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. (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, 764
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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 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 765
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business in connection with any such qualification or determination in any jurisdiction, and the Underwriter shall bear all costs in connection with the foregoing. (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 767
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contemplated by the Authority Documents, including all filings with the California Secretary of 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, 768
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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.
(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 August 30, 2023, 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 769
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Underwriter shall wire to the Trustee Federal Reserve Bank Funds in the amount of the purchase price of the Bonds.
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;
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(viii) A certificate or certificates of the City, dated the Closing Date, to the effect that:
(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, 2022, 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 2021-22 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:
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(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 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) 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. (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 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.
(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:
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(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.
(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 773
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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 E 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 FOR THE BONDS” and “TAX MATTERS” and in APPENDIX C–”SUMMARY OF PRINCIPAL LEGAL DOCUMENTS” and
APPENDIX E—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, (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 the Closing Date (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 774
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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 constitute a legal, valid and binding obligation of the Trustee enforceable in accordance with its terms as to or against the Trustee (subject to bankruptcy, insolvency or other laws affecting the enforcement of creditors’ rights generally and by the supplication of equitable remedied, if equitable remedies are sought); (C) The Bonds have been duly authenticated by an authorized officer of the Trustee and delivered to the Underwriter pursuant to direction from the Authority;
(D) To the officer’s knowledge, 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 775
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materially impair the ability of the Trustee to perform its obligations under the Indenture;
(E) To the officer’s 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 authentication or delivery of the Bonds by the Trustee, the application of the proceeds thereof by the Trustee in accordance with the Indenture, or in any way contesting or affecting the validity or enforceability of the Bonds or the Indenture; (F) To the officer’s knowledge, the execution and delivery of the Indenture by the Trustee 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) To the officer’s knowledge, 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 by the Trustee, the execution and delivery of the Indenture by the Trustee, 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:
(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
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(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:
(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 777
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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 (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 778
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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 PFM Financial Advisors LLC, 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 Way, 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. 780
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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.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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.
Very truly yours,
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By
Managing Director
SOUTH TAHOE JOINT POWERS
FINANCING AUTHORITY
By
Executive Director
CITY OF SOUTH LAKE TAHOE
By
City Manager
Time of Execution:
781
Exhibit A
EXHIBIT A
MATURITIES, PRINCIPAL AMOUNTS,
INTEREST RATES, PRICES AND YIELDS
$____________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, 2023 Series A
Maturity Principal Interest
(October 1) Amount Rate Yield Price
c Priced to the 10/1/20__ par call date.
T Term maturity
Redemption Provisions
Special Mandatory Redemption from Insurance or Condemnation Proceeds The Bonds shall be subject to redemption, in whole or in part, on any date, in denominations of $5,000 or any integral multiple thereof, from and to the extent of: (i) Net Insurance Proceeds received with respect to all or a portion of the Leased Property, deposited by the Trustee in the Redemption Fund pursuant to the Indenture, and (ii) eminent domain proceeds received pursuant to the Sublease, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
Optional Redemption
The Bonds maturing on or after October 1, ____, are subject to optional redemption, in whole or in part, on any date on or after October 1, ____, in denominations of $5,000 or any integral multiple thereof, from and to the extent of prepaid Base Rental Payments paid pursuant to the Sublease, at a Redemption Price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium.
782
Exhibit A
Mandatory Sinking Fund Redemption
The Bonds with a stated maturity on October 1, ____, are subject to mandatory sinking fund redemption in part (by lot) on each October 1 on and after October 1, ____, in integral multiples of $5,000 at a Redemption Price equal to the principal amount thereof plus accrued interest to the date fixed for redemption, without premium, in accordance with the following schedule:
Mandatory Sinking Mandatory
Account Payment Dates Sinking Account
(October 1) Payments
† Maturity
783
Exhibit B
EXHIBIT B
ISSUE PRICE CERTIFICATE
$___________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, 2023 Series A
The undersigned, on behalf of Stifel, Nicolaus & Company, Incorporated, as underwriter (“Stifel”), based on the information available to it, hereby certifies as set forth below with respect to the sale and issuance of the above-captioned obligations (the “Bonds”).
I. General
1. Stifel and the South Tahoe Joint Powers Financing Authority and City of South Lake Tahoe (collectively, the “Issuer”) have executed a bond purchase agreement in connection with the Bonds on the Sale Date. Stifel has not modified the bond purchase agreement since its execution on the Sale Date.
II. Price
1. As of the date of this certificate, for each Maturity of the Bonds, the first price at which at least 10% of such Maturity of the Bonds was sold to the Public is the respective price listed in Schedule A.
III. Defined Terms
1. Maturity means Bonds with the same credit and payment terms. Bonds with different maturity dates, or Bonds with the same maturity date but different stated interest rates, are treated as separate maturities.
2. Public means any person (including an individual, trust, estate, partnership, association, company, or corporation) other than an Underwriter or a Related Party to an Underwriter.
3. A person is a “Related Party” to an Underwriter if the Underwriter and the person 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).
4. Sale Date means the first day on which there is a binding contract in writing for the sale of a Maturity of the Bonds. The Sale Date of the Bonds is August 16, 2023.
5. Underwriter means (i) any person that agrees pursuant to a written contract with the Issuer (or with Stifel to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public).
All terms not defined herein shall have the same meanings as in the Tax Certificate with respect to the Bonds, to which this Certificate is attached.
The Issuer may rely on the statements made herein in connection with its efforts to comply with the conditions imposed by the Internal Revenue Code of 1986, as amended (the “Code”). Bond Counsel may also rely on this Certificate for purposes of its opinion regarding the treatment of interest on the 784
Exhibit B
Bonds as excludable from gross income for federal income tax purposes. However, notwithstanding the foregoing, we remind you that Stifel is not an accountant or actuary, nor is Stifel engaged in the practice of law. Accordingly, while Stifel believes the calculations described above to be correct, it does not warrant their validity for purposes of Sections 103 and 141 through 150 of the Code or make any representation as to the legal sufficiency of the factual matters set forth herein. Except as expressly set forth above, the certifications set forth herein may not be relied upon or used by any third party or for any other purpose.
Dated: August 30, 2023
STIFEL, NICOLAUS & COMPANY,
INCORPORATED, as Underwriter
By
Managing Director
785
Exhibit B
SCHEDULE A TO ISSUE PRICE CERTIFICATE
$_________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
Lease Revenue Bonds, 2023 Series A
Hold-theOffering General Maturity
Price Rule Date Principal Interest
Maturities Maturities (October 1) Amount Rate Price
c Priced to the 10/1/20__ par call date.
T Term maturity
786
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==================================================================
INDENTURE
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 August
Relating to
$[principal amount]
South Tahoe Joint Powers Financing Authority
Lease Revenue Bonds
2023 Series A
================================================================== 787
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.......................................................................................................2 SECTION 1.01 Definitions.....................................................................................2 SECTION 1.02 Rules of Construction..................................................................13 SECTION 1.03 Equal Security..............................................................................13 ARTICLE II AUTHORIZATION ..............................................................................................13 SECTION 2.01 Authorization ..............................................................................13 SECTION 2.02 Terms of Bonds ...........................................................................14 SECTION 2.03 Redemption of Bonds .................................................................15 SECTION 2.04 Form of Bonds.............................................................................17 SECTION 2.05 Execution of Bonds .....................................................................18 SECTION 2.06 Transfer of Bonds........................................................................18 SECTION 2.07 Exchange of Bonds......................................................................19 SECTION 2.08 Temporary Bonds........................................................................19 SECTION 2.09 Registration Books ......................................................................19 SECTION 2.10 Bonds Mutilated, Lost, Destroyed or Stolen...............................19 SECTION 2.11 Book-Entry System......................................................................20 ARTICLE III ISSUANCE .........................................................................................................22 SECTION 3.01 Issuance of Bonds .......................................................................22 SECTION 3.02 Application of Proceeds of Sale of Bonds ...................................22 SECTION 3.03 Costs of Issuance Fund................................................................22 SECTION 3.04 Project Fund................................................................................22 SECTION 3.05 Validity of Bonds .........................................................................23 SECTION 3.06 Additional Bonds.........................................................................23 ARTICLE IV REVENUES ........................................................................................................24 SECTION 4.01 Pledge of Revenues.....................................................................24 SECTION 4.02 Lease Revenue Fund ...................................................................25 SECTION 4.03 Redemption Fund .......................................................................26 SECTION 4.04 Application of Net Proceeds .......................................................27 SECTION 4.05 Investments.................................................................................28 SECTION 4.06 Valuation and Disposition of Investments..................................29 ARTICLE V COVENANTS OF THE AUTHORITY.....................................................................29 SECTION 5.01 Punctual Payment.......................................................................29 SECTION 5.02 Extension of Payment of Bonds..................................................29 SECTION 5.03 Against Encumbrances................................................................29 SECTION 5.04 Power to Issue Bonds and Make Pledge and
Assignment..................................................................................30 SECTION 5.05 Accounting Records and Financial Statements...........................30 SECTION 5.06 Additional Obligations ................................................................30 SECTION 5.07 Sublease ......................................................................................30 SECTION 5.08 Tax Covenants.............................................................................31 SECTION 5.09 Continuing Disclosure .................................................................31 788
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SECTION 5.10 Further Assurances .....................................................................32 ARTICLE VI THE TRUSTEE....................................................................................................32 SECTION 6.01 Appointment of Trustee .............................................................32 SECTION 6.02 Acceptance of Trusts...................................................................32 SECTION 6.03 Fees, Charges and Expenses of Trustee......................................36 SECTION 6.04 Notice to Bond Owners of Default..............................................36 SECTION 6.05 Intervention by Trustee ..............................................................36 SECTION 6.06 Removal of Trustee.....................................................................37 SECTION 6.07 Resignation by Trustee ...............................................................37 SECTION 6.08 Appointment of Successor Trustee.............................................37 SECTION 6.09 Merger or Consolidation.............................................................37 SECTION 6.10 Concerning any Successor Trustee .............................................37 SECTION 6.11 Appointment of Co-Trustee ........................................................38 SECTION 6.12 Indemnification...........................................................................38 SECTION 6.13 Trustee Acceptance of Electronic Instructions ...........................39 SECTION 6.14 Direction to Execute Assignment Agreement.............................40 ARTICLE VII MODIFICATION AND AMENDMENT OF THE INDENTURE................................40 SECTION 7.01 Amendment of Indenture...........................................................40 SECTION 7.02 Effect of Supplemental Indenture ..............................................41 SECTION 7.03 Endorsement or Replacement of Bonds After
Amendment ................................................................................42 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS ..............................42 SECTION 8.01 Events of Default.........................................................................42 SECTION 8.02 Remedies.....................................................................................43 SECTION 8.03 Application of Revenues and Other Funds after Default.........................................................................................43 SECTION 8.04 Power of Trustee to Control Proceedings...................................44 SECTION 8.05 Appointment of Receivers ..........................................................44 SECTION 8.06 Non-Waiver.................................................................................44 SECTION 8.07 Rights of Bond Owners ...............................................................45 SECTION 8.08 Termination of Proceedings........................................................45 ARTICLE IX MISCELLANEOUS..............................................................................................46 SECTION 9.01 Limited Liability of Authority ......................................................46 SECTION 9.02 Benefits of Indenture Limited.....................................................46 SECTION 9.03 Discharge of Indenture ...............................................................46 SECTION 9.04 Trustee’s Additional Acknowledgment of Certain Provisions of the Sublease ..........................................................47 SECTION 9.05 Successor Is Deemed Included in All References to Predecessor.................................................................................47 SECTION 9.06 Content of Certificates and Opinions .........................................47 SECTION 9.07 Execution of Documents by Bond Owners .................................48 789
TABLE OF CONTENTS (cont.)
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SECTION 9.08 Disqualified Bonds ......................................................................48 SECTION 9.09 Waiver of Personal Liability ........................................................48 SECTION 9.10 Partial Invalidity ..........................................................................48 SECTION 9.11 Destruction of Canceled Bonds...................................................49 SECTION 9.12 Funds and Accounts ....................................................................49 SECTION 9.13 Payment on Business Days .........................................................49 SECTION 9.14 Notices ........................................................................................49 SECTION 9.15 Unclaimed Moneys .....................................................................50 SECTION 9.16 Governing Law ............................................................................50 SECTION 9.17 Execution in Counterparts ..........................................................50 EXHIBIT A – FORM OF BOND........................................................................................................A-1 EXHIBIT B – FORM OF REQUISITION (COSTS OF ISSUANCE FUND).............................................. B-1 EXHIBIT C – FORM OF REQUISITION (PROJECT FUND) ................................................................ C-1 790
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12463-0017\2678945
INDENTURE
This Indenture, dated as of August 1, 2023, is made and entered into by and between the South Tahoe Joint Powers Financing Authority, a joint powers authority organized and existing under 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 the laws of the United States of America, being qualified to accept and administer the trusts hereby created (the “Trustee”).
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 has determined to issue its Lease Revenue Bonds, 2023 Series A (the “Bonds”) to assist the City with financing the cost of construction of a new multigenerational recreation center.
C. In conjunction with the issuance of the Bonds, the Authority and the City are entering into: (1) the Lease Agreement, dated as August 1, 2023, by and between the City, as the lessor, and the Authority, as the lessee, and (2) the Sublease, dated as August 1, 2023 (the “Sublease”), by and between the Authority, as the sublessor, and the City, as the sublessee.
D. The Authority has assigned, without recourse, all its rights to receive “Base Rental” payments (the “Base Rental Payments”) to be paid by the City under and pursuant to the Sublease and certain other rights to the Trustee pursuant to an Assignment Agreement, dated as of even date herewith, by and between the Authority and the Trustee.
E. Subject to and in accordance with the terms of this Indenture, the Base Rental Payments to be received by the Trustee shall be held in a special fund pledged to the payment of the debt service of the Bonds.
F. The Bonds shall be issued pursuant to and secured by this Indenture in the manner provided herein.
G. In order to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and to secure the payment of the principal thereof and interest thereon, and premium, if any, the Authority has authorized the execution and delivery of this Indenture. 791
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H. The Authority has determined that all acts and proceedings required by law necessary to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth in accordance with its terms, have been done and taken, and the execution and delivery of the Indenture have been in all respects duly authorized.
NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the Owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:
ARTICLE I
DEFINITIONS; EQUAL SECURITY
SECTION 1.01 Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, request or other document herein mentioned have the meanings herein specified.
“Act” means Articles 1 through 4 (commencing with Section 6500), Chapter 5, Division 7, Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.
“Additional Bonds” means additional bonds payable from and secured by Revenues on parity with all other Outstanding Bonds issued pursuant to and in accordance with Section 3.06 hereof.
“Additional Rental Payments” means the additional rental payable by the City under and pursuant to Section 3(b) of the Sublease.
“Annual Debt Service” means, with respect to any Bond Year, the sum obtained by totaling the following:
(a) The principal amount of all Outstanding Bonds maturing in such Bond Year; and
(b) The interest which would be due during such Bond Year on the aggregate principal amount of Bonds which would be Outstanding in such Bond Year if the Bonds Outstanding on the date of such computation were to mature in accordance with the applicable maturity schedule. At the time and for the purpose of making such computation, the amount 792
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of Bonds already retired in advance of the above- mentioned schedule or schedules shall be deducted pro rata from the remaining amounts thereon.
“Assignment Agreement” means the Assignment Agreement, dated as of August 1, 2023, by and between the Authority and the Trustee (as described in Section 4.01), as the same may be amended, supplemented or otherwise modified from time to time. “Authority” means the South Tahoe Joint Powers Financing Authority, a joint powers authority duly organized and existing under the JPA Agreement and the laws of the State. “Authority Governing Board” means the governing body of the Authority. “Average Annual Debt Service” means the average Annual Debt Service over all Bond Years.
“Base Rental” or “Base Rental Payments” means the base rental payable by the City under and pursuant to Section 3(a) of the Sublease.
“Bond Counsel” means any attorney or firm of attorneys appointed by or acceptable to the Authority of nationally recognized expertise in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Code. “Bond Law” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 of the Act, as in existence on the Closing Date or as thereafter amended from time to time. “Bond Year” means each twelve-month period extending from October 2 in one calendar year to October 1 of the succeeding calendar year, both dates inclusive, except that the first Bond Year shall be the period from the Closing Date to October 1, 2023. “Bonds” means the South Tahoe Joint Powers Financing Authority, Lease Revenue Bonds, 2023 Series A, issued pursuant to this Indenture. “Business Day” means a day other than (i) a Saturday or Sunday, (ii) a day on which commercial banks in the city in which the Trustee maintains its Trust Office are authorized or required by law or executive order to close or (iii) a day on which the New York Stock Exchange is closed.
“Certificate of the Authority” means a certificate in writing signed by the Chair, Vice Chair, Executive Director, or the Controller of the Authority or by any other officer of the Authority duly authorized for that purpose by a resolution adopted by the Authority Commission and filed with the Trustee.
“Certificate of the City” means a certificate in writing signed by the Mayor, Mayor Pro Tem, the City Manager, or the Director of Finance, or by any other officer of the City duly authorized for that purpose.
793
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“City” means the City of South Lake Tahoe, California.
“Closing Date” means [August 30], 2023.
“Code” means the Internal Revenue Code of 1986, as amended, and any regulations promulgated thereunder.
“Continuing Disclosure Agreement” means the continuing disclosure undertaking of the City relating to the Bonds in connection with Rule 15c2-12(b)(5) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as originally executed and as the same may be amended and supplemented from time to time in accordance with the terms thereof.
“Costs of Issuance” means all expenses incurred in connection with the authorization, issuance, sale and delivery of the Bonds, including but not limited to all compensation, fees and expenses (including but not limited to fees and expenses for legal counsel) of the Authority, the City and the Trustee, compensation to any financial consultants or underwriters, legal fees and expenses, filing and recording costs, costs of obtaining title insurance with respect to the Leased Properties, costs relating to conveyance of the Leased Properties, rating agency fees, costs of preparation and reproduction of documents, costs of printing, bond insurance premiums and fees and costs for any guaranty, surety bond, letter of credit or other credit facility.
“Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.03.
“Depository” means The Depository Trust Company, New York, New York, and its successors and assigns as securities depository for the Bonds, or any other securities depository acting as Depository under Section 2.11.
“Event of Default” means any of the events described in Section 8.01. “Federal Securities” means any direct, noncallable obligations of the United States of America (including obligations issued or held in book-entry form on the books of the Department of the Treasury of the United States of America), or other noncallable obligations for which the faith and credit of the United States of America are pledged for the payment of principal and interest.
“Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Code) and, otherwise, the term “fair market value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if: (i) the investment is a certificate of deposit the value of which is determined in accordance with applicable regulations under the Code, (ii) the 794
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investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) the value of which is determined in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security-State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is the Local Agency Investment Fund of the State, but only if at all times during which the investment is held its yield is reasonably expected to be equal to or greater than the yield on a reasonably comparable direct obligation of the United States of America. “Fiscal Year” means any twelve-month period extending from October 1 in one calendar year to September 30 of the succeeding calendar year, both dates inclusive, or any other twelve-month period selected and designated by the Authority as its official fiscal year period. “Indenture” means this Indenture, as originally executed or as it may from time to time be amended or supplemented in accordance herewith.
“Independent Certified Public Accountant” means any certified public accountant or firm of certified public accountants appointed and paid by the Authority, and who, or each of whom: (i) is in fact independent and not under domination of the Authority or the City; (ii) does not have any substantial interest, direct or indirect, in the Authority or the City; and (iii) is not connected with the Authority or the City as an officer or employee of the Authority or the City but who may be regularly retained to make annual or other audits of the books of or reports to the Authority or the City.
“Information Services” means the Electronic Municipal Market Access System (referred to as “EMMA”), a facility of the Municipal Securities Rulemaking Board, at www.emma.msrb.org; provided, however, in accordance with then current guidelines of the Securities and Exchange Commission, Information Services shall mean such other organizations providing information with respect to called bonds as the Authority may designate to the Trustee in writing.
“Interest Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(a).
“Interest Payment Date” means April 1 and October 1 of each year, commencing [April 1, 2024].
“JPA Agreement” means the Joint Exercise of Powers Agreement, dated as of January 3, 1989, as amended by Amendment No. 1, dated as of March 1, 2022, entered into under the Act by the City and the Parking Authority of the City of South Lake Tahoe, together with any amendments thereof and supplements thereto.
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“Lease” means the Lease Agreement, dated as of even date herewith, by and between the City, as the lessor, and the Authority, as the lessee, as the same may be amended, supplemented or otherwise modified from time to time.
“Lease Revenue Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.02.
“Leased Properties” has the meaning given to such term in the Sublease. “Maximum Annual Debt Service” means, with respect to the Bonds, the largest Annual Debt Service during the period from the date of calculation through the final maturity date of any Outstanding Bonds.
“Moody’s” means Moody’s Investors Service, Inc., and its successors and assigns, or if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Authority.
“Net Proceeds” means any insurance or condemnation proceeds, paid with respect to the Leased Properties remaining after payment therefrom of all expenses in the collection thereof.
“Nominee” means the nominee of the Depository, which initially will be Cede & Co., as determined from time to time pursuant to Section 2.11.
“Original Purchaser” means, Stifel Nicolaus & Company, Incorporated. “Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 9.08) all Bonds theretofore executed, issued and delivered by the Authority under this Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section
9.03; and
(c) Bonds in lieu of which or in substitution for which other Bonds shall have been executed, issued and delivered pursuant to this Indenture or any Supplemental Indenture. “Owner” or “Bond Owner,” when used with respect to any Bond, means the person in whose name the ownership of such Bond shall be registered on the Registration Books. “Participants” means those broker-dealers, banks and other financial institutions from time to time for which the Depository holds Bonds as securities depository. 796
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“Permitted Investments” mean any of the following obligations if and to the extent that they are permissible investments of funds of the Authority and/or the City, as applicable (provided, that the Trustee shall be entitled to rely upon a Certificate of the Authority as conclusive certification to the Trustee that the investments described therein are permissible investment of funds of the Authority):
(a) Direct obligations of the United States (including obligations issued or held in book-entry form on the books of the Department of the Treasury) or obligations the principal of and interest on which are unconditionally guaranteed by the United States of America.
(b) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States (stripped securities are only permitted if they have been stripped by the agency itself):
1. Farmers Home Administration (“FmHA”) Certificates of beneficial ownership
2. Federal Housing Administration Debentures (“FHA”)
3. General Services Administration Participation certificates
4. Government National Mortgage Association (“GNMA”)
GNMA—guaranteed mortgage-backed bonds
GNMA—guaranteed pass-through obligations (participation certificates)
5. United States Maritime Administration Guaranteed Title XI financing
6. United States Department of Housing and Urban Development Project Notes Local Authority Bonds
(c) Bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following non-full faith and credit United States government agencies (stripped securities are only permitted if they have been stripped by the agency itself):
1. Federal Home Loan Bank System
Senior debt obligations (consolidated debt obligations)
2. Federal Home Loan Mortgage Corporation (“FHLMC”)
Participation Certificates
Senior debt obligations
3. Federal National Mortgage Association (“FNMA”)
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Mortgage-backed securities and senior debt obligations (excluded are stripped mortgage securities which are valued greater than par on the portion of unpaid principal)
4. Student Loan Marketing Association (“SLMA”)
Senior debt obligations
5. Resolution Funding Corporation (“REFCORP”)
Only the interest component of REFCORP strips which have been stripped by request to the Federal Reserve Bank of New York in book-entry form are acceptable
6. Farm Credit System
Consolidated system-wide bonds and notes
(d) Money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by S&P of “AAAm-G,” “AAA-m” or “AA-m” and if rated by Moody’s rated “Aaa,” “Aa1” or “Aa2,” including funds for which the Trustee or any of its affiliates (including any holding company, subsidiaries, or other affiliates) receives and retains a fee for services provided to the fund, whether as a custodian, transfer agent, investment advisor or otherwise. (e) Certificates of deposit secured at all times by collateral described in (a) and/or (b) above. Such certificates must have a year or less maturity. Such certificates must be issued by commercial banks (including affiliates of the Trustee), savings and loan associations or mutual savings banks whose short term obligations are rated “A-1+” or better by S&P and “Prime-1” by Moody’s. The collateral must be held by a third party and the bondholders must have a perfected first security interest in the collateral. (f) Certificates of deposit, savings accounts, deposit accounts or money market deposits (including those of the Trustee and its affiliates) which are fully insured by FDIC, including BIF and SAIF.
(g) Investment agreements, including guaranteed investment contracts, forward purchase agreements and reserve fund put agreements. (h) Commercial paper rated, at the time of purchase, “Prime - 1” by Moody’s and “A-1+” or better by S&P.
(i) Bonds or notes issued by any state or municipality which are rated by Moody’s and S&P in one of the two highest rating categories assigned by such agencies. (j) Federal funds or bankers acceptances with a maximum term of one year of any bank (including those of the Trustee and its affiliates) which has an unsecured, uninsured and unguaranteed obligation rating of “Prime - 1” or “A3” or better by Moody’s and “A-1+” or better by S&P.
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(k) Repurchase agreements which provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date, and
1. Repurchase agreements must be between the municipal entity and a dealer bank or securities firm:
A. Primary dealers on the Federal Reserve reporting dealer list which are rated “A” or better by S&P and Moody’s, or B. Banks rated “A” or above by S&P and Moody’s.
2. The written repurchase agreements contract must include the following:
A. Securities which are acceptable for transfer are:
(1) Direct United States governments, or
(2) Federal agencies backed by the full faith and credit of the United States government (and FNMA and FHLMC)
B. The term of a repurchase agreement may be up to 30
days.
C. The collateral must be delivered to the municipal entity, trustee (if trustee is not supplying the collateral) or third party acting as agent for the trustee (if the trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities).
D. The trustee has a perfected first priority security interest in the collateral.
E. Collateral is free and clear of third-party liens and in the case of SIPC broker was not acquired pursuant to a repurchase agreement or a reverse repurchase agreement.
F. Failure to maintain the requisite collateral percentage, after a two-day restoration period, will require the Trustee to liquidate the collateral.
G. Valuation of Collateral
1. The securities must be valued weekly, marked-tomarket at current market price plus accrued interest
2. The value of collateral must be equal to 104
percent of the amount of cash transferred by the municipal entity to the dealer bank or security firm under the repurchase agreement plus accrued interest. If the value of securities held as collateral slips below 104 percent of the value of the cash 799
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transferred by municipality, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of collateral must equal 105 percent.
3. A legal opinion must be delivered to the municipal
entity to the effect that the repurchase agreement meets guidelines under state law for legal investment of public funds. (l) Pre-refunded municipal bonds rated “Aaa” by Moody’s and “AAA” by S&P. If, however, the issue is only rated by S&P (i.e., there is no Moody’s rating), then the prerefunded bonds must have been pre-refunded with cash. direct United States or United States guaranteed obligations or “AAA” rated pre-refunded municipals to satisfy this condition. (m) The Local Agency Investment Fund in the treasury of the State. “Principal Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(b).
“Projects” means the following City projects (all of which constitute “public capital improvements” as defined in the Act): (i) the construction of a new multigenerational recreation center, and (ii) such other public infrastructure improvements to be determined by the City.
“Project Costs” means, with respect to a Project, the costs, expenses and liabilities paid or incurred or to be paid or incurred by the City or the Authority, all calculated in accordance with generally accepted accounting principles, in connection with acquisition(s), financing, planning, engineering, design, construction and installation(s) relating to such Project or any portion thereof, and the obtaining of all governmental approvals, certificates, permits and licenses with respect thereto, including but not limited to (a) the costs of acquisition, renovation or construction of real or personal property or any interest therein, (b) any good faith or other similar payment or deposits, (c) the costs of any demolitions or relocation necessary in connection therewith, (d) costs of physical construction and costs incidental to such construction, renovation or acquisition, (e) all costs relating to injury and damage claims, (f) the costs of any indemnity or surety bonds and premiums on insurance, including obligations to a stock, mutual or reciprocal insurance company or exchange, (g) preliminary investigation and development costs, (h) engineering fees, contractors’ fees, legal fees and expenses, and any other fees and expenses of professional consultants and (i) the costs of labor, materials, equipment and utility services and supplies, (j) administrative and general overhead expenses and costs of keeping accounts and making reports required by the Indenture or the Sublease prior to or in connection with the completion of such Project, (k) all federal, state and local taxes and payments in lieu of taxes legally required to be paid in connection with such Project prior to or in connection with the completion of such Project. It is intended that this definition of Project Costs be broadly construed to encompass all costs, expenses and liabilities of the City and the Authority which are chargeable to the capital accounts of related Project in accordance with generally accepted accounting principles.
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“Project Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.04.
[“Qualified Reserve Account Credit Instrument” means an irrevocable standby or directpay letter of credit, surety bond or debt service reserve insurance policy issued by a commercial bank or insurance company and deposited with the Trustee pursuant to Section 4.02(c), provided that all of the following requirements are met: (i) at the time of issuance of such instrument, the long-term credit rating of such bank is within the two highest rating categories (without regard to the numerical or plus/minus modifiers) of Moody’s or S&P, or the claims paying ability of such insurance company is rated within the two highest rating categories (without regard to the numerical or plus/minus modifiers) of S&P or A.M. Best & Company, or if any of the Bonds are insured, the long-term credit rating of the claims paying ability of such insurance company is at least as high as the insured rating of the Bonds; (ii) such letter of credit, surety bond or insurance policy has a term which ends no earlier than the last Interest Payment Date of the Bonds to which the Reserve Requirement applies; (iii) such letter of credit, surety bond or insurance policy has a stated amount at least equal to the portion of the Reserve Requirement with respect to which funds are proposed to be released pursuant to Section
4.02(c); and (iv) the Trustee is authorized pursuant to the terms of such letter of credit, surety bond or insurance policy to draw thereunder amounts necessary to carry out the purposes specified in Section 4.02(c), including the replenishment of the Interest Account or the Principal Account.]
“Record Date” means, with respect to any Interest Payment Date, the fifteenth calendar day of the month immediately preceding such Interest Payment Date, whether or not such day is a Business Day.
“Redemption Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.03.
“Registration Books” means the records maintained by the Trustee pursuant to Section
2.09 for the registration and transfer of ownership of the Bonds. “Rental Payments” means collectively the Base Rental Payments and the Additional Rental Payments.
“Representation Letter” means the Blanket Issuer Letter of Representations, dated November 17, 1995, from the Authority to DTC, qualifying bonds issued by the Authority for the Depository’s book-entry system, as originally executed or as it may be supplemented or revised or replaced by a letter to a substitute depository.
“Request of the Authority” means a request in writing signed by the Chair, Vice Chair, Executive Director, or the Controller of the Authority, or by any other officer of the Authority duly authorized for that purpose by a resolution adopted by the Authority Commission and filed with the Trustee.
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“Request of the City” means a request in writing signed by the Mayor, Mayor Pro Tem, City Manager, Director of Finance or by any other officer of the City duly authorized for that purpose.
[“Reserve Account” means the account by that name established and held by the Trustee pursuant to Section 4.02(c).
“Reserve Requirement” means 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; (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.] “Responsible Officer” means, when used with respect to the Trustee, any managing director, president, vice president, senior associate, associate or other officer of the Trustee within the Trust Office (or any successor corporate trust office) customarily performing functions similar to those performed by the persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred at the Trust Office because of such person’s knowledge of and familiarity with the particular subject and having direct responsibility for the administration of this Indenture. “Revenues” means (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 by the Trustee in the Lease Revenue Fund and the accounts thereof (other than amounts payable to the United States of America pursuant to Section 5.08); 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.
“S&P” means S&P Global Ratings, its successors and assigns, or if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Authority. “Securities Depositories” means The Depository Trust Company, 55 Water Street, New York, New York 10041, Attn: Call Notification Department, Fax (212) 855-7232 and, in accordance with then current guidelines of the Securities and Exchange Commission, such other addresses and/or such other securities depositories as the Authority may designate in a Certificate of the Authority delivered to the Trustee.
“State” means the State of California.
“Sublease” means the Sublease, dated as of August 1, 2023, with respect to the Leased Properties, by and between the Authority as sublessor and the City as sublessee, as the same may be amended, supplemented or otherwise modified from time to time. 802
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“Supplemental Indenture” means any agreement supplemental to or amendatory of this Indenture entered into in accordance with the provisions of Article VII. “Tax Certificate” means the Certificate Regarding Compliance with Certain Tax Matters (or similar instrument) dated the date of the original delivery date of the Bonds relating to the requirements of certain provisions of the Code, as such certificate may from time to time be modified or supplemented in accordance with the terms thereof. “Tax-Exempt” means, with respect to interest on any obligations of a state or local government that such interest is excluded from gross income for federal income tax purposes whether or not such interest is includable as an item of tax preference or otherwise includable directly or indirectly for purposes of calculating tax liabilities, including any alternative minimum tax, under the Code.
“Trust Office” means the corporate trust office of the Trustee in Los Angeles, California or such other offices as may be specified to the Authority by the Trustee in writing. With respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the office or agency of the Trustee at which, at any particular time, its corporate trust business shall be conducted.
“Trustee” means The Bank of New York Mellon Trust Company, N.A., and its successors and assigns, and any other corporation or association that may at any time be substituted in its place as provided in Article VI.
SECTION 1.02 Rules of Construction. All references in this Indenture to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.
SECTION 1.03 Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract between the Authority and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behalf of the Authority shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.
ARTICLE II
AUTHORIZATION; GENERAL PROVISIONS
SECTION 2.01 Authorization; Designation. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that all things, conditions, and acts 803
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required by law to exist, to happen and to be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now authorized under the JPA Agreement and the Bond Law and each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture for the purposes described in the recitals hereof.
The Bonds are authorized to be issued by the Authority under and subject to the Bond Law and the terms of this Indenture and shall be designated the South Tahoe Joint Powers Financing Authority Lease Revenue Bonds, 2023 Series A, and shall be issued in the original aggregate principal amount of ___ Dollars ($[principal amount]).
SECTION 2.02 Terms of Bonds. The Bonds shall be dated the Closing Date, shall mature on the dates and in the amounts, and shall bear interest (calculated on the basis of a 360-day year of twelve 30-day months) at the rates, as follows:
Maturity Date
(October 1)
Principal
Amount
Interest Rate
Per Annum
Maturity Date
(October 1)
Principal
Amount
Interest Rate
Per Annum
The Bonds shall be delivered in fully registered form, numbered from one upwards in consecutive numerical order (with such alphabetical prefix as the Trustee shall determine). The Bonds shall be executed and delivered in the denominations of $5,000 and any integral multiple thereof.
Each Bond shall 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 shall 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 shall 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 shall bear interest from the Interest Payment Date to which interest has been paid or made available for payment with respect to such Bond.
Interest with respect to any Bond shall be payable in lawful money of the United States of America on each Interest Payment Date to the Owner thereof as of the close of business on the Record Date. Subject to Section 2.11, interest on the Bonds shall 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 such Record Date, on the Registration Books 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 shall be paid to such Owner on each 804
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succeeding Interest Payment Date (unless such request has been revoked in writing) by wire transfer of immediately available funds to an account in the United States designated in such written request. Payments of defaulted interest with respect to the Bonds shall 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 shall be given to the Owners of the Bonds not less than ten days prior thereto. The principal of and premium, if any, 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.
SECTION 2.03 Redemption of Bonds.
(a) Extraordinary Redemption. 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 to Section 9 of the Sublease (from Net Proceeds received by the City from insurance payments or condemnation awards with respect to the Leased Properties 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).
Redemption pursuant to this subsection (a) shall 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.
(b) Redemption Resulting from Prepayments of Base Rental. The Bonds maturing on or after October 1, [2033], 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 Section 11(b) of the Sublease on any date with respect to which such prepayment have been made (which shall be on or after October 1, [2032]). The Bonds called for redemption pursuant to this Section 2.03(b) 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.
(c) Redemption Resulting from Sinking Account Payments. The Bonds maturing on October 1, 20__ and October 1, 20__ 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 Section 2.03(a) or 2.03(b), 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 a Section 2.03(a) extraordinary redemption or a Section 2.03(b) optional redemption 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:
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Bonds Maturing on October 1, 20__
Redemption Date
(October 1)
Principal Amount
to be Redeemed
______________
* maturity
Bonds Maturing on October 1, 20__
Redemption Date
(October 1)
Principal Amount
to be Redeemed
______________
* maturity
In lieu of a redemption pursuant to this Section 2.03(c), the Trustee may apply amounts in the Principal Account to purchase Term Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as may be directed by the Authority, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to such Bonds, as set forth in writing by the Authority; provided, however, that no Term Bonds shall be purchased by the Trustee hereunder with a settlement date more than 60 days prior to the date on which the Authority would otherwise redeem such Term Bonds pursuant to this Section 2.03(c). The principal amount of any Term Bonds so purchased by the Trustee shall be credited towards and shall reduce the Principal Account payment otherwise required to be made with respect to such Term Bonds on the applicable redemption date. (d) Notice of Redemption. The Authority shall give written notice of its intention to redeem Bonds under Section 2.03(a) or Section 2.03(b) 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, shall 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 the respective Owners of any Bonds designated for redemption at their respective addresses appearing on the Registration Books, and to the Securities Depositories and 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 shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price and shall specify the CUSIP numbers, the Bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such 806
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maturity or maturities in whole) of the Bonds to be redeemed, and shall 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 shall 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 shall be liable for any inaccuracy in such numbers. (e) 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 at least one Business Day 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. The Trustee shall send notices of such rescission in the same manner as that prescribed in Section 2.03(d) for notices of redemption. (f) Selection of Bonds for Redemption. Whenever provision is made in this Indenture for the redemption of less than all of the Bonds, the Trustee shall select the Bonds to be redeemed from all 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, subject to the procedures of the Depository (if applicable). 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.
(g) 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.
(h) 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 shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date.
All Bonds redeemed pursuant to this Section 2.03 shall be canceled by the Trustee. All moneys 807
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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, shall be held in trust for the account of the Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable to Owners for any interest earned on, moneys so held.
SECTION 2.04 Form of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.
SECTION 2.05 Execution of Bonds. The Bonds shall be signed in the name and on behalf of the Authority with the manual or facsimile signatures of its Chair or Vice Chair and attested with the manual or facsimile signature of its Secretary or any Assistant Secretary duly appointed by the Authority Governing Board, and shall be delivered to the Trustee for authentication by it. In case any officer of the Authority who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though the individual who signed the same had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the Authority by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond such individual shall not have been such officer.
Only such of the Bonds as shall bear thereon a certificate of authentication, manually executed on behalf of the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.
SECTION 2.06 Transfer of Bonds. Any Bond may, in accordance with its terms, be transferred, upon the Registration Books, by the person in whose name it is registered, in person or by his duly authorized attorney, upon presentation and surrender of such Bond for cancellation, accompanied by delivery of a written instrument of transfer in a form approved by the Trustee, duly executed. Whenever any Bond shall be surrendered for transfer, the Authority shall execute and the Trustee shall thereupon authenticate and deliver to the transferee a new Bond or Bonds of like tenor, maturity and aggregate principal amount. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such transfer shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer. The Trustee shall not be required to transfer, pursuant to this Section, (a) any Bond during the period established by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption pursuant to Section 2.03(f). Prior to any transfer of the Bonds outside the book-entry system (including, but 808
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not limited to, the initial transfer outside the book-entry system), the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045, as amended. The Trustee may conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
SECTION 2.07 Exchange of Bonds. Bonds may be exchanged at the Trust Office of the Trustee for the same aggregate principal amount of Bonds of the same tenor and maturity and of other authorized denominations. The cost of printing any Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange shall be paid by the Authority, except that the Trustee shall require the payment by the Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange. The Trustee shall not be required to exchange, pursuant to this Section, (a) any Bond during the period established by the Trustee for the selection of Bonds for redemption or (b) any Bond selected for redemption pursuant to Section 2.03(f).
SECTION 2.08 Temporary Bonds. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, it will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds shall be surrendered, for cancellation, in exchange therefor at the Trust Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds definitive Bonds of like tenor, maturity and aggregate principal amount in authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder.
SECTION 2.09 Registration Books. The Trustee will keep or cause to be kept at its Trust Office sufficient records for the registration and transfer of the Bonds, which shall at all times during regular business hours be open to inspection by the Authority with reasonable prior notice; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer, or cause to be registered or transferred, on said records, Bonds as provided herein.
SECTION 2.10 Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor, maturity and aggregate principal amount in an authorized denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it. If any Bond issued 809
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hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence shall be satisfactory to it and indemnity satisfactory to it shall be given, the Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution for the Bond so lost, destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity satisfactory to the Trustee). The Authority may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses that may be incurred by the Authority and the Trustee.
Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen shall be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.
SECTION 2.11 Book-Entry System.
(a) Book-Entry System; Limited Obligation of Authority. The Bonds shall be initially delivered in the form of a separate single fully registered Bond (which may be typewritten) for each of the maturities of the Bonds (unless the Bonds of such maturity bear different interest rates, then one Bond for each interest rate among such maturity). Upon initial delivery, the ownership of each such Bond shall be registered in the registration books kept by the Trustee in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.11(c), all of the Outstanding Bonds shall be registered in the registration books kept by the Trustee in the name of the Nominee.
With respect to Bonds registered in the registration books kept by the Trustee in the name of the Nominee, the Authority and the Trustee shall have no responsibility or obligation to any Participant or to any person on behalf of which such a Participant holds an interest in the Bonds. Without limiting the immediately preceding sentence, the Authority and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy of the records of the Depository, the Nominee, or any Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any Participant or any other person, other than an Owner as shown in the registration books kept by the Trustee, of any notice with respect to the Bonds, including any notice of redemption, (iii) the selection by the Depository and its Participants of the beneficial interests in the Bonds to be redeemed in the event the Bonds are redeemed in part, or (iv) the payment to any Participant or any other person, other than an Owner as shown in the registration books kept by the Trustee, of any amount with respect to principal of, premium, if any, or interest due with respect to the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered in the registration books kept by the Trustee as the holder and absolute owner of such Bond for the purpose of payment of principal, premium, if any, and interest with respect to such Bond, for the purpose of giving notices of redemption and other matters with respect to such Bond, for the purpose of registering transfers with respect to such Bond, and for all other purposes 810
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whatsoever. The Trustee shall pay all principal of, premium, if any, and interest due with respect to the Bonds only to or upon the order of the respective Owners, as shown in the registration books kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be valid and effective to satisfy and discharge fully the Authority’s obligations with respect to payment of the principal, premium, if any, and interest due with respect to the Bonds to the extent of the sum or sums so paid. No person other than an Owner, as shown in the registration books kept by the Trustee, shall receive a Bond evidencing the obligation of the Authority to make payments of principal, premium, if any, and interest pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the Authority of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository. (b) Representation Letter. In order to qualify the Bonds for the Depository’s book-entry system, the Authority has previously executed and delivered to such Depository the Representation Letter. The Representation Letter does not in any way impose upon the Authority or the Trustee any obligation whatsoever with respect to persons having interests in the Bonds other than the Owners, as shown on the registration books kept by the Trustee. The Trustee agrees to take all action necessary to continuously comply with the Representation Letter to the extent that such action is not inconsistent with this Indenture. In addition to the execution and delivery of the Representation Letter, the Chair, Vice Chair, Executive Director, and the Secretary and all other officers of the Authority are hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.
(c) Transfers Outside of Book-Entry System. In the event (i) the Depository determines not to continue to act as securities depository for the Bonds, or (ii) the Authority determines that the Depository shall no longer so act, then the Authority will discontinue the book entry system with the Depository. If the Authority fails to identify another qualified securities depository to replace the Depository, then the Bonds so designated shall no longer be restricted to being registered in the registration books kept by the Trustee in the name of the Nominee, but shall be registered in whatever name or names persons transferring or exchanging Bonds shall designate, in accordance with the provisions of Section 2.09. (d) Payments to Nominee. Notwithstanding any other provisions of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments with respect to principal, premium, if any, and interest due with respect to such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository. (e) Initial Depository and Nominee. The initial Depository under this Article shall be The Depository Trust Company, New York, New York. The initial Nominee shall be Cede & Co., as Nominee of The Depository Trust Company, New York, New York. 811
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ARTICLE III
ISSUANCE; DEPOSIT AND APPLICATION OF PROCEEDS; VALIDITY; ADDITIONAL BONDS SECTION 3.01 Issuance of Bonds. Upon the execution and delivery of this Indenture, the Authority shall execute and deliver the Bonds to the Trustee for authentication and delivery to or on the order of the Original Purchaser upon the Request of the Authority.
SECTION 3.02 Application of Proceeds of Sale of Bonds. On the Closing Date, the Trustee shall receive, on behalf of the Authority, $___ from the Original Purchaser (representing the par amount of the Bonds, [plus/less] an original issue [premium/discount] of $___, less an underwriter’s discount of $___). The Trustee shall apply the Bonds proceeds as follows:
(a) Deposit $__ in the Costs of Issuance Fund; and
(b) Deposit $__ to the Project Fund.
For record keeping purposes the Trustee may establish such funds and accounts as may be necessary to reflect such deposits.
SECTION 3.03 Costs of Issuance Fund. The Trustee shall establish a fund known as the “Costs of Issuance Fund.” Pursuant to Section 3.02(a), the Trustee shall deposit a portion of the proceeds of the sale of the Bonds into the Costs of Issuance Fund. The moneys in the Costs of Issuance Fund shall be used from time to time to pay Costs of Issuance with respect to the Bonds and shall be disbursed by the Trustee upon delivery to the Trustee of a requisition, substantially in the form attached hereto as Exhibit B, executed by an authorized officer of the Authority. Each such requisition of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the date that is 180 days following the Closing Date, or upon the earlier receipt by the Trustee of a Request of the Authority to do so, the Trustee shall transfer all remaining amounts in the Costs of Issuance Fund to the Lease Revenue Fund.
SECTION 3.04 Project Fund. The Trustee shall establish and maintain a separate fund to be known as the “Project Fund.” On the Closing Date, the Trustee shall deposit a portion of the sale proceeds of the Bonds into the Project Fund pursuant to Section 3.02(b).
The Trustee shall disburse or transfer amounts from the Project Fund, as stated in a Request of the City, substantially in the form attached hereto as Exhibit C, for the payment of the Project Costs relating to the Projects (including reimbursement to the City for any such costs paid by it).
Upon receipt of each such Request of the City, the Trustee shall pay the amount set forth in such Request as directed by the terms thereof. When the Projects, or the portions thereof determined by the City to be financed hereunder, have been completed, the Authority shall deliver or shall cause the City to deliver to the Trustee a Certificate of the City stating the fact and date of such completion. Following the delivery of such certificate, the Trustee shall transfer amounts then on deposit in the Project Fund (or such portion thereof as may be specified in such Request of the City) to the Lease Revenue Fund. 812
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SECTION 3.05 Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken with respect to the application of the proceeds of the Bonds, and the recital contained in the Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of their issuance.
SECTION 3.06 Additional Bonds.
(a) Subject to this Section 3.06, 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. Bonds issued pursuant to this Section 3.06 shall be issued under and pursuant to a Supplemental Indenture which shall specify:
(1) The maturity date or dates of such Additional Bonds, which shall be October 1 in any given year;
(2) The interest payment dates, which shall be April 1 and October 1; (3) The terms, if any, for call and redemption of such Additional Bonds prior to maturity; and
(4) The interest rate or rates on such Additional Bonds and any other matters deemed appropriate or necessary and not inconsistent with the provisions of this Indenture.
(b) All of the Additional Bonds shall be executed by the Authority for issuance under the Indenture and delivered to the Trustee and thereupon shall be delivered by the Trustee upon the Request of the Authority but only upon receipt by the Trustee of the following documents or money or securities:
(1) A certified copy of the Supplemental Indenture authorizing the issuance of such Additional Bonds;
(2) A Request of the Authority as to the delivery of such Additional Bonds;
(3) An opinion of Bond Counsel substantially to the effect that: (i) the Authority has the right and power under the Act to execute and deliver such Supplemental Indenture, and such Supplemental Indenture has been duly executed and delivered by the Authority, and the Indenture and such Supplemental Indentures are in full force and effect and are valid and binding upon the Authority and enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights and similar qualifications); (ii) such Additional Bonds are valid and binding special obligations of the 813
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Authority, enforceable in accordance with their terms (except as enforcement may be limited by bankruptcy, insolvency, reorganization and other similar laws relating to the enforcement of creditors’ rights) and are subject to the terms of the Indenture and all Supplemental Indentures and entitled to the benefits of the Indenture and all such Supplemental Indentures and the Act, and such Additional Bonds have been duly and validly issued in accordance with the Act and the Indenture and all such Supplemental Indentures; and (iii) the obligation of the City to make the Base Rental Payments during the term of the Sublease as amended pursuant to this Section 3.06 is a valid and binding obligation of the City.
(4) A Certificate of the Authority: (i) certifying that the Authority is in compliance in all material respects with all agreement and covenants contained herein 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;
(5) An executed copy of the amendment to the Sublease; and Such further documents, money and securities as are required by the provisions of the Indenture and the Supplemental Indenture providing for the issuance of such Additional Bonds.
ARTICLE IV
REVENUES; FLOW OF FUNDS
SECTION 4.01 Pledge of Revenues; Assignment of Rights. Subject to the provisions of Section 6.03 (Fees, Charges and Expenses of the Trustee), the Bonds shall be secured by a first lien on and pledge (which shall be effected in the manner and to the extent hereinafter provided) 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 shall 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 shall be and are secured by an exclusive pledge, charge and lien upon the Revenues and such moneys. So long as any of the Bonds are Outstanding, the Revenues shall not be used for any other purpose; except that out of the Revenues and such moneys there may be apportioned such sums, for such purposes, as are expressly permitted by Section 4.02. 814
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Pursuant to the Assignment Agreement, the Authority has transferred in trust and assigns to the Trustee, for the benefit of the Owners from time to time of the Bonds, all of the Revenues and all of the right, title and interest of the Authority in (but not of its obligations under) the Lease and the Sublease (other than its rights to indemnification and payment or reimbursement for any costs or expenses), including its rights to receive the Base Rental 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 when due or otherwise to protect the interest of the Owners of the Bonds, including its leasehold title to the Leased Properties leased to the City pursuant to the Sublease. The Trustee accepts such assignments. The Trustee shall be entitled to and shall receive all of the Revenues, and any Revenues collected or received by the Authority shall be deemed to be held, and to have been collected or received, by the Authority as the agent of the Trustee and shall promptly be paid by the Authority to the Trustee.
SECTION 4.02 Lease Revenue Fund. All Base Rental Payments shall be deposited by the Trustee in a special fund designated as the “Lease Revenue Fund,” which the Trustee shall establish, maintain and hold in trust hereunder.
On or before each Interest Payment Date, the Trustee shall transfer from the Lease Revenue Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Lease Revenue Fund), the following amounts 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 account subsequent in priority:
(a) Interest Account. On or before each Interest Payment Date, the Trustee shall 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 shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to Section 2.03).
(b) Principal Account. On or before each Interest Payment Date, the Trustee shall 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 or required to be redeemed through mandatory sinking account redemption on such Interest Payment Date pursuant to Section 2.02 or Section 2.03. All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Bonds.
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(c) [Reserve Account. On or before each Interest Payment Date, the Trustee shall deposit in the Reserve Account such amount as may be necessary to maintain a balance therein equal to the Reserve Requirement. No deposit need be made in the Reserve Account so long as there shall be on deposit an amount equal to the Reserve Requirement. Except as otherwise provided herein, money in (or available to) the Reserve Account shall 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 shall be determined on or promptly after each Interest Payment Date and transferred in accordance with this Indenture, to the Interest Account to be applied toward the interest payment of the Bonds, unless otherwise directed by a Request of the City.
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 shall 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.]
(d) Surplus. On or promptly after each Interest Payment Date, Trustee shall determine the amount, if any, remaining in the Lease Revenue Fund after making the deposits required by paragraphs (a) through (c) above and the transfers of investment earnings pursuant to Section 4.05, and shall notify the City of the amount so determined. The Trustee shall 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 shall, 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.
SECTION 4.03 Redemption Fund. To the extent the Authority has provided the Trustee with written notice of its intention to redeem Bonds in connection with an extraordinary redemption pursuant to Section 2.03(a) or an optional redemption pursuant to Section 2.03(b), the Trustee shall establish a fund known as “Redemption Fund.” At any time the Trustee receives money from the City pursuant to Section 9 of the Sublease (Net Proceeds of insurance payments or taking proceedings) or Section 11(b) of the Sublease (optional prepayment by the City), the Trustee shall immediately deposit such money as follows: (i) an amount equal to the interest on the Bonds to be redeemed pursuant to Section 2.03(a) or Section 2.03(b) accrued to the redemption date shall be deposited in the Interest Account; and (ii) the balance of such moneys shall be deposited in the Redemption Fund. Amounts on deposit in the Redemption Fund shall be applied solely for the purpose of paying the principal of the Bonds to be redeemed pursuant to Section 2.03(a) or Section 2.03(b); provided, however, that at any time prior to giving notice of redemption of any such Bonds, the Trustee 816
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may apply such amounts to the purchase of Bonds at public or private sale, as and when and at such prices (including brokerage and other charges, but excluding accrued interest, which is payable from the Interest Account) as shall be directed in writing by the Authority, except that the purchase price (exclusive of accrued interest) may not exceed the redemption price then applicable to the Bonds.
SECTION 4.04 Application of Net Proceeds. If the Leased Properties or any portion thereof shall be damaged or destroyed, subject to the further requirements of this Section, the City shall, as expeditiously as possible, continuously and diligently prosecute or cause to be prosecuted the repair or replacement thereof, unless the City elects not to repair or replace the Leased Properties or the affected portion thereof in accordance with the provisions hereof.
The Net Proceeds (other than Net Proceeds of rental interruption insurance), including the proceeds of any self-insurance, received on account of any damage or destruction of the Leased Properties or a portion thereof shall as soon as possible be deposited with the Trustee and be held by the Trustee in a special fund entitled the “Insurance and Condemnation Fund” and made available for and, to the extent necessary, shall be applied to the cost of repair or replacement of the Leased Properties or the affected portion thereof upon receipt of a written request of the City, together with invoices therefor. Each such written request of the City shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. Pending such application, such proceeds may be invested by the Trustee as directed by the City in Permitted Investments that mature not later than such times moneys are expected to be needed to pay such costs of repair or replacement.
Notwithstanding the foregoing, the City shall, within 60 days of the occurrence of the event of damage or destruction, notify the Trustee in writing as to whether the City intends to replace or repair the Leased Properties or the portions of the Leased Properties which were damaged or destroyed. If the City does intend to replace or repair the Leased Properties or portions thereof, the City shall deposit with the Trustee the full amount of any insurance deductible to be credited to the special account.
If the damage, destruction or loss was such that there resulted in a substantial interference with the City’s right to the use or occupancy of the Leased Properties and an abatement of Rental Payments results from such damage or destruction pursuant to Section 9(b) of the Sublease, then the City shall be required either to (a) apply sufficient funds from the insurance proceeds and other legally available funds to the replacement or repair of the Leased Properties or the portions thereof which have been damaged to the condition which existed prior to such damage or destruction, or (b) apply sufficient funds from the insurance proceeds and other legally available funds to the redemption, as set forth in subsection (a) of Section 2.03 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued, in full of all the Outstanding Bonds or all of those Outstanding Bonds which would have been payable from that portion of the Base Rental Payments which are abated as a result of the damage or destruction. Funds to be applied to the redemption of Bonds in accordance with clause (b) above shall be deposited in the Redemption Fund. If the City is not required to replace or repair the Leased Properties, or the 817
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affected portion thereof, as set forth in clause (a) above or to use such amounts to redeem Bonds as set forth in clause (b) above, then such proceeds shall, if there is first delivered to the Trustee a Written Certificate of the City to the effect that the annual fair rental value of the Leased Properties after such damage or destruction, and after any repairs or replacements made as a result of such damage or destruction, is at least equal to 100% of the maximum amount of Base Rental Payments becoming due under the Sublease in the then current Rental Period or any subsequent Rental Period and the fair replacement value of the Leased Properties after such damage or destruction is at least equal to the principal amount of the Outstanding Bonds, be paid to the City to be used for any lawful purpose.
The proceeds of any award in eminent domain received in respect to the Leased Properties shall be deposited by the Trustee in the Redemption Fund and applied to the redemption of Bonds pursuant to subsection (a) of Section 2.03 hereof and the corresponding provisions of any Supplemental Indenture pursuant to which Additional Bonds are issued.
SECTION 4.05 Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments pursuant to the written direction of the Authority given to the Trustee at least two Business Days in advance of the making of such investments; which Permitted Investments shall, as nearly as practicable, mature (or be subject to redemption or disposition by the Trustee) on or before the dates on which such money is anticipated to be needed for disbursement hereunder. In the absence of any such direction from the Authority, the Trustee shall invest any such moneys in money market funds described in clause (d) of the definition of Permitted Investments, so long as such money market funds contain only United States Treasury or United States local government obligations; provided, however, that any such investment shall be made by the Trustee only if, prior to the date on which such investment is to be made, the Trustee shall have received a written request of the Authority specifying a specific money market fund and, if no such request of the Authority is so received, the Trustee shall hold such moneys uninvested. Obligations purchased as an investment of moneys in any fund or account shall be deemed to be part of such fund or account. The Trustee may make any and all such investments through its own investment department or that of its affiliates or subsidiaries, and may charge its ordinary and customary fees for such trades, including account maintenance fees. In the absence of investment instructions from the Authority or City, the Trustee shall hold the moneys held by it hereunder uninvested.
The Trustee shall transfer at least semiannually immediately after any Interest Payment Date all investment earnings on amounts in the Principal Account, and the Interest Account to the Lease Revenue Fund. [If the balance in the Reserve Account is then at least equal to the Reserve Requirement, the Trustee immediately shall transfer all investment earnings on amounts in the Reserve Account, which are in excess of the Reserve Requirement, to the Lease Revenue Fund.] Unless otherwise specified in this Indenture, investment earnings on amounts in all other funds and accounts established and maintained pursuant to this Indenture shall be retained in such respective funds and accounts. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder. The Trustee or an affiliate of the Trustee may act as principal or agent in the acquisition or disposition of any investment 818
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and may impose its customary charges therefor. The Trustee shall incur no liability for losses arising from any investments made pursuant to instructions or directions from the Authority.
The Authority acknowledges that regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority the right to receive brokerage confirmations of security transactions to be effected by the Trustee hereunder as they occur.
The Authority specifically waives the right to receive such notification to the extent permitted by applicable law and agrees that it will instead receive periodic cash transaction statements which include detail for the investment transactions effected by the Trustee hereunder; provided, however, that the Authority retains its right to receive brokerage confirmation on any investment transaction requested by the Authority.
SECTION 4.06 Valuation and Disposition of Investments. For the purpose of determining the amount in any fund or account, Permitted Investments credited to such fund or account shall be valued semiannually at the Fair Market Value thereof; provided that as to certificates of deposits and banker acceptances, the value thereof shall equal the face amount, plus accrued interest thereon. The Trustee shall have no duty in connection with the determination of Fair Market Value other than to follow its normal practice in determining the value of Permitted Investments, which may include utilizing computerized securities pricing services that may be available to it including those available through its regular accounting system.
ARTICLE V
COVENANTS OF THE AUTHORITY
SECTION 5.01 Punctual Payment. The Authority shall punctually pay or cause to be paid the principal and interest to become due in respect of all the Bonds, in strict conformity with the terms of the Bonds and of this Indenture, according to the true intent and meaning thereof, but only out of Revenues and other assets pledged for such payment as provided in this Indenture.
SECTION 5.02 Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon which shall not have been so extended. Nothing in this Section shall be deemed to limit the right of the Authority to issue Bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.
SECTION 5.03 Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds are Outstanding, except the 819
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pledge and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, including other programs under the Bond Law, and reserves the right to issue other obligations for such purposes.
SECTION 5.04 Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues, the Lease, the Sublease and other assets purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee (subject to the provisions of Section 6.02 hereof) shall at all times, to the extent permitted by law, defend, preserve and protect said pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.
SECTION 5.05 Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions by the Trustee relating to the proceeds of Bonds, the Revenues, the Sublease and all funds and accounts established pursuant to this Indenture. Such books of record and account shall be available for inspection by the Authority and the City during regular business hours with reasonable prior notice.
SECTION 5.06 Additional Obligations. The Authority covenants that no additional bonds, notes or indebtedness shall be issued or incurred that are payable out of the Revenues in whole or in part, except as permitted under Section 3.06 of this Indenture.
SECTION 5.07 Sublease. The Trustee, as assignee of the Authority’s rights under the Sublease pursuant to Section 4.01 and under the Assignment Agreement, shall receive all amounts due from the City pursuant to the Sublease.
The Authority will faithfully comply with, keep, observe and perform all the agreements, conditions, covenants and terms contained in the Sublease required to be complied with, kept, observed and performed by it and, together with the Trustee, will enforce the Sublease against the City in accordance with its terms.
The Authority will not alter, amend or modify the Sublease without the prior written consent of the Trustee, which consent shall be given only (i) if the Trustee receives an opinion of Bond Counsel that such alteration, amendment or modification will not result in any material impairment of the security given or intended to be given for the payment of the Base Rental Payments, or (ii) if the Trustee first obtains the written consents of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding to such alteration, amendment or modification. Prior to any amendment or modification of the Sublease pursuant to this Section 5.07, the Trustee may require the Authority to deliver to the Trustee an opinion 820
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of Bond Counsel to the effect that such amendment or modification has been adopted in accordance with the requirements of this Indenture.
SECTION 5.08 Tax Covenants.
(a) The Authority shall not take any action, or fail to take any action, if any such action or failure to take action would adversely affect the Tax-Exempt status of interest on the Bonds under Section 103(a) of the Code or cause interest on any Bond to be an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations under Section 55 of the Code.
(b) In furtherance of the foregoing tax covenant, the Authority shall comply with the provisions of the Tax Certificate, which is incorporated in this Indenture as if fully set forth in this Indenture. These covenants shall survive payment in full or defeasance of the Bonds.
(c) If directed in a Request of the City, the Trustee shall establish when required and maintain a fund separate from any other fund or account established and maintained hereunder designated as the “Rebate Fund.” Upon the written direction of the City, there shall be deposited in the Rebate Fund such amounts as are required to be deposited therein pursuant to the Tax Certificate. All money at any time deposited in the Rebate Fund shall be held by the Trustee in trust, to the extent required to satisfy the Rebate Amount (as defined in the Tax Certificate), for payment to the United States of America. Notwithstanding the provisions of Article IV (relating to the pledge of Revenues, the allocation of money in the Lease Revenue Fund, and the investments of money in any fund or account) and Section 9.03 (relating to the defeasance of Bonds), all amounts required to be deposited into or on deposit in the Rebate Fund shall be governed exclusively by this Section 5.08 and by the Tax Certificate (which is incorporated herein by reference). The Trustee shall be deemed conclusively to have complied with such provisions if it follows the Request of the City, and shall have no liability or responsibility to enforce compliance by the Authority or the City with the terms of the Tax Certificate.
(d) Notwithstanding any provision of this Section, if the Authority or the City shall provide to the Trustee an opinion of Bond Counsel that any specified action required under this Section is no longer required or that some further or different action is required to maintain the exclusion from federal income tax of interest on the Bonds, the Trustee, the Authority and the City may conclusively rely on such opinion in complying with the requirements of this Section and, notwithstanding Article VII, the covenants hereunder shall be deemed to be modified to that extent.
SECTION 5.09 Continuing Disclosure. In connection with the issuance of the Bonds, the Authority shall cause the City to enter into a Continuing Disclosure Agreement. It is hereby recognized that a failure of the City to comply with a Continuing Disclosure Agreement shall not constitute a default under this Indenture or the Sublease; provided, however, the Original Purchaser or the Owner or beneficial owner of the Bonds relating to such Continuing Disclosure 821
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Agreement may take such actions as may be necessary and appropriate to compel performance, including seeking mandate or specific performance by court order.
SECTION 5.10 Further Assurances. The Authority shall adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Owners of the Bonds the rights and benefits provided in this Indenture.
ARTICLE VI
THE TRUSTEE
SECTION 6.01 Appointment of Trustee. 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, is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority agrees that, so long as any Bonds are Outstanding, it will maintain a Trustee which is (A) a national banking association that is supervised by the Office of the Comptroller of the Currency and has at least $250 million of assets, or (B) a state-chartered commercial bank that is a member of the Federal Reserve System and has at least $1 billion of assets. If such bank, national banking association or trust company or such parent corporation publishes a report of condition at least annually pursuant to law or to the requirements of any supervising or examining authority above referred to, then for the purpose of this Section 6.01 the combined capital and surplus of such bank, national banking association or trust company or such parent corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
The Trustee is hereby authorized to pay the principal of and interest and redemption premium (if any) on the Bonds when duly presented for payment at maturity, or on redemption prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds and accounts administered by it and of all Bonds paid and discharged.
SECTION 6.02 Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Trustee, unless the Trustee was negligent in ascertaining the pertinent facts.
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action hereunder, the Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, rely upon a Certificate of the Authority. (c) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Owners pursuant to this Indenture, unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(d) The Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent, facsimile transmission, electronic mail, order bond or other paper or document, but the Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.
(e) The Trustee, prior to the occurrence of an Event of Default and after the curing or waiving of all Events of Default that may have occurred, undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no duties, covenants or obligations of or against the Trustee shall be implied in this Indenture. In case an Event of Default hereunder or under the Sublease has occurred (which has not been cured or waived), the Trustee may exercise such of the rights and powers vested in it by this Indenture and by the Sublease, and shall use the same degree of care and skill in the exercise of such rights and powers as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.
(f) The Trustee may execute any of the trusts or powers hereunder and perform the duties required of it hereunder either directly or by or through attorneys or agents, and shall be entitled to advice of counsel concerning all matters of trust and its duty hereunder, and the Trustee shall not be responsible for any misconduct or negligence on the part of any attorney or agent appointed with due care by it hereunder. (g) The Trustee may consult with counsel of its selection (who may include its own counsel or counsel for the Authority or Bond Counsel) and the written opinion of such counsel shall be full and complete authorization and protection in respect of any action taken or suffered by it hereunder in good faith and in accordance with the opinion of such counsel. (h) The Trustee shall not be responsible for any recital herein, in the Sublease, or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and makes no representation as to the validity or sufficiency of the Bonds, this Indenture or the Sublease. The Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority hereunder or on the part of the Authority or the City under the Sublease. The Trustee shall not be responsible for the application by the Authority or the City of the proceeds of the Bonds.
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(i) The Trustee may become the Owner or pledgee of Bonds secured hereby with the same rights it would have if not the Trustee; may acquire and dispose of other bonds or evidences of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a depositary for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in aggregate principal amount of the Bonds then Outstanding. (j) The Trustee may rely and shall be protected in acting or refraining from acting, in good faith and without negligence, upon any notice, resolution, opinion, report, direction, request, consent, certificate, order, affidavit, letter, telegram, facsimile transmission, electronic mail or other paper or document believed by it to be genuine and to have been signed or presented by the proper person or persons. Any action taken or omitted to be taken by the Trustee in good faith and without negligence pursuant to this Indenture or the Sublease upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at such person’s request unless the ownership of such Bond by such person shall be reflected on the Registration Books.
(k) The permissive right of the Trustee to do things enumerated in this Indenture or in the Sublease shall not be construed as a duty and it shall not be answerable for other than its negligence or willful misconduct. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. (l) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder or under the Sublease except failure by the Authority or the City to make any of the payments to the Trustee required to be made by the Authority or the City pursuant hereto or thereto or failure by the Authority or the City to file with the Trustee any document required by this Indenture or the Sublease to be so filed subsequent to the issuance of the Bonds, unless the Trustee shall be specifically notified in writing of such default by the Authority or by the Owners of at least 25 percent in aggregate principal amount of the Bonds then Outstanding and all notices or other instruments required by this Indenture to be delivered to the Trustee must, in order to be effective, be delivered at the Trust Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder except as aforesaid. (m) At any and all reasonable times the Trustee and its duly authorized agents, attorneys, experts, accountants and representatives, shall have the right fully to inspect all books, papers and records of the Authority pertaining to the Bonds, and to make copies of any of such books, papers and records which are not privileged by statute or by law. (n) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises hereof. 824
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(o) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Authority to the execution of any Bonds, the withdrawal of any cash or the taking of any other action by the Trustee.
(p) All moneys received by the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. (q) Whether or not expressly provided therein, every provision of this Indenture and the Sublease relating to the conduct or affecting the liability of the Trustee shall be subject to the provisions of this Section 6.02.
(r) In no event shall the Trustee be liable for special, indirect, punitive or consequential loss or damage (including but not limited to lost profits) even if the Trustee has been advised of the likelihood of such damages and regardless of the form of such action. The Trustee shall not be considered in breach of or in default with respect to any obligations created hereunder, in the event of an enforced delay in the performance of such obligations due to unforeseeable causes beyond its control and without its willful misconduct or negligence, including, but not limited to, acts of God, or of the public enemy, acts of a government, acts of the other party hereto, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to procure or general sabotage or rationing of labor, equipment, facilities, sources of energy, material or supplies in the open market, litigation or arbitration involving a party or others relating to governmental action or inaction pertaining to the Leased Properties, malicious mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors due to such causes or any similar event and/or occurrences beyond the control of the Trustee; provided, that in the event of any such enforced delay, the Trustee shall notify the Authority in writing within five business days after: (i) the occurrence of the event giving rise to such delay, (ii) the Trustee’s actual knowledge of the impending enforced delay, or (iii) the Trustee’s knowledge of sufficient facts under which a reasonable person would conclude the enforced delay will occur.
(s) The Trustee shall have no responsibility or liability with respect to any information, statements or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. (t) The Trustee shall not be liable in connection with the performance of its duties under this Indenture, except for its own negligence or willful misconduct. 825
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(u) With respect to moneys have been released or withdrawn in accordance with the provisions hereof, the Trustee shall not be responsible for or accountable to anyone for the subsequent use or application of such moneys.
(v) To the extent that the Authority or the City has caused to be furnished to the Trustee an opinion from Bond Counsel or other counsel of the Authority or the City, with regard to legal questions, the opinion of such counsel shall be full and complete authorization and protection to the Trustee in respect of any action taken or suffered by it hereunder in good faith and in accordance therewith.
(w) For all purposes hereunder, the Trustee shall not be deemed to have notice or knowledge of any event (including any default or Event of Default) unless a Responsible Officer of the Trustee has received written notice of such event which references this Indenture, the Bonds, the Authority or the City. The delivery of reports and other documents and information to the Trustee hereunder is for informational purposes only and the Trustee’s receipt of such documents and information shall not constitute constructive notice of any information contained therein or determinable from information contained therein.
SECTION 6.03 Fees, Charges and Expenses of Trustee. The Trustee shall be entitled to payment and reimbursement for reasonable fees for its services rendered hereunder and all advances (with interest on such advances at the maximum rate allowed by law), counsel fees (including expenses) and other expenses reasonably and necessarily made or incurred by the Trustee in connection with such services. Upon the occurrence of an Event of Default hereunder, but only upon an Event of Default, the Trustee shall have a first lien with right of payment prior to payment of any Bond upon the amounts held hereunder for the foregoing fees, charges and expenses incurred by it (including indemnities and legal fees and expenses).
SECTION 6.04 Notice to Bond Owners of Default. If an Event of Default hereunder or under the Sublease occurs with respect to any Bonds of which the Trustee has been given or is deemed to have notice, as provided in Section 6.02(k) hereof, then the Trustee shall, within 30 days of the receipt of such notice, give written notice thereof by first class mail to the Owner of each such Bond, unless such Event of Default shall have been cured before the giving of such notice; provided, however, that unless such Event of Default consists of the failure by the Authority to make any payment when due, the Trustee may elect not to give such notice if and so long as the Trustee in good faith determines that it is in the best interests of the Bond Owners not to give such notice.
SECTION 6.05 Intervention by Trustee. In any judicial proceeding to which the Authority or the City is a party that, in the opinion of the Trustee and its counsel, has a substantial bearing on the interests of Owners of any of the Bonds, the Trustee may intervene on behalf of such Bond Owners, and subject to Section 6.02(c), shall do so if requested in writing by the Owners of at least 25 percent in aggregate principal amount of such Bonds then Outstanding.
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SECTION 6.06 Removal of Trustee. The Trustee may be removed at any time by an instrument or concurrent instruments in writing, filed with the Trustee and signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds. The Authority may also remove the Trustee at any time upon 30 days’ notice, except during the existence of an Event of Default. The Trustee may be removed at any time for any breach of the Trustee’s duties set forth herein.
SECTION 6.07 Resignation by Trustee. The Trustee and any successor Trustee may at any time give written notice of its intention to resign as Trustee hereunder, such notice to be given to the Authority and the City in the manner prescribed by Section 9.14. Upon receiving such notice of resignation, the Authority shall promptly appoint a successor Trustee. Any resignation or removal of the Trustee and appointment of a successor Trustee shall become effective upon acceptance of appointment by the successor Trustee. Upon such acceptance, the Authority shall cause notice thereof to be given by first class mail, postage prepaid, to the Bond Owners at their respective addresses set forth on the Registration Books.
SECTION 6.08 Appointment of Successor Trustee. In the event of the removal or resignation of the Trustee pursuant to Sections 6.06 or 6.07, respectively, the Authority shall promptly appoint a successor Trustee. In the event the Authority shall for any reason whatsoever fail to appoint a successor Trustee within 60 days following the delivery to the Trustee of the instrument described in Section 6.06 or within 60 days following the receipt of notice by the Authority pursuant to Section 6.07, the Trustee may, at the expense of the Authority, apply to a court of competent jurisdiction for the appointment of a successor Trustee meeting the requirements of Section 6.01. Any such successor Trustee appointed by such court shall become the successor Trustee hereunder notwithstanding any action by the Authority purporting to appoint a successor Trustee following the expiration of such 60-day period.
SECTION 6.09 Merger or Consolidation. Any company into which the Trustee may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Trustee may sell or transfer all or substantially all of its corporate trust business, provided that such company shall meet the requirements set forth in Section 6.01, shall be the successor to the Trustee and vested with all of the title to the trust estate and all of the trusts, powers, discretions, immunities, privileges and all other matters as was its predecessor, without the execution or filing of any paper or further act, anything herein to the contrary notwithstanding.
SECTION 6.10 Concerning any Successor Trustee. Every successor Trustee appointed hereunder shall execute, acknowledge and deliver to its predecessor and also to the Authority an instrument in writing accepting such appointment hereunder and thereupon such successor, without any further act, deed or conveyance, shall become fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of its predecessors; but such predecessor shall, nevertheless, on the Request of the Authority, or of the Trustee’s successor, execute and deliver an instrument transferring to such successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and every predecessor Trustee shall 827
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deliver all securities and moneys held by it as the Trustee hereunder to its successor. Should any instrument in writing from the Authority be required by any successor Trustee for more fully and certainly vesting in such successor the estate, rights, powers and duties hereby vested or intended to be vested in the predecessor Trustee, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority.
SECTION 6.11 Appointment of Co-Trustee. It is the purpose of this Indenture that there shall be no violation of any law of any jurisdiction (including particularly the law of the State) denying or restricting the right of banking corporations or associations to transact business as Trustee in such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in particular in case of the enforcement of the rights of the Trustee on default, or in the case the Trustee deems that by reason of any present or future law of any jurisdiction in may not exercise any of the powers, rights or remedies herein granted to the Trustee or hold title to the properties, in trust, as herein granted, or take any other action that may be desirable or necessary in connection therewith, it may be necessary that the Trustee or the Authority appoint an additional individual or institution as a separate trustee or co-trustee. The following provisions of this Section 6.11 are adopted to these ends.
In the event that the Trustee or the Authority appoints an additional individual or institution as a separate trustee or co-trustee, each and every remedy, power, right, claim, demand, cause of action, immunity, estate, title, interest and lien expressed or intended by this Indenture to be exercised by or vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in such separate trustee or co-trustee but only to the extent necessary to enable such separate trustee or co-trustee to exercise such powers, rights and remedies, and every covenant and obligation necessary to the exercise thereof by such separate trustee or co-trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Authority be required by the separate trustee or co-trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in writing shall, on request, be executed, acknowledged and delivered by the Authority. In case any separate trustee or co-trustee, or a successor to either, shall become incapable of acting, shall resign or shall be removed, all the estates, properties, rights, powers, trusts, duties and obligations of such separate trustee or co-trustee, so far as permitted by law, shall vest in and be exercised by the Trustee until the appointment of a new trustee or successor to such separate trustee or co-trustee.
SECTION 6.12 Indemnification; Limited Liability of Trustee. The Authority further covenants and agrees, to the extent permitted by law, to indemnify and save the Trustee and its officers, directors, agents and employees, harmless against any loss, expense (including reasonable legal fees and expenses) and liabilities arising out of or in the exercise and performance of its powers and duties hereunder and the enforcement of any provision of this Indenture, the Lease, the Sublease, the Assignment Agreement or any other transaction document, including the costs and expenses of defending against any claim of liability, but 828
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excluding any and all losses, expenses and liabilities that are due to the negligent or willful misconduct of the Trustee, its officers, directors or employees. No provision in this Indenture shall require the Trustee to risk or expend its own funds or otherwise incur any financial liability hereunder if it shall have reasonable grounds for believing repayment of such funds or adequate indemnity against such liability or risk is not assured to it. The Trustee shall not be liable for any action taken or omitted to be taken by it in accordance with the direction of the Owners of at least 25 percent in aggregate principal amount of Bonds Outstanding relating to the time, method and place of conducting any proceeding or remedy available to the Trustee under this Indenture or exercising any power conferred upon the Trustee under this Indenture.
The obligations of the Authority under this Section shall survive the resignation or removal of the Trustee under this Indenture.
SECTION 6.13 Trustee Acceptance of Electronic Instructions. The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using Electronic Means (being the following communications methods: email, facsimile transmission, secure electronic transmission containing applicable authorization codes, passwords and/or authentication keys issued by the Trustee, or another method or system specified by the Trustee as available for use in connection with its services hereunder); provided, however, that the Authority and the City, as applicable shall provide to the Trustee an incumbency certificate listing officers with the authority to provide such Instructions and containing specimen signatures of such officers, which incumbency certificate shall be amended by the Authority or the City, as applicable, whenever a person is to be added or deleted from the listing. If the Authority or the City elects to give the Trustee Instructions using Electronic Means and the Trustee elects to act upon such Instructions, the Trustee’s reasonable understanding of such Instructions shall be deemed controlling. The Authority understands and agrees that the Trustee cannot determine the identity of the actual sender of such Instructions and that the Trustee shall conclusively presume that directions that purport to have been sent by an authorized officer listed on the incumbency certificate provided to the Trustee have been sent by such authorized officer. The Authority and the City shall be responsible for ensuring that only authorized officers transmit such Instructions to the Trustee and that the Authority, the City and all authorized officers are solely responsible to safeguard the use and confidentiality of applicable user and authorization codes, passwords and/or authentication keys upon receipt by the Authority or the City, as applicable.
The Trustee shall not be liable for any losses, costs or expenses arising directly or indirectly from the Trustee’s reliance upon and compliance with such Instructions notwithstanding such directions conflict or are inconsistent with a subsequent written instruction. The Authority and the City agree: (i) to assume all risks arising out of the use of Electronic Means to submit Instructions to the Trustee, including without limitation the risk of the Trustee acting on unauthorized Instructions, and the risk of interception and misuse by third parties; (ii) that it is fully informed of the protections and risks associated with the various methods of transmitting Instructions to the Trustee and that there may be more secure methods of transmitting Instructions than the method(s) selected by the Authority and/or the 829
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City, as applicable; (iii) that the security procedures (if any) to be followed in connection with its transmission of Instructions provide to it a commercially reasonable degree of protection in light of its particular needs and circumstances; and (iv) to notify the Trustee immediately upon learning of any compromise or unauthorized use of the security procedures.
In the event of an ambiguity or a contradiction in such Instructions as determined by the Trustee in its reasonable discretion, the Trustee shall notify the Authority and request clarification from the Authority, and the Trustee shall not be required to act on such ambiguous or contradictory Instructions pending the Authority’s clarification.
The Trustee shall not be liable under this Section 6.13 except for its negligence or willful misconduct.
SECTION 6.14 Direction to Execute Assignment Agreement. The Trustee is hereby authorized and directed to execute the Assignment Agreement. In executing and performing under the Assignment Agreement, the Trustee shall be entitled to all rights, protections, immunities and indemnities granted to it pursuant to this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THE INDENTURE
SECTION 7.01 Amendment of Indenture. This Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may be modified or amended at any time by a Supplemental Indenture which shall become binding upon adoption, without consent of any Bond Owner, to the extent permitted by law but only for any one or more of the following purposes:
(a) to add to the covenants and agreements of the Authority contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any rights or powers herein reserved to or conferred upon the Authority so long as such limitation or surrender of such rights or powers shall not materially adversely affect the Owners of the Bonds;
(b) to cure any ambiguity, to supply any omission or to cure, correct or supplement any defect or inconsistent provisions contained in the Indenture or in any Supplemental Indenture;
(c) to grant to the Trustee for the benefit of the Owners additional rights, remedies, powers or authority;
(d) to subject to the Indenture additional collateral or to add other agreements of the Authority;
(e) to provide for the issuance of Additional Bonds pursuant to Section 3.06; 830
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(f) to modify the Indenture or the Bonds to permit qualification under the Trust Indenture Act of 1939, as amended, or any similar statute at the time in effect, or to permit the qualification of the Bonds for sale under the securities laws of any state of the United States of America;
(g) to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes;
(h) to evidence the succession of a new Trustee; or
(i) for any other purpose that does not materially adversely affect the rights or interests of the Owners.
Except as set forth in the preceding paragraph of this Section 7.01, this Indenture and the rights and obligations of the Authority and of the Owners of the Bonds may only be modified or amended at any time by a Supplemental Indenture which shall become binding when the written consent of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding are filed with the Trustee. No such modification or amendment shall (i) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or redemption premiums (if any) at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the Owner of such Bond, (ii) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (iii) modify any of the rights or obligations of the Trustee without its written consent thereto.
In executing, or accepting the additional trusts created by, any Supplemental Indenture permitted by this Article or the modification thereby of the trusts created by this Indenture, the Trustee shall be entitled to receive, and shall be fully protected in relying upon, an opinion of Bond Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture and complies with all terms under this Indenture.
SECTION 7.02 Effect of Supplemental Indenture. From and after the time any Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be deemed to be modified and amended in accordance therewith, the respective rights, duties and obligations of the parties hereto or thereto and all Owners of Outstanding Bonds, as the case may be, shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modification and amendment, and all the terms and conditions of any Supplemental Indenture shall be deemed to be part of the terms and conditions of this Indenture for any and all purposes.
Prior to entering into any Supplemental Indenture pursuant to this Section 7.02, the Trustee may require the Authority to deliver to the Trustee an opinion of Bond Counsel to the effect that such Supplemental Indenture has been adopted in accordance with the requirements of this Indenture.
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SECTION 7.03 Endorsement or Replacement of Bonds After Amendment. After the effective date of any action taken as hereinabove provided, the Authority may determine that the Bonds shall bear a notation, by endorsement in form approved by the Authority, as to such action, and in that case upon demand of the Owner of any Bond Outstanding at such effective date and presentation of such Owner’s Bond for that purpose at the Trust Office of the Trustee, a suitable notation as to such action shall be made on such Bond. If the Authority shall so determine, new Bonds so modified as, in the opinion of the Authority, shall be necessary to conform to such Bond Owners’ action, then new Bond certificates shall be prepared and executed, and in that case upon demand of the Owner of any Bond Outstanding at such effective date such new Bonds shall be exchanged at the Trust Office of the Trustee, without cost to each Bond Owner, for Bonds then Outstanding, upon surrender of such Outstanding Bonds.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01 Events of Default. The following events shall be Events of Default hereunder:
(a) 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.
(b) 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. (c) Failure by the Authority to observe and perform any of the covenants, agreements or conditions on its part in this Indenture or in the Bonds contained, other than as referred to in the preceding clauses (a) and (b), for a period of 30 days after written notice, specifying such failure and requesting that it be remedied has been given to the Authority by the Trustee, or to the Authority and the Trustee by the Owners of not less than 25 percent in aggregate principal amount of the Outstanding Bonds; provided, however, that if in the reasonable opinion of the Authority, the failure stated in such notice can be corrected, but not within such 30-day period, the Trustee and such Owners shall not unreasonably withhold their consent to an extension of such time if corrective action is instituted by the Authority within such 30-day period and diligently pursued until such failure is corrected. (d) The filing by the Authority of a petition or answer seeking reorganization or arrangement under the Federal bankruptcy laws or any other applicable law of the United States of America, or if a court of competent jurisdiction shall approve a petition, filed with or without the consent of the Authority, seeking reorganization under the Federal bankruptcy laws or any other applicable law of the United States of America, or if, under the provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction shall assume custody or control of the Authority or of the whole or any substantial part of the Leased Properties.
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SECTION 8.02 Remedies; No Acceleration. Upon the occurrence of an Event of Default, the Trustee shall have the right:
(a) by mandamus or other action or proceeding or suit at law or in equity to enforce its rights against the Authority or 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 herein;
(b) by suit in equity to enjoin any acts or things which are unlawful or violate the rights of the Trustee; or
(c) 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.
If an Event of Default shall have occurred and be continuing and if requested so to do by the Owners of at least 25 percent in aggregate principal amount of Outstanding Bonds and indemnified as provided in Section 6.02(c), the Trustee shall be obligated to exercise such one or more of the rights and powers conferred by this Article VIII, as the Trustee, being advised by counsel, shall deem most expedient in the interests of the Bond Owners.
No remedy by the terms of this Indenture conferred upon or reserved to the Trustee (or to the Bond Owners) is intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative and shall be in addition to any other remedy given to the Trustee or the Bond Owners hereunder or now or hereafter existing at law or in equity.
No delay or omission to exercise any right or power accruing upon any Event of Default shall impair any such right or power or shall be construed to be a waiver or any such Event of Default or acquiescence therein; such right or power may be exercised from time to time as often as may be deemed expedient.
The Trustee shall have no right to declare the principal of or interest on the Bonds to be due and payable immediately.
SECTION 8.03 Application of Revenues and Other Funds after Default. Following the declaration of an Event of Default, all amounts then held or received by the Trustee pursuant to any right given or action taken by the Trustee under the provisions of this Indenture shall be applied by the Trustee, in the following order upon presentation of the several Bonds, and the stamping thereon of the amount of the payment if only partially paid, or upon the surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee, including reasonable compensation to its agents, attorneys and counsel; 833
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Second, to the payment of the whole amount of interest on and principal of the Bonds then due and unpaid; provided, however, that in the event such amounts shall be insufficient to pay in full the full amount of such interest and principal, then such amounts shall be applied to the payment of such principal and interest without preference or priority of principal over interest, or interest over principal, or of any installment of interest over any other installment of interest, ratably to the aggregate of such principal and interest; and Third, to replenish the Reserve Account to the Reserve Requirement.
SECTION 8.04 Power of Trustee to Control Proceedings. In the event that the Trustee, upon the happening of an Event of Default, shall have taken any action, by judicial proceedings or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the request of the Owners of at least a majority in aggregate principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its discretion for the best interests of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided, however, that the Trustee shall not, unless there no longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at law or in equity, if at the time there has been filed with it a written request signed by the Owners of a majority in aggregate principal amount of the Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal of such litigation and if the Trustee is indemnified as provided in Section 6.02(c). Any suit, action or proceeding which any Owner of Bonds shall have the right to bring to enforce any right or remedy hereunder may be brought by the Trustee for the equal benefit and protection of all Owners of Bonds similarly situated and the Trustee is hereby appointed (and the successive respective Owners of the Bonds issued hereunder by taking and holding the same, shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-fact of the respective Owners of the Bonds for the purpose of bringing any such suit, action or proceeding and to do and perform any and all acts and things for and on behalf of the respective Owners of the Bonds as a class or classes, as may be necessary or advisable in the opinion of the Trustee as such attorney-in-fact.
SECTION 8.05 Appointment of Receivers. Upon the occurrence of an Event of Default hereunder, and upon the filing of a suit or other commencement of judicial proceedings to enforce the rights of the Trustee and of the Bond Owners under this Indenture, the Trustee shall be entitled, as a matter of right, to the appointment of a receiver or receivers of the Revenues and other amounts pledged hereunder, pending such proceedings, with such powers as the court making such appointment shall confer.
SECTION 8.06 Non-Waiver. A waiver of any default or breach of duty or contract by the Trustee or any Bond Owners shall not affect any subsequent default or breach of duty or contract, or impair any rights or remedies on any such subsequent default or breach. No delay or omission of the Trustee or any Owner of any of the Bonds to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver of any such default or an acquiescence therein; and every power and remedy conferred 834
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upon the Trustee or Bond Owners by the Bond Law or by this Article VIII may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Bond Owners, as the case may be.
SECTION 8.07 Rights of Bond Owners. No Owner of any Bond issued hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for any remedy under or upon this Indenture, unless: (a) such Owner shall have previously given to the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of all the Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to comply with such request for a period of 60 days after such written request shall have been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds of any remedy hereunder; it being understood and intended that no one or more Owners of Bonds shall have any right in any manner whatever by action of such Owner or Owners to enforce any right under this Indenture, except in the manner provided herein, and that all proceedings at law or in equity to enforce any provision of this Indenture shall be instituted, had and maintained in the manner provided herein and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and interest and premium (if any) on such Bond as provided herein or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the written consent of such Owner, notwithstanding the foregoing provisions of this Section or any other provision of this Indenture.
SECTION 8.08 Termination of Proceedings. In case the Trustee shall have proceeded to enforce any right under this Indenture by the appointment of a receiver or otherwise, and such proceedings shall have been discontinued or abandoned for any reason, or shall have been determined adversely, then and in every such case, the Authority, the Trustee and the Bond Owners shall be restored to their former positions and rights hereunder, respectively, with regard to the Leased Properties subject to this Indenture, and all rights, remedies and powers of the Trustee shall continue as if no such proceedings had been taken. 835
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01 Limited Liability of Authority. Notwithstanding anything contained in this Indenture, the Authority shall not be required to advance any moneys derived from any source of income other than the Revenues for the payment of the principal of or interest on the Bonds, or any premiums upon the redemption thereof, or for the performance of any covenants herein contained (except to the extent any such covenants are expressly payable hereunder from the Revenues or otherwise from amounts payable under the Sublease). The Authority may, however advance funds for any such purpose, provided that such funds are derived from a source legally available for such purpose and may be used by the Authority for such purpose without incurring indebtedness.
The Bonds shall be revenue bonds, payable exclusively from the Revenues and other funds as provided in this Indenture. The general fund of the Authority is not liable, and the credit of the Authority is not pledged, for the payment of the interest and premiums (if any) on or principal of the Bonds. The Owners of the Bonds shall never have the right to compel the forfeiture of any property of the Authority except the Revenues and other funds pledged to the payment of the Bonds as provided in this Indenture. The principal of and interest on the Bonds, and any premiums upon the redemption of any thereof, shall not be a legal or equitable pledge, charge, lien or encumbrance upon any property of the Authority or upon any of its income, receipts or revenues except the Revenues and other funds pledged to the payment thereof as provided in this Indenture.
SECTION 9.02 Benefits of Indenture Limited. Nothing in this Indenture, expressed or implied, is intended to give to any person other than the Authority, the Trustee, the City and the Owners of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any covenants, stipulations, promises or agreements in this Indenture contained by and on behalf of the Authority shall be for the sole and exclusive benefit of the Trustee, the City and the Owners of the Bonds.
SECTION 9.03 Discharge of Indenture. If the Authority shall pay and discharge any or all of the Outstanding Bonds in any one or more of the following ways:
(a) by well and truly paying or causing to be paid the principal of and interest and premiums (if any) on such Bonds, as and when the same become due and payable; (b) by irrevocably depositing with the Trustee, in trust, at or before maturity, money which, together with the available amounts then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture, is fully sufficient to pay such Bonds, including all principal, interest and redemption premiums (if any); or (c) by irrevocably depositing with the Trustee or any other fiduciary, in trust, Federal Securities in such amount as an Independent Certified Public Accountant (defined below) shall determine in a written report filed with the Trustee (upon which report the Trustee 836
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may conclusively rely) will, together with the interest to accrue thereon and available moneys then on deposit in the funds and accounts established with the Trustee pursuant to this Indenture, be fully sufficient to pay and discharge the indebtedness on such Bonds (including all principal, interest and redemption premiums) at or before their respective maturity dates; and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption shall have been sent pursuant to Section 2.03(d) or provision satisfactory to the Trustee shall have been made for the sending of such notice, then, at the Request of the Authority, and notwithstanding that any of such Bonds shall not have been surrendered for payment, the pledge of the Revenues and other funds provided for in this Indenture with respect to such Bonds, and all other pecuniary obligations of the Authority under this Indenture with respect to all such Bonds, shall cease and terminate, except only the obligation of the Authority to pay or cause to be paid to the Owners of such Bonds not so surrendered and paid all sums due thereon from amounts set aside for such purpose as aforesaid, and all amounts due the Trustee. Any funds held by the Trustee following any payment or discharge of the Outstanding Bonds pursuant to this Section 9.03, which are not required for said purposes, shall after payment of amounts due the Trustee hereunder be paid over to the Authority. Prior to the discharge of any or all of the Outstanding Bonds, the Trustee shall receive an opinion of Bond Counsel to the effect that the Bonds to be discharged are no longer Outstanding and all conditions precedent with respect to such discharge have been satisfied.
SECTION 9.04 Trustee’s Additional Acknowledgment of Certain Provisions of the Sublease. Without limiting any other provisions herein, the Trustee hereby acknowledges and agrees to comply with Section 9 of the Sublease.
SECTION 9.05 Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture the Authority is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions, with respect to the management, administration and control of the affairs of the Authority, that are presently vested in the Authority, and all the covenants, agreements and provisions contained in this Indenture by or on behalf of the Authority shall bind and inure to the benefit of its successors whether so expressed or not.
SECTION 9.06 Content of Certificates and Opinions. Any certificate made or given by an officer of the Authority may be based, insofar as it relates to legal matters, upon a certificate or opinion of or representations by counsel, unless such officer knows that the certificate or opinion or representations with respect to the matters upon which his certificate may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. Any such certificate or opinion or representation made or given by counsel may be based, insofar as it relates to factual matters, on information with respect to which is in the possession of the Authority, or upon the certificate or opinion of or representations by an officer or officers of the Authority, unless such counsel knows that the certificate or opinion or representations with respect to the matters upon which his certificate, opinion or representation may be based, as aforesaid, are erroneous, or in the exercise of reasonable care should have known that the same were erroneous. 837
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SECTION 9.07 Execution of Documents by Bond Owners. Any request, consent or other instrument required by this Indenture to be signed and executed by Bond Owners may be in any number of concurrent writings of substantially similar tenor and may be signed or executed by such Bond Owners in person or by their agent or agents duly appointed in writing.
Proof of the execution of any such request, consent or other instrument or of a writing appointing any such agent, shall be sufficient for any purpose of this Indenture and shall be conclusive in favor of the Trustee and of the Authority if made in the manner provided in this Section 9.07.
The fact and date of the execution by any person of any such request, consent or other instrument or writing may be proved by the affidavit of a witness of such execution or by the certificate of any notary public or other officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of deeds, certifying that the person signing such request, consent or other instrument or writing acknowledged to him the execution thereof.
The ownership of Bonds shall be proved by the Registration Books. Any request, consent or vote of the Owner of any Bond shall bind every future Owner of the same Bond and the Owner of any Bond issued in exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by the Trustee or the Authority in pursuance of such request, consent or vote. In lieu of obtaining any demand, request, direction, consent or waiver in writing, the Trustee may call and hold a meeting of the Bond Owners upon such notice and in accordance with such rules and obligations as the Trustee considers fair and reasonable for the purpose of obtaining any such action.
SECTION 9.08 Disqualified Bonds. In determining whether the Owners of the requisite aggregate principal amount of Bonds have concurred in any demand, request, direction, consent or waiver under this Indenture, Bonds which are owned or held by or for the account of the City or the Authority (but excluding Bonds held in any employees’ retirement fund) shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, provided, however, that for the purpose of determining whether the Trustee shall be protected in relying on any such demand, request, direction, consent or waiver, only Bonds which the Trustee knows to be so owned or held shall be disregarded. Upon the request of the Trustee, the Authority and the City shall specify in a certificate to the Trustee those Bonds that are disqualified pursuant to this Section and the Trustee may conclusively rely on such certificate.
SECTION 9.09 Waiver of Personal Liability. No officer, agent or employee of the Authority shall be individually or personally liable for the payment of the interest on or principal of the Bonds; but nothing herein contained shall relieve any such officer, agent or employee from the performance of any official duty provided by law.
SECTION 9.10 Partial Invalidity. If any one or more of the covenants or agreements, or portions thereof, provided in this Indenture on the part of the Authority (or of the Trustee) to be performed should be contrary to law, then such covenant or covenants, such agreement or agreements, or such portions thereof, shall be null and void and shall be deemed separable 838
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from the remaining covenants and agreements or portions thereof and shall in no way affect the validity of this Indenture or of the Bonds; but the Bond Owners shall retain all rights and benefits accorded to them under the Bond Law or any other applicable provisions of law.
SECTION 9.11 Destruction of Canceled Bonds. Whenever in this Indenture provision is made for the surrender of any Bonds which have been paid or canceled pursuant to the provisions of this Indenture, the Trustee shall cancel and destroy such Bonds and upon Request of the Authority furnish to the Authority a certificate of such destruction.
SECTION 9.12 Funds and Accounts. Any fund or account required by this Indenture to be established and maintained by the Authority or the Trustee may be established and maintained in the accounting records of the Authority or the Trustee, as the case may be, either as a fund or an account, and may, for the purpose of such records, any audits thereof and any reports or statements with respect thereto, be treated either as a fund or as an account. All such records with respect to all such funds and accounts held by the Authority shall at all times be maintained in accordance with generally accepted accounting principles and all such records with respect to all such funds and accounts held by the Trustee shall be at all times maintained in accordance with corporate trust industry practices; in each case with due regard for the protection of the security of the Bonds and the rights of every Owner thereof.
SECTION 9.13 Payment on Business Days. Whenever in this Indenture any amount is required to be paid on a day that is not a Business Day, such payment shall be required to be made, without accruing additional interest thereby, on the Business Day immediately following such day.
SECTION 9.14 Notices. Any notice, request, complaint, demand or other communication under this Indenture shall be given by first class mail or personal delivery to the party entitled thereto at its address set forth below, by overnight mail, as a .pdf attachment to electronic mail, or by telecopy or other form of telecommunication, confirmed by telephone at its number set forth below. Notice shall be effective either (i) upon transmission by telecopy or other form of telecommunication, (ii) 48 hours after deposit in the United States mail, postage prepaid, (iii) in the case of overnight mail, upon delivery to the addressed destination, or (iv) in the case of personal delivery to any person, upon actual receipt. The Authority, the City or the Trustee may, by written notice to the other party, from time to time modify the address, email address, or number to which communications are to be given hereunder.
If to the Authority: South Tahoe Joint Powers Financing Authority 1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Attention: Executive Director
Phone: (530) 542-6043
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If to the City: City of South Lake Tahoe
1901 Lisa Maloff Way, Suite 210
South Lake Tahoe, CA 96150
Attention: City Manager
Phone: (530) 542-6043
If to the Trustee: The Bank of New York Mellon Trust Company, N.A. 333 South Hope Street, Suite 2525
Los Angeles, CA 90071
Phone: (213) 630-6417
Attention: Alex Dominguez, Client Service Manager
Email: [email protected]
Any party listed above may designate any further or different addresses to which subsequent notices, certificates or other communications shall be sent.
SECTION 9.15 Unclaimed Moneys. Anything in this Indenture to the contrary notwithstanding, any moneys held by the Trustee in trust for the payment and discharge of any of the Bonds that remain unclaimed for two years after the date when such Bonds have become due and payable, either at their stated maturity dates or by call for earlier redemption, if such moneys were held by the Trustee at such date, or for two years after the date of deposit of such moneys if deposited with the Trustee after said date when such Bonds become due and payable, shall be repaid by the Trustee to the Authority, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Bond Owners shall look only to the Authority for the payment of such Bonds; provided, however, that before being required to make any such payment to the Authority, the Trustee shall, at the expense of the Authority, cause to be mailed to the Owners of all such Bonds, at their respective addresses appearing on the Registration Books, a notice that said moneys remain unclaimed and that, after a date named in said notice, which date shall not be less than 30 days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Authority.
SECTION 9.16 Governing Law. This Indenture shall be construed and governed in accordance with the laws of the State of California.
SECTION 9.17 Execution in Counterparts. This Indenture may be executed in any number of counterparts. Each of such counterparts shall for all purposes be deemed to be an original and all such counterparts shall together constitute but one and the same instrument. 840
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be signed by their respective authorized representatives, all as of the day and year first above written.
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
By:
Joe Irvin, Executive Director
ATTEST:
Secretary
The Bank of New York Mellon Trust Company, N.A.,
as Trustee
By:
Name: ___
Title:
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EXHIBIT A
FORM OF BOND
Unless this certificate is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Authority or its agent for registration of transfer, exchange, or payment, and any certificate issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
No. R-___ $_____________
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
LEASE REVENUE BOND
2023 SERIES A
INTEREST RATE MATURITY DATE ORIGINAL ISSUE DATE CUSIP
% October 1, 20__ [August 30], 2023 84049M___
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: ______________________________ DOLLARS The SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY, a joint powers authority organized and existing under the laws of the State of California (the “Authority”), for value received, hereby promises to pay (but only out of the Revenues, as defined in the Indenture hereinafter referred to, and certain other moneys) to the Registered Owner identified above or registered assigns (the “Registered Owner”), on the Maturity Date identified above or any earlier redemption date, the Principal Amount identified above in lawful money of the United States of America; and to pay interest thereon at the Interest Rate identified above in like money from the Interest Payment Date (as hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after the fifteenth calendar day of the month preceding such Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior to the fifteenth calendar day of the month preceding the first Interest Payment Date, in which event it shall bear interest from the Original Issue Date identified above; provided, however, that if, at the time of authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has previously been paid or made available for payment), payable semiannually on April 1 and October 1 in each year, commencing [April 1, 2024] (each an “Interest Payment Date”) until payment of such Principal Amount in full.
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The Principal Amount of this Bond is payable by check upon presentation hereof upon maturity or earlier redemption at the principal corporate trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), in Los Angeles, California, or at such other office as the Trustee may designate (the “Trust Office”). Interest hereon is payable by check or draft of the Trustee mailed by first class mail on each Interest Payment Date to the Registered Owner hereof at the address of the Registered Owner as it appears on the registration books of the Trustee as of the fifteenth calendar day of the month preceding such Interest Payment Date (except that in the case of a Registered Owner of at least $1,000,000 in aggregate principal amount of the Bonds, such payment may, at such Registered Owner’s option, be made by wire transfer of immediately available funds in accordance with written instructions provided by such Registered Owner prior to the 15th calendar day of the month immediately preceding such Interest Payment Date).
This Bond is one of a duly authorized issue of bonds of the Authority designated the “South Tahoe Joint Powers Financing Authority, Lease Revenue Bonds, 2023 Series A” (the “Bonds”), limited in principal amount to ___ Dollars ($[principal amount]) secured by an Indenture, dated as of August 1, 2023 (the “Indenture”), by and between the Authority and the Trustee. Reference is hereby made to the Indenture and all indentures supplemental thereto for a description of the rights thereunder of the owners of the Bonds, of the nature and extent of the Revenues (as that term is defined in the Indenture), of the rights, duties and immunities of the Trustee and of the rights and obligations of the Authority thereunder; and all of the terms of the Indenture are hereby incorporated herein and constitute a contract between the Authority and the Registered Owner hereof, and to all of the provisions of which Indenture the Registered Owner hereof, by acceptance hereof, assents and agrees.
The Bonds are authorized to be issued pursuant to the provisions of the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4, Chapter 5, Division 7, Title 1 of the Government Code of the State of California (the “Act”). The Bonds are special obligations of the Authority and, as and to the extent set forth in the Indenture, are payable solely from and secured by a first lien on and pledge of the Revenues and certain other moneys and securities held by the Trustee as provided in the Indenture. All of the Bonds are equally secured by a pledge of, and charge and lien upon, all of the Revenues and such other moneys and securities, and the Revenues and such other moneys and securities constitute a trust fund for the security and payment of the principal of and interest on the Bonds. The full faith and credit of the Authority are not pledged for the payment of the principal of or interest on the Bonds. The Bonds are not secured by a legal or equitable pledge of, or charge, lien or encumbrance upon, any of the property of the Authority or any of its income or receipts, except the Revenues and such other moneys and securities as provided in the Indenture.
The Bonds have been issued for the purpose of assisting the City with the cost of construction of a new multigenerational recreation center. In connection with the issuance of the Bonds, the Authority has entered into the Sublease, dated as of August 1, 2023 (the “Sublease”) with the City, under which the City is obligated to pay amounts which are 843
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anticipated to be sufficient to enable the Authority to pay the principal of and interest on the Bonds.
The Bonds are subject to redemption prior to their respective maturity dates, upon notice as hereinafter provided, as a whole or in part, on any date, from prepaid Base Rental Payments made by the City from funds received by the City due to a taking of the Leased Properties (as defined in the Sublease) or any portion thereof under the power of eminent domain or from net proceeds of insurance received for material damage or destruction, defects in title to the Leased Properties, under the circumstances and upon the conditions and terms prescribed in the Indenture and in the Sublease, at a redemption price equal to the sum of the principal amount of the Bonds to be redeemed plus accrued interest thereon to the date fixed for redemption, without premium.
The Bonds maturing on or after October 1, [2033], 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, [2032]). The Bonds called for such 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.
The Bonds maturing on October 1, 20__ and October 1, 20__ 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 extraordinary redemption or optional redemption described above, 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 an extraordinary redemption or an optional redemption 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
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Bonds Maturing on October 1, 20__
Redemption Date
(October 1)
Principal Amount
to be Redeemed
______________
* maturity
The Trustee on behalf and at the expense of the Authority shall send by first class mail (or if the registered owner of such Bond is a depository, by such method as acceptable to such depository), notice of any redemption to the respective owners of any Bonds designated for redemption, at their respective addresses appearing on the registration books maintained by the Trustee, to the Securities Depositories and to one or more Information Services (as such terms are defined in the Indenture), at least 30 but not more than 60 days prior to the redemption; provided, however, that neither failure to receive any such notice so sent nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. Such notice shall state the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers, the serial numbers of each maturity or maturities (except that if the event of redemption is of all of the Bonds of such maturity or maturities in whole, the Trustee shall designate such maturities or the maturity in whole without referencing each individual number) of the Bonds to be redeemed, and shall 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 after the redemption date.
The Bonds shall be issued in denominations of $5,000 or any integral multiple thereof.
Subject to the limitations and upon payment of the charges, if any, provided in the Indenture, this Bond may be exchanged at the Trust Office of the Trustee for a like aggregate principal amount, interest rate and maturity of fully registered Bonds of other authorized denominations.
This Bond is transferable by the Registered Owner hereof, in person or by such Registered Owner’s attorney duly authorized in writing, at the Trust Office of the Trustee, but only in the manner, subject to the limitations and upon payment of the charges provided in the Indenture, and upon surrender and cancellation of this Bond. Upon such transfer a new fully registered Bond or Bonds, of authorized denomination or denominations, for the same aggregate principal amount and of the same maturity will be issued to the transferee in exchange herefor. The Authority and the Trustee may treat the Registered Owner hereof as the absolute owner hereof for all purposes, and the Authority and the Trustee shall not be affected by any notice to the contrary. The Trustee shall not be required to register the transfer or exchange of any Bond during the period in which the Trustee is selecting Bonds for redemption or any Bond selected for redemption.
845
A-5
12463-0017\2678945
The Indenture and the rights and obligations of the Authority and of the owners of the Bonds and of the Trustee may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terms provided in the Indenture; provided that no such modification or amendment shall (a) extend the maturity of or reduce the interest rate on any Bond or otherwise alter or impair the obligation of the Authority to pay the principal, interest or premiums at the time and place and at the rate and in the currency provided therein of any Bond without the express written consent of the owner of such Bond, (b) reduce the percentage of Bonds required for the written consent to any such amendment or modification, or (c) without its written consent thereto, modify any of the rights or obligations of the Trustee, all as more fully set forth in the Indenture.
It is hereby certified that all things, conditions and acts required to exist, to have happened and to have been performed precedent to and in the issuance of this Bond do exist, have happened and have been performed in due time, form and manner as required by the Constitution and statutes of the State of California and by the Act and the amount of this Bond, together with all other indebtedness of the Authority, does not exceed any limit prescribed by the Constitution or statutes of the State of California or by the Act.
This Bond shall not be entitled to any benefit under the Indenture, or become valid or obligatory for any purpose, until the certificate of authentication hereon shall have been signed by the Trustee.
846
A-6
12463-0017\2678945
IN WITNESS WHEREOF, the Authority has caused this Bond to be executed in its name and on its behalf, and attested, by the manual or facsimile signatures of its Vice Chair and Secretary as of the Original Issue Date identified above.
SOUTH TAHOE JOINT POWERS FINANCING
AUTHORITY
By:
Vice Chair
Attest:
Secretary
================================================================== TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture and registered on the Bond Registration Books.
Date: The Bank of New York Mellon Trust Company, N.A.,
as Trustee
By:
Authorized Signatory
847
A-7
12463-0017\2678945
FORM OF ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto, whose tax identification number is _________________________, the within-mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s) attorney to transfer the same on the books of the Trustee with full power of substitution in the premises.
Dated:
Signature guaranteed:
NOTE: The signature(s) on this Assignment
must correspond with the name(s) as written
on the face of the within Bond in
every particular without alteration or
enlargement or any change whatsoever.
NOTICE: Signature must be guaranteed by a
member of an institution which is a participant
in the Securities Transfer Agent Medallion
Program (STAMP) or such other similar
program approved by the Trustee.
848
B-1
12463-0017\2678945
EXHIBIT B
FORM OF REQUISITION (COSTS OF ISSUANCE)
REQUISITION NO. __
(Costs of Issuance Fund)
with reference to
$[principal amount]
South Tahoe Joint Powers Financing Authority
Lease Revenue Bonds
2023 Series A
[Date]
I. The South Tahoe Joint Powers Financing Authority (the “Authority”) hereby requests The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) pursuant to that certain Indenture, dated as of August 1, 2023 (the “Indenture”), by and between the Authority and the Trustee, under the terms of which the above-captioned bonds, to pay from the moneys in the Costs of Issuance Fund established pursuant to the Indenture, the amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper charge against the Costs of Issuance Fund. None of the items for which payment is requested has been reimbursed previously from the Costs of Issuance Fund.
All capitalized terms not defined herein have the meanings ascribed to them in the Indenture.
SOUTH TAHOE JOINT POWERS FINANCING AUTHORITY
By:
Name:
Title:
849
C-1
12463-0017\2678945
EXHIBIT C
FORM OF REQUISITION (PROJECT FUND)
REQUISITION NO. __
(Project Fund)
with reference to
$[principal amount]
South Tahoe Joint Powers Financing Authority
Lease Revenue Bonds
2023 Series A
[Date]
I. Pursuant to Section 3.04 of the Indenture, dated as of August 1, 2023 (the “Indenture”), by and between the South Tahoe Joint Powers Financing Authority (the “Authority”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”), under the terms of which the above-captioned bonds were issued, the undersigned, City of South Lake Tahoe, hereby requests the Trustee, to pay from the moneys in the Project Fund the amounts shown on Schedule I attached hereto to the parties indicated in Schedule I.
II. The payees, the purposes for which the costs have been incurred, and the amount of the disbursements requested are itemized on Schedule I hereto.
III. Each obligation mentioned in Schedule I hereto has been properly incurred and is a proper charge against the Project Fund. None of the items for which payment is requested has been reimbursed previously from the Project Fund.
All capitalized terms not defined herein have the meanings ascribed to them in the Indenture.
CITY OF SOUTH LAKE TAHOE
By:
Name:
Title:
850
Notice of Public Hearing
City of South Lake Tahoe
City Council
NOTICE IS HEREBY
GIVEN that the City of
South Lake Tahoe City
Council will conduct a
public hearing on August
8, 2023, at 9:00 a.m.,
or as soon thereafter as
possible, at City Hall, City
Council Chambers, 1901
Lisa Maloff Way, South
Lake Tahoe, to consider
the following agenda
item:
Proposed issuance of
bonds (the “Authority
Bonds”) by the South
Tahoe Joint Powers
Financing Authority .
The Authority Bonds
are being issued
to assist the City
with the financing
of certain public
capital improvements,
including the costs
of construction and
installation of the City’s
new Multigenerational
Recreation & Aquatic
Center Project.
Any interested person
may appear at the public
hearing and speak in
favor or against this item.
Written testimony may be
delivered at, or prior to, the
Public Hearing addressed
to the City Council in
care of the City Clerk
at PublicComment@
cityofslt.us or at the
address listed below.
City Council agendas and
related staff reports are
available at least 72 hours
in advance of regular
meetings on the City
Council page of the City’s
website www.cityofslt.us
or by contacting the City
Clerk.
The City Council
Chambers meeting
facility is accessible to
people with disabilities.
Every reasonable
effort will be made to
accommodate any
person needing special
assistance to attend this
meeting. Contact the
City Clerk at least 48
hours in advance of the
meeting for assistance
[28 CFR 35.102.35.104
ADA Title II and Brown
Act Government Code
Sections 54953.2,
54954.1, 54954.2, and
54957.5].
Susan Blankenship
Susan Blankenship
Elected City Clerk
City of South Lake Tahoe
1901 Lisa Maloff Way, Ste
206
South Lake Tahoe, CA
96150
(530) 542-6005
Published: July 28, 2023
851
City of South Lake Tahoe
2023 Series A Lease Revenue Bonds
August 8, 2023
852
The Multigenerational Center
2 Over the next two years the City plans to construct a new recreation and aquatics facility to replace the existing recreation center
Located on south side of Highway 50 on western end of the City, across from the lake 60,000-square-foot facility planned on 56-acre project site Aquatics center with 6-lane lap pool and separate activity pool with lazy river and spray features
Multi-purpose gymnasium, fitness and dance studios
Commercial grade kitchen and multiple community gathering spaces 853
Plan of Finance
3 The administration has developed a financing plan based on a number of considerations
Use of funds on hand: use funds on hand to limit the amount of lease revenue bonds (LRBs) being issued
Type of financing: fixed rate to take advantage of current low interest rates Repayment structure: use of a 30-yr level debt service structure Repayment source: Pledge of City’s general fund revenues for use and occupancy of the leased property
City intends to use Measure P revenues as primary source for base rental payments Timing: price in mid-August to take advantage of relatively low interest rates; construction to begin next spring
854
Projected Debt Service
4 At current market interest rates, we expect
annual debt service to be approximately
$3.4 million through fiscal year 2053-54
Approximately $55.9 million in proceeds
would be generated for the project
Sources
Par Amount $51,300,000
Premium 5,099,348
56,399,348
Uses:
Project Fund 55,892,848
Cost of Issuance 250,000
Underwriter's Discount 256,500
56,399,348
Good Faith Estimates
Net Proceeds to be Received* $55,892,848
True Interest Costs 4.39%
Total Debt Service 102,150,368
UW Discount 256,500
Cost of Issuance 250,000
*Net of cost of issuances and underwriter’s discount
Preliminary rates plus 25 basis points cushion as of July 31, 2023 Period Ending Principal Interest Debt Service
10/01/2023 $226,455 $226,455
10/01/2024 765,000 2,629,800 3,394,800
10/01/2025 805,000 2,591,550 3,396,550
10/01/2026 845,000 2,551,300 3,396,300
10/01/2027 890,000 2,509,050 3,399,050
10/01/2028 935,000 2,464,550 3,399,550
10/01/2029 980,000 2,417,800 3,397,800
10/01/2030 1,030,000 2,368,800 3,398,800
10/01/2031 1,080,000 2,317,300 3,397,300
10/01/2032 1,135,000 2,263,300 3,398,300
10/01/2033 1,190,000 2,206,550 3,396,550
10/01/2034 1,250,000 2,147,050 3,397,050
10/01/2035 1,315,000 2,084,550 3,399,550
10/01/2036 1,380,000 2,018,800 3,398,800
10/01/2037 1,445,000 1,949,800 3,394,800
10/01/2038 1,520,000 1,877,550 3,397,550
10/01/2039 1,595,000 1,801,550 3,396,550
10/01/2040 1,675,000 1,721,800 3,396,800
10/01/2041 1,760,000 1,638,050 3,398,050
10/01/2042 1,845,000 1,550,050 3,395,050
10/01/2043 1,940,000 1,457,800 3,397,800
10/01/2044 2,035,000 1,360,800 3,395,800
10/01/2045 2,145,000 1,253,963 3,398,963
10/01/2046 2,255,000 1,141,350 3,396,350
10/01/2047 2,375,000 1,022,963 3,397,963
10/01/2048 2,500,000 898,275 3,398,275
10/01/2049 2,630,000 767,025 3,397,025
10/01/2050 2,770,000 628,950 3,398,950
10/01/2051 2,915,000 483,525 3,398,525
10/01/2052 3,065,000 330,488 3,395,488
10/01/2053 3,230,000 169,575 3,399,575
$51,300,000 $50,850,368 $102,150,368
855
5 Interest Rate Movement
As of 7/31/2023
Inflationary pressure and the FOMC rate hikes increased interest rates over the last year:
Tax exempt rates are up 179 basis points (bps) on the short end of the curve Long-term rates are up 62 bps
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
1 3 5 7 9 11 13 15 17 19 21 23 25 27 29
AAA Municipal Curve
10 yr Historical Range 7/28/2022 7/28/2023
0.00 0.50
1.00 1.50
2.00 2.50
3.00 3.50
4.00 1 2 3 4 5 6 7 8 9 101112131415161718192021222324252627282930 AAA Yield Curve
7/28/2023 11/28/2022 7/29/2022
856
The City leases assets to the South Lake Tahoe Joint Powers Financing Authority in exchange for an upfront payment through a Lease Agreement and Sublease The City leases the assets back from the Authority in exchange for an agreement to make payments over time through a Sublease
The Authority signs over its rights to collect and enforce payments to a trustee bank (BNY Mellon) through an Assignment Agreement
Once all payments have been made or the LRBs are refunded, the Lease Agreement and Sublease will be terminated
Financing Structure
6 857
Security
Pledge of revenues, consisting mainly of base rental payments payable from the City’s general fund revenues for use and occupancy of the leased properties City intends to use Measure P revenues as primary source for base rental payments; FY2022 Measure P revenues totaled $3.42 million
City covenants to budget and appropriate annual base rental payments Subject to abatement by reason of any damage, destruction, condemnation or impairment of leasehold interest, there is substantial interference with the use and occupancy of the Leased Properties
Reserve requirement not required but may be funded for marketing purposes Leased Properties
Police Station (released from the 2016 LRBs)
Ice Arena
Bijou Park
2023 Series A Bonds
7 858
Given that lease payments are subject to appropriation and abatement, the value, essentiality, and resiliency of the assets are key credit considerations Value: Value of the assets (typically based on insured values) must be approximate to the value of the lease revenue bonds
The rent in each year represents the “fair rental value” of the premises Essentiality: Is the asset essential to the operations of the City Resiliency: Assets must pass a seismic test to receive a rating by S&P Together, the leased assets provide sufficient value, essentiality, and resiliency Credit Considerations
8 Value Essentiality Resiliency
Police Station Insufficient
Ice Arena Insufficient -
Bijou Park Insufficient - NA
859
Financing Resolutions
Authorizes the issuance of lease revenue bonds in the not to exceed amount of $59 million to finance the construction of the new Multi-generational Recreation and Aquatics Center
Approves certain legal and disclosure documents as to form Acknowledges certain ongoing obligations of the City in connection with the financing Authorizes the execution of the closing documents by City staff Actions of Joint Powers Financing Authority and City Council 9 860
Our strategy is to apply to a single rating
agency, to apply for bond insurance, and to
purchase such bond insurance only to the
extent that its benefit exceeds its cost We made a presentation to Standard & Poor’s on July 17th
S&P assigned their ‘AA’ rating to the bonds The rating is one notch below the City’s implied GO rating due to the appropriation
structure Implied GO rating ‘AA+’ Appropriation rating ‘AA’ An issue with a “AA” rating is less likely to
require the purchase of bond insurance
In its rating report, S&P Global Ratings
highlighted the City’s: Deep and diverse economy Prudent and proactive financial management Conservative fiscal framework Manageable debt burden Credit Ratings
10 861
Financing Schedule
11 The financing is scheduled to price Wednesday, August 16th and to close on Wednesday, August 30th
Date Activity
August 8th
• Presentation of financing plan and financing resolutions to City Council • City Council approval of bond documents and substantially final preliminary official statement
August 8th Phase II bid award
August 9th Post preliminary official statement
August 16th Pricing of LRBs. Establishment of interest rates August 30th Closing. City receives funds
862
Questions?
863
City of South Lake Tahoe
Agenda Item Executive Summary
Joe Irvin, City Manager
__________________________________
Meeting Date: August 8, 2023
Agenda Item #:13
Agenda Item: Agreement with Roebbelen Contracting, Inc. for Multi-Generational Recreation and Aquatic Center
Executive Summary: City Council will consider a contract with Roebbelen Contracting, Inc. for $67,851,097.00, for the Multi-Generational Recreation and Aquatic Center, including Additive Bid Items:
Alt#1: Gymnasium Floor Staining: $10,845; Alt#2: Gym Equipment, Backstops: $132,500; Alt#3: HVL Fans (Add to Gym): $55,400; Alt#4: Paging Capability: $156,200; Alt#5: Card Readers: $137,100; Alt#7:
Integral Waterproofing at Pool Deck: $14,099; and a Deductive Bid Item #6: Spray-On Fireproofing:
($181,047).
Requested Action / Suggested Motions: Pass a Resolution appropriating $71,578,652 for the MultiGenerational Recreation and Aquatic Center Project upon successful bond sale and authorizing and directing the Mayor Pro Tem to execute a construction contract with Roebbelen Contracting, Inc. in the amount of $67,851,097.00.
Responsible Staff Member: Anush Nejad, Director of Public Works, John Stark, Director of Parks and Recreation
Reviewed and Approved By: Susan Blankenship, City Clerk Olga Tikhomirova, Director of Finance Daniel J. Bardzell, Assistant City Attorney
Attachments:
01-Staff_Report_Rec_Center_Award_Roebbelen_Final.docx
02-Resolution-_Phase_2_Budget_Appropriation_Final_V3.docx 03 - Construction_Agreement_Roebbelen-Revised (7-31-23) Signed.pdf 04 - Roebbelen Presentation.pdf
864
Council Agenda Report August 8, 2023 Page 1 of 5
City of South Lake Tahoe
Report to City Council
Meeting Date: August 8, 2023
Title: Construction Contract Award for Multi-Generational Recreation and Aquatics Center Phase 2
Project Location: 1150 Rufus Allen Boulevard, South Lake Tahoe, CA Responsible Staff Member: Anush Nejad, Director of Public Works (530) 542-6031, John Stark, Director of Parks and Recreation (530) 542-6197, and Olga Tikhomirova, Finance Director (530) 542-7431
Background:
In July 2020, the City retained the services of JK Architecture, and the design of the project was completed in 2022. The project construction was divided into 2 phases. Phase 1 was the site work, which started in 2022. Phase 1 of the project is complete and ready for the start of Phase 2, the vertical building construction.
The Department of Public Works released Phase 2 bid documents for the vertical construction and remaining site work to the public on August 22, 2022. On October 24, 2022, the City received two bids for the project from ACC Contractors, Inc. and Bobo Construction, Inc. On November 15. 2022, the City Council rejected both bids due to irregularity of bid submittal from the low bidder, ACC Contractors, Inc., and low confidence in the capacity of both contractors.
The City Council directed staff to conduct value engineering, consider additional contractor incentives, and re-bid the project.
Issue and Discussion:
Staff worked with the consultants to incorporate value engineering and other incentives in the contract provisions. In addition, staff developed Pre-Qualification requirements and advertised the requirements on Planet Bids on March 24, 2023. 225 Contractors were notified regarding the opportunity. 32 contractors downloaded the Pre-Qualification package. Four Contractors submitted Pre-Qualification documents, and all four were selected for submittal of the bids. The four pre-qualified contractors are listed in Table A.
Firm Location
Broward Builders, Inc. Woodland, CA
Clark/Sullivan Construction Roseville, CA
Devcon Construction, Inc. Reno, NV
Roebbelen Contracting, inc. El Dorado Hills, CA
Table A – Firms submitted Pre-Qualification
On May 16, 2023, the City issued the Bid documents to the four qualified bidders. A pre-bid meeting was held on June 2, 2023, including a site meeting. Prospective contractors submitted 111 Request for Information (RFI) during the bidding phase, which were answered. The City issued four addenda to the contract documents to clarify questions.
865
Council Agenda Report August 8, 2023 Page 2 of 5
On June 27, 2003, the City received one bid from Roebbelen Contracting, Inc. for the Base Bid amount of $67,526,000.00. In addition to the Base Bids, the City itemized seven Alternate bid items, as shown in Table B below:
Additive and Deductive Alternates:
ADDITIVE ALTERNATE Amount
1 Gymnasium Floor Staining $10,845
2 Gym Equipment and Backstops $132,500
3 HVL Ceiling Fans (2) - Gymnasium $55,400
4 Paging System (Whole Facility) $156,200
5 Card Readers $137,100
7 Integral Waterproofing at Pool Deck $14,099
TOTAL ADDITIVE ALTERNATES $506,144
DEDUCTIVE ALTERNATE
6 Spray-On Fireproofing ($181,047)
TOTAL DEDUCTIVE ALTERNATES ($181,047)
GRAND TOTAL $325,097
Table B – Alternate Bid Items
Staff is recommending the award of all Additive and Deductive Bid items. The total contract sum with the Additive and Deductive Bid Items is $67,851,097.00.
The Department of Public Works, in coordination with the city’s pre-construction team SierraCon/CORE, estimated the project’s construction cost at $68,118,148.00. The estimate was based on consultation with several contractors and sub-contractors working in the general region on similar projects as well as hard cost data from similar projects within the Reno/Sacramento area.
The bid of $67,526,000 represents a value of approximately 1% below the engineer’s estimate. In addition, based on the Industrial Building Actual Cost Index, construction costs rose 41.9% during the last five years, from 2019 to 2023. A project cost of $50 million in 2019 is approximately $71 million in 2023. Based on these two indicators, Roebbelen’s bid reflects a reasonable cost for this project.
Financial Implications:
Roebbelen’s total bid with Alternate Bid Items is $67,851,097. Staff recommends a 5% construction contingency for $3,392,555. In addition to the construction costs, several short-term budget appropriations is needed, totaling $335,000.
1. Labor Compliance Services: $50,000
2. Utility Fees: $265,000
3. Inspection and Permitting Fees: $20,000
Other peripheral costs associated with the project, which will be required after the start of construction, will be brought forward in the future for appropriation and are estimated at $2,075,000:
1. Construction Management Support Services: $1,000,000
2. Special Inspection Services/Materials Testing: $650,000
3. Commissioning: $200,000
866
Council Agenda Report August 8, 2023 Page 3 of 5
4. Incentive Bonus (If needed): $225,000
Other costs associated with the project and recommended for fundraising through the South Lake Tahoe Parks Foundation are estimated at $1,055,000. These include:
1. Kitchen, Gym, Pool & maintenance Daily Operational Materials: $ 100,000
2. AV and Computer Equipment: $ 175,000
3. Public Art: $100,000
4. Furniture, Fixture, and Equipment (FF&E): $ 680,000
The project costs are supported by Measure P, Measure S, ARPA, and General Fund appropriations as detailed below in Table C
Sources of Funds Amount
Lease Revenue Bond Proceeds (conservative estimate) $55,000,000 Measure P Cash on Hand $12,400,000
Measure S Sales Tax Fund $1,000,000
General Fund Unassigned Excess (Commercial Kitchen) $1,900,000 ARPA unallocated Funds $2,700,000
General Funds Excess Reserves $700,000
Total Funds $73,700,000
Today’s Budget Appropriation $71,578,652
Table C – Project Funding
The total estimated cost of the Phase 2 project requiring budget appropriations today is $71,578,652 and includes total construction contract cost with alternate bid items ($67,851,097), 5% construction contingency ($3,392,555), labor compliance ($50,000), utility fees ($265,000), and inspections and permitting ($20,000).
The budget for construction management ($1,000,000), commissioning ($200,000), materials testing ($650,000), as well as the incentive bonus ($225,000) will be appropriated at a later date upon award of those contracts or as needed.
It is anticipated that based on the current market conditions, selling the bonds at the new approved maximum of $59 million can generate between $54.5 million and $56.6 million. Measure “P” TOT ending fund balance for the fiscal year 2022/23 is projected at approximately $13.0 million. The General Fund has the required estimated $2.6 million in undesignated excess reserves available to allocate to the project, with $1.9 million towards the commercial kitchen which is required to be funded by sources other than Measure P.
Unallocated ARPA funding is required to be obligated by December 2024 and expended by December 2026.
Measure S Sales Tax general fund has an accumulated but unallocated fund balance from the prior fiscal year of approximately $2.2 million.
The attached resolution will appropriate up to the maximum projected usage from each of the five proposed sources identified above, for the total appropriations not to exceed $71,578,652. Once the bonds are sold and the proceeds amount is known, the project funding budget true-up will be presented to Council in September 2023, including annual debt service appropriations.
Environmental Considerations:
On January 18, 2022, City Council adopted an Initial Study/Mitigated Negative Declaration (IS/MND) for the 56 Acre Master Plan and the Multigenerational Recreation and Aquatics Center (State Clearinghouse file 867
Council Agenda Report August 8, 2023 Page 4 of 5
#2021120206). This action is included within the scope of the IS/MND and no further environmental review is required under CEQA Guidelines section 15162.
Policy Implications:
The Project is consistent with the following Strategic Plan, General Plan, Community Plan and Recreation Plan documents:
Strategic Plan 1.2 – Mid-town Revitalization - Action Item
1. Complete the new Recreation and Swim Complex and in the meantime, maintain the current complex for resident use.
General Plan Policy LU‐3.2: Neighborhood and Recreation Connectivity. The City shall improve connections and access to a wide range of recreational opportunities, which will improve the quality of life of residents and visitors.
General Plan Policy LU‐8.1: Mountain Architectural Theme. The City shall promote the use of a “mountain” architectural theme in all new and remodeled developments. Mountain architecture features the use of pitched roofs, natural colors, and natural material such as rock and wood.
General Plan Policy LU‐8.2: Native Plant Use. The City shall require the most environmentally efficient and attractive landscaping at all City‐owned public buildings and encourage their use and maintenance on private property
General Plan Policy LU‐9.1: Sustainable Construction Methods. The City shall promote the use of “green” and sustainable construction in new housing units, commercial developments, and mixed‐use centers.
General Plan Policy LU‐11.3: Equitable Distribution of New Public Facilities and Services. The City shall plan for the equitable distribution and use of new and upgraded public facilities and services that increase and enhance the entire community’s quality of life.
General Plan Policy LU‐11.4: Quality of Life for all Age Groups. The City shall develop a strategy to provide amenities and facilities that support a high quality of life for all age groups.
General Plan Policy ED‐1.10: Expanding Events and Entertainment Opportunities. The City shall encourage the sponsors of sporting events, festivals, parades, international competitions, and entertainment shows to hold events at public (e.g., Parks and Recreation facilities, roads, or public lands) and private facilities in South Lake Tahoe, particularly during off‐season (Spring and Fall). The City shall also participate in community organizations specifically formed for this purpose (e.g., Sports Commission).
General Plan Policy PQP‐8.4: Coordination with Utility Providers. The City shall coordinate with gas and electricity service providers to site and design gas and electric systems to minimize environmental, aesthetic, and safety impacts to existing and future residents.
General Plan Policy PQP‐10.1: Social Activity Centers. The City shall design new community centers and other types of public facilities as social activity centers.
General Plan Policy PQP‐10.2: Energy Efficiency in City Buildings and Facilities. The City shall incorporate energy efficiency standards into all City‐owned and operated buildings and facilities.
General Plan Policy PQP‐10.4: Joint‐Use Facilities. The City shall coordinate with other agencies to 868
Council Agenda Report August 8, 2023 Page 5 of 5
establish and maintain joint‐use facilities in South Lake Tahoe.
General Plan Policy ROS‐1.1: Recreational Services. The City shall design and develop recreational services to promote full use of recreational facilities within their design capacity.
General Plan Policy ROS‐1.5: Community Pool The City shall develop high‐quality community pool facilities that can be used year‐ round, which includes such amenities as a permanent/retractable roof, splash pool, therapy pool, pool sprays, pool climbing wall, adventure apparatus and slides.
General Plan Policy NCR‐6.7: LEED Certified Public Buildings. The City shall develop all new City buildings to meet LEED standards.
Bijou/Al Tahoe Community Plan Chapter V(1) Objective 1: Increase the family oriented active and passive recreational opportunities to serve local residents as well as visitors.
Policy C: Provide a greater variety of sporting facilities in the "Government Center" District (CSLT Recreation Complex, Campground by the Lake, Lake Tahoe Community College, etc.), while maintaining those that are existing. Review the possibility of expanding the CSLT Parks and Recreation facilities located on Rufus Allen Boulevard. Additional outdoor uses (volleyball courts, horseshoe pits, picnic tables/eating areas, ice skate rink, etc.) would be an asset, when provided in conjunction with the existing uses at the complex.
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Resolution 2023-XXX August 8, 2023 Page 1 of 3
Resolution 2023-XXX
Adopted by the City of South Lake Tahoe
City Council
August 8, 2023
Appropriation of Funds Upon Successful Bond Sale for the Construction of the Multi-Generational Recreation and Aquatics Center Phase 2 and Associated Labor Compliance, Permitting and Utilities Fees
BACKGROUND
A. The City of South Lake Tahoe has designated the Multi-Generational Recreation and Aquatics Center a viable and highly-desired community project.
B. The Department of Public Works has solicited bids for construction of Phase 2 of the project.
C. Upon evaluation of proposals, the Department of Public Works recommends award of a Construction Agreement in the amount of $67,851,097 to Roebbelen Contracting, Inc. of El Dorado Hills, CA.
D. The Department of Public Works recommends a project construction contingency of 5% of the Construction Agreement in the amount of $3,392,555 be appropriated to the project fund.
E. The Department of Public Works recommends funds to support project labor compliance, permitting and utilities fees in the amount of $335,000 be appropriated to the project fund.
F. The Department of Public Works will return with additional budget appropriation requests for construction management contract, commissioning costs, materials testing and potentially incentive bonus at a later date upon awards of those contracts or as needed.
G. During August 8, 2023 City Council Meeting, the City Council approved the bond issuance by the South Tahoe Joint Powers Financing Authority (the “Authority”), and the Authority has approved the sale, issuance and delivery of Lease Revenue Bonds 2023 Series A in the principal amount not to exceed $59 million.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, BE IT RESOLVED, that the City Council of the City of South Lake Tahoe:
1. Appropriates the Bond proceeds upon successful bond sale by the South Tahoe Joint Powers Financing Authority and the following funds to the Project fund, not to exceed a total of $71,578,652: Lease Revenue Bonds in the amount of up to $57,000,000, Measure P Cash on Hand in the amount of up to $11,200,000, Measure S Sales Tax 870
Resolution 2023-XXX August 8, 2023 Page 2 of 3
general fund available fund balance in the amount of up to $1,000,000, unallocated ARPA funding in the amount of approximately $2,700,000, and General Fund Undesignated Excess Reserves in the amount of up to $2,600,000. All amounts are subject to true-up on or around September 26, 2023; and
2. After successful bond sale, transfer said funds into the project fund (30160018) to award the Construction Agreement, provide construction contingency, and appropriate funds to support labor compliance, permitting and utilities fees. Fund transfer detail in the table below.
From Fund: Source Amount
36330 Lease Revenue Bonds Proceeds (est.) (-) up to $57,000,000 36309 Measure P Cash on Hand (-) up to $11,200,000
36374 Measure S Sales Tax Fund (-) up to $1,000,000
36300 ARPA unallocated funds (-) up to $2,700,000
36300 General Fund Undesignated Excess
Reserves
(-) up to $2,600,000
Total Not to Exceed (-) $71,578,652
To Fund: Task Amount
30160018-48030 Construction (+) $67,851,097
30160018-48032 Construction Contingency (+) $3,392,555
30160018-48033 Testing/Inspection (+) $70,000
30160018-48035 Utilities (+) $265,000
Total (+) $71,578,652
Account: Description Amount
401-01910-
36406
Proceeds from Sale of 2023 Bonds
(est.)
(-) up to $57,000,000
Account: Description Amount
401-01910-
47040
Bond Issuance Cost Tbd
401-01910-
47041
Underwriter Discount Tbd
401-01910-
50014
Transfer out to City CIP (project) (+) up to
$57,000,000
3. Authorizes and directs the Mayor Pro Tem to execute the Construction Agreement with Roebbelen Contracting Inc. of El Dorado Hills, CA in the amount of $67,851,097 with 5% construction contingency in the amount of $3,392,555, and upon successful bond issuance for the project.
Adopted by the City of South Lake Tahoe City Council on August 8, 2023 by the following vote:
Yes:
No:
871
Resolution 2023-XXX August 8, 2023 Page 3 of 3
Absent:
Abstain:
________________________ Date:_________
Cody Bass, Mayor Pro Tem
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
DEPARTMENT OF PUBLIC WORKS
AGREEMENT
DOCUMENT 00 52 00 - AGREEMENT
City of South Lake Tahoe
DEPARTMENT OF PUBLIC WORKS
AGREEMENT
for
CITY OF SOUTH LAKE TAHOE RECREATION AND AQUATICS CENTER PHASE 2
PWC 15-30160018 – Phase 2
CITY BID NO. 15-30160018 – BN-2
THIS AGREEMENT is made and entered into this 8th day of August 2023, by and between the City of South Lake Tahoe, a political subdivision of the State of California, herein designated “City”, and Roebbelen Contracting, Inc., herein designated as “Contractor.” WITNESSETH, that the City and the Contractor, in consideration of the mutual covenants hereafter set forth, agree as follows:
ARTICLE 1 - THE WORK
Contractor agrees to furnish all labor, tools, equipment, facilities, materials, transportation, and services necessary to perform and complete, in a good and workmanlike manner, the CITY OF SOUTH LAKE TAHOE RECREATION AND AQUATICS CENTER as required pursuant to the Contract Documents.
ARTICLE 2 - COMMENCEMENT AND COMPLETION
The Work to be performed under this Agreement shall commence at the time as specified in the Notice to Proceed, and the Contractor shall diligently undertake the performance of the obligations as set forth in the Contract Documents to achieve Final Completion of the Work within 806 calendar days after the date of commencement of the Work is authorized as set forth in the Notice to Proceed (the “Contract Time”). No grading or excavation or other land disturbance will be allowed between October 15th and May 1st. All Work shall be performed after the issuance of the Notice to Proceed, and Final Completion achieved within the contract time as set forth in these Bid Documents.
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