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PFA 2019-12-17-1501
ATTACHMENT B
ATTACHMENT B
ATTACHMENT B
ATTACHMENT B
EXHIBIT 1
_____________________________________________________________________________ _____________________________________________________________________________
INDENTURE
by and between the
STOCKTON PUBLIC FINANCING AUTHORITY
And
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
Relating to the
$_________
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BONDS, SERIES 2020
Dated as of February 1, 2020
_____________________________________________________________________________ _____________________________________________________________________________
ATTACHMENT B
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS: EQUAL SECURITY
Section 1.01 Definitions........................................................................................................ 4 Section 1.02 Equal Security................................................................................................ 13
ARTICLE II
ISSUANCE OF 2020 BONDS
Section 2.01 Authorization and Purpose of 2020 Bonds .................................................... 14 Section 2.02 Terms of 2020 Bonds..................................................................................... 14 Section 2.03 Redemption of 2020 Bonds ........................................................................... 15 Section 2.04 Form of 2020 Bonds ...................................................................................... 18 Section 2.05 Execution of 2020 Bonds............................................................................... 18 Section 2.06 Transfer and Payment of 2020 Bonds............................................................ 18 Section 2.07 Exchange of 2020 Bonds ............................................................................... 19 Section 2.08 2020 Bonds Registration Books .................................................................... 19 Section 2.09 Mutilated, Destroyed, Stolen or Lost 2020 Bonds......................................... 19 Section 2.10 [Reserved]...................................................................................................... 20 Section 2.11 Use of Book-Entry System for 2020 Bonds .................................................. 20
ARTICLE III
ISSUANCE OF 2020 BONDS AND APPLICATION OF PROCEEDS
Section 3.01 Procedure for the Issuance of 2020 Bonds .................................................... 21 Section 3.02 Acquisition and Construction Fund ............................................................... 22 Section 3.03 Costs of Issuance Fund .................................................................................. 23 Section 3.04 Validity of 2020 Bonds.................................................................................. 23
ARTICLE IV
REVENUES
Section 4.01 Pledge of Revenues........................................................................................ 23 Section 4.02 Receipt and Deposit of Revenues in the 2020 Installment Payment Fund ............................................................................................................... 24 Section 4.03 Establishment and Maintenance of Accounts for Use of Money in the 2020 Installment Payment Fund .................................................................... 24
ARTICLE V
COVENANTS OF THE FINANCING AUTHORITY
Section 5.01 Punctual Payment and Performance .............................................................. 26 Section 5.02 Against Encumbrances................................................................................... 27 Section 5.03 Tax Covenants ............................................................................................... 27 Section 5.04 Accounting Records and Reports................................................................... 28 Section 5.05 Prosecution and Defense of Suits .................................................................. 28 Section 5.06 Amendments to 2020 Installment Purchase Agreement................................ 28 Section 5.07 Continuing Disclosure ................................................................................... 29
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Section 5.08 Further Assurances......................................................................................... 29
ARTICLE VI
THE TRUSTEE
Section 6.01 The Trustee .................................................................................................... 29 Section 6.02 Liability of Trustee ........................................................................................ 30 Section 6.03 Compensation and Indemnification of Trustee.............................................. 32 Section 6.04 Notice to the Trustee...................................................................................... 32
ARTICLE VII
AMENDMENT OF THE INDENTURE
Section 7.01 Amendment of the Indenture ......................................................................... 33 Section 7.02 Disqualified 2020 Bonds................................................................................ 34 Section 7.03 Endorsement or Replacement of 2020 Bonds After Amendment ................. 34 Section 7.04 Amendment by Mutual Consent .................................................................... 34
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
Section 8.01 Events of Default ........................................................................................... 35 Section 8.02 Application of Funds Upon Default............................................................... 35 Section 8.03 Institution of Legal Proceedings by Trustee .................................................. 36 Section 8.04 Non-Waiver.................................................................................................... 36 Section 8.05 Actions by Trustee as Attorney-in-Fact......................................................... 37 Section 8.06 Remedies Not Exclusive................................................................................ 37 Section 8.07 Limitation on 2020 Owners’ Right to Sue..................................................... 37
ARTICLE IX
DEFEASANCE
Section 9.01 Discharge of 2020 Bonds,.............................................................................. 38 Section 9.02 Unclaimed Money.......................................................................................... 39
ARTICLE X
MISCELLANEOUS
Section 10.01 Liability of Authority Limited to Revenues and Certain Other Funds .......... 39 Section 10.02 Benefits of the Indenture Limited to Parties and Beneficiaries ..................... 40 Section 10.03 Successor Is Deemed Included In All References To Predecessor................ 40 Section 10.04 Execution of Documents by Owners ............................................................. 40 Section 10.05 Waiver of Personal Liability.......................................................................... 41 Section 10.06 Deposit or Investment of Money in Accounts and Funds.............................. 41 Section 10.07 [Reserved]...................................................................................................... 41 Section 10.08 Destruction of Cancelled 2020 Bonds ........................................................... 41 Section 10.09 Content of Certificates ................................................................................... 42 Section 10.10 Accounts and Funds; Business Days ............................................................. 42 Section 10.11 Notices ........................................................................................................... 42 Section 10.12 CUSIP Numbers............................................................................................. 43
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Section 10.13 Article and Section Headings and References............................................... 43 Section 10.14 Partial Invalidity............................................................................................. 43 Section 10.15 Governing Law .............................................................................................. 43 Section 10.16 Execution in Several Counterparts................................................................. 43 EXHIBIT A – FORM OF 2020 BONDS................................................................................... A-1 EXHIBIT B – FORM OF ACQUISITION AND CONSTRUCTION FUND REQUISITION B-1 EXHIBIT C – FORM OF COSTS OF ISSUANCE FUND REQUISITION ............................ C-1
ATTACHMENT B
INDENTURE
This Indenture (this “Indenture”), dated as of February 1, 2020, by and between the STOCKTON
PUBLIC FINANCING AUTHORITY, a joint exercise of powers entity duly organized and existing under and by virtue of the laws of the State of California (the “Financing Authority”), and WELLS FARGO BANK, NATIONAL ASSOCIATION, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, as trustee (the “Trustee”);
WITNESSETH:
WHEREAS, The City of Stockton (the “City”) and the former Redevelopment Agency of the City of Stockton entered into a Joint Exercise of Powers Agreement, dated as of June 18, 1990 (the “Joint Powers Agreement”), establishing the Financing Authority; WHEREAS, the Financing Authority is a joint exercise of powers entity duly organized and existing under and pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as amended (the “Act”); WHEREAS, the Act authorizes and empowers the Financing Authority to issue revenue bonds to assist the Parking Authority of the City of Stockton (the “Parking Authority”) in financing and refinancing public capital improvements; WHEREAS, the Parking Authority is a local agency as defined and provided in the Act;
WHEREAS, pursuant to that certain Site and Facilities Lease, dated as of June 1, 2004 (the “Site and Facilities Lease”), the City, as lessor, leased to the Financing Authority, as lessee, certain parcels of real property situated in the City (the “Site”), and the City’s Market Street Parking Garage, the Edmund S. Coy Parking Garage, and the Stockton Events Center Parking Structure, respectively, to the Site and Facilities Lease (collectively, the “Leased Parking Facilities”);
WHEREAS, the Financing Authority issued and sold its $32,785,000 Stockton Public Financing Authority Lease Revenue Bonds, Series 2004 (Parking and Capital Projects) (the “2004 Parking Bonds”), pursuant to an Indenture of Trust (the “2004 Bonds Indenture”), dated as of June 1, 2004, by and between the Financing Authority and Wells Fargo Bank, National Association, as trustee (the “2004 Trustee”);
WHEREAS, to provide for repayment of the 2004 Parking Bonds, the Financing Authority leased the Site and the Leased Parking Facilities to the City pursuant to a Lease Agreement, dated as of June 1, 2004 (the “Lease Agreement”), by and between the Financing Authority and the City, pursuant to which the City agreed to make certain lease payments to the Financing Authority (the “Lease Payments”);
WHEREAS, pursuant to the terms of the 2004 Bonds Indenture and a Memorandum of Assignment of Lease, dated as of June 1, 2004, by and between the Financing Authority and the 2004 Trustee, the Financing Authority assigned, transferred and set over to the
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2004 Trustee, all of the Financing Authority's rights under the Lease Agreement (other than certain retained rights), including the right to receive such Lease Payments; WHEREAS, following the City’s default on certain Lease Payments due under the Lease Agreement, the 2004 Trustee sought and, on April 19, 2012, the Superior Court for the County of San Joaquin (the “Superior Court”) awarded the 2004 Trustee possession of the Leased Parking Facilities (the “2004 Parking Bonds Proceeding”); WHEREAS, the City was the debtor in a bankruptcy case under chapter 9 of Title 11 of the United States Code, Case No. 2012-32118 in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division, styled In re City of Stockton, California (the “Bankruptcy Case”);
WHEREAS, the 2004 Indenture provides that, for all purposes of the 2004 Indenture provisions governing events of default and remedies, except the giving of notice of default to owners of the Bonds, National Public Finance Guarantee Corporation (“NPFG”), as the insurer of the 2004 Parking Bonds (as successor to Financial Guaranty Insurance Company) shall be deemed to be the sole owner of the 2004 Parking Bonds it has insured for so long as it has not failed to comply with its payment obligations under its policy securing payment of principal of and interest on the 2004 Parking Bonds;
WHEREAS, in connection with the Bankruptcy Case, the City agreed to a settlement (the “Settlement”) of the claims of the 2004 Trustee, on behalf of holders of the 2004 Parking Bonds, and NPFG with respect to the 2004 Parking Bonds; WHEREAS, pursuant to the terms of the Settlement, NPFG and the 2004 Trustee agreed, subject to compliance by the City, the Financing Authority and the Parking Authority with certain terms of the Settlement, to forbear enforcement of certain of their rights relating to payment of the 2004 Parking Bonds and related obligations, and to cause the 2004 Trustee to transfer to the Parking Authority all of its possessory rights, title and interest in the Site and the Leased Parking Facilities granted to it in the 2004 Bonds Parking Proceeding in exchange for, among other things, certain payments from the Parking Authority to the Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds;
WHEREAS, pursuant to the terms of the Settlement, the City Council of the City passed Resolution No. 2013-12-17-1209 on December 17, 2013 (the “Parking Authority Resolution”) authorizing the activation of the Parking Authority, and authorizing it to operate within boundaries described in the Parking Authority Resolution; WHEREAS, in furtherance of the Settlement, the City entered into a Forbearance Agreement, dated as of February 25, 2015 (the “Forbearance Agreement”), by and among the City, the 2004 Trustee, the Parking Authority, the Financing Authority and NPFG, setting forth certain terms of the Settlement, including an agreement by NPFG and the 2004 Trustee to forbear enforcement of certain of their rights relating to payment on the 2004 Parking Bonds and related obligations, subject to the compliance by the City and the Parking Authority with their obligations under the Forbearance Agreement and the 2015 Installment Sale Agreement (as defined herein);
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WHEREAS, under the Forbearance Agreement, the City, among other things, transferred to the Parking Authority all of its rights, title and interest in the City’s Parking Facilities (as defined herein) and assigned to the Parking Authority all of the City’s rights, title and interest, as lessee, pursuant to the Site Lease, and as lessor, pursuant to the Lease Agreement, and the Parking Authority assumed all of the City’s obligation under the Site Lease and the Lease Agreement;
WHEREAS, pursuant to the terms of the Settlement, the Parking Authority entered into an Installment Sale Agreement (Parking Garages and Downtown Parking District Facilities), dated as of February 25, 2015 (the “2015 Installment Sale Agreement”), with the 2004 Trustee and NPFG, pursuant to which the Parking Authority is required to make installment payments to the 2004 Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds; and
WHEREAS, the Parking Authority now desires to prepay the 2015 Installment Sale Agreement;
WHEREAS, the Parking Authority has also identified the need to make certain capital improvements to the Parking Facilities, including the improvement of certain elevators located in the Parking Facilities (the “Improvements”); WHEREAS, the Financing Authority and the Parking Authority have determined that providing funds to prepay 2015 Installment Sale Agreement and finance the Improvements by the issuance of revenue bonds of the Financing Authority will result in demonstrable savings in borrowing costs of the Parking Authority and will result in significant public benefits to the Parking Authority;
WHEREAS, the Parking Authority will be obligated to make installment payments to the Financing Authority for the prepaying of the 2015 Installment Sale Agreement and the financing of the Improvements;
WHEREAS, by virtue of the prepayment of the 2015 Installment Sale Agreement, a portion of the 2004 Parking Bonds shall be defeased and redeemed; and WHEREAS, the Parking Authority’s obligation to make the installment payments under the Installment Purchase Agreement are secured by a pledge of certain net revenues of the Parking Facilities;
WHEREAS, in order to achieve the foregoing, the Financing Authority has authorized the issuance of its Parking Revenue Bonds, Series 2020 (the “2020 Bonds”) pursuant to the Act in an aggregate principal amount of _______ dollars ($______); WHEREAS, in order to provide for the authentication and delivery of the 2020 Bonds and to establish and declare the conditions and terms upon which the 2020 Bonds are to be issued and secured and to secure the payment of the interest on and principal of and
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redemption premiums, if any, on the 2020 Bonds, the Financing Authority has authorized the execution and delivery of the Indenture;
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed necessary to make the 2020 Bonds, when executed by the Financing Authority and authenticated and delivered by the Trustee, valid and binding obligations of the Financing Authority payable in accordance with their terms, and to constitute the Indenture a valid and binding agreement of the parties hereto for the uses and purposes herein set forth in accordance with its conditions and terms, do exist, have happened and have been performed in the time, form and manner required by law, and the execution and delivery of the Indenture by the parties hereto has been in all respects duly authorized; NOW, THEREFORE, THIS INDENTURE WITNESSETH, that in order to secure the payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds at any time issued and outstanding hereunder according to their tenor, and to secure the performance and observance of all the agreements, conditions, covenants and terms therein and herein set forth, and to declare the conditions and terms upon and subject to which the 2020 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 2020 Bonds by the registered owners thereof, and for other valuable considerations, the receipt whereof is hereby acknowledged, the Financing Authority does hereby covenant and agree with the Trustee, for the benefit of the respective holders from time to time of the 2020 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 hereof and of any Supplemental Indenture and of any certificate, opinion, request or other document herein or therein mentioned have the meanings herein specified:
2015 Installment Sale Agreement
“2015 Installment Sale Agreement” means the Installment Sale Agreement (Parking Garages and Downtown Parking District Facilities), dated as of February 25, 2015, by and between National Public Finance Guarantee Corporation, Wells Fargo Bank, National Association and the Parking Authority.
2020 Bonds
“2020 Bonds” means the Financing Authority’s Parking Revenue Bonds, Series 2020, authorized, issued and delivered hereunder in accordance with Article II that are at any time Outstanding pursuant hereto.
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2020 Installment Purchase Agreement
“2020 Installment Purchase Agreement” means that certain 2020 Installment Purchase Agreement, dated as of February 1, 2020, by and between the Parking Authority and the Financing Authority, as originally executed and as it may from time to time be amended in accordance therewith.
2020 Installment Payment Fund
“2020 Installment Payment Fund” means the Stockton Public Financing Authority 2020 Installment Payment Fund established pursuant to Section 3.02. 2020 Installment Payments
“2020 Installment Payments” shall have the meaning given in the 2020 Installment Purchase Agreement.
2020 Reserve Account
“2020 Reserve Account” means the account within the 2020 Installment Payment Fund by that name established pursuant to Section 3.03.
2020 Reserve Requirement
“2020 Reserve Requirement” means, as of any date of determination, the least of (a) ten percent (10%) of the proceeds of the 2020 Bonds (or, if there is less than 2% net original issue discount or premium, 10% of the original stated principal amount of the 2020 Bonds), or (b) the maximum annual 2020 Installment Payments payable under the 2020 Installment Agreement in the then current or any future one-year period ending on March 1, or (c) one hundred twenty-five per cent (125%) of the average annual 2020 Installment Payments payable under the 2020 Installment Agreement in the then current and all future one-year periods ending on March 1, all as computed by the Parking Authority under the Code and specified in writing to the Trustee.
Acquisition and Construction Fund
“Acquisition and Construction Fund” means the Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 Acquisition and Construction Fund established pursuant to Section 3.02.
Act
“Act” means the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the Government Code of the State, as amended) and all laws amendatory thereof or supplemental thereto.
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Business Day
“Business Day” means any day (other than a Saturday, a Sunday or a legal holiday) on which banks in New York, New York, are open for business and on which the Trustee is open for business at its Principal Corporate Trust Office.
Certificate of the Financing Authority
“Certificate of the Financing Authority” means an instrument in writing signed by the Treasurer, or by any other officer of the Financing Authority duly authorized by the Financing Authority for that purpose.
Closing Date
“Closing Date” means February 2020, being the date of delivery of the 2020 Bonds to the Original Purchaser.
City
“City” means the City of Stockton, a municipal corporation and chartered city duly organized and existing under and by virtue of the Constitution and laws of the State and its charter.
Code
“Code” means the Internal Revenue Code of 1986, as amended.
Costs of Issuance
“Costs of Issuance” means all items of expense directly or indirectly payable by or reimbursable to the Financing Authority or the Parking Authority related to the authorization, execution and delivery of the 2020 Installment Purchase Agreement, the Indenture and the sale of the 2020 Bonds, including, but not limited to, costs of preparation and reproduction of documents, costs of rating agencies and costs to provide information required by rating agencies, filing and recording fees, initial charges and fees of the Trustee, legal charges and fees, fees and disbursements of consultants and professionals, fees and expenses of the underwriter of the 2020 Bonds, and charges and fees for preparation, execution and safekeeping of the 2020 Bonds, and any other charge, cost or fee in connection with the original execution and delivery of the 2020 Bonds.
Costs of Issuance Fund
“Costs of Issuance Fund” means the Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 Costs of Issuance Fund established pursuant to Section 3.03.
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Escrow Agent
“Escrow Agent” means a bank or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus of at least one hundred million dollars ($100,000,000), subject to supervision or examination by a federal or state banking authority, and having the corporate power and authority to accept the trusts created by a deposit made pursuant to Section 9.01(c). If such bank or trust company 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 definition the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.
Event of Default
“Event of Default” means an event defined as such in Section 8.01.
Financing Authority
“Financing Authority” means the Stockton Public Financing Authority, a joint exercise of powers entity duly organized and existing under and by virtue of the Act.
Fiscal Year
“Fiscal Year” means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Financing Authority as its Fiscal Year in accordance with applicable law.
Improvements
The term “Improvements” shall have the meaning ascribed thereto in the recitals hereof.
Indenture
“Indenture” means this Indenture dated as of February 1, 2020, by and between the Financing Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented by all Supplemental Indentures executed pursuant to the provisions hereof.
Independent Certified Public Accountant
“Independent Certified Public Accountant” means any firm of certified public accountants duly licensed and entitled to practice and practicing as such under the laws of the State, appointed and paid by the Financing Authority, and each of whom -- (1) is in fact independent and not under the domination of the Financing Authority;
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(2) does not have a substantial financial interest, direct or indirect, in the operations of the Financing Authority; and
(3) is not connected with the Financing Authority as a member, officer or employee of the Financing Authority, but which firm may be regularly retained by the Financing Authority to audit the accounting records of the Financing Authority and make reports thereon to the Financing Authority.
Information Services
“Information Services” means 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 Notes as the Financing Authority may designate in writing to the Trustee.
Interest Account
“Interest Account” means the account within the 2020 Installment Payment Fund by that name established pursuant to Section 4.03.
Interest Payment Date
“Interest Payment Date” means a date on which interest is due on the 2020 Bonds, being March 1 and September 1 of each year to which reference is made, commencing on [September 1, 2020].
Moody’s
“Moody’s” means Moody’s Investors Service, and its successors or assigns, but only to the extent that such entity is then rating any Parity Obligations at the request of the Financing Authority.
Opinion of Counsel
“Opinion of Counsel” means a written opinion of counsel of recognized national standing in the field of law relating to municipal bonds, retained by the Financing Authority.
Original Purchaser
“Original Purchaser” means the original purchaser of the 2020 Bonds upon their delivery by the Trustee on the Closing Date.
Outstanding
“Outstanding” means, when used with reference to 2020 Bonds and subject to the provisions of Section 7.02, all 2020 Bonds except --
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(1) 2020 Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;
(2) 2020 Bonds paid or deemed to have been paid within the meaning of Section
9.01; and
(3) 2020 Bonds in lieu of or in substitution for which other 2020 Bonds shall have been executed, issued and delivered by the Financing Authority pursuant hereto.
Owner
“Owner” means any person who shall be the registered owner of any Outstanding 2020 Bonds.
Parking Facilities
“Parking Facilities” means the parking facilities (including, without limitation, surface parking lots, parking meters, metered spaces, and other parking garages) owned, leased, or licensed by the Parking Authority or in which the Parking Authority holds a direct or indirect interest (other than liens, encumbrances or assessments) existing on the date hereof and including all additions, betterments, extensions and improvements to such parking facilities or any part thereof and hereafter acquired or constructed.
Permitted Investments
“Permitted Investments” means any of the following obligations to the extent then authorized by law for the investment of money of the Financing Authority:
(1) Direct obligations (including obligations issued or held in book-entry form on the books of) the Department of the Treasury of the United States of America; (2) Direct obligations of any of the following federal agencies, which obligations represent the full faith and credit of the United States of America:
∑ Export-Import Bank
∑ Farm Credit System Financial Assistance Corporation
∑ Rural Economic Community Development Administration (formerly the Farmers Home Administration)
∑ General Services Administration
∑ U.S. Maritime Administration
∑ Small Business Administration
∑ Government National Mortgage Association (GNMA)
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∑ U.S. Department of Housing & Urban Development (PHA’s) ∑ Federal Housing Administration
∑ Federal Financing Bank;
(3) Direct obligations
of any of the following federal agencies, which obligations are not fully guaranteed by the full faith and credit of the United States of America:
∑ Senior debt obligations rated “Aaa” by Moody’s and “AAA” by S&P issued by the Federal
National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corporation (FHLMC)
∑ Obligations of the Resolution Funding Corporation (REFCORP) ∑ Senior debt obligations of the Federal Home Loan Bank System ∑ Senior debt obligations of other Government Sponsored Agencies; (4) U.S. dollar denominated
deposit accounts, federal funds and bankers’ acceptances with domestic commercial banks which have a rating on their short-term certificates of deposit on the date of purchase of “A-l” or “A-1+” by S&P and “P-1” by Moody’s and maturing no more than three hundred sixty (360) days after the date of purchase. (Ratings on holding companies are not considered as the rating of the bank);
(5) Commercial paper which is rated at the time of purchase in the single highest classification, “A-1+” by S&P and “P-1” by Moody’s and which matures not more than two hundred seventy (270) days after the date of purchase;
(6) Investments in a money market fund rated “AAAm” or “AAAm-G” by S&P, including any such fund managed, advised or sponsored by the Trustee or any of its affiliates; (7) Pre-refunded municipal obligations defined as follows: Any bonds or other obligations of any state of the United States of America or of any agency, instrumentality or local governmental unit of any such state which are not callable at the option of the obligor prior to maturity or as to which irrevocable instructions have been given by the obligor to call on the date specified in the notice; and
(A) which are rated, based on an irrevocable escrow account or fund (the “escrow”), in the highest rating category of S&P and Moody’s or any successors thereto; or (B) (i) which are fully secured as to principal and interest and redemption premium, if any, by an escrow consisting only of cash or obligations described in paragraph (1) above, which escrow may be applied only to the payment of such principal of and interest and redemption premium, if any, on such bonds or other obligations on the maturity date or dates thereof or the specified redemption date or dates pursuant to such irrevocable instructions, as appropriate, and (ii) which escrow is sufficient, as verified by a nationally recognized independent certified public accountant, to pay principal of and interest and redemption premium, if any, on the bonds or
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other obligations described in this paragraph on the maturity date or dates specified in such irrevocable instructions, as appropriate;
(8) General obligations of states with a rating of at least “A2/A” or higher by both Moody’s and S&P;
(9) Investment agreements (supported by appropriate opinions of counsel) with notice to S&P;
(10) Shares in the California Asset Management Program (established pursuant to Title 1, Division 7, Chapter 5 of the Government Code of the State) that invests exclusively in investments permitted by Section 53635 of the Government Code of the State, as now existing and as it may be amended from time to time;
(11) The Local Agency Investment Fund (established under Sections 5360053609 of the California Government Code, as amended or supplemented from time to time); and (12) Other forms of investment agreements (including repurchase agreements) with notice to S&P.
Unless otherwise provided in this Indenture, the value of the above investments shall be determined at fair market value.
The Trustee shall have no responsibility to monitor the ratings of Permitted Investments after the initial purchase of an investment in such Permitted Investments.
Principal Corporate Trust Office
“Principal Corporate Trust Office” means the corporate trust office of the Trustee in Los Angeles, California, or such other office designated by the Trustee from time to time.
Principal Subaccount
“Principal Subaccount” means the subaccount within the Redemption Account by that name established pursuant to Section 4.03.
Qualified Reserve Fund Credit Instrument
“Qualified Reserve Fund Credit Instrument” means an irrevocable standby or direct-pay letter of credit or surety bond issued by a commercial bank or insurance company and deposited with the Trustee pursuant to Section 4.03(c) provided that all of the following requirements are met: (i) the long-term credit rating of such bank or insurance company at the time of delivery of such letter of credit or surety bond is rated in one of the two highest rating categories by Moody’s or S&P; (ii) such letter of credit or surety bond has a term of at least twelve (12) months; (iii) such letter of credit or surety bond has a stated amount at least equal to the portion of the 2020 Reserve Requirement with respect to which funds are proposed to be released pursuant to Section 4.03(c); and (iv) the Trustee is authorized pursuant to the terms of such letter of credit or surety bond to draw thereunder an amount equal to any deficiencies which may exist
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from time to time in the amounts available to repay the principal of and interest on the 2020 Bonds.
Record Date
“Record Date” means, with respect to any Interest Payment Date, the day of the month that is the fifteenth (15th) day of the month prior to such Interest Payment Date.
Redemption Account
“Redemption Account” means the account within the 2020 Installment Payment Fund by that name established pursuant to Section 4.03.
Representation Letter
“Representation Letter” means the blanket letter of representation from the Financing Authority to The Depository Trust Company, New York, New York, relating to its book-entry securities.
Requisition of the Financing Authority
“Requisition of the Financing Authority” means an instrument in writing signed by the Chairperson, Vice-Chairperson, Executive Director or Treasurer of the Financing Authority, or by any other officer of the Financing Authority duly authorized by the Financing Authority for that purpose.
Requisition of the Parking Authority
“Requisition of the Parking Authority” means an instrument in writing signed by the Chairperson, the Executive Director, or the Treasurer of the Parking Authority, or by any other officer of the Parking Authority duly authorized by the Parking Authority for that purpose.
Revenues
“Revenues” means all 2020 Installment Payments paid by the Parking Authority and received by the Financing Authority, its successors and assigns under the 2020 Installment Purchase Agreement, together with all income from any investment pursuant to Section 10.06 of any money in any account or fund established pursuant hereto.
Securities Depositories
“Securities Depositories” means The Depository Trust Company, New York, New York, and its successors and assigns or if (a) the then Depository resigns from its functions as securities depository of the Notes, or (b) the Financing Authority discontinues use of the Depository pursuant to Section 2.15 hereof, any other securities depository which agrees to follow the procedures requested to be followed by a securities depository in connection with the Notes and which is selected by the Financing Authority with the consent of the Trustee.
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S&P
“S&P” means S&P Global Ratings, a Standard and Poor’s Financial Services LLC business, and its successors or assigns, but only to the extent that such entity is then rating any Parity Obligations at the request of the Financing Authority.
State
“State” means the State of California.
Supplemental Indenture
“Supplemental Indenture” means any indenture, duly executed and delivered by the Financing Authority and the Trustee and in full force and effect, which is amendatory hereof or supplemental hereto; but only if and to the extent that such Supplemental Indenture is specifically authorized hereunder.
Tax Certificate
“Tax Certificate” means the Tax Certificate dated as of __________, 2020, concerning certain matters pertaining to the use and investment of proceeds of the 2020 Bonds, executed by the Financing Authority and the Parking Authority, including any and all exhibits attached thereto.
Treasurer
“Treasurer” means the Treasurer of the Financing Authority.
Trustee
“Trustee” means Wells Fargo Bank National Association, a national banking association duly organized and existing under and by virtue of the laws of the United States of America, at its Principal Corporate Trust Office, or any successor Trustee which may at any time be substituted in place of the original or any successor Trustee hereunder as provided in Section
6.01. Written Request of the Financing Authority
“Written Request of the Financing Authority” means an instrument in writing signed by the Chairperson, Vice-Chairperson, Executive Director or Treasurer of the Financing Authority, or by any other officer of the Financing Authority duly authorized by the Financing Authority for that purpose.
SECTION 1.02 Equal Security. In consideration of the acceptance of the 2020 Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract by and among the Financing Authority, the Trustee and the Owners from time to time of all 2020 Bonds authorized, executed, authenticated and delivered hereunder and then Outstanding to secure the full and final payment of the interest on and principal of and redemption premiums, if
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any, on all 2020 Bonds which may from time to time be authorized, executed, authenticated and delivered hereunder, subject to the agreements, conditions, covenants and terms contained herein; and all agreements and covenants set forth herein to be performed by or on behalf of the Financing Authority shall be for the equal and proportionate benefit, protection and security of all Owners of the 2020 Bonds without distinction, preference or priority as to security or otherwise of any 2020 Bonds over any other 2020 Bonds by reason of the number or date thereof or the time of authorization, sale, execution, authentication or delivery thereof or for any cause whatsoever, except as expressly provided herein or therein.
ARTICLE II
ISSUANCE OF 2020 BONDS
SECTION 2.01 Authorization and Purpose of 2020 Bonds. The Financing Authority has reviewed all proceedings heretofore taken relative to the authorization of the 2020 Bonds and has found, as a result of such review, and hereby finds and determines that, as of the date of issuance of the 2020 Bonds, all acts, conditions and things required by law to exist, happen and be performed precedent to and in the issuance of the 2020 Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Financing Authority is now authorized, pursuant to the Act and each and every requirement of law, to issue the 2020 Bonds in the form and manner provided herein for the purpose of providing funds to prepay the 2015 Installment Sale Agreement and to finance the Improvements, as provided under the 2020 Installment Purchase Agreement, and that the 2020 Bonds shall be entitled to the benefit, protection and security of the provisions hereof.
SECTION 2.02 Terms of 2020 Bonds. The 2020 Bonds shall be designated the “Stockton Public Financing Authority Parking Revenue Bonds, Series 2020” and shall be issued in the aggregate principal amount of _____ dollars ($_____).
The 2020 Bonds shall be dated the date of their original delivery, shall be issued in fully registered form in denominations of five thousand dollars ($5,000) or any integral multiple of five thousand dollars ($5,000) (not exceeding the principal amount of 2020 Bonds maturing at any one time), and shall mature on the dates and in the principal amounts and shall bear interest at the annual interest rates as set forth in the following schedule:
Maturity Date
(March 1)
Principal Amount Interest Rate
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The 2020 Bonds shall bear interest payable in lawful money of the United States of America at the annual interest rates (based on a 360-day year of twelve, 30-day calendar months) set forth above, payable semiannually on each Interest Payment Date. Each 2020 Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless such date of authentication is an Interest Payment Date or is during the period from the day after the Record Date preceding an Interest Payment Date to such Interest Payment Date, both dates inclusive, in which event it shall bear interest from such Interest Payment Date, or unless such date of authentication is prior to the first Record Date, in which event it shall bear interest from its date; provided, that if at the time of authentication of any 2020 Bonds interest is then in default on the Outstanding 2020 Bonds, such 2020 Bonds shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment on the Outstanding 2020 Bonds. Payment of interest on the 2020 Bonds due on any Interest Payment Date on or before the maturity or prior redemption thereof shall be made only to the person whose name appears in the bond registration books kept by the Trustee pursuant to Section 2.08 as the registered owner thereof as of the close of business on the Record Date for such Interest Payment Date, whether or not such Record Date is a Business Day, and shall be paid by check mailed on such Interest Payment Date by first class mail to such registered owner at the address as it appears in such books; provided, that upon the written request of any Owner of one million dollars ($1,000,000) or more in aggregate principal amount of 2020 Bonds received by the Trustee prior to the applicable Record Date (which request shall remain in effect until rescinded in writing by such Owner), interest shall be paid on each Interest Payment Date by wire transfer of immediately available funds to an account maintained in any bank or trust company in the United States of America that is a member of the Federal Reserve System designated in writing by such Owner.
The principal of the 2020 Bonds shall be payable in lawful money of the United States of America upon the surrender thereof at maturity or on redemption prior to maturity at the Principal Corporate Trust Office of the Trustee.
SECTION 2.03 Redemption of 2020 Bonds.
(a) The 2020 Bonds maturing on or after March 1, 20__, are subject to optional redemption by the Financing Authority prior to their respective stated maturity dates, upon notice as hereinafter provided, from any source of funds other than sinking account payments, on any date on or after March 1, 20__, as a whole or in part, in either case at a redemption price equal to the sum of the principal amount thereof to be redeemed plus accrued interest thereon to the redemption date, without premium. (b) The Series 2020 Bonds maturing on March 1, 20__ and March 1, 20__ (together, the “Term Bonds”) are also subject to mandatory redemption prior to their respective stated maturities, commencing March 1, _____, and March 1, _____, respectively, and on March 1 in each year thereafter to and including March 1, _____, and March 1, _____, respectively, in part by lot, from mandatory sinking account payments at a redemption price equal to the principal amount thereof, plus accrued interest, if any, to the redemption date, without premium, as set forth below in the aggregate respective principal amounts and on the respective dates as set forth in the following tables; provided, however, that if some but not all of such Series 2020
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Bonds have been redeemed pursuant to optional redemption provisions of this Indenture, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000. The Parking Authority shall provide the Trustee with a revised sinking fund schedule.
Redemption Date
(March 1)
Principal
Amount
_______
* Maturity.
Redemption Date
(March 1)
Principal
Amount
_______
* Maturity.
(c) If less than all Outstanding 2020 Bonds are to be redeemed at any one time, the Financing Authority shall select the maturity date or dates of the 2020 Bonds to be redeemed, and if less than all the Outstanding 2020 Bonds maturing by their terms on any one maturity date are to be redeemed at any one time, the Trustee shall select by lot the 2020 Bonds or the portions thereof of such maturity date, and the Trustee shall promptly notify the Financing Authority in writing of the numbers of the 2020 Bonds so selected by it for redemption, and for purposes of such selection, 2020 Bonds shall be deemed to be composed of five thousand dollars ($5,000) multiples and any such multiple may be separately redeemed. (d) The Financing Authority shall notify the Trustee of an optional redemption at least forty-five (45) days prior to the date fixed for optional redemption (unless the Trustee shall agree to some lesser number of days for notice of optional redemption), and each notice of redemption shall be mailed by first class mail by the Trustee, not less than twenty (20) nor more than sixty (60) days prior to the redemption date, to (i) the respective Owners of the 2020 Bonds designated for redemption at their addresses appearing on the registration books kept by the Trustee pursuant to Section 2.08 as the registered owners thereof, (ii) the Information Services and (iii) the Securities Depositories. Each notice of redemption shall state the date of such notice, the 2020 Bonds to be redeemed, the date of the 2020 Bonds, the redemption date, the redemption price, the place of redemption (including the name and address of the Principal
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Corporate Trust Office of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less than all of the 2020 Bonds of any one maturity are to be redeemed, the distinctive numbers of the 2020 Bonds of such maturity to be redeemed and, in the case of 2020 Bonds to be redeemed in part only, the respective portions of the principal amount thereof to be redeemed.
Each such notice shall also state that, subject to the rescission of such redemption as provided in the Indenture, on such redemption date there will become due and payable on each of the 2020 Bonds to be redeemed the redemption price thereof and, in the case of a 2020 Bonds to be redeemed in part only, the specified portion of the principal amount thereof to be redeemed, and that from and after such redemption date interest on such 2020 Bonds shall cease to accrue, and each such notice shall require that such 2020 Bonds be then surrendered at the Principal Corporate Trust Office of the Trustee specified in the redemption notice for payment of the redemption price thereof; provided, that neither failure to receive any such notice nor any defect contained therein shall invalidate any of the proceedings taken in connection with any such redemption.
(e) If notice of redemption has been duly given as aforesaid and money for the payment of the redemption price of the 2020 Bonds called for redemption is held by the Trustee, then, on the redemption date designated in such notice the 2020 Bonds so called for redemption shall become due and payable, and from and after the date so designated interest on such 2020 Bonds shall cease to accrue, and the Owners of such 2020 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof. (f) Any notice of optional redemption may be rescinded by Written Request of the Financing Authority given to the Trustee not later than five days prior to the date fixed for redemption. Upon receipt of such Written Request of the Financing Authority, the Trustee shall promptly mail notice of such rescission to the same parties that were mailed the original notice of redemption.
(g) With respect to any notice of optional redemption of 2020 Bonds delivered pursuant to this Section 2.03, unless, upon the giving of such notice, such 2020 Bonds are deemed to have been paid within the meaning of Article VIII, such notice shall state (1) that redemption will be conditional upon the receipt by the Trustee on or before the date fixed for redemption of amounts sufficient to pay the principal of, and premium (if any) and interest on, such 2020 Bonds to be redeemed and (2) that if such amounts are not so received, then the notice shall be of no force and effect and the Financing Authority shall not be required to redeem such 2020 Bonds. The Financing Authority may also instruct the Trustee to provide conditional notice of optional redemption, which may be conditioned on the occurrence of any other event if such notice states that if such event does not occur then the notice shall be of no force and effect and the Financing Authority shall not be required to redeem such 2020 Bonds. If a notice of optional redemption contains such a condition and such amounts are not so received or such event does not occur, then the optional redemption shall not be made, and the Trustee shall, within a reasonable time thereafter, give notice to the Owners to the effect that such amounts were not so received or such event did not occur and such redemption was not made, such notice to be given by the Trustee in the manner in which the notice of redemption was given. Such failure to optionally redeem such 2020 Bonds shall not constitute an Event of Default.
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SECTION 2.04 Form of 2020 Bonds. The 2020 Bonds (and the certificate of authentication and assignment to appear thereon) shall be substantially in the form set forth in Exhibit A hereto attached and by this reference incorporated herein.
SECTION 2.05 Execution of 2020 Bonds. The Chairperson or Executive Director of the Financing Authority is hereby authorized and directed to execute each of the 2020 Bonds on behalf of the Financing Authority and the Secretary of the Financing Authority is hereby authorized and directed to countersign each of the 2020 Bonds on behalf of the Financing Authority, which signatures of such Chairperson or Executive Director and Secretary may be manually subscribed or may be copied, printed, lithographed or engraved by facsimile reproduction; provided, that in case any officer whose signature appears on the 2020 Bonds shall cease to be such officer before the delivery of the 2020 Bonds to the purchaser thereof, such signature shall nevertheless be valid and sufficient for all purposes as if such officer had remained in office until such delivery of the 2020 Bonds.
Only those 2020 Bonds bearing thereon a certificate of authentication in the form hereinbefore referred to, executed manually and dated by the Trustee, shall be entitled to any benefit, protection or security hereunder or be valid or obligatory for any purpose, and such certificate of authentication of the Trustee shall be conclusive evidence that the 2020 Bonds so authenticated have been duly authorized, executed, issued and delivered hereunder and are entitled to the benefit, protection and security hereof.
SECTION 2.06 Transfer and Payment of 2020 Bonds. Any 2020 Bonds may, in accordance with its terms, be transferred in the books required to be kept by the Trustee pursuant to the provisions of Section 2.08 by the person in whose name it is registered, in person or by his duly authorized attorney, upon surrender of such 2020 Bonds for cancellation accompanied by delivery of a duly executed written instrument of transfer in a form acceptable to the Trustee.
Whenever any 2020 Bonds shall be surrendered for transfer, the Financing Authority shall execute, and the Trustee shall authenticate and deliver to the transferee a new 2020 Bond or 2020 Bonds and aggregate principal amount of the same maturity date and of the same or other authorized denominations. All costs of printing 2020 Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange shall be paid by the Financing Authority; provided, 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 as a condition precedent to the exercise of such privilege.
The Financing Authority and the Trustee may deem and treat the registered owner of any 2020 Bonds as the absolute owner of such 2020 Bonds for the purpose of receiving payment thereof and for all other purposes, whether such 2020 Bonds shall be overdue or not, and neither the Financing Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of and redemption premium, if any, on such 2020 Bonds shall be made only to such registered owner thereof, which payments shall be valid and effectual to satisfy and discharge liability on such 2020 Bonds to the extent of the sum or sums so paid.
The Trustee shall not be required to register the transfer of any 2020 Bonds during the period established by the Trustee for the selection of 2020 Bonds for redemption or to
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register the transfer of any 2020 Bonds which has been selected for redemption in whole or in part from and after the day of mailing a notice of redemption of such 2020 Bonds selected for redemption in whole or in part as provided in Section 2.03(d).
The transferor shall also 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. The Trustee may 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 2020 Bonds. Any 2020 Bond may be exchanged at the Principal Corporate Trust Office of the Trustee for a new 2020 Bond and aggregate principal amount of the same maturity date and of the same or other authorized denominations. All costs of printing 2020 Bonds and any services rendered or expenses incurred by the Trustee in connection with any such exchange shall be paid by the Financing Authority; provided. 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 as a condition precedent to the exercise of such privilege. The Trustee shall not be required to exchange any 2020 Bonds during the period established by the Trustee for the selection of 2020 Bonds for redemption or to exchange any 2020 Bonds which has been selected for redemption in whole or in part from and after the day of mailing of a notice of redemption of such 2020 Bonds selected for redemption in whole or in part as provided in Section 2.03(d).
SECTION 2.08 2020 Bonds Registration Books. The Trustee will keep at its Principal Corporate Trust Office sufficient books for the registration and transfer of the 2020 Bonds which shall during normal business hours be open to inspection by the Financing Authority, and upon presentation for such purpose the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer the 2020 Bonds in such books as hereinabove provided.
SECTION 2.09 Mutilated, Destroyed, Stolen or Lost 2020 Bonds. If any 2020 Bonds shall become mutilated the Trustee at the expense of the Owner shall thereupon authenticate and deliver a new 2020 Bonds of like tenor and principal amount of authorized denominations in exchange and substitution for the 2020 Bonds so mutilated, but only upon surrender to the Trustee at its Principal Corporate Trust Office of the 2020 Bonds so mutilated, and every mutilated 2020 Bonds so surrendered to the Trustee shall be cancelled and destroyed by the Trustee in accordance with its retention policy then in effect.
If any 2020 Bonds shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee at its Principal Corporate Trust Office and, if such evidence be satisfactory to the Trustee and indemnity satisfactory to the Trustee shall be given, the Trustee, at the expense of the Owner, shall thereupon authenticate and deliver a new 2020 Bonds of like tenor and principal amount of authorized denominations in lieu of and in substitution for the 2020 Bonds so lost, destroyed or stolen.
The Trustee may require payment of the expenses which shall be incurred by the Financing Authority and the Trustee in connection with the issuance of each new 2020 Bonds
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under this section. Any 2020 Bond issued under the provisions of this section in lieu of any 2020 Bonds alleged to be lost, destroyed or stolen shall be equally and proportionately entitled to the benefits hereof with all other 2020 Bonds secured hereby, and neither the Financing Authority nor the Trustee shall be required to treat both the original 2020 Bonds and any replacement 2020 Bonds as being Outstanding for the purpose of determining the principal amount of 2020 Bonds which may be issued hereunder or for the purpose of determining any percentage of 2020 Bonds Outstanding hereunder, but both the original and replacement 2020 Bonds shall be treated as one and the same.
SECTION 2.10 [Reserved]
SECTION 2.11 Use of Book-Entry System for 2020 Bonds. The 2020 Bonds shall be initially issued and registered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”), or such other nominee as DTC shall request pursuant to the Representation Letter, and the ownership of such 2020 Bonds shall be registered in the registration records maintained by the Trustee pursuant to Section 2.08 in the name of Cede & Co., as nominee of DTC, or such other nominee as DTC shall request pursuant to the Representation Letter, and payment of the interest on the 2020 Bonds registered in the name of Cede & Co. shall be made on each Interest Payment Date to the account, in the manner and at the address indicated in or pursuant to the Representation Letter, and the 2020 Bonds shall be issued in the form of a single 2020 Bond for each stated maturity of the 2020 Bonds, representing the aggregate principal amount of the 2020 Bonds of such maturity. The Financing Authority and the Trustee may treat DTC (or its nominee) as the sole and exclusive owner of the 2020 Bonds registered in its name for the purposes of payment of the interest on or principal of or redemption premiums, if any, on such 2020 Bonds, for selecting the 2020 Bonds or portions thereof to be redeemed, for giving any notice permitted or required to be given to Owners hereunder, for registering the transfer of 2020 Bonds, for obtaining any consent or other action to be taken by Owners of the 2020 Bonds and for all other purposes whatsoever; and neither the Financing Authority nor the Trustee shall be affected by any notice to the contrary, and neither the Financing Authority nor the Trustee shall have any responsibility or obligation to any Participant (which shall mean, for purposes of this section, securities brokers and dealers, banks, trust companies, clearing corporations and other entities, some of whom directly or indirectly own DTC), any person claiming a beneficial ownership interest in the 2020 Bonds under or through DTC or any Participant, or any other person whom is not shown on the registration records as being a Owner of 2020 Bonds, with respect to (i) the accuracy of any records maintained by DTC or any Participant, (ii) the payment by DTC or any Participant of any amount in respect of the interest on or principal of or redemption premium, if any, on the 2020 Bonds, (iii) any notice which is permitted or required to be given to Owners of 2020 Bonds hereunder, (iv) the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the 2020 Bonds, or (v) any consent given or other action taken by DTC as a Owner of 2020 Bonds. The Trustee shall pay the interest on and principal of and redemption premiums, if any, on the 2020 Bonds at the times, to the accounts, at the addresses and otherwise in accordance with the Representation Letter, and all such payments shall be valid and effective to satisfy fully and discharge the Financing Authority’s obligations with respect to the interest on or principal of and redemption premiums, if any, on the 2020 Bonds to the extent of the sum or sums so paid.
Upon delivery by DTC to the Trustee of written notice to the effect that DTC has determined to
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substitute a new nominee in place of its then existing nominee, the 2020 Bonds will be transferable to such new nominee in accordance with the last paragraph of this section.
In the event that the Financing Authority determines that it is in the best interests of the beneficial owners of the 2020 Bonds that they be able to obtain definitive 2020 Bonds, the Trustee shall, upon receipt of a Written Request of the Financing Authority, so notify DTC, whereupon DTC shall notify the Participants of the availability through DTC of definitive 2020 Bonds, and in such event, the 2020 Bonds will be transferable in accordance with the last paragraph of this section. DTC may determine to discontinue providing its services with respect to the 2020 Bonds at any time by giving written notice of such discontinuance to the Financing Authority or the Trustee and discharging its responsibilities with respect thereto under applicable law, and in such event the 2020 Bonds will be transferable in accordance with the last paragraph of this section. Whenever DTC requests the Financing Authority and the Trustee to do so, the Financing Authority and the Trustee will cooperate with DTC in taking appropriate action after reasonable notice to arrange for another securities depository to maintain custody of all certificates evidencing the 2020 Bonds then Outstanding, and in such event, the 2020 Bonds will be transferable to such securities depository in accordance with the last paragraph of this section, and thereafter all references herein to DTC or its nominee shall be deemed to refer to such successor securities depository and its nominee, as appropriate.
So long as all 2020 Bonds Outstanding are registered in the name of any nominee of DTC, all payments with respect to the interest on and principal of and redemption premiums, if any, on the 2020 Bonds and all notices with respect to the 2020 Bonds shall be made and given to DTC as provided in the Representation Letter.
The Trustee is hereby authorized and requested to execute and deliver the Representation Letter and, in connection with any successor nominee of DTC or any successor depository, enter into comparable arrangements, and shall have the same rights with respect to its actions thereunder as it has with respect to its actions hereunder.
If any transfer or exchange of 2020 Bond is authorized under the first or second paragraphs of this section, such transfer or exchange shall be accomplished upon receipt by the Trustee from the registered owner thereof of the 2020 Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee, all in accordance with the applicable provisions of Sections 2.06 and 2.07. In the event that definitive 2020 Bonds are issued to Owners other than Cede & Co., its successor as nominee of DTC as Owner of all the 2020 Bonds, another securities depository as Owner of all the 2020 Bonds, or the nominee of such successor securities depository, the provisions of Sections 2.06 and 2.07 shall also apply to, among other things, the registration, exchange and transfer of the 2020 Bonds and the method of payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds.
ARTICLE III
ISSUANCE OF 2020 BONDS AND APPLICATION OF PROCEEDS
SECTION 3.01 Procedure for the Issuance of 2020 Bonds. At any time after the sale of the 2020 Bonds in accordance with the Act, the Financing Authority shall execute the
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2020 Bonds for issuance hereunder and shall deliver them to the Trustee, and thereupon the 2020 Bonds shall be authenticated and delivered by the Trustee to the purchaser thereof upon receipt of a Written Request of the Financing Authority and upon receipt of payment therefor from such purchaser. Upon receipt of payment of the purchase price of the 2020 Bonds by the purchaser thereof, the Trustee shall set aside and deposit in or transfer such net purchase price of the 2020 Bonds received from such sale to the following respective accounts or funds:
(a) The Trustee shall transfer to Wells Fargo Bank, National Association the amount of $______, for the prepayment of the 2015 Installment Sale Agreement pursuant to the terms of the 2015 Installment Sale Agreement;
(b) The Trustee shall deposit in the “Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 Acquisition and Construction Fund” an amount equal to $_______.
(c) The Trustee shall deposit in the “Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 Costs of Issuance Fund,” the sum of $_______. (d) The Trustee shall deposit $_____ in the 2020 Reserve Account.
SECTION 3.02 Acquisition and Construction Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the “Stockton Public Financing Authority Water Revenue Bonds, Series 2020 Acquisition and Construction Fund.” Except as otherwise provided herein, moneys in the Acquisition and Construction Fund shall be used solely for the payment of Acquisition and Construction Costs, as defined in the 2020 Installment Agreement. Before any payment from the Acquisition and Construction Fund shall be made, the Parking Authority shall file or cause to be filed with the Trustee, a Requisition of the Parking Authority which shall be substantially in the form attached hereto as Exhibit B. The Trustee shall be entitled to rely on the representations of the Parking Authority contained in such Requisition of the Parking Authority and shall not be required to independently verify the contents of such Requisition of the Parking Authority.
Within five (5) Business Days following receipt of each such Requisition of the Parking Authority, the Trustee shall pay the amount set forth in such Requisition of the Parking Authority as directed by the terms thereof out of the Acquisition and Construction Fund. Upon the Written Request of the Financing Authority accompanied by a written certificate of the Parking Authority stating that all Acquisition and Construction Costs have been paid or provision made for their payment, any unexpended moneys in the Acquisition and Construction Fund may be used to pay the costs associated with any other improvements to the Parking Facilities, provided that in the Opinion of Counsel such use of the proceeds of the 2020 Bonds shall not adversely affect the exclusion of interest on the 2020 Bonds from gross income of the owners thereof. Any unexpended moneys in the Acquisition and Construction Fund subsequent to the payment of all Acquisition and Construction Cost which are not used to pay the cost of other improvements to the Parking Facilities shall be transferred to the Installment Payment Fund and applied to the payment of the 2020 Bonds upon receipt by the Trustee of a Written Request of the Financing Authority accompanied by a written certificate of the Parking
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Authority stating that all Acquisition and Construction Costs have been paid or provision made for their payment.
SECTION 3.03 Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the “Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 Costs of Issuance Fund.” Except as otherwise provided herein, moneys in the Costs of Issuance Fund shall be used solely for the payment of the Costs of Issuance of the 2020 Bonds. The Trustee shall disburse moneys in the Costs of Issuance Fund from time to time to pay Costs of Issuance (or to reimburse the Financing Authority for payment of Costs of Issuance) upon receipt by the Trustee of a Requisition of the Financing Authority, substantially in the form attached hereto as Exhibit C. Upon the earlier of 180 days from the Closing Date or the filing with the Trustee of a Certificate of the Financing Authority stating that all Costs of Issuance have been paid, the Trustee shall withdraw all amounts then on deposit in the Costs of Issuance Fund and transfer such amounts to the Installment Payment Fund and the Costs of Issuance Fund shall then be closed.
SECTION 3.04 Validity of 2020 Bonds. The validity of the issuance of the 2020 Bonds shall not be dependent on or affected in any way by the proceedings taken by the Financing Authority with respect to or in connection with the 2020 Installment Purchase Agreement. The recital contained in the 2020 Bonds that the same are issued pursuant to the Act and pursuant hereto shall be conclusive evidence of their validity and of the regularity of their issuance, and all 2020 Bonds shall be incontestable from and after their issuance. The 2020 Bonds shall be deemed to be issued, within the meaning hereof, whenever the definitive 2020 Bonds (or any temporary 2020 Bonds exchangeable therefor) shall have been delivered to the purchaser thereof and the proceeds of sale thereof received.
ARTICLE IV
REVENUES
SECTION 4.01 Pledge of Revenues. All Revenues received by the Financing Authority are hereby assigned by the Financing Authority to the Trustee for the benefit of the Owners of the 2020 Bonds, and are hereby irrevocably pledged to the payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds as provided herein, and the Revenues shall not be used for any other purpose while any of the 2020 Bonds remain Outstanding; provided, that out of the Revenues there may be applied such sums for such purposes as are permitted hereunder and in the 2020 Installment Purchase Agreement. This pledge shall constitute a first and exclusive pledge of and charge and lien upon the Revenues and all money on deposit in the accounts and funds established hereunder for the payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds in accordance with the terms hereof and thereof. The Financing Authority (to the extent of its rights, if any, in the 2020 Installment Payment Fund and all money on deposit in the accounts and funds established hereunder, although it is the intent of the parties hereto that the Financing Authority not have any right, title or interest in or to the 2020 Installment Payment Fund or such money) hereby pledges and grants a lien on and a security interest in the 2020 Installment Payment Fund and such money to the Trustee for the benefit of the Owners. The Financing Authority and the Trustee agree to take such action (including, if required under applicable law, the filing of
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financing statements and continuation statements) as may be necessary from time to time to perfect or otherwise preserve the priority of the pledge set forth herein.
In order to secure the pledge of the Revenues hereunder, the Financing Authority hereby transfers, conveys and assigns to the Trustee, for the benefit of the Owners, all of the Financing Authority’s rights under the 2020 Installment Purchase Agreement (excepting its right to indemnification thereunder), including the right to receive 2020 Installment Payments from the City, and the right to exercise any remedies provided therein in the event of a default by the City thereunder. The Trustee hereby accepts such assignment for the benefit of the Owners subject to the provisions of this Indenture.
SECTION 4.02 Receipt and Deposit of Revenues in the 2020 Installment Payment Fund. In order to carry out and effectuate the pledge, charge and lien contained herein, the Financing Authority agrees and covenants that all Revenues when and as received by the Financing Authority will be forthwith transferred by the Financing Authority to the Trustee for deposit in the “Stockton Public Financing Authority 2020 Installment Payment Fund,” which fund is hereby created and which fund the Financing Authority hereby agrees and covenants to maintain with the Trustee so long as any 2020 Bonds are Outstanding hereunder. All money in the 2020 Installment Payment Fund shall be accounted for through and held in trust in the 2020 Installment Payment Fund by the Trustee, and the Financing Authority shall have no beneficial right or interest in any money in the 2020 Installment Payment Fund except only as herein provided. All Revenues, whether received by the Financing Authority or deposited with the Trustee as herein provided, shall nevertheless be allocated, applied and disbursed solely to the purposes and uses hereinafter in this article set forth, and shall be accounted for separately and apart from all other accounts, funds, money or other resources of the Financing Authority.
SECTION 4.03 Establishment and Maintenance of Accounts for Use of Money in the 2020 Installment Payment Fund. All money in the 2020 Installment Payment Fund shall be set aside by the Trustee in the following respective special accounts within the 2020 Installment Payment Fund (each of which is hereby created and each of which the Trustee hereby covenants and agrees to cause to be maintained) in the following order of priority:
Interest Account,
Redemption Account, and
2020 Reserve Account.
All money in each of such accounts shall be held in trust by the Trustee and shall be applied, used and withdrawn only for the purposes hereinafter authorized in this section. (a) Interest Account. On March 1 and September 1 of each year, beginning on [September 1, 2020], the Trustee shall set aside from the 2020 Installment Payment Fund and deposit in the Interest Account an amount of money which is equal to the amount of interest becoming due and payable on all Outstanding 2020 Bonds on such March 1 or September 1, as the case may be; provided, that no such deposit need be made in the Interest Account if the amount contained therein is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding 2020 Bonds on such Interest Payment Date. All money in the Interest
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Account shall be used and withdrawn by the Trustee solely for the purpose of paying the interest on the 2020 Bonds as it shall become due and payable (including accrued interest on any 2020 Bonds purchased or redeemed prior to maturity).
(b) Redemption Account. On March 1 of each year, beginning on March 1, 20__, the Trustee shall set aside from the 2020 Installment Payment Fund and deposit in the Principal Subaccount of the Redemption Account an amount of money equal to the principal amount of all Outstanding 2020 Bonds maturing on such March 1 and any mandatory sinking account payments relating to the Term Bonds coming due and payable on such March 1 by operation of mandatory sinking fund redemption pursuant to Section 2.03(b), provided, that no such deposit need be made in the Principal Subaccount on March 1 of any year if the amount contained in the Principal Subaccount therein is at least equal to the aggregate amount of the principal of all Outstanding 2020 Bonds maturing by their terms on such March 1 and any mandatory sinking account payments relating to the Term Bonds coming due and payable on such March 1 by operation of mandatory sinking fund redemption pursuant to Section 2.03(b).
All money in the Principal Subaccount in the Redemption Account shall be used and withdrawn by the Trustee solely for the purpose of paying the principal of the 2020 Bonds as they shall become due and payable, whether at maturity or on prior redemption. (c) 2020 Reserve Account.
(i) On March 1 of each year, beginning on March 1, 20__, the Trustee shall set aside from the 2020 Installment Payment Fund and deposit in the 2020 Reserve Account the amount of money necessary to restore the 2020 Reserve Account to the 2020 Reserve Requirement, and for this purpose all investments in each such account on March 1 of each year (beginning on March 1, 20__) shall be valued at the face value thereof if such investments mature within twelve (12) months from the date of such valuation, or if such investments mature more than twelve (12) months after the date of such valuation, at the price at which such investments are redeemable by the Owner, at his option, if so redeemable, or if not so redeemable, at the then current market value of such investments.
(ii) Any moneys in the 2020 Reserve Account shall be used solely for the purpose of paying the principal of and interest on the 2020 Bonds, if the moneys in the Installment Payment Fund are insufficient therefor. If the amount on deposit in the Installment Payment Fund on any date is insufficient to enable the Trustee to pay in full the aggregate amount of principal of and interest on the 2020 Bonds coming due and payable, the Trustee shall withdraw the amount of such insufficiency from the 2020 Reserve Account and transfer such amount to the Installment Payment Fund. (iii) If the amount on deposit in the 2020 Reserve Account exceeds the 2020 Reserve Requirement on the fifteenth (15th) calendar day of the month preceding any Interest Payment Date, the amount of such excess shall be withdrawn therefrom by the Trustee and transferred to the Installment Payment Fund and credited against the Installment Payment or Installment Payments next due from the City.
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(iv) The Financing Authority may fund all or a portion of the 2020 Reserve Requirement with one or more Qualified Reserve Fund Credit Instruments. Upon deposit of any future Qualified Reserve Fund Credit Instrument with the Trustee, the Trustee shall transfer any excess amounts then on deposit in the 2020 Reserve Account into a segregated account of the Installment Payment Fund, which monies shall be applied at the written direction of the Financing Authority either (i) to the payment within one year of the date of transfer of capital expenditures of the Financing Authority permitted by law, or (ii) to the redemption of 2020 Bonds on the earliest succeeding date on which such redemption is permitted hereby, and pending such application shall be held either not invested in investment property (as defined in section 148(b) of the Code), or invested in such property to produce a yield that is not in excess of the yield on the 2020 Bonds; provided, however, that the Financing Authority may by written direction to the Trustee cause an alternative use of such amounts if the Financing Authority shall first have obtained an Opinion of Counsel substantially to the effect that such alternative use will not adversely affect the exclusion pursuant to section 103 of the Code of interest on the 2020 Bonds from the gross income of the owners thereof for federal income tax purposes.
In any case where the 2020 Reserve Account is funded with a combination of cash and a Qualified Reserve Fund Credit Instrument, the Trustee shall deplete all cash balances before drawing on the Qualified Reserve Fund Credit Instrument. With regard to replenishment, any available moneys provided by the Financing Authority shall be used first to reinstate the Qualified Reserve Fund Credit Instrument and second, to replenish the cash in the 2020 Reserve Account. If the Qualified Reserve Fund Credit Instrument is drawn upon, the Financing Authority shall make payment of interest on amounts advanced under the Qualified Reserve Fund Credit Instrument after making any payments pursuant to subsections (a) and (b) of this Section 4.3.
If the Qualified Reserve Fund Credit Instrument will lapse or expire, the Trustee shall draw upon such Qualified Reserve Fund Credit Instrument prior to its lapsing or expiring in the full amount of such Qualified Reserve Fund Credit Instrument, make deposits from available Revenues to the 2020 Reserve Account to increase the amount on deposit therein to the 2020 Reserve Requirement or substitute such Qualified Reserve Fund Credit Instrument with a Qualified Reserve Fund Credit Instrument that satisfies the requirements of this subsection (c).
ARTICLE V
COVENANTS OF THE FINANCING AUTHORITY
SECTION 5.01 Punctual Payment and Performance. The Financing Authority will punctually pay the interest on and principal of and redemption premium, if any, to become due on every 2020 Bond issued hereunder from the Revenues in strict conformity with the terms hereof and of the 2020 Bonds, and will faithfully observe and perform all the agreements, conditions, covenants and terms to be observed or performed by it contained herein and in the 2020 Bonds.
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SECTION 5.02 Against Encumbrances. The Financing Authority will not make any pledge of or place any charge or lien upon the Revenues except as provided herein, and will not issue any bonds, notes or obligations payable from the Revenues or secured by a pledge of or charge or lien upon the Revenues except the 2020 Bonds.
SECTION 5.03 Tax Covenants.
(a) General. The Financing Authority hereby covenants with the owners of the 2020 Bonds that, notwithstanding any other provisions of this Indenture, it shall not take any action, or fail to take action, if any such action or failure to take action would adversely affect the exclusion from gross income of interest on the 2020 Bonds under Section 103 of the Code. The Financing Authority shall not, directly or indirectly, use or permit the use of proceeds of the 2020 Bonds or any of the property financed or refinanced with proceeds of the 2020 Bonds, or any portion thereof, by any person other than a governmental person (as such term is used in Section 141 of the Code and applicable Treasury Regulations), in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest on the 2020 Bonds.
(b) Use of Proceeds. The Financing Authority shall not take any action, or fail to take action, if any such action or failure to take action would cause the 2020 Bonds to be “private activity bonds” within the meaning of Section 141 of the Code and applicable Treasury Regulations, and in furtherance thereof, shall not make any use of the proceeds of the 2020 Bonds or any of the property financed or refinanced with proceeds of the 2020 Bonds, or any portion thereof, that would cause the 2020 Bonds to be “private activity bonds” within the meaning of Section 141 of the Code. To that end, so long as any 2020 Bonds are outstanding, the Financing Authority, with respect to such proceeds and property, will comply with the requirements of the Code and the Treasury Regulations, to the extent such requirements are, at the time, applicable and in effect. The Financing Authority shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the continued qualification of the 2020 Bonds as “governmental bonds.” (c) Arbitrage. The Financing Authority shall not, directly or indirectly, use or permit the use of any proceeds of any 2020 Bonds, or of any property financed or refinanced thereby, or of other funds of the Financing Authority, that would cause the 2020 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and applicable Treasury Regulations, and shall not otherwise take any action, or fail to take action, if such action or failure to take action would cause the 2020 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and applicable Treasury Regulations. To that end, the Financing Authority shall comply with all requirements of Section 148 of the Code and the Treasury Regulations to the extent such requirements are, at the time, in effect and applicable to the 2020 Bonds.
(d) Federal Guarantee. The Financing Authority shall not make any use of the proceeds of the 2020 Bonds, or of any other funds of the Financing Authority, that would cause the 2020 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code, and shall not otherwise take any action, or fail to take action, when such action or failure to take
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action would cause the 2020 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
(e) Compliance with Tax Certificate. In furtherance of the foregoing tax covenants of this Section 5.03, the Financing Authority covenants that it will comply with the provisions of the Tax Certificate, which is incorporated herein as if fully set forth herein. These covenants shall survive payment in full or defeasance of the 2020 Bonds.
SECTION 5.04 Accounting Records and Reports. The Financing Authority will keep or cause to be kept proper books of record and accounts in which complete and correct entries shall be made of all transactions relating to the receipts, disbursements, allocation and application of the Revenues, and such books shall be available for inspection by the Trustee at reasonable hours and under reasonable conditions. Not later than March 31 following the close of each Fiscal Year, the Financing Authority will furnish or cause to be furnished to the Trustee audited financial statements for such Fiscal Year prepared by an Independent Certified Public Accountant. The Financing Authority will also keep or cause to be kept such other information as required under the Tax Certificate, and the Trustee shall have no duty to review or examine such statements.
SECTION 5.05 Prosecution and Defense of Suits. The Financing Authority will defend against every suit, action or proceeding at any time brought against the Trustee upon any claim to the extent arising out of the receipt, application or disbursement of any of the Revenues or to the extent involving the failure of the Financing Authority to fulfill its obligations hereunder; provided, that the Trustee or any affected Owner at its election may appear in and defend any such suit, action or proceeding. The Financing Authority will indemnify and hold harmless the Trustee against any and all liability claimed or asserted by any person to the extent arising out of any such failure by the Financing Authority, and will indemnify and hold harmless the Trustee against any attorney’s fees or other expenses which it may incur in connection with any litigation to which it may become a party by reason of its actions hereunder, except for any loss, cost, damage or expense resulting from the active or passive negligence, willful misconduct or breach of duty by the Trustee.
SECTION 5.06 Amendments to 2020 Installment Purchase Agreement. The Financing Authority will not supplement, amend, modify or terminate any of the terms of the 2020 Installment Purchase Agreement, or consent to any such supplement, amendment, modification or termination, without the prior written consent of the Trustee, which consent shall be given only if (a) such supplement, amendment, modification or termination will not materially adversely affect the interests of the Owners or result in any material impairment of the security hereby given for the payment of the 2020 Bonds, or (b) the Trustee first obtains the written consent of the Owners of a majority in aggregate principal amount of the 2020 Bonds then Outstanding to such supplement, amendment, modification or termination; provided, that no such supplement, amendment, modification or termination shall reduce the amount of 2020 Installment Payments to be made to the Financing Authority by the City pursuant to the 2020 Installment Purchase Agreement, or extend the time for making such 2020 Installment Payments, or permit the creation of any lien prior to the lien created by the 2020 Installment Purchase Agreement on the Net System Revenues without the written consent of the Owners of all the 2020 Bonds then Outstanding.
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SECTION 5.07 Continuing Disclosure. Pursuant to the 2020 Installment Purchase Agreement and the Continuing Disclosure Certificate (as defined in the 2020 Installment Purchase Agreement) the City has undertaken all responsibility for compliance with continuing disclosure requirements related to the 2020 Bonds. Notwithstanding any other provisions hereof, failure of the City to comply with the Continuing Disclosure Certificate shall not be considered an Event of Default hereunder; provided, the Trustee may (and, at the request of any Participating Underwriter or the Owners of at least twenty-five per cent (25%) in aggregate principal amount of Outstanding 2020 Bonds, shall) or any Owner or Beneficial Owner 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 section.
SECTION 5.08 Further Assurances. Whenever and so often as reasonably requested to do so by the Trustee or any Owner, the Financing Authority will promptly execute and deliver or cause to be executed and delivered all such other and further assurances, documents or instruments, and promptly do or cause to be done all such other and further things as may be necessary or reasonably required in order to further and more fully vest in the Owners all rights, interests, powers, benefits, privileges and advantages conferred or intended to be conferred upon them hereby.
ARTICLE VI
THE TRUSTEE
SECTION 6.01 The Trustee. Wells Fargo Bank, National Association at its Principal Corporate Trust Office, is hereby appointed Trustee for the purpose of receiving all money which the Financing Authority is required to transfer to it hereunder and for applying and using such money as provided herein for the purpose of paying the interest on and principal of and redemption premiums, if any, on the 2020 Bonds
The Financing Authority may remove the Trustee initially appointed and any successor thereto and may appoint a successor or successors thereto by an instrument in writing; provided, that any such successor shall be a bank or trust company doing business and having a corporate trust office in Los Angeles or San Francisco, California, having a combined capital (exclusive of borrowed capital) and surplus of at least one hundred million dollars ($100,000,000) and subject to supervision or examination by a federal or state banking authority.
If such bank or trust company 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 the combined capital and surplus of such bank or trust company shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. The Trustee may at any time resign by giving thirty (30) days written notice of such resignation to the Financing Authority and to the Owners, and upon receiving such notice of resignation, the Financing Authority shall promptly appoint a successor Trustee by an instrument in writing having the qualifications required hereby. Any resignation or removal of a Trustee and appointment of a successor Trustee shall become effective only upon the acceptance of appointment by the successor Trustee. If within thirty (30) days after notice of the removal or resignation of the Trustee no successor Trustee shall have been appointed by the Financing Authority and shall have accepted such appointment, the removed or resigning Trustee may
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petition any court of competent jurisdiction for the appointment of a successor Trustee, which court may thereupon, after such notice, if any, as it may deem proper and prescribe and as may be required by law, appoint a successor Trustee having the qualifications required hereby. The Trustee’s right to indemnify and reimbursement of outstanding fees and expenses shall survive the Trustee’s resignation or removal.
The Trustee is hereby authorized to pay interest on the 2020 Bonds due on or before the maturity or prior redemption thereof to the Owners as their names appear at the close of business as of the Record Date next preceding each Interest Payment Date on the registration books required to be kept by it pursuant to Section 2.08 as the registered owners thereof, such interest to be paid by check mailed by first class mail to the Owners at their addresses appearing on such books (except that upon the written request of any Owner of one million dollars ($1,000,000) or more in aggregate principal amount of 2020 Bonds received by the Trustee prior to the applicable Record Date (which such request shall remain in effect until rescinded in writing by such Owner), interest shall be paid on each Interest Payment Date by wire transfer of immediately available funds to an account maintained in any bank or trust company in the United States of America that is a member of the Federal Reserve System designated in writing by such Owner) and to pay to the Owners the principal of and redemption premiums, if any, on the 2020 Bonds upon presentation and surrender of the 2020 Bonds to the Trustee at maturity or on redemption prior to maturity. In accordance with its retention policy then in effect, the Trustee shall cancel and destroy all 2020 Bonds paid by it at maturity or on redemption prior to maturity and all 2020 Bonds surrendered to it by the Financing Authority, and shall deliver to the Financing Authority a certificate of such destruction, and the Trustee shall keep accurate records of all 2020 Bonds cancelled and destroyed by it hereunder. All money held by or on behalf of the Trustee for the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds, whether at maturity or upon prior redemption, shall be held in trust for the account of the Owners thereof, and the Trustee shall not be required to pay Owners or the Financing Authority any interest on, or be liable to the Financing Authority, the Owners or any other person for any interest earned on, any money so held.
Any company into which the Trustee shall be merged or converted or with which it may be consolidated or any company resulting from any merger, conversation 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, so long as such company shall meet the requirements set forth in this section, shall be the successor to the Trustee and shall be vested with 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 6.02 Liability of Trustee. The recitals of facts, agreements and covenants contained herein and in the 2020 Bonds shall be taken as statements, agreements and covenants of the Financing Authority, and the Trustee shall not assume any responsibility for the correctness of the same and does not make any representation as to the sufficiency or validity hereof or of the 2020 Bonds or of the 2020 Installment Purchase Agreement, and shall not incur any responsibility in respect thereof other than in connection with the rights and obligations expressly assigned to or imposed upon it herein or in the 2020 Bonds, and shall not be liable in connection with the performance of its duties hereunder except for its own negligence or willful
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misconduct. The Trustee shall not be liable for any error of judgment made in good faith, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts, and no provision hereof shall require the Trustee to expend or risk its own funds or otherwise incur any liability for the performance of its duties hereunder, or in the exercise of any of its rights or powers hereunder, if repayment of such funds, or adequate indemnity satisfactory to it against such risks or liability, is not assured to it.
The Trustee shall not be liable for any error of judgment made in good faith by a responsible officer unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts, and the Trustee shall be entitled to advice of counsel concerning all matters of trust and its duties hereunder; provided, that the Trustee shall not be answerable for the negligence or misconduct of any attorney or certified public accountant selected by it with due care.
The Trustee shall, prior to an Event of Default, and after the curing or waiver of all Events of Default that may have occurred, perform such duties and only such duties as are specifically set forth herein, and no implied duties or obligations shall be read herein against the Trustee. The Trustee shall, during the existence of any Event of Default (that has not been cured or waived), exercise such of the rights and powers vested in it hereby, and use the same degree of care and skill in their exercise, as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.
The Trustee shall not be bound to recognize any person as the Owner of a 2020 Bonds unless and until such 2020 Bond is submitted for inspection, if required, and such Owner’s title thereto satisfactorily established, if disputed.
The Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Owners of not less than a majority in aggregate principal amount of the 2020 Bonds at the time Outstanding relating to the time, method and place of conducting any proceedings for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee hereunder.
The Trustee shall be under no obligation to exercise any of the rights or powers vested in it hereby at the request, order or direction of any of the Owners pursuant to the provisions hereof unless such Owners shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities that may be incurred therein or thereby. The Trustee has no obligation or liability to the Owners for the payment of the interest on, principal of or redemption premiums, if any, with respect to the 2020 Bonds from its own funds, but rather the Trustee’s obligations shall be limited to the performance of its duties and obligations hereunder.
The Trustee shall not be deemed to have knowledge of any Event of Default hereunder unless and until an officer at the Trustee’s Principal Corporate Trust Office responsible for the administration of the Trustee’s duties and obligations hereunder shall have actual knowledge thereof or the Trustee shall have received written notice thereof at its Principal Corporate Trust Office. The Trustee shall not be bound to ascertain or to inquire as to the performance or observance of any of the agreements, conditions, covenants or terms herein or of
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any of the documents executed in connection with the 2020 Bonds, or as to the existence of an Event of Default hereunder.
The Trustee shall be entitled to advice of counsel and other professionals concerning all matters of trust and its duty hereunder, but the Trustee shall not be answerable for the professional malpractice of any attorney-at-law or certified public accountant in connection with the rendering of professional advice in accordance with the terms hereof, if such attorney- at-law or certified public accountant was selected by the Trustee with due care.
No provision hereof shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance or exercise of any of its duties hereunder, or in the exercise of its rights or powers.
The Trustee shall have no responsibility, opinion or liability with respect to any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the 2020 Bonds.
All immunities, indemnifications and releases from liability granted herein to the Trustee shall extend to the directors, employees, officers and agents thereof.
SECTION 6.03 Compensation and Indemnification of Trustee. The Financing Authority agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for all services rendered by it in the exercise and performance of any of the duties and obligations of the Trustee hereunder, and the Financing Authority will pay or reimburse the Trustee upon its request for all expenses, disbursements and advances incurred or made by the Trustee and its affiliates, directors, employees or agents in accordance with any of the provisions hereof (including the reasonable compensation and the expenses and disbursements of its counsel and of all persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its negligence, default or willful misconduct. The Financing Authority, to the extent permitted by law, agrees to indemnify, defend and hold harmless the Trustee against any loss, damages, liability or expense incurred without negligence or bad faith on the part of the Trustee arising out of or in connection with (i) the exercise or performance of any of its duties or obligations hereunder, or (ii) any untrue statement or alleged untrue statement of any material fact or omission or alleged omission to state a material fact necessary to make the statements made, in the light of the circumstances under which they were made, not misleading in any official statement or other offering circular utilized in connection with the sale of any of the 2020 Bonds, including costs and expenses (including attorneys’ fees) of defending itself against any claim or liability in connection with the exercise or performance of any of its duties and obligations hereunder. The rights of the Trustee and the obligations of the Financing Authority under this section shall survive the discharge of the 2020 Bonds and hereof and the resignation or removal of the Trustee.
SECTION 6.04 Notice to the Trustee. The Trustee shall be protected in acting upon any 2020 Bonds, certificate, consent, notice, opinion, report, request, resolution or other document or paper believed by it to be genuine and to have been signed or presented by the proper party or parties. The Trustee may consult with counsel, including, without limitation, counsel to the Financing Authority, with regard to legal questions, and the opinion of such
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counsel shall be full and complete authorization and protection with respect to any action taken or suffered hereunder in good faith and in accordance therewith.
Whenever in the administration of its rights and obligations hereunder the Trustee shall deem it necessary or desirable that a matter be established or proved prior to taking or suffering any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of bad faith on the part of the Trustee, be deemed to be conclusively established or proved by a Certificate of the Financing Authority, which shall be full warrant to the Trustee for any action taken or suffered under the provisions hereof upon the faith thereof, and on which the Trustee may conclusively rely, but in its discretion the Trustee may, in lieu thereof, accept other evidence of such matter or may require such additional evidence as it may deem reasonable.
ARTICLE VII
AMENDMENT OF THE INDENTURE
SECTION 7.01 Amendment of the Indenture.
(a) The Indenture and the rights and obligations of the Financing Authority and of the Owners may be amended at any time by a Supplemental Indenture which shall become binding when the written consents of the Owners of a majority in aggregate principal amount of the 2020 Bonds then Outstanding, exclusive of 2020 Bonds disqualified as provided in Section 7.02, are filed with the Trustee; provided, that before executing any such Supplemental Indenture the Trustee shall first be provided at the Financing Authority’s expense with an Opinion of Counsel that such Supplemental Indenture is permitted by the Indenture, is enforceable against the Financing Authority and does not adversely impact the tax-exempt status of the interest on the 2020 Bonds, on which opinion the Trustee may conclusively rely. No such amendment shall (1) extend the maturity of or reduce the interest rate on or amount of interest on or principal of or redemption premium, if any, on or sinking fund payment for any 2020 Bonds without the express written consent of the Owner of such 2020 Bonds, or (2) permit the creation by the Financing Authority of any pledge of or charge or lien upon the Revenues as provided herein superior to or on a parity with the pledge, charge and lien created hereby for the benefit of the 2020 Bonds, or (3) reduce the percentage of 2020 Bonds required for the written consent to any such amendment, or (4) modify any duties or obligations of the Financing Authority or the Trustee without their prior written assent thereto, respectively. (b) This Indenture and the rights and obligations of the Financing Authority and of the Owners may also be amended at any time by a Supplemental Indenture which shall become binding upon adoption without the consent of any Owners, but only to the extent permitted by law, for any purpose that will not materially adversely affect the interests of the Owners, including (without limitation) for any one or more of the following purposes — (i) to add to the agreements and covenants required herein to be performed by the Financing Authority other agreements and covenants thereafter to be performed by the Financing Authority, or to surrender any right or power reserved herein to or conferred herein on the Financing Authority; or
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(ii) to make such provisions for the purpose of curing any ambiguity or of correcting, curing or supplementing any defective provision contained herein or in regard to questions arising hereunder which the Financing Authority may deem desirable or necessary and not inconsistent herewith; or
(iii) to add to the agreements and covenants required herein, such agreements and covenants as may be necessary to qualify the Indenture under the Trust Indenture Act of 1939; or
(iv) to make any amendments or supplements necessary or appropriate to preserve or protect the exclusion of interest on the 2020 Bonds from gross income for federal income tax purposes under the Code or the exemption of such interest from State personal income taxes; or
(v) to make such amendments or supplements as may be necessary or appropriate to maintain any then current rating on the 2020 Bonds; (vi) to add to the rights of the Trustee; or
(vii) many any other amendment or supplement not materially adverse to Owners of the 2020 Bonds;
provided, that before executing any such Supplemental Indenture the Trustee shall first be provided at the Financing Authority’s expense with an Opinion of Counsel that such Supplemental Indenture is permitted by the Indenture, on which opinion the Trustee may conclusively rely.
SECTION 7.02 Disqualified 2020 Bonds. 2020 Bonds owned or held by or for the account of the Financing Authority shall not be deemed Outstanding for the purpose of any consent or other action or any calculation of Outstanding 2020 Bonds provided in this article, and shall not be entitled to consent to or take any other action provided in this article.
SECTION 7.03 Endorsement or Replacement of 2020 Bonds After Amendment.
After the effective date of any action taken as hereinabove provided, the Financing Authority may determine that the 2020 Bonds may bear a notation by endorsement in form approved by the Financing Authority as to such action, and in that case upon demand of the Owner of any Outstanding 2020 Bonds and presentation of such Owner’s 2020 Bonds for such purpose at the Principal Corporate Trust Office of the Trustee, a suitable notation as to such action shall be made on such 2020 Bonds. If the Financing Authority shall so determine, new 2020 Bonds so modified as, in the opinion of the Financing Authority, shall be necessary to conform to such action shall be prepared and executed, and in that case upon demand of the Owner of any Outstanding 2020 Bonds a new 2020 Bonds or 2020 Bonds shall be exchanged at the Principal Corporate Trust Office of the Trustee without cost to each Owner for its 2020 Bonds or 2020 Bonds then Outstanding upon surrender of such Outstanding 2020 Bonds.
SECTION 7.04 Amendment by Mutual Consent. The provisions of this article shall not prevent any Owner from accepting any amendment as to the particular 2020 Bonds held by him; provided, that due notation thereof is made on such 2020 Bonds.
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF OWNERS
SECTION 8.01 Events of Default. The following events shall constitute “Events of Default” hereunder:
(a) if default shall be made by the Financing Authority in the due and punctual payment of the interest on any 2020 Bonds when and as the same shall become due and payable;
(b) if default shall be made by the Financing Authority in the due and punctual payment of the principal of or redemption premium, if any, on or the making of any sinking fund payment for any 2020 Bonds when and as the same shall become due and payable, whether at maturity or by proceedings for redemption;
(c) if default shall be made by the Financing Authority in the performance of any of the agreements or covenants contained herein required to be performed by the Financing Authority, and such default shall have continued for a period of thirty (30) days after the Financing Authority shall have been given notice in writing of such default by the Trustee; (d) if the Financing Authority shall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of the Financing Authority seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, 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 Financing Authority or of the whole or any substantial part of its property; or (e) If an Event of Default (as that term is defined in the 2020 Installment Purchase Agreement) has occurred under the 2020 Installment Purchase Agreement.
Notwithstanding anything to the contrary contained herein, in no event are the 2020 Bonds subject to acceleration if an Event of Default occurs and is continuing.
SECTION 8.02 Application of Funds Upon Default. All money in the accounts and funds provided in Sections 3.01, 4.02 and 4.03 upon the date of the declaration of an Event of Default by the Trustee as provided in Section 8.01 and all Revenues thereafter received by the Financing Authority hereunder shall be transmitted to the Trustee and shall be applied by the Trustee in the following order--
First, to the payment of the costs and expenses of the Trustee, if any, in carrying out the provisions of this article, including any outstanding fees and expenses of the Trustee and including reasonable compensation to its accountants and counsel, and thereafter to the payment of the costs and expenses of the Owners in providing for the declaration of such Event of Default, including reasonable compensation to their accountants and counsel;
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Second, to the payment of the Owners entitled thereto of all installments of interest then due on the 2020 Bonds, in the order of the maturity of the installments of such interest, and if the amount available shall not be sufficient to pay in full any particular installment, then to the payment ratably, according to the amounts due on such installment, to the Owners entitled thereto, without any discrimination or privilege; Third, to the payment of the Owners entitled thereto of the unpaid principal of and redemption premiums, if any, on any of the 2020 Bonds which shall have become due (other than 2020 Bonds matured or called for redemption for the payment of which moneys are held pursuant to the provisions of this Indenture) in the order of their due dates, and if the amount available shall not be sufficient to pay in full the principal of and redemption premiums, if any, on such 2020 Bonds due on any particular date, then to the payment ratably, according to the amount due on such date, to the Owners entitled thereto without any discrimination or privilege; and
Fourth, to be held for the payment to the Owners entitled thereto as the same shall become due of the principal of and redemption premiums, if any, on and interest on the 2020 Bonds which may thereafter become due, either at maturity or upon call for redemption prior to maturity, and if the amount available shall not be sufficient to pay in full such principal and redemption premiums, if any, due on any particular date, together with interest then due and owing thereon, payment shall be made in accordance with the Second and Third paragraphs hereof.
SECTION 8.03 Institution of Legal Proceedings by Trustee. If one or more of the Events of Default shall happen and be continuing, the Trustee may, and upon the written request of the Owners of a majority in principal amount of the 2020 Bonds then Outstanding (so long as the Trustee is indemnified to its satisfaction therefor) shall, proceed to protect or enforce its rights or the rights of the Owners of 2020 Bonds hereunder by a suit in equity or action at law, either for the specific performance of any agreement or covenant contained herein, or in aid of the execution of any power herein granted, or by mandamus or other appropriate proceeding for the enforcement of any other legal or equitable remedy as the Trustee shall deem most effectual in support of any of its rights and duties hereunder.
SECTION 8.04 Non-Waiver. Nothing in this article or in any other provision hereof or in the 2020 Bonds shall affect or impair the obligation of the Financing Authority, which is absolute and unconditional, to pay the interest on and principal of and redemption premiums, if any, on the 2020 Bonds to the respective Owners of the 2020 Bonds at the respective dates of maturity or upon prior redemption as provided herein from the Revenues and the funds held in the accounts and funds as provided herein pledged for such payment, or (except as provided in Section 8.07) shall affect or impair the right of such Owners, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein and in the 2020 Bonds.
A waiver of any default or breach of duty or contract by the Trustee or any Owner shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract. No delay or omission by the Trustee or any Owner to exercise any right or remedy accruing upon any default or breach of
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duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Owners by the Act or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Trustee or the Owners.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned, the Financing Authority, the Trustee and any Owner shall be restored to their former positions, rights and remedies as if such action, proceeding or suit had not been brought or taken.
SECTION 8.05 Actions by Trustee as Attorney-in-Fact. Any action, proceeding or suit which any Owner 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, whether or not the Trustee is an Owner, and the Trustee is hereby appointed (and the successive Owners, by taking and holding the 2020 Bond issued hereunder, shall be conclusively deemed to have so appointed it) the true and lawful attorney-in-fact of the Owners for the purpose of bringing any such action, proceeding or suit and for the purpose of doing and performing any and all acts and things for and on behalf of the Owners as a class or classes as may be advisable or necessary in the opinion of the Trustee as such attorney-in-fact.
SECTION 8.06 Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Owners is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the Act or any other law.
SECTION 8.07 Limitation on 2020 Owners’ Right to Sue. No Owner of any 2020 Bond issued hereunder shall have the right to institute any suit, action or proceeding, at law or equity, for any remedy hereunder 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 at least a majority in aggregate principal amount of all the 2020 Bonds then Outstanding shall have made written request upon the Trustee to exercise the powers hereinbefore granted or to institute such suit, action or proceeding in its own name; (c) such Owners shall have tendered to the Trustee reasonable security or indemnity 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 sixty (60) days after such request shall have been received by, and such tender of indemnity shall have been made to, the Trustee.
Each 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 2020 Bonds of any remedy hereunder; it being understood and intended that no one or more Owners shall have any right in any manner whatever by his or their action to enforce any right hereunder except in the manner herein provided, and that all proceedings at law or in equity to enforce any provision hereof shall be instituted and maintained in the manner herein provided and for the equal benefit of all Owners of Outstanding 2020 Bonds.
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ARTICLE IX
DEFEASANCE
SECTION 9.01 Discharge of 2020 Bonds,
(a) If the Financing Authority shall pay or cause to be paid or there shall otherwise be paid to the Owners of all Outstanding 2020 Bonds the interest thereon and the principal thereof and the redemption premiums, if any, thereon at the times and in the manner stipulated herein and therein, then the Owners of such 2020 Bonds shall cease to be entitled to the pledge of and charge and lien upon the Revenues as provided herein, and all agreements, covenants and other obligations of the Financing Authority to the Owners of such 2020 Bonds hereunder shall thereupon cease, terminate and become void and be discharged and satisfied. In such event, the Trustee shall execute and deliver to the Financing Authority all such instruments as may be necessary or desirable to evidence such discharge and satisfaction, and the Trustee shall pay over or deliver to the Financing Authority all money or securities held by it pursuant hereto which are not required for the payment of the interest on and principal of and redemption premiums, if any, on such 2020 Bonds and for the payment of any fees and expenses of the Trustee.
(b) Any Outstanding 2020 Bonds shall on the maturity dates or redemption dates thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section if there shall be on deposit with the Trustee money which is sufficient to pay the interest on and principal of and redemption premiums, if any, on such 2020 Bonds on the maturity dates or redemption dates thereof. (c) Any Outstanding 2020 Bonds shall prior to the maturity dates or redemption dates thereof be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this section (except that the Financing Authority shall remain liable for the payment of such 2020 Bonds, but only out of the money or securities deposited with the Trustee or an Escrow Agent) if (1) in case any of such 2020 Bonds are to be redeemed on any date prior to their maturity date, the Financing Authority shall have given to the Trustee in form satisfactory to it irrevocable instructions to provide notice of such redemption in accordance with Section 2.03(d), (2) there shall have been deposited with the Trustee or with an Escrow Agent in trust for the benefit of the Owners thereof either (A) money in an amount which shall be sufficient to pay when due the interest to become due on such 2020 Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, to become due on such 2020 Bonds on such maturity dates or redemption dates, or (B) (a) Permitted Investments of the type described in clause (1) of the definition thereof which are not subject to redemption prior to maturity (including any such Permitted Investments issued or held in book-entry form on the books of the Treasury of the United States of America) or (b) tax exempt obligations of a state or political subdivision thereof which have been defeased under irrevocable escrow instructions by the deposit of such money or Permitted Investments and which are then rated in the highest rating category by Moody’s and S&P, the interest on and principal of which when paid will provide money which, together with the money, if any, deposited with the Trustee or such Escrow Agent at the same time, will be sufficient, in the opinion of an Independent Certified Public Accountant addressed to the Trustee,
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to pay when due the interest to become due on such 2020 Bonds on and prior to the maturity dates or redemption dates thereof, as the case may be, and the principal of and redemption premiums, if any, to become due on such 2020 Bonds on such maturity dates or redemption dates, and (3) in the event such 2020 Bonds are not by their terms subject to redemption within the next succeeding sixty (60) days, the Financing Authority shall have given the Trustee in form satisfactory to it irrevocable instructions to mail as soon as practicable a notice to the Owners of such 2020 Bonds that the deposit required by clause (2) above has been made with the Trustee or such Escrow Agent and that such 2020 Bonds are deemed to have been paid in accordance with this section and stating the maturity date or redemption date upon which money is to be available for the payment of the principal of and redemption premiums, if any, on such 2020 Bonds. (d) After the payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds as provided in this section, the Trustee shall, after the payment of all amounts due the Trustee hereunder, execute and deliver to the Financing Authority all such instruments as may be necessary or desirable to evidence the discharge and satisfaction of the Indenture, and the Trustee shall pay over or deliver to the Financing Authority all money or deposits or investments held by it pursuant hereto which are not required for the payment of the interest and principal and redemption premiums, if any, on the 2020 Bonds.
SECTION 9.02 Unclaimed Money. 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 Notes which remain unclaimed for two (2) years after the date when such Notes or interest thereon 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 (2) years after the date of deposit of such moneys if deposited with the Trustee after said date when such Notes become due and payable, shall be repaid by the Trustee to the Financing Authority, as its absolute property and free from trust, and the Trustee shall thereupon be released and discharged with respect thereto and the Owners shall look only to the Financing Authority for the payment of such Notes; provided, however, that before being required to make any such payment to the Financing Authority, the Trustee shall, at the Written Request of the Financing Authority (and of its expense), cause to be mailed to the Owners of all such Notes, 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 thirty (30) days after the date of mailing of such notice, the balance of such moneys then unclaimed will be returned to the Financing Authority.
ARTICLE X
MISCELLANEOUS
SECTION 10.01 Liability of Authority Limited to Revenues and Certain Other Funds. Notwithstanding anything contained herein, the Financing Authority shall not be required to advance any money derived from any source other than the Revenues and the hinds held in the accounts and funds as provided herein for the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds or for the performance of any agreements or covenants herein contained; provided, that the Financing Authority may, however, advance funds
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for any such purpose so long as such funds are derived from a source legally available for such purpose without incurring an indebtedness.
The 2020 Bonds are limited obligations of the Financing Authority and are payable, as to interest thereon, principal thereof and any redemption premiums thereon, solely from the Revenues and the funds held in the accounts and funds provided herein, and the Financing Authority is not obligated to pay such interest, principal or redemption premiums, if any, on the 2020 Bonds except from the Revenues and such funds. All the 2020 Bonds are equally and ratably secured by a pledge of and charge and lien upon the Revenues and such funds, and the Revenues and such funds constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds as provided herein. The full faith and credit of the Financing Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds, and no tax shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the 2020 Bonds. The 2020 Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Financing Authority or any of its income or receipts except the Revenues and such funds. Neither the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds is a debt, liability or general obligation of the City, the Parking Authority or the State and neither the faith and credit of the City, the Parking Authority or the State are pledged to the payment of interest on or principal, or redemption premium, if any, on the 2020 Bonds.
SECTION 10.02 Benefits of the Indenture Limited to Parties and Beneficiaries.
Nothing contained herein, expressed or implied, is intended or shall be construed to confer upon, or to give or grant to, any person or entity other than the Financing Authority, the Trustee, and the Owners any right, remedy or claim under or by reason hereof or any covenant, condition or stipulation hereof; and all covenants, stipulations, promises and agreements herein contained by and on behalf of the Financing Authority shall be for the sole and exclusive benefit of the Financing Authority, Trustee, and the Owners.
SECTION 10.03 Successor Is Deemed Included In All References To Predecessor.
Whenever herein either the Financing Authority or any officer thereof is named or referred to, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Financing Authority or such officer, and all agreements and covenants required hereby to be performed by or on behalf of the Financing Authority or any officer thereof shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
SECTION 10.04 Execution of Documents by Owners. Any declaration, request or other instrument which is permitted or required herein to be executed by Owners may be in one or more instruments of similar tenor and may be executed by Owners in person or by their attorneys appointed in writing. The fact and date of the execution by any Owner or his attorney of any declaration, request or other instrument or of any writing appointing such attorney may be proved by the certificate of any notary public or other officer authorized to make acknowledgments of deeds to be recorded in the state or territory in which he purports to act that the person signing such declaration, request or other instrument or writing acknowledged to him the execution thereof, or by an affidavit of a witness of such execution duly sworn to before such
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notary public or other officer. The ownership of any 2020 Bonds and the amount, maturity, number and date of holding the same may be proved by the registration books kept by the Trustee pursuant to Section 2.08.
Any declaration, request, consent or other instrument or writing of the Owner of any 2020 Bonds shall bind all future Owners of such 2020 Bonds with respect to anything done or suffered to be done by the Trustee or the Financing Authority in good faith and in accordance therewith.
SECTION 10.05 Waiver of Personal Liability. No member, officer or employee of the Financing Authority shall be individually or personally liable for the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds by reason of their issuance, but nothing herein contained shall relieve any such member, officer or employee from the performance of any official duty provided by the Act or any other applicable provisions of law or hereby.
SECTION 10.06 Deposit or Investment of Money in Accounts and Funds. Subject to Section 5.03, all money held by the Trustee in any of the accounts or funds established pursuant hereto shall be invested in those Permitted Investments described in a Written Request of the Financing Authority filed with the Trustee at least two (2) Business Days prior to the making of any such investment, which such Permitted Investments shall, as nearly as practicable, mature on or before the dates on which such money is anticipated to be needed-for disbursement hereunder, except that any money held in the 2020 Reserve Account shall be invested in those Permitted Investments that mature (or which may be redeemed or terminated by the Financing Authority or the Trustee at par) not later than five (5) years after their purchase or the final maturity date of the related 2020 Bonds, whichever is earlier, and the Trustee shall have no liability or responsibility for any loss resulting from any investment made in accordance herewith; provided, that if no such Written Request is received by the Trustee, the Trustee shall invest such money in the Wells Fargo Government Money Market Fund. The earnings on any investment in any fund or account created hereunder shall be deposited in such fund or account.
The Trustee will furnish the Financing Authority periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.
The Financing Authority acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Financing Authority the right to receive brokerage confirmations of security transactions as they occur, the Financing Authority specifically waives receipt of such confirmations to the extent permitted by law.
The Trustee or any of its affiliates may act as principal, agent, sponsor or advisor in connection with any investment made by the Trustee hereunder and may impose its customary fees therefor.
SECTION 10.07 [Reserved].
SECTION 10.08 Destruction of Cancelled 2020 Bonds. Whenever provision is made for the return to the Financing Authority of any Notes which have been cancelled pursuant
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to the provisions hereof, the Trustee shall destroy such Notes and shall cancel such Notes in accordance with its retention policy then in effect.
SECTION 10.09 Content of Certificates. Every Certificate of the Financing Authority with respect to compliance with any agreement, condition, covenant or provision provided herein shall include (a) a statement that the person or persons making or giving such certificate have read such agreement, condition, covenant or provision and the definitions herein relating thereto; (b) a statement that, in the opinion of the signers, they have made or caused to be made such examination or investigation as is necessary to enable them to express an informed opinion as to whether or not such agreement, condition, covenant or provision has been complied with; and (c) a statement as to whether, in the opinion of the signers, such agreement, condition, covenant or provision has been complied with.
Any Certificate of the Financing Authority may be based, insofar as it relates to legal matters, upon an Opinion of Counsel unless the person making or giving such certificate knows that the Opinion of Counsel with respect to the matters upon which his certificate may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous. Any Opinion of Counsel may be based, insofar as it relates to factual matters information with respect to which is in the possession of the Financing Authority, upon a representation by an officer or officers of the Financing Authority unless the counsel executing such Opinion of Counsel knows that the representation with respect to the matters upon which his opinion may be based, as aforesaid, is erroneous, or in the exercise of reasonable care should have known that the same was erroneous.
SECTION 10.10 Accounts and Funds; Business Days. Any account or fund required herein to be established and maintained by the Trustee may be established and maintained in the -accounting records of the Trustee either as an account or a fund, and may, for the purposes of such accounting records, any audits thereof and any reports or statements with respect thereto, be treated either as an account or a fund; but all such records with respect to all such accounts and funds shall at all times be maintained in accordance with sound industry practice and with due regard for the protection of the security of the 2020 Bonds and the rights of the Owners. Any action required to occur hereunder on a day which is not a Business Day shall be required to occur on the next succeeding Business Day.
SECTION 10.11 Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely:
If to the Financing Authority:
Stockton Public Financing Authority
425 N. Eldorado Street
Stockton, California 95202
Attention: Executive Director
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If to the Trustee:
Wells Fargo Bank National Association
MAC # E2064-05A
333 S. Grand Avenue, 5
th Floor
Los Angeles, CA 90071-1504
Attention: Corporate Trust Services
SECTION 10.12 CUSIP Numbers. Neither the Financing Authority nor the Trustee shall be liable for any defect or inaccuracy in the CUSIP number that appears on any 2020 Bonds or in any redemption notice relating thereto, and the Trustee may, in its discretion, include in any redemption notice relating to any of the 2020 Bonds a statement to the effect that the CUSIP numbers on the 2020 Bonds have been assigned by an independent service and are included in such notice solely for the convenience of the Owners and that neither the Financing Authority nor the Trustee shall be liable for any defects or inaccuracies in such numbers.
SECTION 10.13 Article and Section Headings and References. The headings or titles of the several articles and sections hereof and the table of contents appended hereto shall be solely for convenience of reference and shall not affect the meaning, construction or effect hereof. All references herein to “Articles,” “Sections” and other subdivisions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,” “herein,” “hereof,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to the Indenture as a whole and not to any particular article, section, subdivision or clause hereof.
SECTION 10.14 Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed by or on the part of the Financing Authority or the Trustee shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be null and void and shall be deemed separable from the remaining agreements and covenants or portions thereof and shall in no way affect the validity hereof or of the 2020 Bonds, and the Owners shall retain all the benefit, protection and security afforded to them under the Act or any other applicable provisions of law.
The Financing Authority and the Trustee hereby declare that they would have executed and delivered the Indenture and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof and would have authorized the issuance of the 2020 Bonds pursuant hereto irrespective of the fact that any one or more articles, sections, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
SECTION 10.15 Governing Law. The Indenture shall be construed and governed in accordance with the laws of the State.
SECTION 10.16 Execution in Several Counterparts. The Indenture may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original; and all such counterparts, or as many of them as the Financing Authority and the Trustee shall preserve undestroyed, shall together constitute but one and the same instrument.
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IN WITNESS WHEREOF, the Stockton Public Financing Authority has caused the Indenture to be signed in its name by its Executive Director and Wells Fargo Bank National Association, in token of its acceptance of the trusts created hereunder, has caused the Indenture to be signed by one of its duly authorized signatories, all as of the day and year first above written.
STOCKTON PUBLIC FINANCING
AUTHORITY
By
Executive Director
WELLS FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
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EXHIBIT A
FORM OF 2020 BONDS
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BOND, SERIES 2020
No. R-1 $_______
Interest Rate Maturity Date Bond Date CUSIP
_____% March 1, _____ February __ ,2020 _____
REGISTERED OWNER:
PRINCIPAL SUM: DOLLARS
The Stockton
Public Financing Authority, a joint exercise of powers entity duly organized and existing under and pursuant to the laws of the State of California (the “Financing Authority”), for value received, hereby promises to pay (but only out of the Revenues and certain other funds hereinafter referred to) to the registered owner identified above or registered assigns, on the maturity date specified above (subject to any right of prior redemption hereinafter provided for) the principal sum specified above, together with interest thereon computed on the basis of a 360-day year of twelve (12), 30 day calendar months from the interest payment date next preceding the date of authentication of this 2020 Bond (unless this 2020 Bond is authenticated on an interest payment date or on a day during the period from the sixteenth (16th) day of the month next preceding an interest payment date to such interest payment date, both dates inclusive, in which event it shall bear interest from such interest payment date, or unless it is authenticated on a day on or before the Record Date (as that term is hereinafter defined) for the first interest payment date, in which event it shall bear interest from its date) until the principal hereof shall have been paid, at the interest rate per annum specified above, payable semiannually thereafter on March 1 and September 1 in each year, commencing on [September 1, 2020]. The interest due on this 2020 Bond on or before the maturity or prior redemption hereof shall be payable only to the person whose name appears in the registration books required to be kept by Wells Fargo, Bank National Association (the “Trustee”) at its Principal Corporate Trust Office (as that term is defined in the Indenture hereinafter referred to, and herein the “Principal Corporate Trust Office”) as the registered owner hereof at the close of business as of the fifteenth (15th) day of the month next preceding each interest payment date (each, a “Record Date”), with such interest to be paid by check mailed by first class mail on each interest payment date to such registered owner at his address as it appears on such registration books; provided, that upon the written request of the registered owner of one million dollars ($1,000,000) or more in aggregate principal amount of 2020 Bond received by the Trustee prior to the applicable Record Date (which such request shall remain in effect until rescinded in writing by such registered owner), interest shall be paid on each interest payment date by wire transfer of immediately available
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funds to an account maintained in any bank or trust company in the United States of America that is a member of the Federal Reserve System designated in writing by such registered owner.
The principal of and redemption premium, if any, on this 2020 Bond shall be payable only to the person whose name appears in such registration books as the registered owner hereof, such principal and redemption premium, if any, to be paid upon surrender of this 2020 Bond to the Trustee at its Principal Corporate Trust Office at maturity or upon prior redemption. The interest on and principal of and redemption premium, if any, on this 2020 Bond is payable in lawful money of the United States of America.
This 2020 Bond is one of a duly authorized issue of revenue bonds of the Financing Authority designated as its “Parking Revenue Bonds, Series 2020” (the “2020 Bonds”) in the aggregate principal amount of _________ dollars ($_____) all of like tenor and date (except for such variations, if any, as may be required to designate varying numbers, maturities and interest rates), and is issued under and pursuant to the provisions of the Joint Exercise of Powers Act (being Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended) and all laws amendatory thereof or supplemental thereto (the “Act”) and under and pursuant to the provisions of a Indenture dated as of February 1, 2020, by and between the Financing Authority and the Trustee (the “Indenture”) (copies of which are on file at the Principal Corporate Trust Office of the Trustee ).
The 2020 Bonds are issued to provide funds to refinance the cost of the acquisition and construction of certain additions, betterments, extensions and improvements to the Parking Facilities (as that term is defined in the Indenture) of the Parking Authority of the City of Stockton (the “Parking Authority”). The Bonds are limited obligations of the Financing Authority and are payable, as to interest thereon, principal thereof and any redemption premiums thereon, solely from the Revenues (the “Revenues”) constituting the installment payments (the “2020 Installment Payments”) to be made by the Parking Authority to the Financing Authority for the prepayment of the 2015 Installment Sale Agreement and the financing of the Improvements (each as defined in the Indenture) pursuant to the 2020 Installment Purchase Contract, dated as of February 1, 2020, by and between the Parking Authority and the Financing Authority (the “2020 Installment Purchase Agreement”) and the funds held in the accounts and funds pursuant to the Indenture as provided therein, and the Financing Authority is not obligated to pay interest on or principal of or redemption premiums, if any, on the Bonds except from the Revenues and such funds.
All the 2020 Bonds are equally and ratably secured in accordance with the terms and conditions of the Indenture by a pledge of and charge and lien upon the Revenues and such funds, and the Revenues and such funds constitute a trust fund for the security and payment of the interest on and principal of and redemption premiums, if any, on the 2020 Bonds as provided in the Indenture. The full faith and credit of the Financing Authority is not pledged for the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds, and no tax shall ever be levied or collected to pay the interest on or principal of or redemption premiums, if any, on the 2020 Bonds. The 2020 Bonds are not secured by a legal or equitable pledge of or charge or lien upon any property of the Financing Authority or any of its income or receipts except the Revenues and such funds. Neither the payment of the interest on or principal of or redemption premiums, if any, on the 2020 Bonds is a debt, liability or general obligation of the City, the Parking Authority or the State of California and neither the faith and credit of the
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City, the Parking Authority or the State of California are pledged to the payment of interest on or principal or redemption premiums, if any, on the 2020 Bonds. Reference is hereby made to the Act and to the Indenture and any and all amendments thereof and supplements thereto for a description of the terms on which the 2020 Bonds are issued, the provisions with regard to the nature and extent of the Revenues, the rights of the registered owners of the 2020 Bonds, the security for payment of the 2020 Bonds, the remedies upon default and limitations thereon, and the amendment of the Indenture (with or without consent of the registered owners of the 2020 Bonds); and all the terms of the Indenture are hereby incorporated herein and constitute a contract between the Financing Authority and the registered owner of this 2020 Bond, to all the provisions of which the registered owner of this 2020 Bond, by acceptance hereof, agrees and consents.
The 2020 Bonds shall be subject to redemption as provided in the Indenture.
This 2020 Bond is transferable only on a register to be kept for that purpose at the above-mentioned office of the Trustee by the registered owner hereof in person or by his duly authorized attorney upon payment of the charges provided in the Indenture and upon surrender of this 2020 Bond together with a written instrument of transfer satisfactory to the Trustee duly executed by the registered owner or his duly authorized attorney, and thereupon a new fully registered 2020 Bond or 2020 Bond in the same aggregate principal amount of authorized denominations will be issued to the transferee in exchange therefor. The Financing Authority and the Trustee may deem and treat the registered owner hereof as the absolute owner hereof for the purpose of receiving payment of the interest hereon and principal hereof and redemption premium, if any, hereon and for all other purposes, whether or not this 2020 Bond shall be overdue, and neither the Financing Authority nor the Trustee shall be affected by any notice or knowledge to the contrary; and payment of the interest on and principal of and redemption premium, if any, on this 2020 Bond shall be made only to such registered owner, which payments shall be valid and effectual to satisfy and discharge liability on this 2020 Bond to the extent of the sum or sums so paid.
This 2020 Bond shall not be entitled to any benefit, protection or security under the Indenture or become valid or obligatory for any purpose until the certificate of authentication hereon endorsed shall have been executed and dated by the Trustee.
It is hereby certified that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in the issuance of this 2020 Bond do exist, have happened and have been performed in due time, form and manner as required by law and that the amount of this 2020 Bond, together with all other indebtedness of the Financing Authority, does not exceed any limit prescribed by the Constitution or laws of the State of California and is not in excess of the amount of 2020 Bond permitted to be issued under the Indenture.
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IN WITNESS WHEREOF, the Stockton Public Financing Authority has caused this 2020 Bond to be executed in its name and on its behalf by the manual or facsimile signature of its Chairperson and countersigned by the manual or facsimile signature of its Secretary, and has caused this 2020 Bond to be dated as of [_____], 2020.
STOCKTON PUBLIC FINANCING
AUTHORITY
By
Chairperson
Countersigned:
________________________
Secretary
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This is one of the 2020 Bonds described in the within-mentioned Indenture which has been authenticated on _________________________________.
WELLS FARGO BANK NATIONAL
ASSOCIATION, as Trustee
By
Authorized Signatory
For value received the undersigned hereby sells, assigns and transfers unto ___________________ (Taxpayer Identification Number: ___________________) the within 2020 ___________________ Bonds and all rights thereunder, and hereby irrevocably constitutes and appoints attorney to transfer the within 2020 Bonds on the books kept for registration thereof, with lull power of substitution in the premises.
Dated: ___________________
Signature Guaranteed: ___________________
Note: The signature to this Assignment must correspond with the name as written on the face of the 2020 Bonds in every particular, without alteration or enlargement or any change whatever, and the signature must be guaranteed by an eligible guarantor institution. [DTC LEGEND]
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation (“DTC”), to the Trustee 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.
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EXHIBIT B
STOCKTON PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS,
SERIES 2020
(Issue Dated Date: ____, 2020)
Requisition of the Parking Authority
(Acquisition and Construction Fund)
(Section 3.02 of the Indenture)
Wells Fargo Bank, National Association, as Trustee
Attention: Corporate Trust Department
Request No.: P-___ (to be sequentially numbered)
Project Component
Amount of
This Draw
Aggregate Amount
Draws Including
This Draw
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
___________ _______________
(Continue on Additional Sheet if Necessary)
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Name and Address of party to whom payment is to be made:
Purpose for which the obligation was incurred:
The undersigned representative of the Parking Authority of the City of Stockton (the “Parking Authority”) hereby certifies that (i) each such cost or expense constitutes a proper charge against the Acquisition and Construction Fund for services rendered, and has not been the subject of any other payment request filed with you; and (ii) if the payment is to be made to the Parking Authority for amounts that it has paid or will pay to third parties, then the Parking Authority has either made payment or will make payment within three business days of receipt of moneys requisitioned hereunder and that the aggregate number of business days during this calendar year during which it has held such amounts before making payment does not exceed twenty.
Date: ________________________
PARKING AUTHORITY OF
THE CITY OF STOCKTON
By:___________________________
Title:_________________________
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EXHIBIT C
STOCKTON PUBLIC FINANCING AUTHORITY
WATER REVENUE BONDS,
SERIES 2020
(Issue Dated Date: _______, 2020)
Requisition of the Financing Authority
(Costs of Issuance Fund)
(Section 3.03 of the Indenture)
Wells Fargo Bank, National Association, as Trustee
Attention: Corporate Trust Department
Date of Requisition: ________, 20__.
Request No.: P-___ (to be sequentially numbered)
The undersigned, ____________________, hereby certifies as follows:
1. I am _______________________ of the Stockton Public Financing Authority, a joint powers authority duly established and existing under the laws of the State of California (the “Issuer”).
2. Pursuant to the provisions of the Indenture, dated as of February 1, 2020 (the “Indenture”), between the Issuer and Wells Fargo Bank, National Association, as trustee (the “Trustee”), I am an authorized signatory of the Issuer and I am delivering this Requisition on behalf of the Issuer.
3. The undersigned hereby requests that the Trustee pay from the Costs of Issuance Fund established pursuant to Section 3.03 of the Indenture the amounts specified in Schedule I hereto to the persons identified in Schedule I.
4. The undersigned hereby certifies that: (i) each obligation mentioned therein is a proper charge against the Costs of Issuance Fund and has not previously been disbursed by the Trustee from amounts in the Costs of Issuance Fund, and (ii) the amount of such disbursement is for payment of Costs of Issuance incurred and payable by the Issuer; and that this Requisition specifies in reasonable detail the nature of the obligation; and is accompanied by a bill or statement of account (if any) for each obligation.
Dated: _______, 20__.
STOCKTON PUBLIC FINANCING
AUTHORITY
By
Authorized Signatory
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Schedule I
Costs of Issuance Fund
To Amount Purpose
$
ATTACHMENT B
Exhibit 2
INSTALLMENT PURCHASE AGREEMENT
by and between
PARKING AUTHORITY OF THE CITY OF STOCKTON,
as Purchaser
and
STOCKTON PUBLIC FINANCING AUTHORITY,
as Seller
RELATING TO THE
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BONDS, SERIES 2020
Dated as of February 1, 2020
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TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.................................................................................................. 4 SECTION 1.02. Article and Secti on Headings, Gender and References ........................... 14 SECTION 1.03. Terms Not Defined Herein ........................ ............................................... 15
ARTICLE II
ISSUANCE OF THE 2020 BONDS; SALE AND PURCHASE OF THE LEASED PARKING
FACILITIES AND THE IMPROVEMENTS
SECTION 2.01. 2020 Bonds ...................................... ........................................................ 15 SECTION 2.02. Appointment of Parki ng Authority as Agent of Financing Authority .................................................................................................. 15 SECTION 2.03. Sale and Purchas e of the Improvements .................................................. 15 SECTION 2.04. Failure of the Fin ancing Authority to Perform Under this 20202 Installment Purchase Agreement .................................................. 16
ARTICLE III
2020 INSTALLMENT PAYMENTS
SECTION 3.01. Purchase Price .......................................................................................... 16 SECTION 3.02. Payment of the 2020 Installment Payments ............................................. 17 SECTION 3.03. Prepayment of th e 2020 Installment Payments ........................................ 17
ARTICLE IV
REVENUES
SECTION 4.01. Pledge of Net Par king Revenues; Revenue Fund .................................... 18 SECTION 4.02. Allocation of Net Parking Revenues........................................................ 18 SECTION 4.03. Additional Obligations .......................... ................................................... 19
ARTICLE V
COVENANTS OF THE PARKING AUTHORITY
SECTION 5.01. Compliance with and Amendment of 2020 Installment Purchase Agreement ................................................................................ 21 SECTION 5.02. Against Encumbrances ............................ ................................................. 22 SECTION 5.03. Against Sale or Other Disposition of Property ... ..................................... 22 SECTION 5.04. Against Competitive Facilities .................. ............................................... 22 SECTION 5.05. Tax Covenants ................................... ...................................................... 23 SECTION 5.06. Maintenance and O peration of the Parking Facilities .............................. 24 SECTION 5.07. Payment of Claims ................................................................................... 24 SECTION 5.08. Compliance with Contracts ...................................................................... 24 SECTION 5.09. Insurance ....................................... ........................................................... 24 SECTION 5.10. Accounting Records; Financial Statements and Other Reports ............... 24 SECTION 5.11. Protection of Securi ty and Rights of Authority ....................................... 25 SECTION 5.12. Payment of Taxes a nd Compliance with Governmental Regulations .............................................................................................. 25 SECTION 5.13. Amount of Charges, F ees and Rates; Rate Stabilization Fund ................ 25
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TABLE OF CONTENTS
(continued)
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SECTION 5.14. Eminent Domain and Insurance Proceeds ........... .................................... 25 SECTION 5.15. Continuing Disclosure ........................... .................................................. 26 SECTION 5.16. Further Assurances................................................................................... 26 SECTION 5.17. Application of CFD R evenues to the Payment of Gross Operation and Maintenance Costs ........................................................... 26 SECTION 5.18. Incurrence of Oblig ations Payable From CFD Revenues ....................... 26 SECTION 5.19. Preservation of the CFD Revenues .......................................................... 26 SECTION 5.20. CFD Revenues Assignment Agreement ............... ................................... 26
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES OF THE FINANCING AUTHORITY SECTION 6.01. Events of Default ..................................................................................... 27 SECTION 6.02. Distribution of Assets .............................................................................. 27 SECTION 6.03. Remedies of the Financing Authority ...................................................... 28 SECTION 6.04. Non-Waiver ...................................... ........................................................ 28 SECTION 6.05. Remedies Not Exclusive .......................... ................................................ 29
ARTICLE VII
DISCHARGE OF OBLIGATIONS
SECTION 7.01. Discharge of Obligations ......................................................................... 29
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Liability of Cit y Limited to Net Parking Revenues ................................. 30 SECTION 8.02. Benefits of Contr act Limited to Parties and Beneficiary ......................... 30 SECTION 8.03. Assignment .............................................................................................. 30 SECTION 8.04. Successor is Deeme d Included in all References to Predecessor .............................................................................................. 31 SECTION 8.05. Waiver of Personal Liability .................... ................................................ 31 SECTION 8.06. Partial Invalidity....................................................................................... 31 SECTION 8.07. Net Contract ............................................................................................. 31 SECTION 8.08. California Law ......................................................................................... 31 SECTION 8.09. Notices ..................................................................................................... 31 SECTION 8.10. Effective Date .................................. ........................................................ 32 SECTION 8.11. Governing Law ........................................................................................ 32 SECTION 8.12. Execution in Counterparts ........................................................................ 32
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INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT (the “2020 Installment Purchase Agreement”), dated as of February 1, 2020, by and betw een THE PARKING AUTHORITY OF CITY OF STOCKTON, a public body corporate and poli tic organized and existing under and by virtue of the laws of the State of Califo rnia (the “Parking Authority”), and the STOCKTON PUBLIC FINANCING AUTHORITY, a joint exercise of po wers entity duly organized and existing under and by virtue of the laws of the S tate of California (the “Financing Authority”);
WITNESSETH:
WHEREAS, The City of Stockton (the “City”) and the former Redev elopment Agency of the City of Stockton en tered into a Joint Exercise of Powers Agreement, dated as of June 18, 1990 (the “Joint Powers Agreement”), establishing the Financing Authority; WHEREAS, the Parking Authority is authorized by law to purchase parking facilities and improvements thereto;
WHEREAS, the Financing Authority is a joint exercise of powers entity duly organized and existing under and pursuant to Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California, as amended (the “Act”); WHEREAS, the Act authorizes and empowers the Financing Authorit y to issue revenue bonds to assist the Parking Authority in financing and refinancing public capital improvements;
WHEREAS, the Parking Authority is a local agency as defined and provided in the Act;
WHEREAS, pursuant to that certain Site and Facility Lease, dated as of June 1, 2004 (the “Site and Facility Lease”), the City, as lessor, leas ed to the Financing Authority, as lessee, certain parcels of real property situated in the City (the “Site”), and the City’s Market Street Parking Garage, the Edmund S. Coy Parking Garage, and the Stock ton Events Center Parking Structure, respectively, to the Site and Facility Lease (collec t i v e l y , t h e “ L e a s e d P a r k i n g Facilities”);
WHEREAS, the Financing Authority issued and sold its $32,785,00 0 Stockton Public Financing Authority Lease Revenue Bonds, Series 2004 (Parking and Capital Projects) (the “2004 Parking Bonds”), pursuant to an Indenture of Trust (the “2004 Bonds Indenture”), dated as of June 1, 2004, by and between the Financing Authority and Wells Fargo Bank, National Association, as trustee (the “2004 Trustee”);
WHEREAS, in order to provide for repayment of the 2004 Parking Bonds, the Financing Authority leased the Site and the Leased Parking Faci lities to the City pursuant to a Lease Agreement, dated as of J une 1, 2004 (the “Lease Agreement ”), by and between the Financing Authority and the City, pursuant to which the City ag r e e d t o m a k e c e r t a i n l e a s e payments to the Financing Authority (the “Lease Payments”);
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WHEREAS, Pursuant to the terms of the 2004 Indenture and a Memo randum of Assignment of Lease, dated as of June 1, 2004, by and between t he Financing Authority and the 2004 Trustee, the Financing Aut hority assigned, transferred and set over to the 2004 Trustee, all of the Financing Authority's rights under the Lease Agreement (other than certain retained rights), including the right to receive such Lease Payments;
WHEREAS, following the City’s default on certain Lease Payments due under the Lease Agreement, the 2004 Trus tee sought and, on April 19, 2012 , the Superior Court for the County of San Joaquin (the “Superior Court”) awarded the 2004 Trustee possession of the Leased Parking Facilities (the “2004 Parking Bonds Proceeding”); WHEREAS, the City was the debtor in a bankruptcy case under chapter 9 of Title 11 of the United States Code, Case No. 2012-32118 in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division, styled In re City of Stockton, California (the “Bankruptcy Case”);
WHEREAS, the 2004 Indenture provides that, for all purposes of the 2004 Indenture provisions governing ev ents of default and remedies, except the giving of notice of default to owners of the Bonds, National Public Finance Guarantee Corporation (“NPFG”), as the insurer of the 2004 Parking Bonds (as successor to Financial Guaranty Insurance Company) shall be deemed to be the sole holder of the 2004 Parking Bonds it has insured for so long as it has not failed to comply with its payment obligations under its policy securing payment of principal of and interest on the 2004 Parking Bonds;
WHEREAS, in connection with the Bankruptcy Case, the City agreed to a settlement (the “Settlement”) of the claims of the 2004 Trustee , on behalf of holders of the 2004 Parking Bonds, and NPFG with respect to the 2004 Parking Bonds; WHEREAS, pursuant to the terms of the Settlement, NPFG and the 2004 Trustee agreed, subject to compliance by the City, the Financing Author ity and the Parking Authority of the City of Stockton (the “Parking Authority”) with certain ter ms of the Settlement, to forbear enforcement of certain of their rights relating to payment of t he 2004 Parking Bonds and related obligations, and to cause the 2004 Trustee to transfer to the Parking Authority all of its possessory rights, title and interest in the Site and the Leased Parking Facilities granted to it in the 2004 Bonds Parking Proceeding in exchange for, among other things, certain payments from the Parking Authority to the Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds; WHEREAS, pursuant to the terms of the Settlement, the City Coun cil of the City passed Resolution No. 2013-12-17-1209 on December 17, 2013 (the “Parking Authority Resolution”) authorizing the activation of the Parking Authorit y, and authorizing it to operate within boundaries described in the Parking Authority Resolution; WHEREAS, in furtherance of the S ettlement, the City entered int o a Forbearance Agreement, dated as of February 25, 2015 (the “Forbearance Agreement”), by and among the City, the 2004 Trustee, the Parking Authority, the Financing Authority and NPFG, setting forth certain terms of the Settlement, includi ng an agreement by NPFG and the 2004 Trustee to forbear enforcement of certain of their rights relating to payment on t he 2004 Parking Bonds and related
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obligations, subject to the compliance by the City and the Parking Authority with their obligations under the Forbearance Agreement and the 2015 Installment Sale Agreement (as defined herein); WHEREAS, under the Forbearance A greement, the City, among other things, transferred to the Parking Authority all of its rights, title and interest in the City’s Parking Facilities (as defined herein) and assigned to the Parking Authority all of the City’s rights, title and interest, as lessee, pursuant to the Site Lease, and as lessor, pursuant to th e L e a s e A g re e me n t, a n d t h e Parking Authority assumed all of the City’s obligation under th e Site Lease and the Lease Agreement;
WHEREAS, pursuant to the terms of the Settlement, the Parking Authority entered into an Installment Sale Agreement (Parking Garages and Downtown Parking District Facilities), dated as of February 25, 2015 (the “2015 Installment Sale Agreement”), with the 2004 Trustee and NPFG, pursuant to which the Parking Authority is required to ma ke installment payments to the 2004 Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds; and WHEREAS, the Parking Authority now desires to prepay the 2015 Installment Sale Agreement; and
WHEREAS, the Parking Authority h as also identified the need to make certain capital improvements to the Par king Facilities, including the i mprovement of certain elevators located in the Parking Facilities (the “Improvements”); and WHEREAS, the Financing Authority and the Parking Authority have determined that providing funds to prepay 2015 Installment Sale Agreement and finance the Improvements by the issuance of revenue bonds of the Financing Authority will r esult in demonstrable savings in borrowing costs of the Parking Authority and will result in sig nificant public benefits to the Parking Authority; and
WHEREAS, by virtue of the prepayment of the 2015 Installment Sale Agreement, a portion of the 2004 Parking Bonds shall be defeased and redeemed; and W H E R E A S , t h e P a r k i n g A u t h o r i t y h a s a g r e e d t o m a k e s c h e d u l e d i n stallment payments to the Financing Authority to prepay the 2015 Installm ent Sale Agreement and finance the Improvements, together with interest thereon, which install ment payments are to be secured by a pledge of and lien on certain revenues of the Parking Facilities (as further described herein, the “Net Parking Revenues”), as provided herein; and
WHEREAS, the Parking Authority and the Financing Authority hereby certify that all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and entering into of the 2020 Installment Purchase Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties h ereto are now duly authorized to execute and enter into the 2020 Installment Purchase Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES AND OF THE
MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER
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VALUABLE CONSIDERATION, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
2015 Installment Sale Agreement
“2015 Installment Sale Agreement” means the Installment Sale Ag reement (Parking Garages and Downtown Parking District Facilities), dat ed as of February 25, 2015, by and between National Public Fin ance Guarantee Corporation, Well s Fargo Bank, National Association and the Parking Authority.
2020 Bonds
“2020 Bonds” means all parking revenue bonds of the Financing A uthority authorized, issued and delivered under the 2020 Indenture that are at any time outstanding pursuant thereto.
2020 Installment Purchase Agreement
“2020 Installment Purchase Agreement” means this Installment Pu rchase Agreement dated as of February 1, 2020, by and between the Parking Authority and the Financing Authority, as originally executed and as it may from time to ti me be amended in accordance herewith.
2020 Indenture
“2020 Indenture” means that certain 2020 Indenture, dated as of February 1, 2020, by and between the Financing Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. 2020 Installment Payment Date
“2020 Installment Payment Date” has the meaning set forth in Section 3.02. 2020 Installment Payment Fund
“2020 Installment Payment Fund” means the Stockton Public Financing Authority 2020 Installment Payment Fund established pursuant to Section 3.02 of the 2020 Indenture. 2020 Installment Payments
“2020 Installment Payments means the installment payments scheduled to be paid by the Parking Authority hereunder and set forth in Exhibit A hereto.
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2020 Reserve Account
“2020 Reserve Account” means the account within the 2020 Instal lment Payment Fund by that name established pursuant to Section 3.03 of the 2020 Indenture.
Accountant’s Report
“Accountant’s Report” means an audited financial report prepare d and signed by an Independent Certified Public Accountant.
Acquisition and Construction
“Acquisition and Construction” m eans, with respect to the Impro vements, the acquisition, construction, impro vement, equipping, renovation, remodeling or reconstruction thereof.
Acquisition and Construction Costs
“Acquisition and Construction Cos t s ” m e a n s , w i t h r e s p e c t t o a ny of the Improvements, all costs of the Acquisition and Construction thereof which are paid from moneys on deposit in the Acquisition and Construction Fund, including but not limited to:
(a) all costs required to be paid to any person under the terms of any agreement for or relating to the Acquisition and Construction of the Improvements; (b) obligations incurred for la bor and materials in connection with the Acquisition and Construction of the Improvements;
(c) the cost of performance or other bonds and any and all type s of insurance that may be necessary or appropriate to have in effect in connection with the Acquisition and Construction of the Improvements;
(d) all costs of engineering a nd architectural services, including the actual out- of-pocket costs for test borings, surveys, estimates, plans and specifications and preliminary investigations therefor, development fees, sales commissions, and for supervising construction, as well as for the performance of all other duties required by or consequent to the proper Acquisition and Construction of the Improvements;
(e) any sums required to reimburse the Financing Authority or the Parking Authority for advances made for an y of the above items or for a ny other costs incurred and for work done which are properly chargeable to the Acquisition and Construction of the Improvements;
(f) all financing costs incurred in connection with the Acquisi tion and Construction of the Improvements, including but not limited to Costs of Issuance and other costs incurred in connection with this Agreement and the financing of the Improvements; and
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(g) the interest components of t he Installment Payments during the period of Acquisition and Construction of the Improvements, to the extent not paid from the proceeds of the 2020 Bonds deposited in the Interest Account pursuant to the Indenture.
Act
“Act” means the Joint Exercise of Powers Act (being Chapter 5 o f Division 7 of Title 1 of the Government Code of the State, as amended) and all laws amendatory thereof or supplemental thereto.
Adjusted Net Parking Revenues
“Adjusted Net Parking Revenues” means, for any Fiscal Year, the N e t P a r k i n g Revenues for such Fiscal Year less, to the extent included in t he calculation of Net Parking Revenues for such Fiscal Year, all amounts referred to in claus e (G) of the definition of Parity Debt Service received or expected to be received by the Parking Authority or a fiduciary, on behalf of the Parking Authority, in such Fiscal Year.
Balloon Obligation
“Balloon Obligation” means any Parity Obligation designated as such in such obligation or in the related Issuing Document.
Balloon Payments
“Balloon Payments” means any paym ents designated as such in any Balloon Obligation or in the related Issuing Document.
CFD
“CFD” means Communities Faciliti es District No. 2001-1 (Downtow n Parking) formed the City.
CFD Revenues
“CFD Revenues” means all revenues generated by the levy of the Special Tax within the CFD pursuant to the terms of the Rate and Method.
CFD Revenues Assignment Agreement
“CFD Revenues Assignment Agreement” means that certain Assignme nt Agreement, dated as of Februar y 1, 2020, by and between the Cit y and the Parking Authority, pursuant to which the City assigned the CFD Revenues to the Parking Authority.
City
“City” means the City of Stockton, a municipal corporation and chartered city duly organized and existing under and by virtue of the Constitution and laws of the State and its charter.
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Code
“Code” means the Internal Revenue Code of 1986, as amended.
Consultant
The term “Consultant” means the consultant, consulting firm, financial consultant, financial consulting firm, engine er, architect, engineering fir m, architectural firm, accountant or accounting firm retained by the Parking Authority to perform acts or carry out the duties provided for such consultant in this 2020 Installment Purchase Agreement. Such consultant, consulting firm, financial consultant, financial consulting firm, engineer, arch itect, engineering firm or architectural firm shall be nationally or regionally recognized within its profession for work of the character required. Any such accountants or accounting firms sh all be an Independent Certified Public Accountant licensed to practice in the State of California.
Credit Provider Reimbursement Obligations
“Credit Provider Reimbursement Obligations” means obligations o f the Parking Authority to repay, from Net Parking Revenues, amounts advanced by a municipal bond insurance company, bank or other financial institution or organization as credit support or liquidity support for Parity Obligations or obligations secured by Parity Obligat ions, together with any interest on such advances and any related administrative costs.
Event of Default
“Event of Default” means an even t defined as such in Section 6. 01(a), (b), (c), or (d).
Federal Securities
“Federal Securities” means United States of America Treasury bi lls, notes, bonds or certificates of indebtedness, or obligations for which the full faith and credit of the United States of America are pledged for the payment of interest and principa l, or securities evidencing direct ownership interests in such obligations or in specified portion s of the interest on or principal of such obligations that are held by a custodian in safekeeping on behalf of the owners of such securities.
Financing Authority
“Financing Authority” means the Stockton Public Financing Autho rity, a joint exercise of powers entity duly organized and existing under and by virtue of the Act.
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Fiscal Year
“Fiscal Year” means the twelve-month period terminating on June 30 of each year, or any other annual accounting period hereafter selected and designated by the Parking Authority as its Fiscal Year in accordance with applicable law.
Generally Accepted Accounting Principles
“Generally Accepted Accounting Principles” means the uniform ac counting and reporting procedures set forth in publications of the American Institute of Certified Public Accountants or its successor, or by any other generally accepted authority on such procedures, and includes, as applicable, the standards set forth by the Governmental Accounting Standards Board or its successor.
Gross Operation and Maintenance Costs
“Gross Operation and Maintenance Costs” means the reasonable an d necessary costs spent or incurred for maintenance and operation of the Parking Facilities calculated in accordance with Generally Accepted Accounting Principles, inclu ding (among other things) (a) the reasonable expenses of management and repair, including fees, charges and other invoices of a professional operator, person, firm or corporation with staff experienced in the management and operation of parking facilities similar to the Parking Facilities who is managing and operating all or a portion of the Parking Facil ities, and other expenses nece ssary to maintain and preserve the Parking Facilities in good repair and working order, (b) the reasonable administrative costs of the Parking Authority and the City that are reasonably charged or directly apportioned to the Parking Facilities, including but not limited to, salaries and wages of employees, payments to the Public Employees Retirement System, over head, utilities and services, insurance, taxes (including parking taxes), fees of audito rs, accountants, attorneys, consu ltants or engineers and insurance premiums and , and including all other reasonable and necessary costs of the Parking Authority or the City or charges required to be paid by it to comply with the terms hereof, or the terms of any Parity Obligations, but excluding in all cases (i) depreciation , replacement and obsolescence charges or reserves therefor, (i i) amortization of intangibles, (iii) costs of capital additions, replacements, betterments, exten sions or improvements to the Pa rking Facilities which under Generally Accepted Accounting Principles are chargeable to a ca pital account, and (iv) charges for the payment of principal and interest on any debt service or other regularly scheduled payments on account of any Parity Obligation or obligation subordinate to the Parity Obligations.
Improvements
The term “Improvements” shall have the meaning ascribed thereto in the recitals hereof.
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Independent Certified Public Accountant
“Independent Certified Public Accountant” means any firm of cer tified public accountants duly licensed and enti tled to practice and practici ng as such under the laws of the State, appointed and paid by the Parking Authority, and each of whom — (1) is in fact independent and not under the domination of the Park ing Authority;
(2) does not have a substantial financial interest, direct or indir ect, in the operations of the Parking Authority; and
(3) is not connected with the Parking Authority as a councilmember, officer or employee of the Parki ng Authority, but which firm ma y be regularly retained by the Parking Authority to audit the accounting recor ds of the Parking Authority and make reports thereon to the Parking Authority.
Issuing Document
“Issuing Document” means the 2020 Installment Purchase Agreemen t and any installment purchase contract, indenture, trust agreement or ot her document that provides for the issuance or incurrence of Parity Obligations.
Leased Parking Facilities
The term “Leased Parking Facilities” shall have the meaning ascribed thereto in the recitals hereof.
Maximum Annual Debt Service
The term “Maximum Annual Debt Service” means, as of any date of calculation, the largest amount of Parity Deb t Service during the period fro m the date of such calculation through the final maturity date of all Parity Obligations.
Net Parking Revenues
“Net Parking Revenues” means, for any period, the Parking Revenues during such period less the Net Operation and Maintenance Costs during such period.
Net Operation and Maintenance Costs
“Net Operation and Maintenance Costs” means, for any period, the Gross Operation and Maintenance Costs during such period less the amount of any CFD Revenues applied to the payment of Gross Operation and Maintenance Costs during such period.
Parity Debt Service
“Parity Debt Service” means, with respect to any Parity Obligat ion for any period of calculation, those portions of the payments of interest on a nd principal and redemption
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premiums, if any, or other regularly scheduled payments require d to be made during such period under such Parity Obligation, less any such interest that is to be paid from proceeds of such Parity Obligation, less the earnings to be derived from the investment of moneys on deposit in debt service reserve funds and capitaliz ed interest funds establishe d for such Parity Obligation; provided, that for purposes of the calculation of Parity Debt Service, the following shall apply:
(A) Interest on Variable Interest Rate Obligations. Interest on any Variable Interest Rate Obligation shall be assumed to bear interest at a fixed rate equal to the higher of:
(1) the actual rate on the date of calculation, or if such Parity Obligation is not yet outstanding, the initial rate (if established and binding); or (2) if such Parity Obligation has been outstanding for at least twe lve months, the average rate over the twelve months immediately preceding the date of calculation, or if such Parity Ob ligation has not been outstand ing for the twelve prior months, the average rate borne by reference to an index comparable to that to be utilized in determining the interest rate for the Parity Obligation to be issued. (B) Interest on Parity Obligations with respect to which a Payment Agreement is in force. For purposes of the definition of Parity Debt Service, interest deemed to be payable on any Parity Obligation with respect to which a Payment Agreement is in force shall be based on the net economic effect on the Parking Authority expected to be produced by the terms of such Parity Obligation and such Payment Agr eement, including but not limited to the effects that (i) such Parity Obligation would, but for such Payment Agreement, be tre ated as an obligation bearing interest at a Variable Interest Rate instead shall be treated a s an obligation bearing interest at a fixed interest rate, and (ii) suc h Parity Obligation would, but for such Payment Agreement, be treated as an obligation bearing interest at a fixed interest r ate instead shall be treated as an obligation bearing interest at a Variable Interest Rate; and ac cordingly, the am ount of interest deemed to be payable on any Parity Obligation with respect to w hich a Payment Agreement is in force shall be an amount equal to the amount of interest that w ould be payable at the rate or rates stated in such Parity Obligation plus the applicable Payment Ag reement Payments minus the applicable Payment Agreement Receipts, and for the purpose of calculating as nearly as practicable the Payment Agreement Receipts and the Payment Agreement Paymen ts under such Parity Obligation, the following assumptions shall be made:
(1) Parking Authority Obligated to Pay Net Variable Payments. If a Payment Agreement has been entered into by the Parking Authority with respect to a Parity Obligation resulting in the payment of a net variable interest rate with respect to such Parity Obligation and Payment Agreement by the Parking Authority, the interest rate on such Parity Obligation for futu re periods when the actual interest rate cannot yet be determined shall be assumed, during the period the Payment Agreement is in effect, to be equal to the sum of ( i) the fixed rate or rates stated in such Parity Ob ligation, minus (ii) the fixed ra te paid by the counterparty to the Parking Aut hority, plus (iii) the lesser of (A) the interest rate cap, if any, provided by the counterparty with respect to such Payment Agreement (but only during the period that such interest rate cap is in effect) and (B) the higher
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of (x) the actual variable rate or rates payable by the Parking Authority to the Counterparty pursuant to the Payment Agreement on the date of calculation, or if such Payment Agreement is not yet outstanding, the initial rate (if established and binding) and (y) if such Payment Agreement has been in effect f or at least twelve months, the average variable rate or rates payable by the Parki ng Authority to the counterparty pursuant to the Payment Agreement over the twelve months immediately preceding the date of calculation, or if such Payme nt Agreement has not been outstanding for the twelve prior months, the average variable rate or rates that would have been payable by the Parking Authority to the counterparty pursuant to such Payment Agreement for th e twelve prior months determine d by reference to an index comparable to that to be utilized in determining the variable rate for the Payment Agreement to be executed.
(2) Parking Authority Obligated to Pay Net Fixed Payments. If a Payment Agreement has been entered into by the Parking Authority with respect to a Parity Obligation which is reasonably believed, in the opinio n of a financial consultant or financial consulting firm, to result in the payme nt of a net fixed interest rate with respect to such Parity Obligation and Payment Agreement by the Parking Authority, the interest on such Parity Obligation shall be included in the calculation of the Parity Debt Service during the period the Payment Agreement is in effect by including for each calculation period an amount equal to the amount of interest payable at the fixed interest rate pursuant to such Payment Agreement; (C) For purposes of calculating the Parity Debt Service on any Ball oon Obligation, it shall be assumed that the principal of such Ball oon Obligation will be amortized in a manner resulting in approximately equal annual installments of debt service over a term of thirty (30) years, at an assumed intere st rate determined by reference to subparagraph (A) of this definition of Parity Debt Service;
(D) For purposes of any Parity Obligation or portions thereof the debt service requirements under which contain no current interest component but which are sold at a discount and which discount accretes with respect to such Parity Obligat ion or portions thereof, such accreted discount shall be treated as interest in the calculation of Parity Debt Service; (E) For purposes of any Parity Obligations that constitute paired o bligations, the interest rate on such Parity Obligations shall be the resul ting linked rate or the effective fixed interest rate (each as certified by a financial consultant or f inancial consulting firm) reasonably expected to be paid by the Parking Authority with respect to such paired obligations; (F) The amount on deposit in a debt service reserve fund with respect to a Parity Obligation on any date of calculation of Parity Debt Service shall be deducted from the amount of principal due at the final maturity of such Parity Obligation a nd to the extent the amount in such debt service reserve fund is in excess of such amount of principal, such excess shall be applied to the full amount of principal due , in each preceding year, in in verse order of due date, until such amount is exhausted;
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(G) If, under any statutory scheme, during any period of calculation the Parking Authority or a fiduciary, on behalf of the Parking Authority, r eceives or expects to receive any subsidy, reimbursement or other payment from a governmental entity (including, but not limited to, the federal government of the United States of America) in connection with, or related to, payments of principal of and/or interest or other regularly sch eduled payments on Parity Obligations, then principal of and/or interest or other regularly scheduled payments on such Parity Obligations during such period of calculation shall be disregarded and not included in calculating Parity Debt Service to the exten t that such subsidy, reimbursement or other payment is received or expected to be received by the Parking Authority or fiduciar y, on behalf of the Parking Authority, during such period of calculation; and
(H) Credit Provider Reimbursement Obligations shall be disregarded, except to the extent such Credit Provider Reimbursement Obligations are d ue and owing at the time of calculation of Parity Debt Service.
Parity Obligations
“Parity Obligations” means the 2020 Installment Payments, any o bligation (including, but not limited to, any installment payment obligat ion) payable on a parity with the 2020 Installment Payments from Net Parking Revenues, as the case may be, as provided in Article IV and the regularly scheduled payments under any Payment Agree ment which have been designated by the Parking Authority as a “Parity Obligation” in the Payment Agreement.
Parking Authority
“Parking Authority” means the Parking Authority of the City of Stockton, a public body corporate and politic organ ized and existing under and by virtue of the laws of the State of California.
Parking Facilities
“Parking Facilities” means the parking facilities (including, w ithout limitation, surface parking lots, parking meters, metered spaces, and other parking garages) owned, leased, or licensed by the Parking Authority or in which th e Parking Authority holds a direct or indirect interest (other than liens, encumbrances or assessments) existing on the date hereof and including all additions, betterments, exten sions and improvements to such parking facilities or any part thereof and hereafter acquired or constructed.
Parking Revenues
“Parking Revenues” means all gross income and revenue received or receivable by the Parking Authority from the ownership or operation of the Parking Facilities, determined in accordance with Generally Accepted Accounting Principles, inclu ding all fees, rates, charges, incomes, rents, fines, penalties collections and amounts paid under any contracts received by or owed to the Parking Authority i n connection with the operation of the Parking Facilities and all proceeds of insurance relating to the Parking Facilities and al l other income and revenue howsoever derived by the Parking Authority from the ownership o r operation of the Parking Facilities; but excluding, (a) any proceeds of grants or loans or other debt obligations received by
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the Parking Authority, (b) customer deposits or any other depos its or advances subject to refund until such deposits or advances have becomes property of the Pa rking Authority, and (c) the proceeds of any special assessments or special taxes levied upo n real property within any improvement district established for the benefit of the Parking Facilities, including, but not limited, to the CFD Revenues.
Payment Agreement
“Payment Agreement” means a written agreement for the purpose o f managing or reducing the Parking Authority’s exposure to fluctuations in interest rates or for any other interest rate, investment, asset or liability managing purposes, entered into either on a current or forward basis by the Parking Authority as authorized under any applicable laws of the State in connection with, or incidental to, the entering into of any Parity Obligat ion, that provides for an exchange of payments based on interest rates, ceilings or floors on such pa yments, options on such payments or any combination thereof, or any similar device.
Payment Agreement Payments
“Payment Agreement Payments” means the regularly scheduled amou nts (excluding Termination Payments) periodically required to be paid by the Parking Authority under all Payment Agreements.
Payment Agreement Receipts
“Payment Agreement Receipts” means the regularly scheduled amounts (excluding Termination Payments) required to be paid by all counterparties to the Parking Authority under all Payment Agreements.
Principal Corporate Trust Office
“Principal Corporate Trust Office” means the corporate trust of fice of the Trustee in Los Angeles, California or such other office designated by the Trustee from time to time.
Project
“Project” means any additions, betterments, extensions or impro vements to the Parking Facilities designated by the Board of the Parking Authority as a designated Project for the Parking Authority.
Rate and Method
“Rate and Method” means the Second Amended Rate and Method of Apportionment of Special Tax, approved by the voters of a speci al election held within the CFD on December 13, 2005, as such Second Amended Rate and Method of Apportionment of Special Tax may be amended from time to time in accordance with the laws of the State of California.
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Revenue Fund
“Revenue Fund” means the Parking Authority Fund, established and held by the Parking Authority into which all Parking Revenues are deposited.
S&P
“S&P” means S&P Global Ratings, a Standard and Poor’s Financial Services LLC business, and its successors or a ssigns, but only to the extent that such entity is then rating any Parity Obligations at the request of the Financing Authority.
Special Tax
“Special Tax” means the special tax levied in the CFD in accordance with the Rate and Method.
State
“State” means the State of California.
Termination Payments
“Termination Payments” means any payments due and payable by th e Parking Authority in connection with the termination of a Payment Agreement.
Trustee
“Trustee” means Wells Fargo Bank, National Association, a natio nal banking association duly organized and existing under and by virtue of the laws of the United States of America, at its Principal Corporate Trust Office, as trustee un der the 2020 Indenture, and any successors thereto.
Variable Interest Rate
“Variable Interest Rate” means any variable interest rate or ra tes to be paid under any Parity Obligation, the method of computing which variable i nterest rate shall be as specified in such obligation, which obligation shall also specify either (i) the payment period or periods or time or manner of determining such period or periods or time for which each value of such variable interest rate shall remain in effect, and (ii) the time or times based upon which any change in such variable interest rate shall become effective, and which variable interest rate may, without limitation, be based on the interest rate on certain bonds or may be based on interest rate, currency, commodity or other indices.
Variable Interest Rate Obligations
“Variable Interest Rate Obligations” means, for any period of t ime, any Parity Obligations that bear a Variable Interest Rate during such period.
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SECTION 1.02. Article and Section Headings, Gender and References. The headings or titles of the several articles and sections hereof and the table of c ontents appended hereto shall be solely for convenience of reference and shall not affect the meaning, convenience or effect hereof, and words of a ny gender shall be deemed and c onstrued to include all genders.
All references herein to “Artic les,” “Sections” and other subdi visions or clauses are to the corresponding articles, sections, subdivisions or clauses hereof; and the words “hereby,” “herein,” “hereto,” “herewith,” “hereunder” and other words of similar import refer to the 2020 Installment Purchase Agreement as a whole and not to any particular article , section, subdivision or clause hereof.
SECTION 1.03. Terms Not Defined Herein. Unless the context otherwise re q u ir e s , th e te r ms d e fin e d in th is A rti c le s h a l l f o r a l l p u rp oses hereof and of any amendment hereof and of any report or other document mentioned herein or therein have the meanings defined herein, the following definitions to be equally applicable to both the singular and plural forms of any of the terms defined herein. Unless a contrary intent is ex pressed in this 2020 Installment Purchase Agreement, capitalized terms used but not defined in t his 2020 Installment Purchase Agreement shall have the meanings given in the 2020 Indenture.
ARTICLE II
ISSUANCE OF THE 2020 BONDS; SALE AND PURCHASE OF THE LEASED PARKING
FACILITIES AND THE IMPROVEMENTS
SECTION 2.01. 2020 Bonds. The Financing Authority has authorized the issuance of the 2020 Bonds pursuant to the 2020 Indenture in the aggregate principal amount of ________ Dollars ($_______). The Financing Authority and the Parking Authority agree that the proceeds of the sale of the 2020 Bonds shall be paid to the Trustee on the Closing Date for deposit pursuant to the terms and conditions of the Indenture. The Parking Authority hereby approves the Indenture, the assignment to the Trustee of the rights of the Financing Authority assigned under and pursuant to the Indenture, and the issuance of the 2020 Bonds by the Financing Authority under and pursuant to the Indenture.
SECTION 2.02. Appointment of Parking Authority as Agent of Financing Authority. The Financing Author ity hereby appoints the Parking Authority as its agent to carry out all phases of the Acquisition and Construction of the Impro vements pursuant to and in accordance with the provisions hereof and the Indenture. The P arking Authority hereby accepts such appointment and assumes all rights, liabilities, duties an d responsibilities of the Financing Authority regarding the Acquisition and Construction of the Imp r o v e m e n t s . T h e F i n a n c i n g Authority, or the Parking Authority as agent of the Financing Authority hereunder, shall enter into, administer and enforce all purchase orders or other contracts r elating to the Acquisition and Construction of the Improvements. All contracts for, and all work relating to, the Acquisition and Construction of the Improvements shall be subject to all applic able provisions of law relating to the acquisition, construction, im provement, and equipping of li ke facilities and property by the Parking Authority.
SECTION 2.03. Sale and Purchase of the Improvements. As consideration for the proceeds of the 2020 Bonds, the Financing Authority hereby agrees to purc hase, and the
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Parking Authority hereby agrees to sell, the Improvements and t he Leased Parking Facilities. As consideration for the City’s a greement to make 2020 Installment Payments in accordance with Section 3.01 hereof, the Financing Authority hereby agrees to sell, and the Parking Authority hereby agrees to purchase, the Improvements and the Leased Parking Facilities. All right, title and interest in the Improvements and the Leased Parking Facilities shall vest in the City immediately upon execution of this Agreement. S uch vesting shall occur wit hout further action by the Financing Authority or the Parki ng Authority; and the Financing Authority shall, if requested by the Parking Authority, or if necessary to assure such automatic vesting, deliver any and all documents required to assure such vesting.
SECTION 2.04. Failure of the Financing Authority to Perform Under this 20202 Installment Purchase Agreement. If the Financing Authority fai ls to observe or perform any agreement, condition, covenant or term contained herein required to be observed or performed by it, the Parking Authority may institute such action or proceedi ng against the Financing Authority as the Parking Authority may deem necessary or convenient to co mpel the observance or performance of such agreement, condition, covenant or term, or to recover damages for the nonobservance or nonperformance the reof. The Parking Authority may, at its own cost and expense and in its own name or in the name of the Financing Authority, prosecute or defend any action or proceeding or take any other action involving third persons which the Parking Authority deems reasonably necessary to protect or secure its rights here under, and in such event the Financing Authority agrees to c ooperate fully with the Parking Authority and to take all action necessary to effect the substitution of the Parking Authority f or the Financing Authority in any action or proceeding if the Parking Authority shall so request.
ARTICLE III
2020 INSTALLMENT PAYMENTS
SECTION 3.01. Purchase Price.
(a) The Parking Authority shall pay to the Financing Authority from N e t Parking Revenues, the purchase price of the Leased Parking Faci lities and Improvements in the amount of ________ dollars ($_______), payable in installments of principal together with interest on the unpaid principal balance thereof, all as provided in Section 3.01(b) (subject in each case to any right of prepayment provide d herein), plus the 2020 Reserve Account deposits required pursuant to Section 4.02, which may be credited to the 2020 Ins tallment Payments as provided herein.
(b) The interest on the unpaid balance of the principal amount of t he Parking Authority’s obligations hereunder constituting the 2020 Install ment Payments shall accrue from February __ , 2020, at the following annual rates of interest p er annum, and shall be paid by the Parking Authority as and constitute interest paid on the princi pal amount of the Parking Authority’s obligations hereunder constituting the 2020 Installment Payments, namely:
Installment
Payment Date
(March 1)
Principal
Installment
Interest
Rate
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SECTION 3.02. Payment of the 2020 Installment Payments. The Parking Authority shall, subject to any right of prepayment as provided herein, pay the Financing Authority the 2020 Installment Payments as herein provided, without offse t or deduction of any kind, by paying the principal components of the 2020 Installment Payment s annually in the amounts and on or before the date that is at least two (2) business days pr ior to March 1 in each of the years in accordance with Exhibit A attached hereto and incorporated herein and made a part hereof, together with the interest components of the 2020 Installment P a y m e n t s , w h i c h i n t e r e s t components shall be paid semiannually on or before each February 25 and August 25, commencing [August 25, 2020] (each such February 25 and August 25, a “2020 Installment Payment Date”), in the amounts set forth in Exhibit A attached hereto and incorporated herein and made a part hereof; provided, that in the event the Parking Authority fails to make any 2020 Installment Payment when due, the defaulted 2020 Installment Payment shall continue as a n obligation of the Parking Authority, and the Parking Authority shall pay the same with in terest thereon from the due date thereof at the rate of interest applicable thereto.
The obligation of the Parking Authority to pay the 2020 Installment Payments from the Net Parking Revenues as herein provided is absolute and unconditional, and until such time as the 2020 Installment Payments shall have been fully paid (or pr ovision for the payment thereof shall have been made pursuant to Section 7.01), the Parking Aut hority will not discontinue or suspend any 2020 Installment Paym ents required to be made by it under this section, whether or not the Parking Facilities, or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced or curtailed or terminated in whole or in part, and such payments shall not be subject to abatement because of any damage to, destruction or condemnation of the Parking Facilities, and such payments shall not be subject to reduction whether by offset or otherwise and shall not be conditioned upon the performance or nonperformance by any party of any agreement for any cause whatsoever.
SECTION 3.03. Prepayment of the 2020 Installment Payments. The Parking Authority may prepay the principal components of the 2020 Insta llment Payments at the same times, in the same amounts and upon the same terms and conditions as 2020 Bonds (as defined in the 2020 Indenture) may be redeemed pursuant to the 2020 Indenture.
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Notwithstanding any such prepayment, the Parking Authority shall not be relieved of its obligations hereunder until all 2020 Installment Payment s sha ll h ave been fu lly paid (o r provision for the payment thereof shall have been made pursuant to Section 7.01).
ARTICLE IV
REVENUES
SECTION 4.01. Pledge of Net Parking Revenues; Revenue Fund. (a) The Parking Authority hereby grants to the Financing Authority a first lien on and a security interest in and pledge of all Net Parking Revenues to secure the payment of the 2020 Installment Payments and any Parity Obligations as provide d herein, and the Net Parking Revenues shall not be used for any other purpose while any 2020 Installment Payments or any Parity Obligations remain unpaid; provided, that out of the Net Parking Revenues there may be apportioned such sums for such purposes as are expressly permit ted by this Article. This lien, security interest, and pledge shall constitute a first lien on the Net Parking Revenues for the payment of the 2020 Installment Payments and any Parity Obligations in accordance with the terms hereof (subject to the incurrence of Parity Obligations in accordance with Section 4.03 hereof). (b) All Parking Revenues shall be deposited as and when received in t h e Revenue Fund which fund is hereby continued in the treasury of the Parking Authority and which fund shall be maintained by the Parking Authority, and all mone y in the Revenue Fund shall be set aside by the Parking Authority and applied to the payment of Net Operation and Maintenance Costs, as and when required to be paid.
(c) The Parking Authority hereby covenants to cause all Net Parking Revenues to be allocated and applied as provided in Section 4.02; provid ed, that pending the use by the Parking Authority of the Net Parking Revenues for such purposes , such money may be invested by the Parking Authority in Permitted Investments.
SECTION 4.02. Allocation of Net Parking Revenues. All Net Parking Revenues shall be set aside by the Parki ng Authority at the following ti mes and deposited in the following account or fund in the following order of priority:
(a) 2020 Installment Payment Fund Deposits. On or before each 2020 Installment Payment Date, the Parking Authority shall, from Net Parking Revenues, transfer to the Trustee (on a parity with any required transfers of Net Parking Revenues for the payment of all other Parity Obligations) for deposit in the 2020 Installment P ayment Fund a sum equal to the amount of the interest components becoming due hereunder on suc h 2020 Installment Payment Date and a sum equal to the amount of the principal components, if any, becoming due hereunder on such 2020 Installment Payment Date;
(b) Reserve Account Deposits. On each date required by the 2020 Indenture, after making the transfers and deposits required by paragraph (A) for 2020 Installment Payments and payments on Parity Obligations currently due and payable, the Parking Authority shall, from Net Parking Revenues, transfer to the Trustee (on a parity with any required transfers of Net Parking Revenues for the replenishment of all other reserve acc ounts for all Parity Obligations)
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for deposit in the 2020 Reserve Account a sum equal to the amount, if any, required by the terms of the 2020 Indenture, to be necessary to restore the 2020 Rese rve Account to the 2020 Reserve Requirement, on such date; and
(c) Surplus Net Parking Revenues. On any date, provided that (i) al l transfers and deposits required by paragra ph (A) for 2020 Installment Pay ments and payments on Parity Obligations currently due and payable have been made and (ii) a ll transfers required to be made on such date by paragraph (B) have been made, Net Parking Revenues may be used for any lawful purpose, including, but not limited to the payment of any oblig ations secured by Net Parking Revenues on a priority subordinate to the Parity Obligations or the payment of any Termination Payment;
provided, that no such transfers to and deposits in the 2020 Installment Payment Fund need be made if the amount available and c ontained therein is at least equal to the interest component becoming due hereunder on such 2020 Installment Payment Date, p lus the principal component, if any, becoming due hereunder on such 2020 Installment Payment Date and if the 2020 Indenture does not require a replenishment of the amounts contained in th e 2020 Reserve Account; and provided further, that nothing in this section shall be constru ed to limit the Parking Authority’s ability to make other transfers and deposits at any time from Net Parking Revenues for the payment of debt service, reserve replenishment, credit enhancement reim bursement costs and Payment Agreement Payments to the extent required with respect to additional Parity Obligations incurred in accordance with Section 4.03.
SECTION 4.03. Additional Obligations.
(a) The Parking Authority will not incur any obligations payable fr om Net Parking Revenues superior to the payment of the 2020 Installment Payments. (b) Without regard to Section 4.03(c) , the Parking Authority may at any time enter into or create an obligation or commitment which is a Cre dit Provider Reimbursement Obligation or a Payment Agreement.
(c) The Parking Authority may at any time and from time to time issue or create any other Parity Obligations (in addition to the 2020 Installment Payments, which may be incurred without compliance with this Section 4.03), provided:
(1) There shall not have occurred and be continuing (i) an Event of Default under the terms of this 2020 Installment Purchase Agree ment or any Issuing Document or (ii) an Event of Default or Termination Event (as d efined in any Payment Agreement) under any Payment Agreement; and
(2) The Parking Authority obtains or provides a certificate or certificates, prepared by the Parking Authority or at the Parki ng Authority’s option by a Consultant, showing that either:
(A) the Adjusted Net Parking Re venues for either the most recent Fiscal Year for which audited financial statements are a vailable or any 12 consecutive calendar month period during the 18 consecutive cal endar month
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period ending immediately prior to the incurring of such additi onal Parity Obligations were at least [one hundred fifty percent (150%)] of Maximum Annual Debt Service, as calculated after the execution of such Parity Obligations; and for the purpose of providing such certificate or certificates, the Parking Authority or the Parking Authority’s Consulta nt, as applicable, may adjust t he Adjusted Net Parking Revenues for such Fiscal Year or 12 calendar month peri od, as the case may be, to reflect:
(i) an allowance for Net Parking Revenues that would
have been derived from any additio nal Parking Facilities that w ere added prior to the incurrence of such additional Parity Obligations but which were not in existence, during all or any part of such Fiscal Year or 12 calendar month period under consideration, in an amount equal to the est imated additional Net Parking Revenues that would have been derived fr om such additional Parking Facilities if they had been added prior to the beginning of such Fiscal Year or 12 calendar month period, and
(ii) an allowance for Net Parking Revenues that would
have been derived from any increase in the rates, fees and charges fixed and prescribed for the Parking Facilities which became effective pr ior to the incurrence of such additional Parity Obligations but which was not in effect, during all or any part of such F iscal Year or 12 calendar month period, in an amount equal to the estimated additional Net Parking Revenue s that would have been derived from such increase in rates, fees and c harges if it had been in effect prior to the beginning of such Fiscal Year or 12 calendar month period; or
(B) the estimated Adjusted Net Parking Revenues will be at least [one hundred fifty percent (150%)] of Maximum Annual Debt Service, as calculated after the execution of such Parity Obligations; and for the purpose of providing such certificate or cer tificates, the Parking Authori ty or the Parking Authority’s Consultant, as applicable, may adjust the foregoing estimated Adjusted Net Parking Revenues to reflect:
(i) an allowance for Net Parking Revenues that are
estimated to be derived from any increase in the rates, fees and charges for the Parking Facilities which hav e been adopted by the Parking A uthority and which will be in effect during all or any portion of the period for which such estimates are provided; and
(ii) an allowance for Net Parking Revenues that are
estimated to be derived from new customers of the Parking Facil ities anticipated to be served by any additions or improvements to the Parking Facilities financed by the Parity Obligations in an amount equa l to the additional Net Parking Revenues that are estimated to be derived from such customers.
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For purposes of clause (B) above, with respect to Net Operation and Maintenance Costs, the Parking Authority or the Parking Authority’s Consultant, as applicable, shall use such assumptions (which shall be set forth in such certificate or ce rtificates) as such believes to be reasonable, taking into account: (i) historical Net Operation a nd Maintenance Costs, (ii) Net Operation and Maintenance Costs associated with the additions or improvements to the Parking Facilities to be financed with the proceeds of such additional Parity Obligations and any other new additions or improvements to or extensions of the Parking Facilities during such five year period and (iii) such other factors, including inflation and changing operations or policies of the Parking Authority, as the Parking Authority or the Parking Authority’s Consultant, as applicable, believes to be appropriate.
The certificate or certificates described above in subsection ( c)(2) shall not be required if the Parity Obligations being issued are for the purpose of refunding (x) then outstanding Parity Obligations, if at the time of the issuance of such refunding Parity Obligations a certificate of the Parking Authority shall be delivered showing that Parity Debt Service in each Fiscal Year on all Parity Obligations outstanding after the issuance of the refunding Parity Obligations will not exceed 110% of Parity Debt Service in each corresponding Fiscal Year on all Parity Obligations outstanding prior to the issuance of such refunding Parity Obli gations; or (y) then outstanding Balloon Obligations or Variable Interest Rate Obligations, but only to the extent that the principal amount of such Balloon Obligations or Variable Interest Rate Ob ligations has been put, tendered to or otherwise purchased by a standby purchase or other liquidity facility relating to such Balloon Obligations or Variable Interest Rate Obligations.
(d) Without regard to Section 4.03(c), the Parking Authority may issue or incur obligations secured by Net Parking Revenues on a priority subordinate to the Parity Obligations and such obligations may be paid only in accordance with the provisions of Section 4.02 as long as (i) no Event of Default has occurred and is continuing (unless such Event of Default will not be continuing after the incurrence of such subordinate obligations) and (ii) no Event of Default or Termination Event (as defined in any Payment Agreement) under a ny Payment Agreement has occurred and is continuing (unless such Event of Default or Ter mination Event will not be continuing after the incurrence of such subordinate obligations).
ARTICLE V
COVENANTS OF THE PARKING AUTHORITY
SECTION 5.01. Compliance with and Amendment of 2020 Installment Purchase Agreement.
(a) The Parking Authority will punctually pay the 2020 Installment Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein re quired to be observed and performed by it, and will not terminate the 2020 Installment Purchase Agreement for any cause whatsoever, including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Parking Facilities, commercial frustration of purpose, any change in the tax or oth er laws of the United States of America or of the State of California or any political subdivis ion of either or any failure of the
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Financing Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether exp ress or implied. The Parking Authority will, so long as any 2020 Installment Payments remain unpaid, apply Net Parking Revenues as provided herein. The Trustee shall not be obligated to enter into any supplemental or amendment that adversely impacts its rights.
(b) The Parking Authority and the Fi nancing Authority shall not supplement, amend, modify or terminate any of the terms of the 2020 Installment Purchase Agreement, or consent to any such supplement, amendment, modification or termination, without the prior written consent of the Trustee, which such consent, in the case of the Trustee, shall be given only if (a) such supplement, amendment, modification or termination will not materially adversely affect the interests of the 2020 Bonds or re sult in any material impairment of the security hereby given for the payment of the 2020 Installment Payments, or (b) the Trustee first obtains the written consent of a majority in aggregate principal amount of the 2020 Bonds t hen Outstanding to such supplement, amendment, modificati on or termination; provided, that no such supplement, amendment, modification or termination shall reduce the amount of 2020 Installment Payments to be made to the Financing Authority or the Trustee by the Parkin g Authority pursuant to the 2020 Installment Purchase Agreement, or extend the time for making such 2020 Installment Payments, or permit the creation of any lien prior to the lien created by the 2020 Installment Purchase Agreement on Net Parking Revenues without the written consent of all of the Holders of all 2020 Bonds then Outstanding.
SECTION 5.02. Against Encumbrances. The Parking Authority will not make any use of or encumber the Net Parking Revenues except as provi ded herein; provided, that so long as the Parking Authority is not in default hereunder, the Parking Authority may issue any obligations subordinate to the Pa rity Obligations that are paya ble from surplus Net Parking Revenues as provided in paragraph (c) of Section 4.02.
SECTION 5.03. Against Sale or Other Disposit ion of Property. The Parking Authority will not sell, lease or otherwise dispose of the Park ing Facilities or any part thereof essential to the proper operati on of the Parking Facilities or to the maintenance of Net Parking Revenues. The Parking Authority w ill not enter into any agreeme nt which impairs the operation of the Parking Facilities or any part thereof necessary to secure adequate Net Parking Revenues for the payment of Parity Obliga tions or which would otherwise impair the rights of the Parking Authority with respect to Net Parking Revenues or the operation of the Parking Facilities.
SECTION 5.04. Against Competitive Facilities. The Parking Authority will not, to the extent permitted by law, acquire, purchase, maintain or operate and will not, to the extent permitted by law and within the scope of its powers, permit any other public or private agency, corporation, district or politic al subdivision or any person wh omsoever to acquire, purchase, maintain or operate within any competitive Parking Facilities.
SECTION 5.05. Tax Covenants.
(a) General. The Parking Authority hereby that, notwithstanding an y other provisions of this Installment Purchase Agreement, it shall not take any action, or fail to take action, if any such action or failure to take action would adversely affect the exclusion from gross
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income of interest components of the 2020 Installment Payments under Section 103 of the Code.
The Parking Authority shall not, directly or indirectly, use or permit the use of proceeds of the 2020 Bonds or any of the property financed or refinanced with proceeds of the 2020 Bonds, or any portion thereof, by any person other than a governmental person (as such term is used in Section 141 of the Code and applicable Treasury Regulations), in such manner or to such extent as would result in the loss of exclusion from gross income for federal income tax purposes of interest on the 2020 Bonds.
(b) Use of Proceeds. The Parking Authority shall not take any action, or fail to take action, if any such action or failure to take action would cause the 2020 Bonds to be “private activity bonds” within the meani ng of Section 141 of the Code a nd applicable Treasury Regulations, and in furtherance thereof, shall not make any use of the proceeds of the 2020 Bonds or any of the property financed or refinanced with proceeds of the 2020 Bonds, or any portion thereof, that would cause the 2020 Bonds to be “private activit y bonds” within the meaning of Section 141 of the Code. To th at end, so long as any 2020 Bond s are outstanding, the Parking Authority, with respect to such proceeds and property, will com ply with the requirements of the Code and the Treasury Regulations, to the extent such requireme nts are, at the time, applicable and in effect. The Parking Aut hority shall esta blish reasonable procedures necessary to ensure continued compliance with Section 141 of the Code and the conti nued qualification of the 2020 Bonds as “governmental bonds.”
(c) Arbitrage. The Parking Authority shall not, directly or indire ctly, use or permit the use of any proceeds of any 2020 Bonds, or of any pro perty financed or refinanced thereby, or of other funds of th e Parking Authority, that would cause the 2020 Bonds to be “arbitrage bonds” within the m eaning of Section 148 of the Code a n d a p p l i c a b l e T r e a s u r y Regulations, and shall not otherwise take any action, or fail to take action, if such action or failure to take action would cause the 2020 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and applicable Tre asury Regulations. To that end, the Parking Authority shall comply with all requirements of Section 148 of the Code and the Treasury Regulations to the extent such requirements are, at the time, in effect and applicable to the 2020 Bonds. (d) Federal Guarantee. The Parking Authority shall not make any us e of the proceeds of the 2020 Bonds, or of any other funds of the Parkin g Authority, that would cause the 2020 Bonds to be “federally guaranteed” within the meaning of S ection 149(b) of the Code, and shall not otherwise take any action, or fail to take action, when such action or failure to take action would cause the 2020 Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Code.
(e) Compliance with Tax Certificate. In furtherance of the foregoi ng tax covenants of this Section 5.05, the Parking Authority covenants that it will comply with the provisions of the Tax Certificate , which is incorporated herein as if fully set forth herein. These covenants shall survive any defeasance or discharge of the 2020 Installment Payments pursuant to Article VII or any prepayment of principal components of the 2020 Installment Payments pursuant to Article III.
SECTION 5.06. Maintenance and Operation of the Parking Facilities. The Parking Authority will maintain and preserve the Parking Facili ties in good repair and working
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order at all times and will operate the Parking Facilities in an efficient and economical manner and will pay all Gross Operation and Maintenance Costs as they become due and payable.
SECTION 5.07. Payment of Claims. The Parking Authority will pay and discharge any and all lawful claims for labor, materials or supplies which, if unpaid, might become a lien on Net Parking Revenues or any part thereof or on any funds in the hands of the Parking Authority or which might impair the security of the 2020 Installment Payments.
SECTION 5.08. Compliance with Contracts. The Parking Authority will comply with, keep, observe and perform all agreements, conditions, cov enants and terms, express or implied, required to be kept, observed and performed by it contained in all contracts for the use of the Parking Facilities and all other contracts affecting or inv olving the Parking Facilities to the extent that the Parking Authority is a party thereto.
SECTION 5.09. Insurance. The Parking Authority will procure and maintain such insurance relating to the Parking Facilities which it shal l deem advisable or necessary to protect its interests and the interests of the Financing Author ity and the Trustee, which insurance shall afford protection in such amounts and against such risks as are usually covered in the State in connection with parking facilities comparable to the Parking Facilities; provided, that any such insurance may be maintained unde r a self-insurance program so l ong as such self-insurance is maintained in the amounts and manner usually maintained in connection with parking facilities in the State comparable to the Parking Facilities and is, in the o pinion of an accredited actuary, actuarially sound. All policies of insurance required to be maintained herein shall provide that the Financing Authority and the Trustee shall be given thirty (30) days’ written notice of any intended cancellation thereof or reduction of coverage provided thereby.
SECTION 5.10. Accounting Records; Financial Statements and Other Reports. (a) The Parking Authority will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Parking Facilities and the Net Parking Revenues and the Gross Operation and Maintenance Costs and Net Operation and Maintenance Costs relating thereto, which records shall be avai lable for inspection by the Financing Authority and the Trustee at reasonable hours and under reasonable conditions. (b) The Parking Authority will prepare annually by no later than Ma rch 31 following the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2020) financial statements of the Parking Authority for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with an Accountant’s Report thereon, which records shall be available for inspection by the Financing Authority and the Trustee at reasonable hours and under reasonable conditions.
SECTION 5.11. Protection of Security and Rights of Authority. The Parking Authority will preserve and protect the security hereof and the rights of the Financing Authority to the 2020 Installment Payments hereunder and will warrant and defend such rights against all claims and demands of all persons.
SECTION 5.12. Payment of Taxes and Compliance with Governmental Regulations. The Parking Authority will pay and discharge all taxes, assessments and other
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governmental charges which may hereafter be lawfully imposed upon the Parking Facilities or any part thereof or upon Net Parking Revenues when the same shall b ecome due. The Parking Authority will duly observe and comply with all valid regulatio ns and requirements of any governmental authority relative to the operation of the. Parking Facilities or any part thereof, but the Parking Authority shall not be required to comply with any regulations or requirements so long as the validity or application thereof shall be contested in good faith.
SECTION 5.13. Amount of Charges, Fees and Rates; Rate Stabilization Fund.
The Parking Authority will fix, prescribe and collect rates, fe es and charges with respect to the Parking Facilities during each Fiscal Year which are estimated to yield Net Parking Revenues for such Fiscal Year equal to at least [one hundred twenty-five percent (125%)] of Parity Debt Service for such Fiscal Year. The Parking Authority may make adjustments from time to time in such fees and charges and may make such classification thereof as it deem s necessary, but shall not reduce the rates, fees and charges then in effect unless the Net Parking Revenues from such reduced rates, fees and charges are estimated to be sufficient to meet the requirements of this section. [The Parking Authority may establish a fund denominated the Rat e Stabilization Fund. From time to time the Parking Authority may deposit into the Rate Stabilization Fund, from current Parking Revenues, such amounts as the Parking Authority shall determine and the amount of available current Parking Revenues in the Fiscal Year shall be reduced by the amount so transferred. Amounts may be trans ferred from the Rate Stabiliza tion Fund and deposited in the Revenue Fund, and any amounts so transferred within 270 days after the end of a Fiscal Year shall be deemed Parking Revenues for such Fiscal Year when so transfe rred. The Parking Authority may also apply moneys on deposit in the Rate Stabilization Fund for any lawful purpose. All interest or other earnings upon amounts in the Rate Stabilization Fund may be withdrawn therefrom and accounted for as Parking Revenues in accordance with the terms of this Section or used for any lawful purpose.] [Discuss]
SECTION 5.14. Eminent Domain and Insurance Proceeds. If all or any part of the Parking Facilities shall be taken by eminent domain proceed ings, or if the Parking Authority receives any insurance proceeds resulting from a casualty loss to the Parking Facilities, the net proceeds thereof, at the option of the Parking Authority, shall be applied either to (a) the prepayment of Parity Obligations , or (b) to acquire and constru ct additions, betterments or improvements to the Parking Facil ities to replace the condemned or destroyed portion of the Parking Facilities.
SECTION 5.15. Continuing Disclosure. The Parking Authority hereby agrees to comply with and carry out all of t he provisions of the continuing disclosure undertaking relating to the 2020 Bonds. Notwithstanding any other provision of this 2020 Installment Purchase Agreement, failure of the Parking Authority to comply with such undertaking shall not be considered an Event of Default un der the 2020 Installment Purch ase Agreement or the 2020 Indenture; provided, that the Trustee may (and, at the request of any Participating Underwriter or the Holders of at least twenty-five percent (25%) in aggregate principal amount of Outstanding 2020 Bonds, shall) or any Holder or Beneficial Owner may take such actions as may be necessary and appropriate, including seek ing mandate or specific performa nce by court order, to cause the Parking Authority to comply with its obligations under this section. Capitalized terms used in this
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section but not defined in this 2020 Installment Purchase Agreement shall have the meanings given in the aforesaid continuing disclosure undertaking.
SECTION 5.16. Further Assurances. The Parki ng Authority will adopt, deliver, execute and make any and all further assurances, instruments and resolutions as may be reasonably necessary or proper to carry out the intention or to facilitate the performance hereof and for the better assuring and confirming unto the Financing Authority of the rights and benefits provided to it herein.
SECTION 5.17. Application of CFD Revenues to the Payment of Gross Operation and Maintenance Costs. (a) The Parking Authority her eby covenants to establish an account to be held by the Parking Authority to be known as the “CFD Revenues Account.” When received, the Parking Authority shall deposit all CFD Revenues into the CFD Revenues Account.
The Parking Authority herby covenants to apply all CFD Revenues to the payment of Gross Operation and Maintenance Costs. If at the end of the Fiscal Ye ar, after the CFD Revenues have been applied to the Gross Operation and Maintenance Costs, ther e are any CFD Revenues remaining in the CFD Revenues Account, such CFD Revenues the Parking Authority may be used for any lawful purpose consistent with the Rate and Method. (b) [The obligation of the Parking Authority to apply all CFD Revenues to payment of Operation and Maintenance Co sts pursuant to Section 5.17(a) shall cease and terminate following upon the delivery to the Trustee and the Financing Au thority of a certificate of the Parking Authority demonstrating that Adjusted Net Parking Revenues were at least [one hundred fifty percent (150%)] of Maximum Annual Debt Service for each o f the three completed Fiscal Years prior to the date of calculation.]
SECTION 5.18. Incurrence of Obligations Payable From CFD Revenues. The Parking Authority will not incur any obligations payable from C FD Revenues superior to the payment of Gross Operation and Maintenance Costs.
SECTION 5.19. Preservation of the CFD Revenues. The Parking Authority shall take all necessary actions to ensure that the Special Tax is le vied and collected within the CFD pursuant to the terms of the Rate and Method. The Parking Auth ority shall not allow the City to make any amendments to the Rate and Method that would decrease the amount of CFD revenues that the Parking Authority is entitled to receive as of the Clo sing Date or would otherwise have a material adverse effect on the receipt of CFD Revenues by the Parking Authority.
SECTION 5.20. CFD Revenues Assignment Agreement. As long as any 2020 Bonds remain outstanding, the Parking Authority shall not termi nate the CFD Revenues Assignment Agreement. In addition, the Parking Authority covenants not to amend or modify the CFD Revenues Assignment Agreement if such amendment or modifica tion would decrease the amount of CFD revenues that the Parking Authority is entitled to receive as of the Closing Date or would otherwise have a material adverse effect on the receipt o f CFD Revenues by the Parking Authority.
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES OF THE FINANCING AUTHORITY SECTION 6.01. Events of Default. The following events shall constitute “Events of Default” hereunder:
(a) if default shall be made in the due and punctual payment of any 2020 Installment Payment when the same shall become due and payable; (b) if default shall be made by the Parking Authority in the performance of any of the other agreements or covenants contained herein required to be performed by it, and such default shall have continued for a period of sixty (60) days after the Parking Authority shall have been given notice in writing of such default by the Financing Authority or the Trustee; (c) except for the current bankruptcy filing existing on the effective date of this 2020 Installment Purchase Agreeme nt, if the Parking Authority s hall file a petition or answer seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if a court of competent jurisdiction shall approve a petition filed with or without the consent of t he Parking Authority seeking arrangement or reorganization under the federal bankruptcy laws or any other applicable law of the United States of America or any state therein, or if under the provisions of any other law for the relief or aid of debtors any court of competent jurisdictio n shall assume custody or control of the Parking Authority or of the whole or any substantial part of its property; or (d) if an event of default (as defined in any Parity Obligation or Issuing Document) shall have occurred.
Notwithstanding anything to the contrary contained herein, in no event are the 2020 Installment Payments subject to acceleration if an Event of Default occurs and is continuing.
SECTION 6.02. Distribution of Assets. Upon the date of the declaration of an Event of Default by the Financing Authority as provided in Section 6.01, all Net Parking Revenues shall be applied in the following order -
(1) First, to the payment of the costs and expenses of the Trustee (as assignee of the Financing Author ity), if any, in carrying out t he provisions of this article, including reasonable compensati on to its agents, accountants an d counsel and including any expenses of the Financing Authority in indemnifying the Trustee; (2) Second, to the payment of interest and regularly scheduled payments then due on Parity Obligations (except Termination Payments), and, if the amount available shall not be sufficient to pay in full all such interest and regularly scheduled payments then due and payable, then to the payment thereof ratably, according to the amounts due thereon without any discrimination or preference;
(3) Third, to the payment of the unpaid principal amount of the Par ity Obligations then due and payable with interest on the overdue p rincipal and interest
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amounts of the unpaid Parity Obligations at the rate or rates o f interest then applicable to such Parity Obligations if paid in accordance with their terms, and, if the amount available shall not be sufficient to pay in full all the amounts due with respect to the Parity Obligations on any date, together with such interest, then to t he payment thereof ratably, according to the principal amount due on such date, without any discrimination or preference;
(4) Fourth, to the required replenishment of any debt service reser ves with respect to the Parity Obligations (including Credit Suppor t Reimbursement Obligations);
(5) Fifth, to the payment of any other amounts becoming due and payable with respect to Parity Obligations; and
(6) Sixth, to the payment of the costs and expenses of the Financin g Authority, if any, in carrying out the provisions of this artic le, including reasonable compensation to its agents, accountants and counsel, that were not paid pursuant to clause (1) above;
(7) Seventh, to the payment of all other amounts due and payable by the Parking Authority from Net Parking Revenues, including, but not limited to the payment of obligations secured by Net Park ing Revenues on a priority su bordinate to the Parity Obligations, and to the payment of any Termination Payments on any Payment Agreements.
SECTION 6.03. Remedies of the Financing Authority. The Financing Authority 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 Parking Authority or any councilmember, officer or employee thereof, and to compel the Parking Authority or any such councilmember, officer or employee to perform and carry out its duties under agreements and covenants require d to be performed by it or him or her contained herein;
(b) by suit in equity to enjoin any acts or things which are unlawf ul or violate the rights of the Financing Authority; or
(c) by suit in equity upon the happening of an Event of Default to require the Parking Authority and its councilmembers, officers and employees to account as the trustee of an express trust.
SECTION 6.04. Non-Waiver. Nothing in this article or in any other- provision hereof shall affect or impair the obligation of the Parking Aut hority, which is absolute and unconditional, to pay the 2020 Installment Payments to the Financing Authority at their respective due dates or upon prepayment as provided herein from the Net Pa rking Revenues, or shall affect or impair the right of the Financing Authority, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein.
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A waiver of any default or breach of duty or contract by the Financing Authority shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such subsequent default or breach of duty or contract, and no delay or omission by the Financing Authority to exercise any right or remedy accruing upon any default or breach of duty or contract shall impair any such right or remedy or shall be construed to be a waiver of any such default or breach of duty or contract or an acquiescence t herein, and every right or remedy conferred upon the Financing Authority by applicable law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Financing Authority.
If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Financing Authority, t he Parking Authority and the Financing Authority shall be res tored to their former positions , rights and remedies as if such action, proceeding or suit had not been brought or taken.
SECTION 6.05. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Financing Authority is intended to be exclusive of any other remedy, and each such remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing in law or in equity or by statute or othe rwise and may be exercised without exhausting and without regard to any other remedy conferred by applicable law.
ARTICLE VII
DISCHARGE OF OBLIGATIONS
SECTION 7.01. Discharge of Obligations.
(a) If the Parking Authority shall pay or cause to be paid all the 2020 Installment Payments at the times and in the manner provided he rein, the right, title and interest of the Financing Authority herei n and the obligations of the Parking Authority hereunder shall thereupon cease, terminate, become void and be completely discharged and satisfied, except as provided in Section 5.05.
(b) Any unpaid principal component of the 2020 Installment Payments shall on its scheduled payment date or date of prepayment be deemed to have been paid within the meaning of and with the effect expressed in subsection (a) of this sect ion if the Parking Authority makes payment of such 2020 Installment Payments and the interest and prepayment premium, if applicable, thereon in the manner provided herein, and money for the purpose of such payment or prepayment is then held by the Trustee.
(c) All or any portion of unpaid prin cipal components of the 2020 I nstallment Payments shall, prior to their scheduled payment dates or dates of prepayment, be deemed to have been paid within the meaning of and with the effect expressed i n subsection (a) of this section (except that the Parking Authority shall remain liable for the payment of such 2020 Installment Payments, but only out of the m oney or securities deposited wit h the Trustee or an escrow agent as hereinafter described) if (i) notice is provided by the Parking Authority to the Trustee and (ii) there shall have been deposited with the Trustee or such e scrow agent either money in an amount which shall be sufficient t o pay when due the principal components of such 2020
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Installment Payments or such portions thereof and the interest and prepayment premiums, if any, thereon on and prior to their payment date or their dates of pr epayment, as the case may be, or Federal Securities which are not subject to redemption prior to maturity except by the holder thereof (including any such Federal Securities issued or held i n book entry form) the interest on and principal of which when paid will provide money which, toge ther with money, if any, deposited with the Trustee or such escrow agent at the same tim e, shall be sufficient, as stated in a report of an Independent Certified Public Accountant addressed to the Parking Authority and the Trustee or such escrow agent, to pay when due the principal components of such 2020 Installment Payments or such portions thereof and the interest and prepayment premiums, if any, thereon on and prior to their payment dates or their dates of prepayment, as the case may be.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Liability of City Limited to Net Parking Revenues.
Notwithstanding anything contained herein, the Parking Authority shall not be required to advance any money derived from any source of income other than the Net Parking Revenues and the other funds provided herein for the p ayment of the 2020 Installment P ayments or for the performance of any agreements or covenants required to be performed by it contained herein; provided, that the Parking Authority may advance money for any such purpose so lon g as such money is derived from a source legally available for such purpose and may be legally used by the Parking Authority for such purpose.
The obligation of the Parking Authority to make the 2020 Installment Payments is a special obligation of the Parking Authority and is payable solely from the Net Parking Revenues and the other funds as provided herein, and does not constitute a debt of the Parking Authority or the State of California or of any political subdivision thereof within the meaning of any constitutional or statutory debt limitation or restriction, and does not constitute an obligation for which the Parking Authority is obligated to levy or pledge any form of taxation or for which the Parking Authority has levied or pledged any form of taxation.
SECTION 8.02. Benefits of Contract Limited to Parties and Beneficiary. Except as provided in Sections 8.03 and 8.04, nothing contained herein, expressed or implied, is intended to give to any person other than the Parking Authority, the Fin ancing Authority and their assigns any right, remedy or claim under or pursuant hereto, and any agreement or covenant required herein to be performed by or on behalf of the Parking Authority or the Financing Authority shall be for the sole and exclusive benefit of the, City, the Financing Authority and their assigns.
SECTION 8.03. Assignment. The 2020 Installment Purchase Agreement and any rights hereunder may be assigned by the Financing Authority, as a whole or in part, without the necessity of obtaining the prior consent of the Parking Authority. The assignment of the 2020 Installment Purchase Agreement or rights hereunder to the Trust ee is solely in its capacity as Trustee and the duties, powers and liabilities of the Trustee in acting hereunder shall be subject to the provisions of the 2020 Indenture.
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SECTION 8.04. Successor is Deemed Included in all References to Predecessor.
Whenever either the Parking Authority or the Financing Authority is named or referred to herein, such reference shall be deemed to include the successor to the powers, duties and functions that are presently vested in the Parking Authority or the Financing Authority, and all agreements and covenants required hereby to be performed by or on behalf of th e Parking Authority or the Financing Authority with respect to the Parking Facilities shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.
SECTION 8.05. Waiver of Personal Liability. No councilmember, officer or employee of the Parking Authority shall be individually or personally liable for the payment of the 2020 Installment Payments, but nothing contained herein shall relieve any councilmember, officer or employee of the Parking Authority from the performance of an y official duty provided by any applicable provisions of law or hereby.
SECTION 8.06. Partial Invalidity. If any one or more of the agreements or covenants or portions thereof required hereby to be performed b y or on the part of the Parking Authority or the Financing Authority shall be contrary to law, then such agreement or agreements, such covenant or covenants or such portions thereof shall be nu ll and void and shall be deemed separable from the remaining ag reements and covenants or portio ns thereof and shall in no way affect the validity hereof, and the Parking Authority and the F inancing Authority hereby declare that they would have executed the 2020 Installment Purchase Agreement and each and every other article, section, paragraph, subdivision, sentence, clause and phrase hereof irrespective of the fact that any one or more articles, se ctions, paragraphs, subdivisions, sentences, clauses or phrases hereof or the application thereof to any person or circumstance may be held to be unconstitutional, unenforceable or invalid.
SECTION 8.07. Net Contract. The 2020 Installme nt Purchase Agreement shall be deemed and construed to be a net contract, and the Parking A uthority shall pay absolutely net during the term hereof the 2020 Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever.
SECTION 8.08. California Law. The 2020 Installment Purchase Agreement shall be construed and governed in accordance with the laws of the State of California.
SECTION 8.09. Notices. All written notices to be given hereunder shall be given by mail to the party entitled thereto at its address set forth below, or at such other address as such party may provide to the other party in writing from time to time, namely:
If to the Parking Authority:
Parking Authority of the Parking Authority of Stockton
425 N. Eldorado Street
Stockton, California 95202
Attention: Executive Director
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If to the Financing Authority:
Stockton Public Financing Authority
425 N. Eldorado Street
Stockton, California 95202
Attention: Executive Director
SECTION 8.10. Effective Date. The 2020 Installment Purchase Agreement shall become effective upon its execution and delivery.
SECTION 8.11. Governing Law. This Agreement is a contract made under the laws of the State and shall be governed by and construed in accordance with the Constitution and laws applicable to contracts made and performed in the State of California.
SECTION 8.12. Execution in Counterparts. The 2020 Installment Purchase Agreement may be executed in several counterparts, each of whic h shall be deemed an original, and all of which shall constitute but one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed the 2020 I nstallment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above.
PARKING AUTHORITY OF THE PARKING
AUTHORITY OF STOCKTON
By
Executive Director
STOCKTON PUBLIC FINANCING AUTHORITY
By
Executive Director
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EXHIBIT A
2020 INSTALLMENT PAYMENT SCHEDULE
2020 Installment
Payment Date(1)
Interest
Component
Principal
Component
Total 2020
Installment Payments
(1) Pursuant to the 2020 Installment Purchase Agreement, the 2020 Installment Payments are to be paid by the Parking Authority to the Trustee on each 2020 Installment Payment Date.
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1 $_____________
STOCKTON PUBLIC FINA
NCING AUTHORITY
PARKING REVENUE BONDS, SERIES 2020
BOND PURCHASE AGREEMENT
___________, 2020
Stockton Public Financing Authori
ty,
Parking Authority of the City of Stockton, and
City of Stockton
425 N El Dorado Street
Stockton, California 95202
Ladies and Gentlemen:
The undersigned, Stifel, Nicolaus & Company, Incorporated (the “ Underwriter”), acting not as
a fiduciary for you, but on behalf of itself, offers to enter into this Bond Purchase Agreement (this “Bond Purchase Agreement”) with the Stockton Public Financing Authority (the “Financing Authority”),
the Parking Authority of the City of Stockton (the “Parking Authority”) and the City of Stockton
(the “City,” and together with the Financing Authority and the Parking Authority, the “City Parties ”), which will be binding upon the City Parties and the Underwriter upon the acceptance hereof by all parties hereto.
This offer is made subject to its acceptance by the City Parties by execution of this Bond Purchase Agreement and its delivery to the Underwriter on or before 11:59 p.m., California time, on the date hereof. All terms used herein and not otherwise defined shall have the respective meanings given to such terms in the Indenture and the Installment Purchase Agreement (as those terms are hereafter defined).
1. Purchase and
Sale. Upon the terms and conditions and upon the basis of the representations,
warranties and agreements hereinafter set forth, the Underwriter hereby agree to purchase from the Financing Authority for offering to the public, and the Financing Authority hereby agrees to sell to the Underwriter for such purpose, all (but not less than all) of the $_____________ aggregate principal amount of the above-captioned bonds (the “Bonds”), at a purchase price
equal to $____________, being the aggregate principal amount thereof less an Underwriter’ discount of $__________ and plus/less [net] original issue premium/discount of $_____________.
The City Parties 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 among the City Parties and the Underwriter, (ii) in connection with such transaction, including the process leading thereto, the Underwriter is acting solely as a principal and is not as an agent or fiduciary to the City Parties; (iii) the Underwriter has neither assumed an advisory or fiduciary responsibility in favor of the City Parties with respect to the offering of the Bonds, or the process leading thereto (whether or not such Underwriter, or any affiliate of such Underwriter, has advised or is currently advising the City Parties on other matters) nor has such Underwriter assumed any other obligation to the City Parties 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 City Parties; and
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2 (v) each of the City Parties has consulted its own legal and financial advisors to the extent it deemed appropriate
in connection with the offering of the Bonds and the transactions related thereto.
2. Description of Bonds. The Bonds shall be issued pursuant to an Indenture, dated as
of __________ 1, 2020 (the “Indenture”) by and between the Financing Authority and Well
s Fargo Bank, National Association, as trustee (the “ Trustee”), and pursuant to Article 4 of Chapter 5,
Division 7, Title 1 (commencing with Section 6500) of the California Government Code (the “Act”). The Bonds shall be as described in the Indenture and the Official Statement relating to the Bonds (defined herein).
The
Bonds are payable from “ Revenues” consisting primarily of the 2020 Installment Payments paid
by the Parking Authority and received by the Financing Authority (the “Installment Payments”) under an Installment Purchase Agreement dated as of __________ 1, 2020 (the “Installment Purchase Agreement”) and amounts on deposit in certain funds and accounts established by
the Installment Purchase Agreement and the Indenture. The obligation of the Parking Authority to make Installment Payments under the Installment Purchase Agreement is a special obligation of the Parking Authority payable solely from and secured by a pledge of Net Parking Revenues (as such term is defined in the Installment Purchase Agreement). The Net Parking Revenues includes proceeds of any special assessments or special taxes levied upon real property within any improvement district established for the benefit of the Parking Facilities (as such term is defined in the Installment Purchase Agreement), including, but not limited, to the “CFD Revenues,” which is defined to mean the revenues generated by the levy of the Special Tax withi
n Communities Facilities District No. 2001-1 (Downtown Parking) (the “ CFD”) pursuant to the
terms of the Second Amended Rate and Method of Apportionment of Special Tax, approved by the voters of a special election held within the CFD on December 13, 2005, as such Second Amended Rate and Method of Apportionment of Special Tax may be amended from time to time in accordance with the laws of the State of California (the “Rate and Method”).
In order
to enable the Underwriter to comply with Rule 15c2-12 under the Securities Exchange Act of 1934 (the “ Rule”), the City will execute and deliver a Continuing Disclosure Certificate concurrently wi
th issuance of the Bonds (the “Continuing Disclosure Certificate”). [The scheduled
payment of principal of and interest on the Bonds when due will be guaranteed under an insurance policy (the “Bond Insurance Policy”) to be issued concurrently with the delivery
of the Bonds by ___________ (the “Insurer”). The Financing Authority will also purchase from
the Insurer a reserve fund insurance policy (the “Reserve Policy”) for deposit to the credit of the 2020 Reserv
e Account established under the Indenture.]
The net proceeds of the Bonds will be used to refund certain prior obligations of the City, Finance Authority and/or Parking Authority, and to finance the acquisition and construction of certain capital improvements, as described in the Official Statement.
3. Public Offering. The Underwriter agrees to make a bona fide public offering of all the Bonds initiall
y at the public offering prices (or yields), and redemption provisions, set forth on Appendix A attached hereto and incorporated herein by reference. Subsequent to the initial public offering,
the Underwriter reserves the right to change the public offering prices (or yields) as the Underwriter deems necessary in connection with the marketing of the Bonds, provided that the Underwriter shall not change the interest rates set forth on Appendix A. The Bonds may be offered and sold to certain deale
rs at prices lower than such initial public offering prices.
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3 4. Delivery of Official Statement. The City Parties have delivered or caused to be delivered to
the Underwriter prior to the execution of this Bond Purchase Agreement, copies of the Preliminary Official Statement relating to the Bonds (the “ Preliminary Official Statement”).
Such Preliminary
Official Statement is the official statement deemed final for purposes of the Rule and approved for distribution by resolution of the governing body of each of the applicable City Parties. The City Parties shall have executed and delivered to the Underwriter a certification to such effect in the form attached hereto as Appendix B.
Wit
hin seven (7) business days from the date hereof, or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet their obligations under the Rule and Rule G-32 of the Municipal Securities Rulemaking Board (or such earlier date identified by the Underwriter to be necessary to allow the Underwriter to meet their obligations under the Rule and Rule G-32 of the Municipal Securities Rulemaking Board (“MSRB”)), the City Parties shall deliver to the Underwriter
a final Official Statement, executed on behalf of the applicable City Parties by authorized representatives of such entities and dated the date of delivery thereof to the Underwriter, which shall include information permitted to be omitted by paragraph (b)(1) of the Rule and with such other amendments or supplements as shall have been approved by the City Parties and the Underwriter (the “ Final Official Statement ”) and such additional conformed copies thereof
as the Underwriter may reasonably request in sufficient quantities to comply with the Rule and to meet potential customer requests for copies of the Official Statement. The Preliminary Official Statement and the Final Official Statement, including the cover pages, the appendices thereto and all information incorporated therein by reference are hereinafter referred collectively to as the “Official Statement.”
The Underwri
ter agree to file the Final Official Statement in compliance with MSRB Rule G-32. The Underwriter agree that they will not confirm the sale of any Bonds unless the confirmation of sale is accompanied or preceded by the delivery of a copy of the Final Official Statement.
5. The Closing. At 8:00 a.m., California time, on __________, 2020, or at such other time or on
such earlier or later business day as shall have been mutually agreed upon by the City Parties and the Underwriter (the “Closing Date”), the Financing Authority will deliver (i) the Bonds in definitive
form to the Underwriter in such place as the Underwriter shall request, and (ii) the closing documents hereinafter mentioned at the offices of Norton Rose Fulbright US LLP, in San Francisco, California or another place to be mutually agreed upon by the City Parties and the Underwriter. The Underwriter will accept such delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof in immediately available funds to the order of the Trustee on behalf of the Financing Authority. This payment and delivery, together with the delivery of the aforementioned documents, is herein called the “Closing.” The Bonds will be delivered in such denominations and
deposited in the account or accounts specified by the Underwriter pursuant to written notice given by the Underwriter not later than five business days prior to Closing. The Bonds will be made available to the Underwriter for inspection and packaging not less than 48 hours prior to the Closing.
6. Representations, Warranties and Covenants of the Financing Authority.The Financing Authority represen
ts, warrants and covenants to the Underwriter that:
(a) Due Organization, Existence and Authority. The Financing Authority is a joint powers authority, duly organized and existing under the laws of the State of California (the “State”), including the Act, with full right, power and authority to issue the Bonds and to execute, deliver and
perform its obligations under the Bonds, this Bond Purchase Agreement, the
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4 Installment Purchase Agreement and the Indenture (collectively, the “ Financing Authority Documents”) and to carry out and consummate the transactions contemplated by the Financing Authority Documents
and described in the Official Statement.
(b) Due Authorization and Approval. By all necessary official action, the Financing Authority has duly authorized and approved the execution and delivery of, and the performance by the Financing Authority of the obligations contained in, the Bonds, the Preliminary Official Statement, the Official Statement, and the Financing Authority Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the Bonds and the Financing Authority Documents will constitute the legally valid and binding obligations of the Financing Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. The Financing Authority has complied, and will at the Closing be in compliance in all respects, with the terms of the Bonds and the Financing Authority Documents.
(c) Official Statement Accurate and Complete. The Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Official Statement contains and up to and including the Closing will contain no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading. (d) Underwriter’ Consent to Amendments and Supplements to Official Statement. The Financing Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Financing Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (e) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Financing Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Financing Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the Financing Authority’s performance under the Financing Authority Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Financing Authority Documents and the Bonds and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance agreement or other instrument to which the Financing Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or
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5 encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any
such law, regulation or instrument, except as may be provided by the Bonds and the Financing Authority Documents.
(f) No Litigation. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending and served or, to the best of the Financing Authority’s knowledge, threatened (i) in any way questioning the corporate existence of the Financing Authority or the titles of the officers of the Financing Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity of the Bonds, the Financing Authority Documents or the consummation of the transactions contemplated thereby or hereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the powers of the Financing Authority or its authority to issue the Bonds; (iii) which may result in any material adverse change relating to the Financing Authority; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence. (g) Preliminary Official Statement. For purposes of the Rule, the Financing Authority has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule.
7. Representations, Warranties and Covenants of the Parking Authority. The Parking Authority represen
ts, warrants and covenants to the Underwriter that:
(a) Due Organization, Existence and Authority. The Parking Authority is a parking authority, duly organized and existing under the laws of the State of California (the “State”), with full right,
power and authority to execute, deliver and perform its obligations under this Bond Purchase Agreement, the Installment Purchase Agreement[, the Continuing Disclosure Certificate] and the CFD Revenues Assignment Agreement (collectively, the “Parking Authority Documents”) and to carry out and consummate the transactions contemplated by the Parking Authority Documents
and described in the Official Statement.
(b) Due Authorization and Approval. By all necessary official action, the Parking Authority has duly authorized and approved the execution and delivery of, and the performance by the Parking Authority of the obligations contained in, the Preliminary Official Statement, the Official Statement, and the Parking Authority Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the Parking Authority Documents will constitute the legally valid and binding obligations of the Parking Authority enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. The Parking Authority has complied, and will at the Closing be in compliance in all respects, with the terms of the Parking Authority Documents.
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6 (c) Official Statement Accurate and Complete. The Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Official Statement contains and up to and including the Closing will contain no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading. (d) Underwriter’ Consent to Amendments and Supplements to Official Statement. The Parking Authority will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The Parking Authority will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds. (e) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the Parking Authority is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the Parking Authority is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the Parking Authority’s performance under the Parking Authority Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the Parking Authority Documents and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance agreement or other instrument to which the Parking Authority (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided in the Parking Authority Documents.
(f) No Litigation. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened (i) in any way questioning the corporate existence of the Parking Authority or the titles of the officers of the Parking Authority to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment of the Installment Payments, or in any way contesting or affecting the validity of the Bonds or the Parking Authority Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the power of the Parking Authority to pay the Installment Payments; (iii) which may result in any material adverse change relating to the Parking Authority or relating to the financial condition of the Parking Authority or the Parking Authority’s rights with respect to the CFD Revenues; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or
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7 any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement
contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.
(g) Preliminary Official Statement. For purposes of the Rule, the Parking Authority has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(1) of the Rule.
8. Representations, Warranties and Covenants of the City. The City represents, warrants and covenants to the Underw
riter that:
(a) Due Organization, Existence and Authority. The City is a municipal corporation and charter city, duly organized and existing under the laws of the State, with full right, power and authority to execute, deliver and perform its obligations under this Bond Purchase Agreement[, the Continuing Disclosure Certificate], the CFD Revenues Assignment Agreement and the Installment Purchase Agreement (collectively, the “ City Documents”) and to carry out and consummate the transactions contemplated by the
City Documents and described in the Official
Statement.
(b) Due Authorization and Approval. By all necessary official action of the City, the City has duly authorized and approved the execution and delivery of, and the performance by the City of the obligations contained in, the Preliminary Official Statement, the Official Statement and the City Documents and as of the date hereof, such authorizations and approvals are in full force and effect and have not been amended, modified or rescinded. When executed and delivered, the City Documents will constitute the legally valid and binding obligations of the City enforceable in accordance with their respective terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or affecting creditors’ rights generally. The City has complied, and will at the Closing be in compliance in all respects, with the terms of the City Documents. (c) Official Statement Accurate and Complete. To the City’s knowledge, the Official Statement is, and at all times subsequent to the date of the Official Statement up to and including the Closing will be, true and correct in all material respects, and the Official Statement contains, and up to and including the Closing will contain, no misstatement of any material fact and does not, and up to and including the Closing will not, omit any statement necessary to make the statements contained therein, in the light of the circumstances in which such statements were made, not misleading.
(d) Underwriter’ Consent to Amendments and Supplements to Official Statement. The City will advise the Underwriter promptly of any proposal to amend or supplement the Official Statement and will not effect or consent to any such amendment or supplement without the consent of the Underwriter, which consent will not be unreasonably withheld. The City will advise the Underwriter promptly of the institution of any proceedings known to it by any governmental agency prohibiting or otherwise affecting the use of the Official Statement in connection with the offering, sale or distribution of the Bonds.
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8 (e) No Breach or Default. As of the time of acceptance hereof and as of the time of the Closing, except as otherwise disclosed in the Official Statement, the City is not and will not be in breach of or in default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment or decree or any trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City is a party or is otherwise subject, and no event has occurred and is continuing which, with the passage of time or the giving of notice, or both, would constitute a default or event of default under any such instrument which breach or default would materially adversely affect the security of the Bonds or the City’s performance under the City Documents; and, as of such times, except as disclosed in the Official Statement, the authorization, execution and delivery of the City Documents and compliance with the provisions of each of such agreements or instruments do not and will not conflict with or constitute a breach of or default under any applicable constitutional provision, law or administrative rule or regulation of the State or the United States, or any applicable judgment, decree, license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which the City (or any of its officers in their respective capacities as such) is subject, or by which it or any of its properties is bound; nor will any such authorization, execution, delivery or compliance result in the creation or imposition of any lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets or properties or under the terms of any such law, regulation or instrument, except as may be provided by the City Documents. (f) No Litigation. As of the time of acceptance hereof and the Closing, except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body, pending or threatened (i) in any way questioning the corporate existence of the City or the titles of the officers of the City to their respective offices; (ii) affecting, contesting or seeking to prohibit, restrain or enjoin the issuance or delivery of any of the Bonds, or the payment of the Installment Payments, or in any way contesting or affecting the validity of the Bonds or the City Documents or the consummation of the transactions contemplated thereby, or contesting the exclusion of the interest on the Bonds from taxation or contesting the power of the City to pay the Installment Payments; (iii) which may result in any material adverse change relating to the City or relating to the financial condition of the City or the City’s rights with respect to the CFD Revenues; or (iv) contesting the completeness or accuracy of the Preliminary Official Statement or the Official Statement or any supplement or amendment thereto or asserting that the Preliminary Official Statement or the Official Statement contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, and there is no basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses (i) through (iv) of this sentence.
(g) Preliminary Official Statement. For purposes of the Rule, the City has heretofore deemed final the Preliminary Official Statement prior to its use and distribution by the Underwriter, except for the information specifically permitted to be omitted by paragraph (b)(l) of the Rule. (h) Formation and Authority of the CFD. The CFD was duly formed and is validly existing as a community facilities district under the Mello-Roos Community Facilities Act of 1982, as amended (the “ Mello-Roos Act ”). The Special Taxes have been and will be levied in accordance with the Rate and M
ethod and are secured by a lien on the properties on which they are levied. The CFD Revenues Assignment Agreement assigns all of the City’s rights, title and interest in, and to, the CFD Revenues to the Parking Authority, and the Parking Authority thereby acquires, accepts and receives, all of the City’s rights, title and interest in, and to, the CFD
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9 Revenues received by the City. The resolutions and ordinance relating to the formation of the CFD and
the levy of the special taxes therein are in full force and effect and have not been amended, modified, rescinded or challenged by referendum. The City has recorded the notice of special tax lien in the real property records of the County of San Joaquin, which established a continuing lien on the land within the CFD securing the payment of the special taxes therein. The City has and will comply with the terms of the CFD Revenues Assignment Agreement for so long as the Bonds are outstanding.
(i) Compliance with the Rule. Except as disclosed in the Preliminary Official Statement and the Final Official Statement, the City [and its related entities] have not failed in any material respect to comply with any undertaking under the Rule in the previous five years.
9. Closing Conditions
. The Underwriter has entered into this Bond Purchase
Agreement in reliance up
on the Closing. The Underwriter’ obligations under this Bond Purchase Agreement to purchase representations, warranties and covenants herein and the performance by the City Parties of their respective obligations hereunder, both as of the date hereof and as of the date of and pay for the Bonds shall be subject to the following additional conditions:
(a) Bring-Down Representation. The representations, warranties and covenants of the City Parties contained herein shall be true, complete and correct at the date hereof and at the time of the Closing, as if made on the date of the Closing. (b) Executed Agreements and Performance Thereunder. At the time of the Closing (i) the City Documents, the Financing Authority Documents and the Parking Authority Documents shall be in full force and effect, and shall not have been amended, modified or supplemented except with the written consent of the Underwriter and (ii) there shall be in full force and effect such ordinances and resolutions (the “Resolutions”) as, in the opinion of Norton Rose Fulbright US LLP (“Bond Counse
l”), shall be necessary in connection with the transactions contemplated by the
Official Statement, the Financing Authority Documents, the Parking Authority Documents and the City Documents.
(c) Termination Events. The Underwriter shall have the right to terminate this Bond Purchase Agreement, without liability therefor, by notification to the City Parties if at any time at or prior to the Closing:
(i) any event shall occur which causes any statement contained in the Official Statement to be materially misleading or results in a failure of the Official Statement to state a material fact necessary to make the statements in the Official Statement, in the light of the circumstances under which they were made, not misleading; or (ii) the marketability of the Bonds or the market price thereof, in the reasonable opinion of the Underwriter, has been materially adversely affected by an amendment to the Constitution of the United States or by any legislation in or by the Congress of the United States or by the State, or the amendment of legislation pending as of the date of this Bond Purchase Agreement in the Congress of the United States, or the recommendation to Congress or endorsement for passage (by press release, other form of notice or otherwise) of legislation by the President of the United States, the Treasury Department of the United States, the Internal Revenue Service or the Chairman or ranking minority member of the Committee on Finance of the United States Senate or the Committee on Ways and Means of the United States House of Representatives, or the proposal for consideration of legislation by either such Committee or by any member
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10 thereof, or the presentment of legislation for consideration as an option by either such Committee, or
by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable reporting for passage of legislation to either House of the Congress of the United States by a Committee of such House to which such legislation has been referred for consideration, or any decision of any Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement on behalf of the United States Treasury Department, the Internal Revenue Service or other federal or State authority materially adversely affecting the federal or State tax status of the Bonds, or the interest on bonds or notes or obligations of the general character of the Bonds; or (iii) the marketability of the Bonds or the market price thereof, in the opinion of the Underwriter, has been materially and adversely affected by disruptive events, occurrences or conditions in the securities or debt markets; or (iv) any legislation, ordinance, rule or regulation shall be introduced in, or be enacted by any governmental body, department or agency of the State, or a decision by any court of competent jurisdiction within the State or any court of the United States shall be rendered which, in the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds; or
(v) legislation shall be enacted by 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 any other governmental agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance, offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement, is in violation or would be in violation of, or that obligations of the general character of the Bonds, or the Bonds, are not exempt from registration under, any provision of the federal securities laws, including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(vi) 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 which restrictions materially adversely affect the Underwriter’ ability to trade the Bonds; or
(vii) a general banking moratorium shall have been established by federal or State authorities; or
(viii) there shall have occurred any outbreak of hostilities or other local, national or international calamity or crisis, or a default with respect to the debt obligations of, or the institution of proceedings under the federal bankruptcy laws by or against, any state of the United States or agency thereof, or any city in the United States having a population of over one million, the effect of which on the financial markets of the United States will be such as in the Underwriter’ reasonable judgment, makes it impracticable for the Underwriter to market the Bonds or enforce contracts for the sale of the Bonds; or (ix) there shall have occurred or any notice shall have been given of any intended downgrading, suspension, withdrawal or negative change in credit watch status
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11 by any national rating service to any of the Financing Authority’s or the City’s obligations; or
(x) the commencemen
t of any action, suit or proceeding described in
Paragraphs 6(f) or 7(f) hereof which, in the judgment of the Underwriter, materially adversely affects the market price of the Bonds; or
(xi) there shall be in force a general suspension of trading on the New York Stock Exchange; or
(xii) there shall have been any materially adverse change in the affairs of any of the City Parties which in the Underwriter’ reasonable judgment materially adversely affects the ability of the Underwriter to market the Bonds. (d) Closing Documents. At or prior to the Closing, the Underwriter shall receive with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. An approving opinion of Bond Counsel dated the date of the Closing
and substantially in the form appended to the Official Statement, together with a letter from such counsel, dated the date of the Closing 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 were addressed to them.
(2) Supplemental Opinion . A supplemental opinion or opinions of Bond Counsel addressed
to the Underwriter, in form and substance acceptable to the Underwriter, and dated the date of the Closing substantially to the following effect:
(i) Each of the City Parties has duly and validly executed the Bond Purchase Agreement, and the Bond Purchase Agreement constitutes the legal, valid and binding agreement of the City Parties, subject to bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights heretofore or hereafter enacted and to the exercise of judicial discretion in appropriate cases;
(ii) The statements contained in the Official Statement on the cover page and under the captions "INTRODUCTION," “THE BONDS (other than information relating to DTC and its book-entry only system, as to which no opinion need be expressed),” “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS,” “TAX MATTERS,” and in [Appendices A and D] thereto, insofar as such statements expressly summarize certain provisions of the Bonds, the Indenture, the Installment Purchase Agreement, the CFD Revenues Assignment Agreement and our final approving opinion relating to the Bonds, are accurate in all material respects; and
(iii) The Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended.
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12 (3) City Attorney Opinion. An opinion of the City Attorney, dated the date of the Closing
and addressed to the Underwriter and the Trustee, in form and substance acceptable to Bond Counsel, substantially to the following effect:
(i) The City is a charter city duly organized and validly existing under the Constitution and the laws of the State of California; (ii) The resolution of the City (the “City Resolution”) approving and authorizing the execution and delivery of the City Documents and approving the Official Statement, was duly adopted at a meeting of the City Council called and held pursuant to law and with all public notice required by law and at which a quorum was present and acting throughout and the City Resolution is in full force and effect and has not been modified, amended or rescinded; (iii) The execution and delivery of the City Documents and compliance with the provisions thereof, under the circumstances contemplated thereby, do not and will not in any material respect conflict with, or constitute on the part of the City a breach of or default under, any agreement or other instrument to which the City is a party or by which it is bound or any existing law, regulation, court order or consent decree to which the City is subject;
(iv) No additional authorization, approval, consent, waiver or any other action by any person, board or body, public or private, not previously obtained is required as of the date of the Closing for the City to enter into the City Documents, or to perform its obligations thereunder;
(v) Except as otherwise disclosed in the Official Statement, there is no litigation, proceeding, action, suit, or investigation at law or in equity before or by any court, governmental agency or body, pending or, to the best knowledge of such counsel after due investigation, threatened against the City, challenging the creation, organization or existence of the City, or the validity of the City Documents or seeking to restrain or enjoin the City’s obligations under the City Documents or in any way contesting or affecting the validity of the City Documents or any of the transactions referred to therein or contemplated thereby or contesting the City to enter into or perform its obligations under any of the City Documents, or under which a determination adverse to the City would have a material adverse effect upon the financial condition or the revenues of the City, or which, in any manner, questions or affects the right or ability of the City to enter into the City Documents or affects in any manner the right or ability of the City to perform under the City Documents;
(vi) That nothing has come to the attention of such counsel which would lead it to believe that the Official Statement (excluding therefrom the financial and statistical data and forecasts included therein, as to which no opinion need be expressed) contains any untrue statement of a material fact 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. (4) Financing Authority Counsel Opinion . An opinion of counsel to the Financing Authority, date
d the date of the Closing and addressed to the Underwriter and
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13 the Trustee, in form and substance acceptable to Bond Counsel, substantially to the following effect:
(i) The Financin
g Authority is a joint powers authority, duly created and lawfully existing under the laws of the State of California; (ii) The resolution (“ Financing Authority Resolution ”) of the Financing Authority
approving and authorizing the execution and delivery of the Financing Authority Documents and approving the Official Statement has been duly adopted, and the Financing Authority Resolution is in full force and effect and has not been modified, amended or rescinded;
(iii) The authorization, execution and delivery of the Financing Authority Documents by the Financing Authority and compliance by the Financing Authority with the provisions thereof, will not conflict with, or constitute a breach or default under, any law, administrative regulation, court decree, resolution, ordinance or other agreement to which the Financing Authority is subject or by which it is bound; and
(iv) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel, there is no litigation, action, suit, proceeding or investigation at law or in equity before or by any court, governmental agency or body, pending and served or, to the best of such counsel’s knowledge, threatened against the Financing Authority, challenging the creation, organization or existence of the Financing Authority, or the validity of the Bonds, the Financing Authority Documents or contesting the Financing Authority of the Financing Authority to enter into or perform its obligations under any of the Financing Authority Documents, or which, in any manner, questions the right of the Financing Authority to issue the Bonds or to use the Revenues for repayment of the Bonds. (5) Parking Authority Counsel Opinion. An opinion of counsel to the Parking Authority, dated
the date of the Closing and addressed to the Underwriter and the Trustee, in form and substance acceptable to Bond Counsel, substantially to the following effect:
(i) The Parking Authority is a parking authority, duly created and lawfully existing under the laws of the State of California; (ii) The resolution (“ Parking Authority Resolution”) of the Parking Authority approv
ing and authorizing the execution and delivery of the Parking Authority Documents and approving the Official Statement has been duly adopted, and the Parking Authority Resolution is in full force and effect and has not been modified, amended or rescinded;
(iii) The authorization, execution and delivery of the Parking Authority Documents by the Parking Authority and compliance by the Parking Authority with the provisions thereof, will not conflict with, or constitute a breach or default under, any law, administrative regulation, court decree, resolution, ordinance or other agreement to which the Parking Authority is subject or by which it is bound; and (iv) Except as otherwise disclosed in the Official Statement and to the best knowledge of such counsel, there is no litigation, action, suit, proceeding or
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14 investigation at law or in equity before or by any court, governmental agency or body, pending a
nd served or, to the best of such counsel’s knowledge, threatened against the Parking Authority, challenging the creation, organization or existence of the Parking Authority, or the validity of the Bonds, the Parking Authority Documents or contesting the Parking Authority to enter into or perform its obligations under any of the Parking Authority Documents, or which, in any manner, questions the right of the Parking Authority to use the Net Parking Revenues for payment of the Installment Payment.
(6) Disclosure Counsel Letter . A letter of Schiff Hardin LLP (“ Disclosure Counsel”), dated the date of the Closing, addressed to the City Parties and the Underwriter
substantially to the following effect: On the basis of the information made available to such firm in the course of its participation in the preparation of the Official Statement (but without having undertaken to determine or verify independently, or assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement), no facts have come to the attention of the personnel in such firm directly involved in rendering legal advice and assistance to the City Parties in connection with the preparation of the Official Statement which cause such firm to believe that the Official Statement as of its date (excluding therefrom financial, engineering and statistical data; forecasts, projections, estimates, assumptions and expressions of opinions, including without limitation, the descriptions of the City Parties’ finances and operation; information relating to the Depository Trust Company and the book-entry only system; as to all of which such firm expresses no view as Disclosure Counsel) 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.
(7) Underwriter’ Counsel Opinion. An opinion of Jones Hall, A Professional Law Corporation, counsel to the Underwriter
, dated the date of Closing and addressed to
the Underwriter to the effect that, based upon the information made available to them in the course of their participation in the preparation of the Official Statement and without passing on and without assuming any responsibility for the accuracy, completeness and fairness of the statements in the Official Statement, and having made no independent investigation or verification thereof, no information has come to the attention of the attorneys rendering legal services in connection with such representation that leads them to believe that, as of the date of Closing, the Official Statement (except for any financial or statistical data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion, or any information concerning the DTC or the book-entry only system, included therein, as to which no opinion or view need be expressed) contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; that the Bonds are exempt from registration under the Securities Act of 1933, as amended; the Indenture is exempt from qualification pursuant to the Trust Indenture Act of 1939, as amended; and the Continuing Disclosure Certificate provides a suitable basis for the Underwriter, in connection with the Offering (as defined in Rule 15c2-12) of the Bonds to make a reasonable determination as required by section (b)(5) of such Rule. (8) Trustee’s Certificate . A certificate of Wells Fargo Bank, National Association, dated
the date of Closing, in form and substance acceptable to the Underwriter, to the following effect:
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15 (i) The Trustee is duly organized and existing as a national banking association in good standing under the laws of the United States of America, having the full power and authority to enter into and perform its duties under the Indenture;
(ii) The Trustee is duly authorized to enter into the Indenture; (iii) To the Trustee’s knowledge, there is no action, suit, proceeding or investigation, at law or in equity, before or by any court or governmental agency, public board or body served on the Trustee or threatened against the Trustee which in the reasonable judgment of the Trustee would affect the existence of the Trustee or in any way contesting or affecting the validity or enforceability of the Indenture or contesting the powers of the Trustee or its authority to enter into, accept and perform its obligations under the Indenture. (9) City Certificate. A certificate of the City, dated the date of the Closing, signed on
behalf of the City by the City Manager or other duly authorized officer of the City to the effect that:
(i) The representations, warranties and covenants of the City contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the City has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the City at or prior to the date of the Closing; and (ii) No event affecting the City has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(10) Financing Authority Certificate . A certificate of the Financing Authority, dated the
date of the Closing, signed on behalf of the Financing Authority by a duly authorized officer of the Financing Authority to the effect that:
(i) The representation, warranties and covenants of the Financing Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Financing Authority has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the Financing Authority at or prior to the date of Closing; and
(ii) No event affecting the Financing Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
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16 (11) Parking Authority Certificate. A certificate of the Parking Authority, dated the date
of the Closing, signed on behalf of the Parking Authority by a duly authorized officer of the Financing Authority to the effect that:
(i) The representation, warranties and covenants of the Parking Authority contained herein are true and correct in all material respects on and as of the date of the Closing as if made on the date of the Closing and the Parking Authority has complied with all of the terms and conditions of this Bond Purchase Agreement required to be complied with by the Parking Authority at or prior to the date of Closing; and
(ii) No event affecting the Parking Authority has occurred since the date of the Official Statement which has not been disclosed therein or in any supplement or amendment thereto which event should be disclosed in the Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(12) Documents. An original executed copy of the Bond Purchase Agreement, of each of the Financing Authority
Documents, each of the Parking Authority Documents,
and each of the City Documents.
(13) Resolutions. A certified copy of the Financing Authority Resolution, the Parking Authority Resolution
and the City Resolution.
(14) Form 8038-G. Evidence that the federal tax information form 8038-G has been prepared for filing.
(15) Nonarbitrage
Certificate. A tax and nonarbitrage certificate in form satisfactory to Bond Counsel.
(16) CDIAC Statements.
A copy of the Notice of Proposed Sale and Report of
Final Sale
required to be delivered to the California Debt and Investment Advisory Commission (“CDIAC”) pursuant to Section 8855(g) of the California Government Code. (17) A Continuing Disclosure Certificate executed by the [[City]] in order to assist the Underwriter
with compliance with the Rule.
(18) Ratings. Evidence that the Bonds have been given the rating(s) set forth in the Final Official Statement.
(19) Documents
Related to 2004 Parking Bonds and Related Matters. Such documents related to the 2004
Parking Bonds, the 2004 Parking Bonds Proceedings, the
Settlement, the Forbearance Agreement, the 2015 Installment Sale Agreement and related matters, as may be requested by Bond Counsel or the Underwriter. [(20) Policies, Certificates and Opinions of the Insurer. (a) the Bond Insurance Policy; (b)
the Reserve Policy; (c) one or more certificates of the Insurer certifying as to the accuracy of the information concerning the Insurer in the Official Statement; and (d) one or more legal opinions of counsel to the Insurer dated the Closing Date and addressed to the Underwriter, addressing the enforceability of the Bond Insurance Policy and the Reserve Policy.]
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17 (21) Additional Documents. Such additional certificates, instruments and other documents as
Bond Counsel, the City Parties or the Underwriter may reasonably deem necessary.
If the City Parties shall be unable to satisfy the conditions contained in this Bond Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason permitted by this Bond Purchase Agreement, this Bond Purchase Agreement shall terminate and neither the Underwriter nor any of the City Parties shall be under further obligation hereunder, except as further set forth in Section 11 hereof.
10. Establishment of Issue Price .
(a) The Underwriter agrees to assist the Financing Authority in establishing the issue price of the Bonds and shall execute and deliver to the Financing Authority at Closing an “issue price” or similar certificate, together with the supporting pricing wires or equivalent communications, substantially in the form attached hereto as Appendix C , with such modifications as
may be appropriate or necessary, in the reasonable judgment of the Underwriter, the Financing Authority 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. (b) Except as otherwise set forth in Appendix A attached hereto, the Financing Authority will
treat the first price at which 10% of each maturity of the Bonds (the “ 10% test”), identified under
the column “10% Test Satisfied” in Appendix A, 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 Agreement, the Underwriter shall report to the Financing Authority 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 Financing Authority 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 it has offered the Bonds to the public on or before the date of this Agreement at the offering price or prices (the “ initial offering price”), or at the corresponding yiel
d or yields, set forth in Appendix A attached hereto, except as otherwise set forth therein.
Appendix A also sets forth, identified under the column “Subject to Hold the Offering Price
Rule,” as of the date of this Agreement, the maturities, if any, of the Bonds for which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are confirmed by the close of the business day immediately following the date of this Agreement) and (ii) the 10% test has not been satisfied and for which the Financing Authority and the Underwriter agree that the restrictions set forth in the next sentence shall apply, which will allow the Financing Authority to treat the initial offering price to the public of each such maturity as of the sale date as the issue price of that maturity (the “ hold-the-offering-price rule”). So long as the hold-the- offering-price rule
remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold Bonds of that maturity to any person at a price that is higher than the initial offering price to the public during the period starting on the sale date and ending on the earlier of the following: (i) the close of the fifth (5th) business day after the sale date; or (ii) the date on which the Underwriter has sold at least 10% of that maturity of the Bonds to the public at a price that is no higher than the initial offering price to the public. The Underwriter shall promptly advise
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18 the Financing Authority when it has sold 10% of that maturity of the Bonds to the public at a price that is
no higher than the initial offering price to the public, if that occurs prior to the close of the fifth (5th) business day after the sale date.
(d) The Underwriter confirms that:
(i) any selling group agreement and any third-party 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 third-party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply with the hold-the-offering- price rule, if applicable, if and for so long as directed by the Underwriter, (B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge, are made to a purchaser who is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below), and
(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group 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 that is a party to a third-party distribution agreement to be employed in connection with the initial sale of the Bonds to the public to (A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B) comply with the hold-the-offering- price rule, if applicable, if and for so long as directed by the Underwriter or the dealer and as set forth in the related pricing wires
(e) The Financing Authority acknowledges that, in making the representation set forth in this section, 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 requirements for establishing issue price of the Bonds, including, but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third-party 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 requirements for establishing issue price of the Bonds, including,
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19 but not limited to, its agreement to comply with the hold-the-offering-price rule, if applicable to the Bonds, as set forth in the third
-party distribution agreement and the related pricing wires. (f) The Underwriter acknowledges that sales of any Bonds to any person that is a related party to an underwriter participating in the initial sale of the Bonds to the public (each such term being used as defined below) shall not constitute sales to the public for purposes of this section. Further, for purposes of this section:
(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 Financing Authority (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 third-party 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 (A) more than 50% common ownership of the voting power or the total value of their stock, if both entities are corporations (including direct ownership by one corporation of another), (B) 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 (C) 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 Purchase Agreement by all parties.
11. Expenses. The Underwriter shall be under no obligation to pay, and the City Parties shall
pay or cause to be paid, the expenses incident to the performance of the obligations of the City Parties hereunder including but not limited to (a) the costs of the preparation and printing, or other reproduction (for distribution on or prior to the date hereof) of the Financing Authority Documents, Parking Authority Documents and City Documents and the cost of preparing, printing, issuing and delivering the definitive Bonds, (b) the fees and disbursements of any counsel, financial advisors, accountants or other experts or consultants retained by the City Parties, (c) the fees and disbursements of Bond Counsel, (d) the fees and disbursements of Disclosure Counsel, (e) the cost of preparation and printing of the Preliminary Official Statement and any supplements and amendments thereto and the cost of preparation and printing of the Official Statement, including the requisite number of copies thereof for distribution by the Underwriter, (f) charges of rating agencies for the rating of the Bonds, (g) premiums and costs for any bond insurance and/or reserve policy insurance, if applicable, and (h) for expenses (included in the expense component of the spread) incurred by the Underwriter on behalf of the City’s employees that are incidental to implementing this Purchase Agreement, including, but not limited to, meals and transportation of those employees.
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20 The Underwriter shall pay, and the City Parties shall be under an obligation to pay, all expenses incurred by the Underwriter,
and the CDIAC fee, in connection with the public offering of the Bonds.
12. Coven ants of the City Parties. The City Parties covenant with the Underwriter that:
(a) If, at
any time prior to the date twenty-five (25) days following the later of the Closing or the date the Underwriter no longer retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public, which date, if other than the date of the Closing, shall be provided to the Issuer by written notice of the Underwriter (the " End of the Under
writing Period"), any event of which any of the City Parties has knowledge shall occur which might
or would cause the Final Official Statement to contain an untrue statement of a material fact or to omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City Parties will promptly notify the Underwriter in writing of the circumstances and details of such event. If, as a result of such event or any other event, it is necessary, in the opinion of the Underwriter, the City Parties or their respective counsel, to amend or supplement the Final Official Statement in order to make the statements therein, in the light of the circumstances under which they were made, not misleading, the City Parties will forthwith cooperate with the Underwriter in the prompt preparation and furnishing to the Underwriter of a reasonable number of copies of an amendment of or a supplement to the Final Official Statement, in form and substance reasonably satisfactory to the Underwriter, which will so amend or supplement the Final Official Statement so that, as amended or supplemented, it will not contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (b) The City Parties will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request 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; provided, however, that the City Parties shall not be required to register as a dealer or broker or foreign corporation in any such state or jurisdiction or consent to service of process therein; and (c) The City Parties will comply, and perform all actions as may be requested by the Underwriter (including delivering of an appropriate certificate with respect to the preliminary Official Statement) in order for the Underwriter to comply, with the applicable provisions of Rule 15c2-12 under the Securities Exchange Act of 1934.
13. Notice. Any notice or other communication to be given to any City Party under this Bond
Purchase Agreement may be given by delivering the same in writing to such entity at the address set forth above. Any notice or other communication to be given to the Underwriter under this Bond Purchase Agreement may be given by delivering the same in writing to Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, 35th Floor, San Francisco, CA 94104, Attn.: Eric McKean.
14. Entire A
greement; Survival. This Bond Purchase Agreement, when accepted by the City
and the Financing Authority, shall constitute the entire agreement among the City Parties and the Underwriter and is made solely for the benefit of the City Parties and the Underwriter (including the successors or assigns of either Underwriter). No other person shall acquire or have any right hereunder by virtue hereof, except as provided herein. All of the City Parties’
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21 representations, warranties, and agreements in this contract will remain operative and in full force and effect,
regardless of any investigations made by or on behalf of the Underwriter and will survive the Closing.
15. Counterparts. This Bond Purchase Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.
16. Severab ility. In case any one or more of the provisions contained herein shall for any reason be held to be invalid, illegal or unenfor
ceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
17. State of California Law Governs. The validity, interpretation and performance of this Bond Purchase Agreement shall
be governed by the laws of the State.
[Signature Page Follows]
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22 18. No A ssignment. The rights and obligations created by this Bond Purchase Agreement shall
not be subject to assignment by the Underwriter or any of the City Parties without the prior written consent of the other parties hereto.
STIFEL NICOLAUS & COMPANY,
INCORPORATED
By:
Authorized Representative
Agreed to and Accepted by:
STOCKTON PUBLIC FINANCING AUTHORITY
By:
Authorized Representative
Date/Time: ____________, 2020, ___ a.m./p.m.
PARKING AUTHORITY OF THE CITY OF STOCKTON
By:
Authorized Representative
Date/Time: ____________, 2020, ___ a.m./p.m.
CITY OF STOCKTON
By:
Authorized Representative
Date/Time: ____________, 2020, ___ a.m./p.m.
ATTACHMENT B
EXHIBIT 3
A-1
APPENDIX A
Maturity Date
(March 1)
Principal
Amount
Interest
Rate Yield Price
10% Test
Used
Hold-The-
Offering-Price
Rule Used
_______________
C Priced to call at par on March 1, 20__.
Redemption Provisions
Optional Redemption. The 2020 Bonds maturing on or after March 1, 20__, are subject to optional
redemption by the Financing Authority prior to their respective stated maturity dates, upon notice as hereinafter provided, from any source of funds other than sinking account payments, on any date on or after March 1, 20__, as a whole or in part, in either case at a redemption price equal to the sum of the principal amount thereof to be redeemed plus accrued interest thereon to the redemption date, without premium.
Mandatory Sinking Fund Redemption. The Series 2020 Bonds maturing on March 1, 20__ and March 1, 20__ (together, the “Term Bonds”) are also subject to mandatory redemption
prior to their respective stated maturities, commencing March 1, _____, and March 1, _____, respectively, and on March 1 in each year thereafter to and including March 1, _____, and March 1, _____, respectively, in part by lot, from mandatory sinking account payments at a redemption price equal to the principal amount thereof, plus accrued interest, if any, to the redemption date, without premium, as set forth below in the aggregate respective principal amounts and on the respective dates as set forth in the following tables; provided, however, that if some but not all of such Series 2020 Bonds have been redeemed pursuant to optional redemption provisions of this Indenture, the total amount of all future sinking fund payments shall be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000. The Parking Authority shall provide the Trustee with a revised sinking fund schedul
e.
Redemption Date
(March 1)
Principal
Amount
_______
* Maturity.
ATTACHMENT B
EXHIBIT 3
A-2
Redemption Date
(March 1)
Principal
Amount
_______
* Maturity.
ATTACHMENT B
B-1
APPENDIX B
STOCKTON PUBLIC FINA
NCING AUTHORITY
PARKING REVENUE BONDS, SERIES 2020
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies to Stifel, Nicolaus & Company, Incorporated (the “Underwriter”) that I am an authorized representative of the City of Stockton (the “City”), the Stockton Public Financing Authority (the “Financing Authority”) and the Parking Authority of the City of Stockton (the “Parking Authority” and together with the City and the Financing Authority, the “City Parties”), and as such, I am authorized to execute and deliver this Certificate and further hereby certify and reconfirm on behalf of the City Parties to the Underwriter as follows:
(1) This Certificate is delivered to enable the Underwriter to comply with Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act of 1934 (the “Rule”) in connection with the offering and sale of the above-captioned bonds (the “Bonds”). (2) In connection with the offering and sale of the Bonds, there has been prepared a Preliminary Official Statement, setting forth information concerning the Bonds and the City Parties (the “Preliminary Official Statement”).
(3) As used herein, “Permitted Omissions” means the offering price(s), interest rate(s), selling compensation, aggregate principal amount, principal amount per maturity, delivery dates, ratings and other terms of the Bonds depending on such matters and the identity of the underwriter(s), all with respect to the Bonds.
(4) The Preliminary Official Statement is, except for the Permitted Omissions, deemed final within the meaning of the Rule and has been, and the information therein is, accurate and complete except for the Permitted Omissions.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of this ______ day of ____________.
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING AUTHORITY OF THE CITY OF STOCKTON
CITY OF STOCKTON
By:
Authorized Representative
ATTACHMENT B
C-1
APPENDIX C
FORM OF ISSUE PRICE CER
TIFICATE
[To Come – From Bond Counsel]
ATTACHMENT B
Exhibit 4
PRELIMINARY OFFICIAL STATEMENT DATED JANUARY __, 2020
NEW ISSUE - FULL BOOK-ENTRY RATINGS: (See “RATINGS”)
$___,___,000*
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BONDS,
SERIES 2020
Dated: Date of Delivery Due: [March] 1, as shown on inside front cover
This cover page contains information for general reference only. It is not a complete summary of the 2020 Bonds. Investors should read the entire Officia l Statement to obtain information essential to the making of an informed investment decision. See “CERTAIN BONDOWNERS’ RISKS” for a discussion of certain factors that should be considered, in addition to the other matters set forth herein, in evaluating the investment quality of the 2020 Bonds.
The Stockton Public Financing Authority (the “Authority”) is issuing $___,___,000* principal amount of Stockton Public Financing Authority Parking Revenue B onds, Series 2020 (the “2020 Bonds”) to provide funds which, together with certain other available funds, will be used to: (i) prepay outstanding obligations under an Installment Sale Agreement (Parking Garage s and Downtown Parking District Facilities), dated as of February 25, 2015 that secure payment of the Authority’s Lease Revenue Bonds, Series 2004 (Parking and Capital Projects) and to finance the c onstruction, acquisition, and installation of certain improvements to parking facilities owned by the City of Stockton Parking Authority (the “Parking Authority”) located in the downtown area of the City of Stockto n (the “City”); (ii) fund a reserve account [purchase a municipal bond insurance policy and a debt service reserve policy] as security for the 2020 Bonds; and (iii) pay certain cos ts associated with the issuance of the 2020 Bonds. See “P LAN OF
FINANCE” and “E STIMATED SOURCES AND USES OF FUNDS. ” T h e 2 0 2 0 B o n d s a r e i s s u e d u n d e r a n d pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended (the “Act”) and other applicable laws of the State of California, a resolution adopted by the Authority on December __, 2019 and in accordance with the provisions of a 20 20 Indenture, dated as of February 1, 2020 (the “2020 Indenture”), by and between the Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
The 2020 Bonds are limited obligations of the Authority payable solely from installment payments (the “2020 Installment Payments”) to be made by the Pa rking Authority to the Authority pursuant to a 2020 Installment Purchase Agreement, dated as of February 1, 2020 (the “2020 Installment Purchase Agreement”), and certa in amounts held under the 2020 Indenture. As security for the payment of the 2020 Installment Payments, the Parking Authority has ple dged Net Parking Revenues, which consist generally of: (i) fees, rates, charges, and revenues de rived from the operation of Parking Facilities (consisting of parking meters, surface lots and garages) locate d within the City (collectively, the “Parking Facilities”) and (ii) proceeds of a special tax levied on Taxable Property (as defined herein) within the City’s Community Facilities District No. 2001-01 (Downtown Park ing) (the “Parking CFD”), which have been assigned by the City to the Parking Authority pursuant to an Assignment Agreement, dated as of February 1, 2020 (the “CFD Revenues Assignment Agreement”) betw een the City and the Parking Authority, less payment of Operation and Maintenance Costs (as defined herein). See “S
ECURITY AND
SOURCES OF PAYMENT FOR THE 2020 BONDS.”
ATTACHMENT B
The Parking Authority may issue or incur additional obligations secured by and payable from Net Parking Revenues on a parity with the 2020 Installment Payments and other Parity Obligations (each as defined herein). See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–Issuance of Parity Obligations.” The Parking Authority may also issue or incur ad ditional obligations secured by and/or payable from Net Parking Revenues on a basis subordinate to the 2020 Installment Payments and other Parity Obligations. The City, on behalf of the Parking CFD, ma y issue bonds or incur other obligations secured by CFD Revenues [parity/subordinate? – Discuss] . The assignment of CFD Revenue to the Authority and the pledge there of to secure the 2020 Bonds may by terminated by the Authority and the City as described in the CFD Re venues Assignment Agreement. See “T HE PARKING CFD–Pledge of CFD Revenues–Termination of Pledge of CFD Revenues.”
The 2020 Bonds will mature on the and bear interest at the fixe d rates set forth on the inside front cover page. Interest on the 2020 Bonds will be payable on each [ M a r c h ] 1 a n d [ S e p t e m b e r ] 1 , commencing [September] 1, 2020. The 2020 Bonds are subject to optional [and mandatory sinking fund] redemption prior to their respective maturities. See “T HE 2020 BONDS–Redemption Provisions.”
The 2020 Bonds will be issued in fully registered form in denominations of $5,000 or any integral multiple thereof. When delivered, the 2020 Bonds will be registered in the name of Cede & Co., as nominee of The Depository Trust C ompany, New York, New York (“D TC”). DTC will act as securities depository for the 2020 Bonds. So long as Cede & Co. is the registered owner of the 2020 Bonds, payment of principal of and premium, if any, and interest on th e 2020 Bonds will be made to Cede & Co.
Purchasers will not receive 2020 Bonds representing their inter est in the 2020 Bonds. Individual purchases of the 2020 Bonds will be made in book-entry form onl y. See A PPENDIX F–“DTC AND THE
BOOK-ENTRY ONLY SYSTEM.”
THE 2020 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM 2020 INSTALLMENT PAYMENTS MADE BY THE PARKING AUTHO RITY AND CERTAIN MONEYS HELD UNDER THE 2020 INDENTURE. THE 2020 BONDS A RE NOT A
DEBT OF THE PARKING AUTHORITY, THE CITY, THE STATE OF CALIFORNI A OR ANY
POLITICAL SUBDIVISION THEREOF, AND SHALL BE PAYABLE SOLELY FROM T H E REVENUES PLEDGED THEREFOR PURSUANT TO THE 2020 INDENTURE. THE OBLIGATION OF THE PARKING AUTHORITY TO MAKE 2020 INSTALLMENT PAYMENTS IS A SPECIAL
OBLIGATION OF THE PARKING AUTHORITY PAYABLE SOLELY FROM NET SYS TEM REVENUES OF THE PARKING FACILITIES AS PROVIDED IN THE 2020 INSTALLMENT PURCHASE AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXIN G POWER OF
THE CITY, THE STATE OR ANY POLITI CAL SUBDIVISION THEREOF (INCLU DING THE
AUTHORITY) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL AND PREMI UM, IF ANY, OF, OR INTEREST ON THE 2020 BONDS. THE AUTHORITY HAS NO TAXING POWER. THE ISSUANCE OF THE 2020 BONDS SHALL NOT DIRECTLY OR INDIRECTLY OBL IGATE THE
AUTHORITY, THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY
OR PLEDGE ANY FORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROP RIATION FOR PAYMENT OF THE 2020 BONDS. THE 2020 BONDS AND THE 2020 INS TALLMENT PAYMENTS ARE NOT PAYABLE FROM THE GENERAL FUND OF THE CITY.
In the opinion of Norton Rose Fulbright US LLP (“Bond Counsel”), based on existing statutes, regulations, rulings and judicial decisions, and assuming compliance with certain covenants in the documents pertaining to the 2020 Bonds and requirements of the Internal Revenue Code of 1986, as amended, as described herein, interest on the 2020 Bonds is not includable in the gross income of the owners of the 2020 Bonds for federal income tax purposes. In the further opinion of Bond Counsel, interest on the 2020 Bonds is not treated as an item of tax preference for purposes of the federal
ATTACHMENT B
alternative minimum tax. Bond Counsel is also of the opinion that interest on the 2020 Bonds is exempt from personal income taxes imposed by the Stat e of California. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the 2020 Bonds. See “TAX MATTERS.” [Bond Counsel to Review and Revise] The 2020 Bonds are offered when, as and if issu ed by the Authority and received by the Underwriter, subject to the approval as to their validity by Norton Rose Fulbright US LLP, Bond Counsel to the Authority, and certain other conditions. Del Rio Advisors, LLC, Modesto, California is serving as municipal advisor to the Authority and the Parking Authority in connection with the issuance of the 2020 Bonds. Certain legal matters will be passed on for the Authority and the Parking Authority by the City Attorney and by Schiff Hardin LLP, San Francisco, Ca lifornia, Disclosure Counsel to the Authority and the Parking Authority, and for the Underwriter by Jones Hall, A Professional Corporation, San Francisco, California, Underwriter’s Counsel. It is anticipated that the 2020 Bonds will be available for delivery in book-entry only form through the facilities of DTC on or about February __, 2020. [STIFEL Logo]
Dated: February __, 2020.
___________
* Preliminary, subject to change.
ATTACHMENT B
MATURITY SCHEDULE*
$___,___,000*
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BONDS,
SERIES 2020
Maturity
([March] 1)
Principal
Amount*
Interest
Rate Yield Price CUSIP No. †
[$__,___,000* ____% Term Bonds Due [March] 1, 20__, Yield _____%; Price _____%; CUSIP No. † _________]
_______________
* Preliminary, subject to change.
† CUSIP® is a registered trademark of the American Bankers Asso ciation. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2020 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CGS. This data is not intended to create a database and does not serve in any way as a substitute for CGS database. The CUSIP® numbers are provided for convenience of reference only. None of the Authority, the Parking Authority, the City, the Underwriter, their agents, or counsel is responsible for the selection or uses of the CUSIP® numbers, and no representation is made as to their correctness on the applicable 2020 Bonds or as included herein. The CUSIP® numbers of specific maturities is subject t o change following the issuance of the 2020 Bonds as a result of various actions, including, but not limited to, a refunding in whole or in part or as the result of the procurement of a secondary market portfolio insurance or other similar enhanceme nt by investors that is applicable to all or a portion of certain maturities of the 2020 Bonds.
ATTACHMENT B
No dealer, broker, salesperson or other person has been authorized by the Authority, the Parking Authority, or the Underwriter to give any information or to make any representations other than as contained in this Official Statement, and if given or made, such other information or repr esentations must not be relied upon as having been authorized by any of the foregoing.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of the 2020 Bonds by any person, in any juris diction in which it is unlawful for such person to make such offer, solicitation or sale. This Official Statement is not to be construed as a contract with the purchasers of the 2020 Bonds. Statements contained in this Official State ment which involve estimates, forecasts or matters of opinion, whether or not expressly so described herein, are intended solely as such and are not to be construed as representations of fact.
The information set forth herein has been obtained from sources which are believed to be reliable, but such information is neither guaranteed as to accuracy or completenes s, nor shall it be construed as a representation of such by the Authority, the Parking Authority, or the Underwriter. The information and expressions of opinion stated herein are subject to change without notice; and neither the delivery of this Official Statement nor any sale made hereunder shall, under any circ umstances, create any implicatio n that there has been no change in the affairs of the Parking Authority or in the condition of the Parking Facilities, since the date hereof.
The summaries and references to the 2020 Indenture, the 2020 In stallment Purchase Agreement, the Act and to other statutes and documents referred to herein do not p urport to be comprehensive or definitive and are qualified in their entireties by reference to each such statute and document. This Official Statement including any amendment or supplement hereto is intended to be deposited with one or more information repositories.
The Underwriter have provided the following sentence for inclus ion in this Official Statement: the Underwriter have reviewed the in formation in this Official Stat ement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter do not guarantee the accuracy or completeness of such information.
In connection with the offering of the 2020 Bonds, the Underwri ter may overallot or effect transactions which stabilize or maintain the market price of the 2020 Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be dis continued at any time. The Underwriter may offer and sell the 2020 Bonds to certain dealers and others at prices lower than the public offerin g prices set forth on the inside cover page hereof and said public offering prices may be changed from time to time by the Underwriter.
The 2020 Bonds have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption from the registration requirements contained in such act. The 2020 Bonds have not been registered or qualified under the securities laws of any state.
The City maintains a website. Unless specifically indicated ot herwise, the information presented on that website is not incorporated by reference as par t of this Official Statement a nd should not be relied upon in making investment decisions with respect to the 2020 Bonds.
Any statement involving any forecast or matter of opinion or es timates, whether or not expressly stated, is intended solely as such and not as a representation of fact. Certain statements included or incorporated by reference in this Official Statement constitute “forward looking statemen ts” within the meaning of the United States Private Securities Litigation Reform Act of 1995, Section 21E of the Un ited States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended (the “Securities Act”). Such forward-looking statements are generally identified by use of t he words “plan,” “project,” “expect,” “estimate,” “budget” or other similar words. Such forward looking statements refer to the achievement of certain results or other expectations or performance which involve known and unknown ris ks, uncertainties and other factors. These risks, uncertainties and other factors may cause actual results, performance or achievements to be materially different from any projected results, performance or achievements described or i mplied by such forward looking statements. The
Parking Authority does not plan to issue updates or revisions t o such forward looking statements if or when its expectations, or events, conditions or circumstances on which s uch statements are based, occur, or if actual results, performance or achievements are materially different from any r esults, performance or achievements described or implied by such forward looking statements.
[_______ (the “Bond Insurer”) makes no representation regarding the 2020 Bonds or the advisability of investing in the 2020 Bonds. In addition, the Bond Insurer has not independently verified, makes no representation regarding, and does not accept any responsibility for the accur acy or completeness of this Official Statement or any information or disclosure contained herein, or omitted herefrom , other than with respect to the accuracy of the information regarding the Bond Insurer, supplied by the Bond In surer and presented under the heading “B OND INSURANCE” and APPENDIX G–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.”]
ATTACHMENT B
STOCKTON PUBLIC FINANCING AUTHORITY
CHAIR AND BOARD OF DIRECTORS
AND
CITY COUNCIL
CITY OF STOCKTON
CHAIR AND BOARD OF DIRECTORS
AND MAYOR AND CITY COUNCIL
Michael Tubbs, Chair and Mayor
Daniel Wright, Member and Vice Mayor, District 2
Sol Jobrack, Member and Councilmember, District 1
Paul Canepa, Member and Councilmember District 3
Susan Lenz, Member and Councilmember, District 4
Christine Fugazi, Member and Councilmember, District 5
Jesus Andrade, Member and Councilmember, District 6
CITY STAFF
Laurie Montes, Interim City Manager
John Luebberke, City Attorney
Matt Paulin, Chief Financial Officer
[Carrie Wright, Director Economic Development Department] Kevin Beltz, Program Manager III-Debt and Treasury
Eliza R. Garza, City Clerk
SPECIAL SERVICES
Norton Rose Fulbright US LLP
Bond Counsel
Schiff Hardin LLP
San Francisco, California
Disclosure Counsel
Del Rio Advisors, LLC
Modesto, California
Municipal Advisor
___________
[City], [State]
Verification Agent
Wells Fargo Bank, National Association
San Francisco, California
Trustee and Escrow Agent for the
Refunded Bonds
Willdan Financial Services
Temecula, California
District Administrator
ATTACHMENT B
TABLE OF CONTENTS
Page Page
i
INTRODUCTION ............................................. 1 General; Purpose ................................... 1
Security for the 2020 Bonds ................. 2
2020 Reserve Account .......................... 3
Other Obligations .................................. 3
Continuing Disclosure .......................... 3
Bondowners’ Risks ............................... 4
Certain Information Related to
this Official Statement .................... 4
PLAN OF FINANCE ......................................... 4 Background ........................................... 5 2020 Improvements .............................. 6
2004 Parking Bonds .............................. 6
Verification ........................................... 7
ESTIMATED SOURCES AND USES OF
FUNDS ...................................................... 8 DEBT SERVICE SCHEDULE .......................... 9
THE 2020 BONDS .......................................... 10 General ................................................ 10 Redemption Provisions ....................... 10
SECURITY AND SOURCES OF PAYMENT
FOR THE 2020 BONDS ......................... 12
Pledge of Net Parking Revenues ......... 12
Rate Covenant ..................................... 14
Deposit of Revenues ........................... 15
2020 Reserve Account ........................ 16
Rate Stabilization Fund ....................... 16
Issuance of Parity Obligations and
Subordinate Obligations ............... 16
Default Under the 2020 Indenture
and 2020 Installment
Purchase Agreement;
Remedies ...................................... 18
THE PARKING CFD ...................................... 18 Special Tax Authorization .................. 18
Assignment and Pledge of CFD
Revenues ...................................... 19
Teeter Plan .......................................... 21 Special Tax Formula ........................... 22
Special Tax is not a Personal
Obligation ..................................... 26
Principal Taxpayers ............................ 27
Secured Property Tax Levies,
Collections and Delinquencies ..... 29
CERTAIN BONDOWNERS’ RISKS ............. 29
General ................................................ 29 Rate Covenant is Not a Guarantee
of Sufficient Net Parking
Revenues ...................................... 30
System Expenses ................................ 30
Parking Demand ................................. 30
Limited Recourse on Default .............. 30
Risk Factors Relating to the
Parking Facilities .......................... 30
Constitutional and Statutory
Restrictions on Fees and
Charges ........................................ 31
Climate Change .................................. 33
Risk of Earthquake and Other
Natural Disasters
.......................... 34
Risk Management and Insurance ........ 35
Limitations on Remedies .................... 35
Cybersecurity ...................................... 36 Bankruptcy ......................................... 36 Secondary Market ............................... 38
[Risks Associated with Bond
Insurance] ..................................... 38
Initiatives; Changes in Law ................ 39
CITY ................................................................ 39 THE AUTHORITY ......................................... 39 THE PARKING AUTHORITY ...................... 40
PARKING FACILITIES ................................. 40 Description ......................................... 40 Parking Meters .................................... 43
Management of the Parking
Facilities ....................................... 43
Capital Improvement Program ........... 43
Employee Benefits .............................. 44
PARKING AUTHORITY FINANCES ........... 48
Rate Setting, Fines, Enforcement,
and Collection Procedures ........... 48
Revenues by Parking Facility ............. 49
Historical Operating Results ............... 50
Historical Debt Service Coverage ...... 53
Projected Debt Service Coverage ....... 54
TAX MATTERS ............................................. 55 LEGAL MATTERS ........................................ 55 LITIGATION .................................................. 55 The Authority ..................................... 55
The Parking Authority ........................ 55
CONTINUING DISCLOSURE ....................... 56
ATTACHMENT B
TABLE OF CONTENTS
(continued)
Page Page
ii
FINANCIAL STATEMENTS ......................... 56
RATINGS ........................................................ 57 UNDERWRITING .......................................... 58 MUNICIPAL ADVISOR ................................. 58
VERIFICATION OF MATHEMATICAL
COMPUTATIONS .................................. 58
MISCELLANEOUS ........................................ 59
List of Maps and Tables
Regional Location Map ................................................................................................................................ iii Flow of Funds ........................................................................................................................................... 14 Downtown Parking Garages and Lots ............................................................................................ ............ 42
Table 1 – 2004 Parking Bonds ................................................................................................. ............ 7 Table 2 – Estimated Sources and Uses of Funds ................. ................................................................. 8 Table 3 – Debt Service Schedule ............................... ........................................................................... 9 Table 4 – Taxable Property Classifications .................... .................................................................... 23 Table 5 – Top 10 Taxpayers for Fiscal Year 2019-20 ............ ............................................................ 27 Table 6 – Historical Principal Taxpayers ...................... ..................................................................... 28 Table 7 – Historical Delinquency Information ................................................................................. .. 29 Table 8 – Parking Facilities ................................................................................................................ 41 Table 9 – Revenues by Parking Facilities ..................................................................................... ..... 49 Table 10 – Statement of Net Position .......................... ......................................................................... 50 Table 11 – Statement of Revenu es, Expenses and Changes in Net Position ........................................ 51 Table 12 – Historical Revenues, Expenses and Debt Service Cover age .............................................. 53 Table 13 – Projected Pro Forma and Debt Service Coverage Calcul ation ........................................... 54
List of Appendices
APPENDIX A GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY OF STOCKTON ............................................................... A-1
APPENDIX B AUDITED FINANCIAL STATEMENTS OF THE CITY OF STOCKTON FOR THE YEAR ENDED JUNE 30, 2019 .................................................................... B-1
APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS ................................................................................................................ C-1 APPENDIX D RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX .... ..................... D-1 APPENDIX E PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE .................... E-1 APPENDIX F DTC AND THE BOOK-ENTRY ONLY SYSTEM ................ ....................................... F-1 APPENDIX G PROPOSED FORM OF OPINION OF BOND COUNSEL .......... ................................ G-1 APPENDIX H SPECIMEN MUNICIPAL BOND INSURANCE POLICY ........... ............................... H-1
ATTACHMENT B
iii
REGIONAL LOCATION MAP
ATTACHMENT B
OFFICIAL STATEMENT
$___,___,000*
STOCKTON PUBLIC FINANCING AUTHORITY
PARKING REVENUE BONDS,
Series 2020
INTRODUCTION
This Introduction is only a brief description of, and is qualified by, more complete and detailed information contained in the entire Official Statement, including the cover page through the appendices hereto, and the documents summarized or described herei n. A full review should be made of the entire Official Statement. The offering of the 2020 Bonds to potential investors is made only by means of the entire Official Statement. Capitalized terms used herein and not otherwise defined shall have the meanings given to such terms as set forth in the 2020 Indenture or the 2020 Installment Purchase Agreement. See A
PPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS– DEFINITIONS OF CERTAIN TERMS.”
General; Purpose
This Official Statement, which includes the cover page through the Appendices hereto (the “Official Statement”), provides certain information concerning the issuance by the Stockton Public Financing Authority (the “Authority”) of $___,___,000* principa l amount of Stockton Public Financing Authority Parking Revenue Bonds, Series 2020 (the “2020 Bonds”).
The 2020 Bonds are being issued by the Authority under and pursuant to Chapter 5 of Division 7 of Title 1 of the California Government Code, as amended (the “ Act”) and other applicable laws of the State of California, a resolution adopted by the Authority on December __, 2019 and in accordance with the provisions of a 2020 Indenture, dated as of February 1, 202 0 (the “2020 Indenture”), by and between the Authority and Wells Fargo Bank, National Association, as trustee (the “Trustee”).
The 2020 Bonds are being issued by the Authority to provide fun ds which, together with certain other available funds, will be used to: (i) prepay outstanding obligations under an Installment Sale Agreement (Parking Garages and Do wntown Parking District Facili ties), dated as of February 25, 2015 (the “2015 Installment Sale Agreement”) that secure payment of the Authority’s Lease Revenue Bonds, Series 2004 (Parking and Capital Pr ojects) (the “2004 Parking B onds”) and to finance the construction, acquisition, and installation of certain improvements (the “2020 Improvements”) to parking facilities owned by the City of Stockton Parking Authority (the “Parking Authority”) located in the downtown area of the City of Stockton (the “City”); (ii) fund a reserve accou nt [purchase a municipal bond insurance policy and a debt service reserve policy] as security for the 2 020 Bonds; and (iii) pay certain costs associated with the issuance of the 2020 Bonds. See “P LAN OF FINANCE” and “E STIMATED SOURCES AND USES OF FUNDS.”
______________
* Preliminary, subject to change.
ATTACHMENT B
2 Security for the 2020 Bonds
The 2020 Bonds are limited obligations of the Authority payable solely from installment payments (the “2020 Installment Payments”) to be made by the Ci ty of Stockton Parking Authority (the “Parking Authority”) pursuant to a 2020 Installment Purchase Ag reement, dated as of February 1, 2020 (the “2020 Installment Purchase Ag reement”) to the Authority an d certain amounts held under the 2020 Indenture. As security for the payment of the 2020 Installment Payments, the Parking Authority has pledged “Net Parking Revenues” derived from the operation of th e parking facilities located within the City (the “Parking Facilities”), including revenues of a special tax levied on taxable parcels located within Community Facilities District No. 2001-1 (Downtown Parking) (the “Parking CFD”), that remain after payment of Operations and Mainte nance Costs (each as defined he rein). See “S
ECURITY AND SOURCES
OF PAYMENT FOR THE 2020 BONDS.”
The 2020 Bonds are limited obligations of the Authority payable solely from installment payments (the “2020 Installment Payments”) to be made by the Pa rking Authority to the Authority pursuant to a 2020 Installment Purchase Agreement, dated as of February 1, 2020 (the “2020 Installment Purchase Agreement”), and certa in amounts held under the 2020 Indenture. As security for the payment of the 2020 Installment Payments, the Parking Authority has ple dged Net Parking Revenues, which consist generally of: (i) fees, rates, charges, and revenues de rived from the operation of Parking Facilities (consisting of parking meters, surface lots and garages) locate d within the City (collectively, the “Parking Facilities”); and (ii) proceeds of a special tax levied on Taxa ble Property (as defined herein) within the City’s Community Facilities District No. 2001-01 (Downtown Park ing) (the “Parking CFD”), which have been assigned by the City to the Parking Authority pursuant to an Assignment Agreement, dated as of February 1, 2020 (the “CFD Revenues Assignment Agreement”) betw een the City and the Parking Authority, less payment of Operation and Maintenance Costs (as defined herein). See “S
ECURITY AND
SOURCES OF PAYMENT FOR THE 2020 BONDS.”
THE 2020 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM 2020 INSTALLMENT PAYMENTS MADE BY THE PARKING AUTHO RITY AND CERTAIN MONEYS HELD UNDER THE 2020 INDENTURE. THE 2020 BONDS A RE NOT A
DEBT OF THE PARKING AUTHORITY, THE CITY, THE STATE OF CALIFORNI A OR ANY
POLITICAL SUBDIVISION THEREOF, AND SHALL BE PAYABLE SOLELY FROM T H E REVENUES PLEDGED THEREFOR PURSUANT TO THE 2020 INDENTURE. THE OBLIGATION OF THE PARKING AUTHORITY TO MAKE 2020 INSTALLMENT PAYMENTS IS A SPECIAL
OBLIGATION OF THE PARKING AUTHORITY PAYABLE SOLELY FROM NET SYS TEM REVENUES OF THE PARKING FACILITIES AS PROVIDED IN THE 2020 INSTALLMENT PURCHASE AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXIN G POWER OF
THE CITY, THE STATE OR ANY POLITI CAL SUBDIVISION THEREOF (INCLU DING THE
AUTHORITY) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL AND PREMI UM, IF ANY, OF, OR INTEREST ON THE 2020 BONDS. THE AUTHORITY HAS NO TAXING POWER. THE ISSUANCE OF THE 2020 BONDS SHALL NOT DIRECTLY OR INDIRECTLY OBL IGATE THE
AUTHORITY, THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY
OR PLEDGE ANY FORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROP RIATION FOR PAYMENT OF THE 2020 BONDS. THE 2020 BONDS AND THE 2020 INS TALLMENT PAYMENTS ARE NOT PAYABLE FROM THE GENERAL FUND OF THE CITY.
The City emerged from bankruptcy on February 25, 2015 when the City’s plan of adjustment became effective. Throughout its bankruptcy case, the City mai ntained that revenues of its Parking Enterprise Fund qualified as “special revenues” under the United States Bankruptcy Code, and no creditor or party in interest argued otherwise. As a result, all revenu es attributable to the Parking Authority were available solely for parking facilities operations. At no poin t were revenues of the Parking Authority
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3 diverted to fund general fund operations; nor did the general f und borrow funds from the Parking Facilities. See “PLAN OF FINANCE–Background.”
CFD Revenues. On December 11, 2001 the City Council approved Resolution No. 0 1-0651 forming the Parking CFD, approving the boundaries of the Parking CFD, stating the facilities and services to be provided, the cost of providing such facilities and services, and the rate and method of apportionment of the special tax to be levied within the Parkin g CFD for the purpose of providing certain facilities and services serving the Parking CFD. See “T HE PARKING CFD” and APPENDIX D–“RATE AND
METHOD OF APPORTIONMENT OF SPECIAL TAX.”
2020 Reserve Account
Pursuant to the 2020 Indenture, a 2020 Reserve Account in the a mount of the 2020 Reserve Requirement (defined herein) is established as security for the 2020 Bonds. [Concurrently with the issuance of the 2020 Bonds, the Bond Insurer will issue a debt service reserve fund policy in the amount of the 2020 Reserve Requirement (the “Reserve Policy”) for deposit in the 2020 Reserve Account.] See “S
ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–2020 Reserve Account.”
Other Obligations
Following the issuance of the 2020 Bonds and the refunding of t he Refunded Bonds there will be no other obligations outstanding that are secured by or payable from Net Parking Revenues on a parity basis or senior to the 2020 Bonds.
The Parking Authority may issue or incur additional obligations secured by and payable from Net Parking Revenues on a parity with the 2020 Installment Payments and other Parity Obligations (as defined herein). See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–Issuance of Parity Obligations.” The Parking Authority may also issue or incur ad ditional obligations secured by and/or payable from Net Parking Revenues on a basis subordinate to the 2020 Installment Payments and other Parity Obligations.
The City, on behalf of the Parking CFD, may issue bonds or incu r other obligations secured by CFD Revenues [parity/subordinate? – Discuss]. Pursuant to the CFD Revenues Assignment Agreement, the assignment of CFD Revenues to the Authority and the pledge thereof to secure the 2020 Bonds may by terminated on the earlier of: (i) the date the Parking Autho rity is no longer required to apply CFD Revenues to the payment of Operation and Maintenance Costs purs uant to the Installment Purchase Agreement, or (ii) the date on which the obligations of the Par king Authority under the Installment Payment Agreement have been discharged.
Continuing Disclosure
The Authority has determined tha t no financial or operating dat a concerning the Authority is material to an evaluation of the offering of the 2020 Bonds or to any decision to purchase, hold or sell the 2020 Bonds, and the Authority will not provide any such information.
The Parking Authority has undertaken all responsibilities of th e Authority for any continuing disclosure to Holders of the 2020 Bonds.
The Parking Authority will covenant for the benefit of Holders of the 2020 Bonds and beneficial owners to provide certain finan cial information and operating data relating to the Parking Authority and the Parking Facilities by not later than March 31 after the end of the City’s Fiscal Year (the “Annual
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4 Report”), commencing with the re port due March 31, 2021, and to provide notices of the occurrence of certain specified events. The Annual Report and notices of events will be filed by means of the Electronic Municipal Market Access (“EMMA”) site maintained by the Municipal Securities Rulemaking Board (the “MSRB”). The specific nature of the information to be contained in the Annual Report or the notices of events is set forth in A PPENDIX E–“PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE.” These covenants have been made in order to assist the Under writer in complying with S.E.C. Rule 15c2-12(b)(5). See “C ONTINUING DISCLOSURE” for the status of the Parking Authority’s City’s compliance with its outstanding continuing disclosure un dertakings, including continuing disclosure undertakings relating to the Parking Facilities.
City staff administers all operations of the Parking Authority and will prepare and file all applicable continuing disclosure notices of the Parking Authority. See “THE PARKING AUTHORITY.” Bondowners’ Risks
An investment in the 2020 Bonds involves risk. See “C ERTAIN BONDOWNERS’ RISKS” for a discussion of important investment considerations and other ris k factors associated with the purchase of the 2020 Bonds. Any one or more of the risks discussed, and ot hers, could lead to a decrease in the market value of the 2020 Bonds or the ability of the Parking Au thority to make 2020 Installment Payments. Potential purchasers of the 2020 Bonds are advised t o review the entire Official Statement carefully and to conduct such due diligence and other review as they deem necessary and appropriate under the circumstances.
Certain Information Related to this Official Statement
Brief descriptions of the 2020 Bonds, the security for the 2020 Bonds, the Parking Facilities, the Authority, the Parking Authority, and the City are included in this Official Statement together with summaries of certain provisions of the 2020 Bonds, the 2020 Ind enture, the 2020 Installment Purchase Agreement and certain other documents. Such descriptions do not purport to be comprehensive or definitive. Certain general dem ographic and economic informati on relating to the City is contained in APPENDIX A – “ GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING TO THE CITY OF STOCKTON.”
All references herein to the 202 0 Indenture, the 2020 Installme nt Purchase Agreement, and other documents are qualified in their entirety by reference to such documents, and references herein to the 2020 Bonds are qualified in their entirety by reference to the form thereof included in the 2020 Indenture, copies of which are available prior to the issuance of the 2020 Bonds at the office of the Chief Financial Officer, City of Stockton, 425 North El Dorado Street, Stockton , California 95202; telephone:
209-937-8908 and thereafter at the office of the Trustee, Wells Fargo Bank, National Association, 333 Market Street, 18th Floor, San Francisco, California 94105; telephone: 415-371-3353.
PLAN OF FINANCE
The proceeds of the 2020 Bonds will be used by the Authority t o: (i) prepay outstanding obligations under the 2015 Insta llment Sale Agreement that secu re payment of the 2004 Parking Bonds and to finance the construction, acquisition, and installation of certain improvements located in parking facilities owned by the Parking Authority located in the downto wn area of the City; (ii) fund a reserve account [purchase a municipal bond insurance policy and a debt service reserve policy] as security for the 2020 Bonds; and (iii) pay certain costs associated with the iss uance of the 2020 Bonds. See also “ESTIMATED SOURCES AND USES OF FUNDS.”
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5 Background
On June 25, 2004, the Authority issued $32,785,000 principal a mount of its Lease Revenue Bonds, Series 2004 (Parking and Capital Projects) (the “2004 Pa rking Bonds”) to provide funds to finance the construction of the Edmund S. Coy Parking Structure and the Stockton Events Center Parking Structure located in the City. The 2004 Parking Bonds were issued pursuant to the terms of an Indenture of Trust (the “2004 Parking Bonds Indenture”), dated as of June 1, 2004, by and between the Financing Authority and Wells Fargo Bank, National Association, as trustee (the “2004 Parking Bonds Trustee”) and were insured by National Public Finance Guarantee Corporation (“NPFG”), as successor to Financial Guaranty Insurance Company. Pursuant the terms an d conditions of a Site and Facility Lease, dated as of June 1, 2004 (the “2004 Parking Bonds Site and Facility Lease”), the City, as lessor, leased to the Authority, as lessee, certain parcels of real property situated in the City (the “Site”), and the City’s Market Street Parking Garage, the Edmund S. Coy Parking Garage, and the Stockton Events Center Parking Structure, respectively (collectively, the “2004 Parking Bonds Leased Parking Facilities”). Pursuant to the terms and conditions of a Lease Agreement, dated as of June 1, 2004 (the “2004 Parking Bonds Lease Agreemen t”), by and between the Autho rity, the City agreed to make lease payments to the Authority for th e use and occupancy of the 2004 Parking Bonds Leased Parking Facilities.
Following the City’s default on certain 2004 Lease Payments due under the 2004 Parking Bonds Lease Agreement, the 2004 Parking Bonds Trustee sought and, on April 19, 2012, the Superior Court for the County of San Joaquin (the “Superior Court”) awarded posses sion of the Leased Parking Facilities (the “2004 Parking Bonds Proceeding”) to the 2004 Parking Bonds Trustee. The Superior Court also entered an Order Appointing Receiver (the “2012 Receivership Or der”) that appointed a post-judgement receiver of the 2004 Parking Bonds Leased Parking Facilities to operate the 2004 Leased Parking Bonds Leased Parking Facilities (the “Receiver”) and collect the revenues from such operations.
The 2004 Parking Bonds Indenture provides that, for all purposes of the 2004 Indenture provisions governing events of default and remedies, except the giving of notice of default to owners of the 2004 Parking Bonds, NPFG, as the insurer of the 2004 Parking Bonds, is deemed to be the sole holder of the 2004 Parking Bonds it has insured for so long as it has not failed to comply with its payment obligations under its policy securing payment of principal of and interest on the 2004 Parking Bonds;
The City was the debtor in a bankruptcy case under chapter 9 of Title 11 of the United States Code, Case No. 2012-32118 in the United States Bankruptcy Court for the Eastern District of California, Sacramento Division, styled In re City of Stockton, California (the “Bankruptcy Case”). In connection with the Bankruptcy Case, the Ci ty agreed to a settlement (the “Settlement”) of the claims of the 2004 Parking Bonds Trustee, on behalf of holders of the 2004 Parking Bonds, and of NPFG with respect to the 2004 Parking Bonds, pursuant to which the 2004 Parking Bonds Trustee and NPFG and agreed, subject to compliance by the City, the Fina ncing Authority, and the Parkin g Authority with certain terms of the Settlement, to forbear enforcement of certain of their rights r elating to payment of the 2004 Parking Bonds and related obligations, and to cause the 2004 Parking Bo nds Trustee to transfer to the Parking Authority all of its possessory rights, title and interest in t he Site and the Leased Parking Facilities granted to it in the 2004 Bonds Parking Proceeding in exchange for, among other things, certain payments from the Parking Authority to the 2004 Parking Bonds Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds.
In furtherance of the Settlement, the City Council of the City passed Resolution No. 2013-12-17- 1209 on December 17, 2013 (the “Pa rking Authority Resolution”) authorizing the activation of the Parking Authority, and authorizing it to operate within boundar ies described in the Parking Authority Resolution; the City entered into a Forbearance Agreement, date d as of February 25, 2015 (the
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6 “Forbearance Agreement”), by and among the City, the 2004 Parking Bonds Trustee, the Parking Authority, the Authority, and NPFG, setting forth certain terms of the Settlement, including an agreement by NPFG and the 2004 Parking Bonds Trustee to forbear enforceme nt of certain of their rights relating to payment on the 2004 Parking Bonds and related obligations, subject to the compliance by the City and the Parking Authority with their obligations under the Forbearance Agreement; and the 2004 Bonds Trustee and NPFG entered into an Installment Sale Agreement (Parking Ga rages and Downtown Parking District Facilities), dated as of February 25, 2015 (the “2015 Installme nt Sale Agreement”), pursuant to which the Parking Authority is required to make installment payments to t he 2004 Parking Bonds Trustee for the benefit of NPFG and the owners of the 2004 Parking Bonds.
Under the Forbearance Agreement, the City, among other things, transferred to the Parking Authority all of its rights, title and interest in the Parking Facilities and assigned to the Parking Authority all of the City’s rights, title and interest, as lessee, pursua nt to the Site Lease, and as lessor, pursuant to the Lease Agreement, and the Parking Authority assumed all of t he City’s obligation under the Site Lease and the Lease Agreement.
[Discussion of payment to NPFG of less than the amount outstanding and agreement to accept same in full satisfaction ]
2020 Improvements
The 2020 Improvements consist of replacing garage and parking enforcement equipment with innovative parking technology desi gned provide real time data o f day-to-day operations, more stringent internal controls, improved enforcement efficiencies, LED solar lighting, painting and updated signage to better support options for downtown businesses in the City. [Timeline for acquisition/installation – To Come]
2004 Parking Bonds
The 2004 Parking Bonds were issued pursuant to the 2004 Parking Bonds Indenture to finance certain improvements to the Parking Facilities.
A portion of the proceeds of the 2020 Bonds will be deposited with the 2004 Parking Bonds Trustee which, together with securities and certain moneys on d eposit under the 2004 Parking Bonds Indenture, will be sufficient and will be used to pay the princ ipal of and interest on the 2004 Parking Bonds on [September] 1, 2023 and to redeem the remaining Refunded Bonds on [September] 1, 2023 at a price equal to 100% of the principal amount redeemed, plus accr ued and unpaid interest through the date of redemption.
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7 The 2004 Parking Bonds c onsist of the following:
Table 1
2004 Parking Bonds
$_________
Stockton Public Financing Authority
Lease Revenue Bonds, Series 2004
(Parking and Capital Projects)
Maturity or Redemption Date: [September] 1, 2023
Redemption Price: 100%
Outstanding
Maturity Date Principal Interest
(September 1) Amount Rate CUSIP No.†
_______________
† CUSIP® is a registered trademark of the American Bankers Ass ociation. CUSIP Global Servic es (“CGS”) is managed on behalf of the American Bankers Association by S&P Capital IQ. Copyright 2020 CUSIP Global Services. All rights reserved. CUSIP® data herein is provided by CGS. This data is not intended to create a database and does not serve in any way as a substitute for the CUSI P service. The CUSIP number is provided for convenience of reference only. None of the Authority, the Parking Authority or the Underwriter assume any responsibility for the accuracy of such numbers.
Upon the deposit of cash and/or securities into an escrow fund (the “Escrow Fund”) established pursuant to an Escrow Agreement, dated as of February 1, 2020 ( the “Escrow Agreement”) by and between the Authority and the 2004 Parking Bonds Trustee, the 2 004 Parking Bonds will no longer be deemed outstanding under the 2004 Indenture and the 2015 Instal lment Sale Agreement will be discharged.
Verification
The amounts deposited with the 2004 Parking Bonds Trustee purs uant to the respective Escrow Agreement will be held by the 2004 Parking Bonds Trustee and he ld in cash and invested in securities that are irrevocably pledged solely to the payment of the princ ipal and interest on the 2004 Parking Bonds. ___________ will deliver a r eport confirming that the c ash and principal of and interest on such securities, when received, will be sufficient to pay the principal of and interest on the 2004 Parking Bonds on [September] 1, 20__ and redeem the remaining 2004 Parking Bonds on [September] 1, 2023. See “V
ERIFICATION OF MATHEMATICAL COMPUTATIONS.”
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8 ESTIMATED SOURCES AND USES OF FUNDS
The proceeds to be received from the sale of the 2020 Bonds, t ogether with other available funds, are estimated to be applied as set forth in the following table:
Table 2
Estimated Sources and Uses of Funds
Sources of Funds:
Par Amount of 2020 Bonds $____,___,000.00*
Funds held under the 2010 Indenture ______________
T
OTAL ESTIMATED SOURCES $______________
Uses of Funds:
Deposit to Escrow Fund
(1) $______________
Costs of Issuance(2)
T OTAL ESTIMATED USES OF FUNDS $______________
_______________
* Preliminary, subject to change.
(1) See “P
LAN OF FINANCE.”
(2) Includes fees of Bond Counsel, Disclosure Counsel, the Municipa l Advisor, the Verification Agent, the Refunded Bonds Trustee, and the Trustee, the Underwriter’s discount[, premiums for the Policy and the Reserve Policy,] fees relating to the credit ratings, printing, and other miscellaneous costs associated with the issuance of the 2020 Bonds. For the details of the Underwriter’s discount, see “UNDERWRITING.”
(Remainder of this Page Intentionally Left Blank)
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9 DEBT SERVICE SCHEDULE
The Fiscal Year debt service requirements for the 2020 Bonds is set forth below.
Table 3
Debt Service Schedule
Series 2020 Bonds
Fiscal Year
(June 30) Principal Interest Total
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
2041
2042
2043
2044
2045
2046
2047
TOTAL
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10 THE 2020 BONDS
The following is a summary of certain provisions of the 2020 Bonds. Re ference is made to the 2020 Indenture for the complete provisions thereof, and the discussion herein is qualified in its entirety by such reference. See A
PPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS –THE 2020 INDENTURE.”
General
The 2020 Bonds will be dated their date of original delivery, will be issued in fully registered form, in denominations of $5,000 and any integral multiple thereof and will mature on the dates and in the principal amounts and bear interest at the rates as set forth o n the inside front cover of this Official Statement.
Interest on the 2020 Bonds will be calculated on the basis of a 360-day year comprised of twelve, 30-day calendar months, payable semiannually on [March] 1 and [ September] 1 of each year, commencing [September] 1, 2020 (each, an “Interest Payment Date”).
The 2020 Bonds when issued, will be in fully-registered form, r egistered in the name of Cede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”). DTC acts as securities depository for the 2020 Bonds. Individual purchases and sales of the 2020 Bonds may be made in book-entry form only. Purchasers will not receive certificates representing their interest in the 2020 Bonds purchased. References herein to the Bondholders or Owners shall mean DTC and shall not mean the beneficial owners of the 2020 Bonds. So long as DTC, or it s nominee, is the registered owner of all of the 2020 Bonds, all payments on the 2020 Bonds are made directly to DTC. Principal of and interest on the 2020 Bonds are payable by wire transfer by the Trustee t o DTC, which is expected, in turn, to remit such amounts to the DTC Direct Participants for subsequent disbursement to DTC Indirect Participants (each as defined in A
PPENDIX F) and beneficial owners. See A PPENDIX F–“DTC AND THE BOOK–ENTRY ONLY SYSTEM.”
Payment of interest on the 2020 Bonds due on any Interest Payme nt Date on or before the maturity or prior redemption thereof will be made only to the p erson whose name appears in the bond registration books kept by the Trustee as of the close of busin ess on the 15th day of the month immediately preceding an Interest Payment Date (the “Record Date”), whether or not such Record Date is a Business Day, by check mailed on such Interest Payment Date by first class mail to such registered owner at the address as it appears in such books; provided, that upon the written request of any Holder of $1,000,000 or more in aggregate principal amount of 2020 Bonds received by the Trustee prior to the applicable Record Date, interest will be paid on each Interest Payment Date by wire transfer of immediately available funds to an account maintained in any ban k or trust company in the United States of America that is a member of the Federal Reserve System designated in writing by such Holder.
Redemption Provisions
Optional Redemption . The 2020 Bonds maturing on or after March 1, 20__, are subjec t to optional redemption by the Authority prior to their respective stated maturity dates, upon notice, on any date on or after March 1, 20__, as a whole or in part f redemption price equal to the sum of the principal amount thereof to be redeemed plus accrued interest thereon to the redemption date, without premium.
Mandatory Sinking Fund Redemption. The Series 2020 Bonds maturing on March 1, 20__ and March 1, 20__ (together, the “Term Bonds”) are also subject to mandatory redemption prior to their respective stated maturities, commencing March 1, _____, and Ma rch 1, _____, respectively, and on
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11 March 1 in each year thereafter to and including March 1, _____ , and March 1, _____, respectively, in part by lot, from mandatory sinking account payments at a redem ption price equal to the principal amount thereof, plus accrued interest, if any, to the redemption date, without premium, as set forth below in the aggregate respective principal amounts and on the respective da tes as set forth in the following tables; provided, however, that if some but not all of such Series 2020 Bonds have been redeemed pursuant to optional redemption provisions of this Indenture, the total amo unt of all future sinking fund payments shall be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral multiples of $5,000. The Parking Authority is required to provide the Trustee with a revised sinking fund schedule.
Term 2020 Bonds Sinking Fund Redemption Schedule
Sinking Fund
Redemption Date
(March 1)
Principal
Amount
$
†
_________________
† Maturity.
Term 2020 Bonds Sinking Fund Redemption Schedule
Sinking Fund
Redemption Date
(March 1)
Principal
Amount
$
†
_________________
† Final Maturity.
Notice of Redemption. Notice of redemption is required to be mailed by the Trustee by first class mail, not less than 20 nor more than 60 days prior to the redem ption date, to the respective Holders of the 2020 Bonds designated for redemp tion at their addresses appeari ng on the registration books kept by the Trustee. Each notice of redemption is required to state the da te of such notice, the 2020 Bonds to be redeemed, the date of the 2020 Bonds, the redemption date, the redemption price, the place of redemption (including the name and address of the Principal Corporate Trus t Office of the Trustee), the CUSIP number (if any) of the maturity or maturities, and, if less tha n all of the 2020 Bonds of any one maturity are to be redeemed, the distin ctive numbers of the 2020 Bonds o f such maturity to be redeemed and, in the case of 2020 Bonds to be redeemed in part only, the respect ive portions of the principal amount thereof to be redeemed. Each such notice is also required to state that, subject to the rescission of such redemption as provided in the 2020 Indenture, on such redemptio n date there will become due and payable on each of the 2020 Bonds to be redeemed the redemption price thereof and, in the case of 2020 Bonds to be redeemed in part only, the specified portion of the principal amount thereof to be redeemed, and that from and after such redemption date interest on such 2 020 Bonds shall cease to accrue, and each
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12 such notice shall require that such 2020 Bonds be then surrendered at the Principal Corporate Trust Office of the Trustee specified in the redemption notice for payment of the redemption price thereof.
Neither failure to receive any such notice nor any defect conta ined therein will invalidate any of the proceedings taken in connection with any such redemption.
Selection of 2020 Bonds to be Redeemed. If less than all Outstanding 2020 Bonds are to be redeemed at any one time, the Financing Authority shall select the maturity date or dates of the 2020 Bonds to be redeemed, and if less than all the Outstanding 2020 Bonds maturing by their terms on any one maturity date are to be redeemed at any one time, the Trustee shall select by lot the 2020 Bonds or the portions thereof of such maturity date, and the Trustee shall p romptly notify the Financing Authority in writing of the numbers of the 2020 Bonds so selected by it for redemption, and for purposes of such selection, 2020 Bonds shall be deemed to be composed of $5,000 multiples and any such multiple may be separately redeemed.
Effect of Redemption. I If notice of redemption has been duly given as aforesaid an d money for the payment of the redemption price of the 2020 Bonds called fo r redemption is held by the Trustee, then, on the redemption date designated in such notice the 2020 Bonds so called for redemption shall become due and payable, and from and after the date so designated inte rest on such 2020 Bonds shall cease to accrue, and the Owners of such 20 20 Bonds shall have no rights in respect thereof except to receive payment of the redemption price thereof.
Rescission of Notice of Redemption. Any notice of redemption may be rescinded by Written Request of the Authority given to the Trustee not later than fi ve days prior to the date fixed for redemption. Upon receipt of such Written Request of the Author ity, the Trustee is required to promptly mail notice of such rescission in the same manner and to the sa me parties that were mailed the original notice of redemption.
Conditional Notice of Optional Redemption. Any notice of optional redemption may be conditional on the RECEIPT by the Trustee of sufficient money to pay the full redemption price of the 2020 Bonds to redeemed.
SECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS
Pledge of Net Parking Revenues
The 2020 Bonds are limited obligations of the Authority issued under and pursuant to the 2020 Indenture, payable solely from the 2020 Installment Paymen t s t o b e m a d e b y t h e P a r k i n g Authority pursuant to the 2020 Installment Purchase Agreement, and certain amounts held under the 2020 Indenture. The obligation of the Parking Authority to make 2020 Installment Payments constitutes a special obligation of the Parking Authority payab le solely from a pledge of the “Net Parking Revenues.”
Pursuant to the 2020 Installment Purchase Agreement, the Parkin g Authority grants to the Authority a first lien on and a security interest in and pledge of all Net Parking Revenues to secure the payment of the 2020 Installment Payments and any Parity Obligations. [Net Parking Revenues may not be used for any other purpose while any 2020 Installment Paymen ts or any Parity Obligations remain unpaid]; provided, that out of the Net Parking Revenues there m ay be apportioned such sums for such purposes as are expressly permitted by 2020 Installment Purchase Agreement. [The lien, security interest, and pledge constitute an exclusive first lien on the Net Parking Revenues for the payment of the 2020
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13 Installment Payments and any Pa rity Obligations in accordance w ith the terms hereof (subject to the incurrence of Parity Obligations in accordance with 2020 Instal lment Purchase Agreement). Pursuant to the Installment Purchase Agreement, the Parking Authority coven ants to establish an account to be held by the Parking Authority to be known as the “CFD Revenues Accou nt” and to deposit therein all CFD Revenues Defined herein), when received, and to apply all CFD R evenues to the payment of Gross Operation and Maintenance Costs.
Parking Revenues consist of: (i) charges and revenues derived from the operation of Parking Facilities (consisting of parking meters, surface lots and gara ges) located within the City (collectively, the “Parking Facilities”) and (ii) proceeds of a special tax levied on Taxable Property (as defined herein) within the City’s Community Facilities District No. 2001-01 (Do wntown Parking) (“CFD Revenues”).
See “P
ARKING AUTHORITY FINANCES” for discussions of charges and revenues derived from operations of the Parking Facilities. See “T HE PARKING CFD” for a discussion of the Parking CFD and CFD Revenues.”
The Parking Authority may issue or incur additional obligations secured by and payable from Net Parking Revenues on a parity with the 2020 Installment Payments and other Parity Obligations as described in the Installment Purchase Agreement. See “–Issuance of Parity Obligations.”
Definitions
“Gross Operation and Maintenance Costs ” means the reasonable and necessary costs spent or incurred for maintenance and operation of the Parking Facilitie s calculated in accordance with Generally Accepted Accounting Principles, including (among other things) (a) the reasonable expenses of management and repair, including fees, charges and other invoices of a professional operator, person, firm or corporation with staff experienced in the management and operation of parking facilities similar to the Parking Facilities who is managi ng and operating all or a porti on of the Parking Facilities, and other expenses necessary to maintain and preserve the Parking Facilit ies in good repair and working order, (b) the reasonable administrative costs of the Parking Authority an d the City that are reasonably charged or directly apportioned to the Parking Facilities, including but n ot limited to, salaries and wages of employees, payments to the Public Employees Retirement System, overhead, utilities and services, insurance, taxes (including parking taxes), fees of auditors, a ccountants, attorneys, consultants or engineers and insurance premiums and , and including all other reasonable and necessary costs of the Parking Authority or the City or charges required to be paid by it to comply with the terms hereof, or the terms of any Parity Obligations, but excluding in all cases (i) depreciation, replacement and obsolescence charges or reserves therefor, (ii) amortization of intangibles, (iii) costs of capital additions, replacements, betterments, extensions or improvements to the Parking Facilities which under Generally Accepted Accounting Principles are chargeable to a capital account, and (iv) charges for the payment of principal and interest on any debt service or other regularly scheduled p ayments on account of any Parity Obligation or obligation subordinate to the Parity Obligations. “Net Parking Revenues” means, for any period, the Parking Revenues during such perio d less the Operation and Maintenance Costs during such period.
“Parity Obligations ” means the 2020 Installment Payments, any obligation (includin g, but not limited to, any installment paym ent obligation) payable on a pa rity with the 2020 Installment Payments from Net Parking Revenues, as the case may be, as provided in t he 2020 Installment and the regularly scheduled payments under any Payment Agreement which have been designated by the Parking Authority as a “Parity Obligation” in the Payment Agreement.
ATTACHMENT B
14 “ Payment Agreement” means a written agreement for the purpose of managing or redu cing the Parking Authority’s exposure to fluctuations in interest rates or for any other interest rate, investment, asset or liability managing purposes, entered into either on a current or forward basis by the Parking Authority as authorized under any applicable laws of the State in connection with, or incidental to, the entering into of any Parity Obligation, that provides for an ex change of payments based on interest rates, ceilings or floors on such payments, options on such payments or any combination thereof, or any similar device.
“Parking Revenues” means all gross income and revenue received or receivable by the Parking Authority from the ownership or operation of the Parking Facili ties, determined in accordance with Generally Accepted Accounting Principles, including all fees, r ates, charges and amounts paid under any contracts received by or owed to the Parking Authority in connection with the operation of the Parking Facilities and all proceeds of insurance relating to the Parkin g Facilities and all other income and revenue howsoever derived by the City from the ownership or operation of the Parking Facilities, but excluding (i) any proceeds of grants or loans or other debt obligations recei ved by the Parking Authority, (ii) customer deposits or any deposits or adva nces subject to refund until su ch deposits or advances have become property of the Parking Authority , and (ii) the proceeds of any special assessments or special taxes levied upon real property within any im provement district established for the benefit of the Parking Facilities including, but not limited to, the CFD Revenues.
[Insert Flow of Funds Chart – To Come]
THE 2020 BONDS ARE LIMITED OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY FROM 2020 INSTALLMENT PAYMENTS MADE BY THE PARKING AUTHO RITY AND CERTAIN MONEYS HELD UNDER THE 2020 INDENTURE. THE 2020 BONDS A RE NOT A
DEBT OF THE PARKING AUTHORITY, THE CITY, THE STATE OF CALIFORNI A OR ANY
POLITICAL SUBDIVISION THEREOF, AND SHALL BE PAYABLE SOLELY FROM T H E REVENUES PLEDGED THEREFOR PURSUANT TO THE 2020 INDENTURE. THE OBLIGATION OF THE PARKING AUTHORITY TO MAKE 2020 INSTALLMENT PAYMENTS IS A SPECIAL
OBLIGATION OF THE PARKING AUTHORITY PAYABLE SOLELY FROM NET SYS TEM REVENUES OF THE PARKING FACILITIES AS PROVIDED IN THE 2020 INSTALLMENT PURCHASE AGREEMENT. NEITHER THE FAITH AND CREDIT NOR THE TAXIN G POWER OF
THE CITY, THE STATE OR ANY POLITI CAL SUBDIVISION THEREOF (INCLU DING THE
AUTHORITY) IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL AND PREMI UM, IF ANY, OF, OR INTEREST ON THE 2020 BONDS. THE AUTHORITY HAS NO TAXING POWER. THE ISSUANCE OF THE 2020 BONDS SHALL NOT DIRECTLY OR INDIRECTLY OBL IGATE THE
AUTHORITY, THE CITY, THE STATE OR ANY POLITICAL SUBDIVISION THEREOF TO LEVY
OR PLEDGE ANY FORM OF TAXATION WHATSOEVER OR TO MAKE ANY APPROP RIATION FOR PAYMENT OF THE 2020 BONDS. THE 2020 BONDS AND THE 2020 INS TALLMENT PAYMENTS ARE NOT PAYABLE FROM THE GENERAL FUND OF THE CITY.
Rate Covenant
In the 2020 Installment Purchase Agreement, the Parking Authori ty covenants to fix, prescribe and collect rates, fees and charges with respect to the Parking Facilities during each Fiscal Year which are estimated to yield Net Parking Revenues for such Fiscal Year eq ual to at least [125%] of Parity Debt Service for such Fiscal Year. The Parking Authority may make a djustments from time to time in such fees and charges and may make such classification thereof as it deems necessary, but shall not reduce the rates, fees and charges then in effect unless the Net Parking Revenues from such re duced rates, fees and charges are estimated to be sufficient to meet the requirements of such covenant.
ATTACHMENT B
15 “Adjusted Net Parking Revenues” means, for any Fiscal Year or other period of calculation, the Net Parking Revenues for such Fiscal Year or other period of ca lculation less, to the extent included in the calculation of Net Parking Revenues for such Fiscal Year or other period of calculation, all amounts referred to in clause (G) of the definition of Parity Debt Serv ice in the 2020 Installment Purchase Agreement received or expected to be received by the Parking Au thority or fiduciary, on behalf of the Parking Authority, in such Fiscal Year or other period of calculation. “Parity Debt Service ” generally means with respect to any Parity Obligation for any p e r i o d o f calculation, those portions of the payments of interest on and principal and redemption premiums, if any, required to be made during such period under such Parity Obliga tions, less any such interest that is to be paid from proceeds of such Parity Obligations, less the earning s to be derived from the investment of moneys on deposit in debt service reserve funds and capitalized interest funds established for such Parity Obligations. See A PPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS–DEFINITIONS OF CERTAIN TERMS” for a complete description of the definition of Parity Debt Service, including various assumptions and adjustments used to calculate Parity Debt Service.
Deposit of Revenues
Pursuant to the 2020 Indenture, the Authority agrees and covenants that all Revenues when and as received will be transferred by the Authority to the Trustee f or deposit in the 2020 Installment Payment Fund.
All money in the 2020 Installmen t Payment Fund is required to b e set aside by the Trustee in the following special accounts in the following order of priority:
Interest Account,
Redemption Account,
2020 Reserve Account.
All money in each of such accounts will be held in trust by the Trustee and applied, used, and withdrawn only for the purposes authorized in the 2020 Indenture.
Interest Account. On [March] 1 and [September] 1 of each year, beginning on [Se ptember] 1, 2020, the Trustee is required to set aside from the 2020 Instal lment Payment Fund and deposit in the Interest Account an amount of money which is equal to the amoun t of interest becoming due and payable on all Outstanding 2020 Bonds on such [March] 1 or [September] 1, as the case may be; provided, that no such deposit need be made in the Interest Account if the amount contained therein is at least equal to the aggregate amount of interest becoming due and payable on all Outstanding 2020 Bonds on such Interest Payment Date. All money in the Interest Account is required to be used and withdrawn by the Trustee solely for the purpose of paying the interest on the 2020 Bonds as it becomes due and payable (including accrued interest on any 2020 Bonds purchased or redeemed prior to maturity).
Redemption Account. On [September] 1 of each year, beginning on [September] 1, 202 0, the Trustee is required to set aside from the 2020 Installment Paym ent Fund and deposit in the Principal Subaccount of the Redemption Acc ount an amount of money equal t o the principal amount of all Outstanding Serial 2020 Bonds maturing on such [September] 1 an d to set aside from the 2020 Installment Payment Fund and de posit in the Sinking Fund Accoun t of the Redemption Fund an amount of money equal to the Sinking Fund Payment, if any, required to be made on such [September] 1; provided, that no such deposit need be made in the Principal Subaccount on [September] 1 of any year if the amount contained in the Principal Subaccount therein is at least equal to the aggregate amount of the principal of all Outstanding Serial 2020 Bonds maturing by thei r terms on such [September] 1 and no
ATTACHMENT B
16 such deposit need be made for the Sinking Fund Subaccount on [September] 1 of any year if the amount contained therein is at least e qual to the amount of the Sinkin g Fund Payments, if any, required to be made on such [September] 1. All money in the Principal Subacco unt in the Redemption Account is required to be used and withdrawn by the Trustee solely for the purpose of paying the principal of the Serial 2020 Bonds as they shall become due and payable, whether at maturity or on prior redemption and all money in the Sinking Fund Subaccount is required to be used and withdrawn to purchase, redeem or pay Term 2020 Bonds. See also, A
PPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS–THE 2020 INDENTURE–Establishment and Maintenance of Accounts for Use of Money in the 2020 Installment Payment Fund–Redemption Account.” 2020 Reserve Account. If moneys on deposit in the 2020 Reserve Account are less than the 2020 Reserve Requirement, after making the deposits required to be m ade to the Interest Account and Redemption Account, the Trustee is required to deposit available Revenues in the 2020 Reserve Account until the balance in the 2020 Reserve Account equals the 2020 Reserve Requirement. 2020 Reserve Account
The 2020 Indenture establishes a 2020 Reserve Account to be he ld by the Trustee, and requires that the 2020 Reserve Account be maintained in the amount of $_ _________ (the “2020 Reserve Requirement”); provided, that such requirements (or any portion thereof) may be provided by one or more financial instruments (including, but not limited to, one or mo re policies of financial guaranty insurance, one or more surety bonds or one or more letters of credit) issued by a municipal bond insurer, bank or other financial institution or org anization with ratings at the time of issuance of such financial instrument in one of the highest rating categories (without regarding to numerous modifier or plus or minus sign) from at least one nationally recognized rating agency.
[Upon the issuance of the 2020 Bonds the Reserve Policy in the amount of the 2020 Reserve Requirement will be issued by the Bond Insurer and deposited into the 2020 Reserve Account.]
Rate Stabilization Fund
[The 2020 Installment Purchase Agreement permits the Parking Au thority the option of establishing a fund (the “Rate Stabilization Fund”) into which the Parking Authority may, from time to time, from current Parking Revenues such amounts as the Parking A u t h o r i t y m a y d e t e r m i n e a n d t h e amount of available current Parking Revenues in the Fiscal Year will be reduced by the amount so transferred. Amounts may be tra nsferred from the Rate Stabiliz ation Fund and deposited in the Revenue Fund, and any amounts transferred within 270 days after the end of a Fiscal Year will be deemed Parking Revenues for such Fiscal Year when transferred. The Parking Authority may also apply moneys on deposit in the Rate Stabilization Fund for any lawful purpose. All interest or other earnings upon amounts in the Rate Stabilization Fund may be withdrawn and acc ounted for as Parking Revenues in accordance with the terms of the 2020 Installment Purchase Contra or used for any lawful purpose.]
Issuance of Parity Obligations and Subordinate Obligations The Parking Authority may at any time and from time to time iss ue or create any Parity Obligations, in addition to the 2020 Installment Payments, whic h may be incurred without compliance with the requirements described in the 2020 Installment Purchase Agreement, provided:
(i) None of the following has occurred and is continuing: (A) an Ev ent of Default under the terms of the 2020 Installment Purchase Agreement, and any other installment purchase contract, indenture, trust agreement or other document that provides for the issuance of Parity Obligations (each an
ATTACHMENT B
17 “Issuing Document”) or (B) an Event of Default or Termination E vent (as defined in any Payment Agreement) under any Payment Agreement; and
(ii) The Parking Authority obtains or provides a certificate or cert ificates, prepared by the Parking Authority or at the option of the Parking Authority by a Consultant, showing that either:
(A) the Adjusted Net Parking Revenues for either the most recen t Fiscal Year for which audited financial statem ents are available or any 12 cons ecutive calendar month period during the 18 consecutive calendar month period ending immediat ely prior to the incurring of such additional Parity Obligati ons were at least [150%] of “Max imum Annual Debt Service” (defined in the Installment Purchase Agreement as of any date o f calculation, the largest amount of Parity Debt Service during the period from the date of such calculation through the final maturity date of all Parity Obligations) as calculated after the execution of such Parity Obligations; and for the purpose of providing such certificate or certificates, the Parking Authority or the Parking Authority’s Consultant, as applicable, may adjust the Adjusted Net Parking Revenues for such Fiscal Year or 12 calendar month peri od, as the case may be, to reflect:
(1) an allowance for Net Parking Revenues that would have been deri ved from any additional Parking Facilities that were added prior to the incurrence of such additional Parity Obligations but which were not in existence, during all or any part of such Fiscal Year or 12 calendar month period under consideration, in an amount equal to the estimated additional Net Parking Revenues that would have b een derived from such additional Parking Facilities if they had been added prior to t he beginning of such Fiscal Year or 12 calendar month period, and
(2) an allowance for Net Parking Revenues that would have been deri ved from any increase in the rates, fees and charges fixed and pres cribed for the Parking Facilities which became effective prior to the incurrence of such additional Parity Obligations but which was not in effect, during all or any part of such Fiscal Year or 12 calendar month period, in an am ount equal to the estimated additional Net Parking Revenues that would have been derived from such increase in rat es, fees and charges if it had been in effect prior to the beginning of such Fiscal Year or 12 calendar month period; or
(B) the estimated Adjusted Net Parking Revenues will be at least [1 50%] of Maximum Annual Debt Service, as calculated after the execution of such Parity Obligations; and for the purpose of providing such certificate or certificates, the Parking Authority or the Parking Authority’s Consultant, as applicable, may adjust the foregoing estimated Adjusted Net Parking Revenues to reflect:
(1) an allowance for Net Parking Reve nues that are estimated to be derived from any increase in the rates, fees and charges for Parking Fa cilities which have been adopted by the Parking Authority and which will be in effect du ring all or any portion of the period for which such estimates are provided; and
(2) an allowance for Net Parking Reve nues that are estimated to be derived from new customers of the Parking Facilities anticipated to be served by any additions or improvements to or extensions of the Parking Facilities finance d by the Parity Obligations in an amount equal to the
additional Net Parking Revenues that are estimated
to be derived from such customers.
ATTACHMENT B
18 For purposes of clause (B) above, with respect to the Operation and Maintenance Costs, the Parking Authority or the Parking Authority’s Consultant, as applicable, is required to use such assumptions (which are required to be set forth in such certifi cate or certificates) as such believes to be reasonable, taking into account: (i) historical Operation and Maintenance Costs, (ii) Operation and Maintenance Costs associated with the additions or improvements to or extensions of the Parking Facilities to be financed with the proceeds of such additional P a r i t y O b l i g a t i o n s a n d a n y o t h e r n e w additions or improvements to or extensions of the Parking Facil ities during such five year period and (iii) such other factors, including inflation and changing operations or policies of the Parking Authority, as the Parking Authority or the Parking Authority’s Consultant, as applicable, believes to be appropriate.
The certificate or certificates described above in paragraph (i i) are not required if the Parity Obligations being issued are for the purpose of refunding (x) then outstanding Parity Obligations, if at the time of the issuance of such refunding Parity Obligations a cer tificate of the Parking Authority is delivered showing that Parity Debt Service in each Fiscal Year on all Parity Obligations outstanding after the issuance of the refunding Parity Obligations will not excee d 110% of Parity Debt Service in each corresponding Fiscal Year on all Parity Obligations outstanding prior to the issuance of such refunding Parity Obligations; or (y) the n outstanding Balloon Obligations or Variable Interest Rate Obligations, but only to the extent that the principal amount of such Balloon Ob ligations or Variable Interest Rate Obligations has been put, tendered to or otherwise purchased by a standby purchase or other liquidity facility relating to such Balloon Obligations or Variable Interest Rate Obligations, as applicable.
Without complying with the requirements described above, the Parking Authority may issue or incur obligations secured by and/or payable from Net Parking Re venues on a priority subordinate to the Parity Obligations.
Default Under the 2020 Indenture and 2020 Installment Purchase Agreement; Remedies For a description of the events of default and remedies under t he 2020 Indenture and the 2020 Installment Purchase Agreement, see A
PPENDIX C–“SUMMARY OF CERTAIN PROVISIONS OF THE
PRINCIPAL LEGAL DOCUMENTS–THE 2020 INDENTURE–Events of Default and Remedies of Owners” and “THE 2020 INSTALLMENT PURCHASE AGREEMENT–Events of Default and Remedies of the Authority,” respectively.
THE PARKING CFD
Special Tax Authorization
Pursuant to the CFD Act, on December 11, 2001 the City Council , acting as the legislative body of the Parking CFD, adopted a resolution establishing the Parki ng CFD, determining to incur bonded indebtedness, and calling a special election to authorize the l evy of the Special Tax. At an election held pursuant to the CFD Act, the la ndowners who were the qualified electors of the Parking CFD authorized (by more than the requisite two-thirds vote) approved the Rate and Method of Apportionment of Special Tax, the facilities and services to be provided, the cost of such facilities and services, and the issuance of bonded indebtedness in an amount not to exceed $60,000,000. The Rate and Method of Apportionment of Special Tax, as amended by th e First Amended Rate and Method of Apportionment of Special Tax approved on June 10, 2003 and the Second Amended Rate and Method of Apportionment of Special Tax approved on December 13, 2005 (collectively, the “Special Tax F ormula”) is authorized to be levied annually within the Parking CFD commencing Fiscal Year 2002-03 and continues in full force and effect until the lien is cancelled in accordance with law or until col lection of the Special Tax is ceased by the City. The Special Tax is levied and collected according to the Special Tax Formula as set forth in
ATTACHMENT B
19 APPENDIX D–“RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” The City Council annually establishes tax rates to levy and apportion the Special Tax aga inst Taxable Property within the Parking CFD.
The Parking CFD was formed to: (i) finance parking facilities, including but not limited to, on and off street parking, surface lots, multi-level parking struc tures, publicly owned spaces within the private properties, parking meters, fee collection facilities, signage, related walkways, street furniture, debris containers, landscaping, lighting, conforming street improvements and all necessary utility facilities, and (ii) to pay for the public services required to maintain the parking facilities in a safe, sanitary, and fit operating condition, including provision of r eplacement parts, painting, cleaning, sweeping, removal of debris, care of landscaping, provision of irrigation for landscaping, electric and communication services and related police, traffic control, fir e, and emergency services. For the boundaries of the Parking CFD, see the map on page __. [The bo undaries of the Parking CFD were established to provide and maintain parking facilities serving the City’s downtown business and entertainment district.]
Assignment and Pledge of CFD Revenues
General. Pursuant to the Assignment Agreement, dated as of February 1, 2020 (the “CFD Revenues Assignment Agreement”) between the City and the Parking Authority, all proceeds of the Special Tax are assigned by the City to the Parking Authority. Pursuant to the 2020 Installment Purchase Agreement, the Parking Authority covenants to establish a “CFD Revenues Account” to be held by the Parking Authority into which the Parking Authority is required to deposit all CFD Revenues. The Parking Authority covenants to apply all CFD Revenues to the pa yment of “Gross Operation and Maintenance Costs.”
“Gross Operation and Maintenance Costs” is defined in the 2020 Installment Purchase Agreement to mean the reasonable and necessary costs spent or incurred fo r maintenance and operation of the Parking Facilities calculated in accordance with Generally Acce pted Accounting Principles, including (among other things) (i) the reasonable expenses of management and repair, including fees, charges and other invoices of a professional operator, person, firm or corp oration with staff experienced in the management and operation of parking facilities similar to the P arking Facilities who is managing and operating all or a portion of the Parking Facilities, and other expenses necessary to maintain and preserve the Parking Facilities in good repair and working order, (ii) t he reasonable administrative costs of the Parking Authority and the City that are reasonably charged or directly apportioned to the Parking Facilities, including but not limited to, salaries and wages of employees, payments to the Public Employees Retirement System, overhead, utilities and services, insurance, taxes (including parking taxes), fees of auditors, accountants, attorneys, consultants or engineers and insurance premiums and , and including all other reasonable and necessary costs of the Parking Authority or the City or charges required to be paid by it to comply with the terms hereof, or the terms of any Parity Obligations, but excluding in all cases (A) depreciation, replacement and obsolescence charges or reserves therefor, (B) amortization of intangibles, (C) costs of capital additions, replacements, bett erments, extensions or improvements to the Parking Facilities which under Ge nerally Accepted Accounting Pr inciples are chargeable to a capital account, and (iv) charges for the payment of principal and inte rest on any debt service or other regularly scheduled payments on account of any Parity Obligation or oblig ation subordinate to the Parity Obligations.
Termination of Pledge of CFD Revenues. [The obligation of the Parking Authority to apply all CFD Revenues pursuant to the 2020 Installment Purchase Agreemen t will cease and terminate following upon the delivery to the Trustee and the Authority of a certifi cate of the Parking Authority demonstrating
ATTACHMENT B
20 that Adjusted Net Parking Revenues were at least [150%] of Maxi mum Annual Debt Service for each of the three completed Fiscal Years prior to the date of calculation.] See also APPENDIX D–“RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
Manner of Collection . The Special Tax is collected in the same manner and at the sa me time as ad valorem property taxes are collected by the County and, except for the Movie Theater Property, is billed in the first quarter of each calendar year. Under the S pecial Tax Formula, City is permitted to directly bill and collect the Special Tax at a different time o r in a different manner. Collection of delinquent Special Tax payments is through foreclosure or other available methods. [To Be Conformed to IPA Revisions]
Of the 153 parcels subject to the Special Tax, as of Fiscal Year 2019-20, 17 (representing approximately 37.5% of the Special Tax levy) are directly bille d by the City. These 17 Parcels are owned by the San Juaquin Regional Transit District, the State, the County, [or the City].
The manner of collection and the amount of the Special Tax Lev y for the Fiscal Year 2019-20 Special Tax levy is summarized below:
Manner of Collection
Number of Parcels of
Taxable Property
Special Tax Levy
Amount Percent
County Roll (Teetered) 136 $773,279.22 62.49%
Hand Billed 17 464,100.36 37.51
TOTAL 153 $1,237,379.58 100.0%
_______________
Source: Willdan Financial Services.
Taxes are levied by the County for each Fiscal Year on taxable real property that is situated in the County as of the preceding January 1. For collection purposes, property is classified either as “secured” or “unsecured” and is listed accordingly on separate parts of t he assessment roll. The “secured roll” is that part of the assessment roll containing State-assessed public utilities property and real property having a tax lien that is sufficient, in the opinion of the County Ass essor, to secure payment of the taxes. Other property is assessed and collected 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. If unpaid, such taxes become delinquent on D ecember 10 and April 10, respectively, and a 10% penalty attaches to any delinquent payment. Property on the secured roll with respect to which taxes are delinquent become tax defaulted on June 30 of the Fis cal Year; such property may thereafter be redeemed by payment of a penalty of 1.5% per month to the date of redemption, together with the defaulted taxes, the delinquency penalty, costs, and a redempti on fee. If taxes are unpaid for a period of five years or more, the property is subject to auction sale by the County, however, under certain circumstances property may be foreclosed sooner. See “–Delinqu ent Payments of Special Tax; Covenant to Foreclose.”
Property taxes on the unsecured roll are due as of the lien date and become delinquent, if unpaid, 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 add itional penalty of 1.5% attaches to them on the first day of each month until paid. The County has four ways of collecting delinquent unsecured property taxes: (i) bringing a civil action against the taxpayer; (ii) filing a certificate in the office of the County Clerk specifying certain facts in order to obtain a lien on certain property of the taxp ayer; (iii) filing a certificate of delinquency for record in the County Clerk and County Recorder’s office in order to obtain a lien on certain property
ATTACHMENT B
21 of the taxpayer; and (iv) seizing and selling personal property , improvements, or possessory interests belonging or assessed to the assessee.
Teeter Plan
In 1949, the California Legislature enacted an alternative met hod for the distribution of secured ad valorem property taxes to local agencies. This method, commonly known as the Teeter Plan, is set forth in Sections 4701-4717 of Revenue and Taxation Code of the State of California. The Yolo County Board of Supervisors (the “Boar d of Supervisors”) approved impl ementation of the Teeter Plan in November 1993, both as to general and special taxes entered and collected on the secured tax roll.
Generally, the Teeter Plan provides for a tax distribution pro cedure by which secured roll taxes, special taxes and assessments are distributed to taxing agencie s within a county included in the Teeter Plan on the basis of the tax levy, rather than on the basis of actual tax collections. A county then receives all future delinquent tax payments, penalties and interest, and a complex tax redemption distribution system for all taxing agencies is avoided. In connection with the Teeter Plan, a county can advance to the participating taxing agencies an amount equal to 95% of the tot al then-prior years’ delinquent secured property taxes, 100% of the total then-prior years’ delinquent secured special taxes, including the associated penalties and interest, and 100% of the then-current year’s secured roll levy.
The Teeter Plan remains in effect unless the Board of Supervis ors orders discontinuance. The County policy provides that it may order discontinuance of the Teeter Plan as to special taxes for the next year if the rate of delinquency for a taxing district exceeds 3 % in any Fiscal Year. Unless and until the Board of Supervisors orders discontinuance of the Teeter Plan w ith respect to the Parking CFD, the City is credited with 100% of the sch eduled Special Tax payments wit hout regard to actual amounts collected.
The City can give no assurance, however, that the Teeter Plan will be continued in future years.
If any tax or assessment which was distributed to a Teeter Pla n participant is subsequently changed by correction, cancellation or refund, a pro rata adjustment for the amount of the change is made on the records of the treasurer of the County and the County Au ditor. Such an adjustment would be an offset to future distributions of tax revenues to the Parking CFD.
So long as the County maintains its policy of collecting taxes pursuant to said procedures and the City meets the Teeter Plan requirements, the Parking CFD will receive 100% of the annual installments levied on the Teetered Parcels without regard to actual collect ions in the City. No assurance can be given that the County will continue to include special taxes levied w ithin community facilities districts in the Teeter Plan, and the County could decide to discontinue the inc lusion of such special taxes in the Teeter Plan at any time, or to discontinue the Teeter Plan in its entirety.
ATTACHMENT B
22 Special Tax Formula
Capitalized terms used under this heading and not otherwise defined shall have the same meanings as set forth in the Special Tax Formula. See A PPENDIX D–“RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.”
General. The Special Tax is levied on and collected from each parcel in the Parking CFD subject to the Special Tax as set forth in the Special Tax Formula, a c opy of which is contained in A PPENDIX D– “RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX.” All capitalized terms used in this section will have the meaning set forth in Appendix D.
[Since formation of the CFD, th e Special Tax has been collected at the Maximum Special Tax rate. The City expects to levy the Special Tax at the Maximum Special Tax in the future.]
The Special Tax Formula provides that the Special Tax levy each Fiscal Year is calculated by first determining the “Special Tax Requirement” for such Fiscal Year. The “Special Tax Requirement” is defined in the Special Tax Formula as the amount necessary in any Fiscal Year (i) to pay the principal of and interest on bonds or other i ndebtedness which is due in the calendar year that begins in such Fiscal Year; (ii) to create or replenish the reserve funds; (iii) to cure any delinquencies in the payment of the principal of or interest on b or other indebtedness which have occurred in the prior Fiscal Year or (based on delinquencies in the payment of the Special Tax which have already taken place) are expected to occur in the Fiscal Year in which the Special Tax will be collected; (iv) to pay administrative expenses of the Parking CFD; and (v) to pay the costs of public improvements or public services authorized to be funded by the Parking CFD. The Special Tax Requirement may be reduced in any Fiscal Year by: (a) interest earnings on or surplus balances in funds and accounts for the bonds or other indebtedness to the extent that such earnings or balances are available to apply against d ebt service pursuant to the bond indenture, bond resolution, or other legal document that set forth these terms; (b) proceeds from the collection of penalties associated with delinquent Special Taxes; and (c) any other revenues available to pay debt service on the Bonds as determined by the Administrator.
Pursuant to the Special Tax Formula prior to July 1 of each year the Administrator is required to determine the following for all Parcels of Taxable Property wit hin the Parking CFD: (i) the current Assessor’s Parcel number based upon reference to the most curre nt County Assessor’s Parcel maps; (ii) whether the Parcel is Devel oped/Redeveloped Property or Undeveloped Property; (iii)whether the Parcel is Public Property, Special Use Property or Other Proper ty; (iv) for Parcels of Public Property and Other Property, the Parking Deficiency associated with the building on or associated with the Parcel; (v) for Parcels of Undeveloped Property and other Property, the Acreage of the Parcel; (vi) for Parcels of Other Property, the Proximity Factor; (vii) for Parcels of Othe r Property, the Building Square Footage; and (viii) for Parcels of Other Property, the Building Square Footage that is Special Use Square Footage, if any.
ATTACHMENT B
23 For Fiscal Year 2019-20, the Parking CFD contains 153 parcels o f Taxable Property under the Special Tax Formula comprised o f three parcels classified as “s pecial use,” six parcels classified as “public,” and 144 parcels classified as “other,” each as defined herein.
Table 4
Taxable Property Classifications
Fiscal Year 2019-20
Special Tax
Category
Number of
Parcels of
Taxable
Property
Associated
Square Footage
Associated
Acreage
Total
Fiscal Year
2019-20
Maximum Tax
Special Use Property 3 0 1.05 $490.56
Public Property 6 945,700 227,441.52
[Movie Theater 1 _______ __.__ ____.__]
Other Property 144 2,092,608 40.86 1,009,447.50
Undeveloped 0.00
TOTAL 153 47.47 $1,237,379.58
_______________
Source: Willdan Financial Services.
For purposes of the Special Tax Formula the following terms are defined as follows:
“ Acre” or “ Acreage” means the land area of an Assessor’s Parcel as shown on an As sessor’s Parcel Map, or if the land area is not shown on an Assessor’s P arcel Map, the land area shown on the applicable final subdivision map or other map recorded at the County Recorder’s Office.
“ Acreage Charge” means the Special Tax to be levied on the Acreage of each Par cel of Other Property, as described in the Special Tax Formula.
“ Annual Ticket Sales ” means, in any calendar year, the number of movie tickets sold from operation on the Movie Theater Property in the prior calendar y ear as reported to the City by the theater operator, subject to verification by the City.
“ Building Square Footage” means the square footage within a structure, determined in th e City’s sole discretion that shall be subject to the Special Tax pursuant to the Special Tax Formula.
“ Deficiency Charge ” means the Special Tax to be levied based on the Parking Defic iency for each Parcel of Public Property and Other Property in the Parkin g CFD, as described in the Special Tax Formula.
“ Developed/Redeveloped Property ” means, in any Fiscal Year, all Parcels within the Parking CFD that have had one or more of the following take place before June 30 of the prior Fiscal Year: (i) a building permit for new construction has been issued on a vacan t parcel, (ii) additions that increase the square footage more than 10% have been made to existing buildings, (iii) alterations to or remodeling of existing buildings has taken place, and such alternations or re modeling increase the assessed value of the Parcel more than 50%) and (iv) a change of use within the build ing has occurred which increases the demand for parking by more than 50%.
ATTACHMENT B
24 “ Maximum Special Tax ” means the maximum Special Tax, determined in accordance with the Special Tax Formula that can be levied in any Fiscal Year.
“ Movie Theater Property ” means that Parcel identified in Fiscal Year 2005-06 by Assess or’s Parcel number 139-100-22 and any additional Parcels designated by the City as Movie Theater Property in future Fiscal Years.
As of the date of this Official Statement, the City has not de signated any additional Parcels as “Movie Theater Parcels.” [City to Confirm]
“ Other Property” means, in any Fiscal Year, all Taxable Property within the Pa rking CFD that does not meet the definition of Public Property or Special Use Property as set forth in the Special Tax Formula.
“ Parking Deficiency” means the number of parking spaces determined by subtracting the number of off-street parking stalls provided by an individual Assessor’s Parcel by the number of off-street parking stalls required for that Parcel on the basis of the Zoning Ordi nance Code. If a business establishment includes more than one Assessor’s Parcel, the City may calculat e the Parking Deficiency for the business as a whole and spread the corresponding Maximum Special Tax acc ording to the procedures set forth in the Special Tax Formula. If a business provides more parking sp aces than it requires, the Parking Deficiency assigned to the Parcel may be a negative number. Th e Parking Deficiency for each Parcel in the Parking CFD shall be determined at the sole discretion of t he Director of Housing and Redevelopment.
“ Proximity Charge” means the Special Tax to be levied on each Parcel of Other Property based on the Proximity Factor assigned to the Parcel, as described in the Special Tax Formula.
“ Proximity Factor” means the factor assigned by the Director of Housing and Rede velopment to each Assessor’s Parcel to reflect that Parcel’s proximity to a parking garage(s) or surface parking lot(s).
“ Public Property” means, in any Fiscal Year, any property within the boundaries of the Parking CFD that, as of August 31, 2005, was owned by or leased to, and that continues to be owned by or leased to, the federal government, State of California, City, County or other public agency. Public Property within the Parking CFD as of August 31, 2005 is identified in A ttachment 1 of this Rate and Method of Apportionment of Special Tax. If an Assessor’s Parcel that had been Public Property in any Fiscal Year is subsequently categorized as and taxed as Other Property, such Parcel shall remain Other Property in all future Fiscal Years, even if the Parcel or a building on the Pa rcel is again sold to or leased by the federal government, State of California, City, County or other public agency.
“ Special Use Square Footage ” means, in a building that has a variety of tenants, that port ion of the building that, as of August 31, 2005, was leased to and use d by, and that, in the current Fiscal Year, continues to be leased to and used by, a religious organization, fraternal organization, 501(c)(3) or other tax-exempt non-profit entity. If, As of August 31, 2005, all o f the square footage that was leased within a building was leased by a religious, fraternal and/or non-profit organization, the Assessor’s Parcel on which the building is located shall be categorized as Special U se Property. If Building Square Footage that had been Special Use Square Footage in any Fiscal Year is subsequently categorized as and taxed as Other Property, such Building Square Footage shall remain Other Property in all future Fiscal Years, even if the Square Footage is again sold to or leased by a religious , fraternal and/or non-profit organization.
“ Special Use Property ” means, in any Fiscal Year, any property within the boundaries o f t h e Parking CFD that, as of August 31, 2005, met one of the following criteria, and that continues to meet one of the following criteria:
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25 • The Parcel is owned by or leased to a religious organization, and the structure built on the Parcel is used solely as a place of worship, rectory, convent p rivate school or homeless shelter.
• The Parcel is owned by or leased to a fraternal organization (e.g., Boy Scouts of America, Knights of Columbus, Elks Club), and the structure built on the Parcel is used solely for the activities of the fraternal organization.
• The Parcel is owned by or leased to a 501(c)(3) or other tax-exempt non-profit organization (e.g., American Red Cross, Boys and Girls Club, Th e Salvation Army), and the structure built on the Parcel is used solely for the activities of the non-profit organization.
“ Square Footage Charge ” means the Special Tax to be l evied on Building Square Footage o f Other Property as described in the Special Tax Formula.
“ Taxable Property” means all of the Assessor’s Parcels within the boundaries of the Parking CFD which are not exempt from the Special Tax pursuant to the Special Tax Formula.
“ Undeveloped Property ” means, in any Fiscal Year, all Assessors Parcels of Taxable P roperty that are not Developed/Redeveloped Property as defined in the Special Tax Formula.
Pursuant to the Special Tax Formula, once the Special Tax has been levied on and collected from a Parcel, the Maximum Special T ax that can be collected from th at Parcel will not be reduced regardless of changes in parking deficiency, land use, building square foo tage or Acreage on the Parcel unless the total Maximum Special Tax that can be levied within the Parking CFD after such a reduction is applied is sufficient to provide debt service coverage required by the applicable bond documents.
Maximum Special Tax
Special Use Property. For Fiscal Year 2019-20, there are three Parcels within the Parking CFD classified as “Special Use Property” and the Maximum Special Ta x for each Parcel of Special Use Property is $____.
Commencing July 1, 2006 and each July 1 thereafter, the Maximum Special Tax increased by the lesser of (i) the increase, if any, in the Consumer Price Index of the San Francisco-Oakland-San Jose area for all urban consumers, and (ii) 5%. The Maximum Special Tax for buildings that include Special Use Square Footage, but do not qualify as Special Use Property, are required to be calculated pursuant the Special Tax Formula.
Public Property. For Fiscal Year 2019-20, there are six Parce ls within the Parking CFD classified as “Public Property” and the Maximum Special Tax for each Parcel of Special Use Property is $____.
Each Fiscal Year, the Maximum Special Tax for each parcel of P ublic Property in the Parking CFD is required to be determined as follows:
Step 1. Determine the Parking Deficiency for the Parcel; and
Step 2. Multiply the Parking Deficiency by $44.92, which amoun t shall be increased on July 1, 2006 and each July 1 thereafter, by the lesser of (i) the increase, if any, in the Consumer
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26 Price Index of the San Francisco-Oakland-San Jose area for all urban consumers, and (ii) 5%.
For Fiscal Year 2019-20, the multiplier value is $_________.
Other Property. For Fiscal Year 2019-20, there are 144 parcel s within the Parking CFD classified as “Other Property” and the Maximum Special Tax for each parcel of Other Property is $____.
Each Fiscal Year, the Administrator shall apply the following steps to determine the Maximum Special Tax for each Parcel of Other Property in the CFD:
Step 1. Multiply the Deficiency Charge by the Parking Deficienc y for the Parcel (if the Parking Deficiency assigned to the Parcel is a negative number, this ca lculation will result in a negative number, which will serve as a reduction in the total Maximum Special Tax calculated in Step 5);
Step 2. Determine the Proximity Factor assigned to the Parcel and identify the appropriate Proximity Charge;
Step 3. Identify the Building Sq uare Footage on the Parcel, and multiply the Building Square Footage by the appropriate Building Square Footage Charge per square foot;
Step 4. Multiply the Acreage Cha rge by the Acreage of the Parcel; and Step 5. Sum the amounts determined in Steps 1 through 4 to dete rmine the total Maximum Special Tax assigned to the Parcel for the Fiscal Year, with th e following exception: if the Building Square Footage on a Parcel includes Special Use Sq uare Footage, add an additional $112.31 for Fiscal Year 2005-06, which amount shall increase on July 1, 2006 and each July 1 thereafter, by the lesser of (i) the increase, if any, in the Consumer Price Index of the San Francisco-Oakland-San Jose area for all urban consumers, and (ii) 5%.
Special Tax is not a Personal Obligation
Although the Special Tax constitutes a lien on Taxable Propert y, it does not constitute a personal indebtedness of the property owners of such property. There is no assurance that the property owners will be financially able to pay the Special Tax or that they will pa y such tax even if financially able to do so.
The risk of the property owners not paying the Special Tax is more fully described in “C
ERTAIN RISKS TO
BONDOWNERS AND INVESTMENT CONSIDERATIONS–Payment of the Special Tax is Not a Personal Obligation of the Property Owner.”
(Remainder of this Page Intentionally Left Blank)
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27 Principal Taxpayers
The following table summarizes the top 10 taxpayers in the Park ing CFD based on the Fiscal Year 2019-20 Special Tax levy calculated pursuant to the Special Tax Formula.
Table 5
Community Facilities District No. 2001-1
(Downtown Parking)
Top 10 Taxpayers for Fiscal Year 2019-20
Property Owner
No. of
Parcels
Parcel
Category
Deficiency
Charge
Proximity
Charge
Square
Footage
Charge
Acreage
Charge
Special Tax
Levy
County of San Joaquin 5 Public $181,569.08 $315.73 $904.22 $904.22 $2 25,741.04 City of Stockton 1 Public 19,915.45 817.62 6,737.19 6,737.19 202,900. 76 Gatehouse Media 4 Othe r 27,018.30 2,207.58 15,580.57 15,580.57 108,695.94 Stockton Arena Hotel & Conference Center LLC 1 Othe r 12,086.62 817.62 13,507.08 13,507.08 96,033.16 Open Window Project LLC 13 Othe r 15,009.19 5,641.64 8,620.99 8,620.99 32,807.90 San Joaquin Real Estate Co. Inc. 2 Othe r 15,088.65 1,635.24 3,375.14 3,375.14 25,276.50 Cort Tower LLC 1 Othe r 14,599.60 408.82 879.76 879.76 22,388.38 El Dorado Street Partners et. al. 1 Othe r 16,530.81 817.62 2,344.93 2,344.93 21,673.86 San Joan Regional Transit District 8 Othe r 5,444.87 6,540.96 5,615.41 5,615.41 20,047.36 Taymax National LLC 1 Other 11,949.27 408.82 1,710.46 1,710.46 19,388.78 SUBTOTAL – TOP TEN TAXPAYERS 37 $319,211.83 $19,611.65 $59,275.76 $59,275.76 $774,953.68 All Others 116 Various 206,566.41 73,586.06 107,997.83 75,260.62 462,425.90 TOTAL 153 $525,778.24 $93,197.70 $167,273.59 $134,536.38 $1,237,379.58 ______________
Sources: Willdan Financial Services.
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28 The following table summarizes the top 10 taxpayers in the Parking CFD by total Special Tax levy calculated pursuant to the Sp ecial Tax Formula for the past five Fiscal Years.
Table 6
Community Facilities District No. 2001-1
(Downtown Parking)
Historical Principal Taxpayers
Fiscal Year 2014-15 through Fiscal Year 2018-19
Fiscal Year
Property Owner
Parcel
Category 2014-15 2015-16 2016-17 2017-18 2018-19
SUBTOTAL – TOP TEN TAXPAYERS
All Others Various
TOTAL
______________
Sources: Willdan Financial Services and _________.
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29 Secured Property Tax Levies, Collections and Delinquencies The following table summarizes of p a y m e n t h i s t o r y f o r t a x e s l e vied in the Parking CFD on Taxable Property for the past seven Fiscal Years.
Table 7
Community Facilities District No. 2001-1
(Downtown Parking)
Historical Delinquency Information
Number of Parcels of
Taxable Property Amount
Fiscal Year Levied Delinquent Levied Delinquent
Percent
Delinquent
2012-13 154 0 $1,051,181.26 $0.00 0.00%
2013-14 154 0 1,038,037.88 0.00 0.00
2014-15 154 2 1,066,475.80 5,049.34 1.30
2015-16 154 4 1,092,497.84 7,238.87 2.60
2016-17 154 6 1,110,914.46 9,428.66 3.90
2017-18 154 10 1,153,661.60 15,577.00 6.49
2018-19 153 13 1,189,673.64 30,670.31 8.50
TOTAL 1,077 35 $7,702,442.48 $67,964.18 22.79%
______________
Sources: San Joaquin County and City of Stockton as compiled by Willdan Financial Services. Data is as of September 11, 2019 for Teetered Taxable Property and as of December 3, 2019 for hand billed Taxable Property. See “–Assignment and Pledge of CFD Revenues–Manner of Collection” for a description of Teetered and hand billed Taxable Property.
CERTAIN BONDOWNERS’ RISKS
This section provides a general overview of certai n risk factors which should be considered, in addition to the other matters set forth in this Official Statement, in evaluating an investment in the 2020 Bonds. This section is not meant to be a comprehensive or definitive discussion of the risks associated
with an investment in the 2020 Bonds, and the order in which this information is presented does not necessarily reflect the relative importance of various risks. Potential investors in the 2020 Bonds are advised to consider the following factors, among oth ers, and to review this entire Official Statement to obtain information essential to the ma king of an informed investment decision. Any one or more of the risk factors discussed below, among others, could le ad to a decrease in the market value and/or in the marketability of the 2020 Bonds or the ability of the City to make 2020 Installment Payments. There can be no assurance that other risk factors not discussed herein will not become material in the future.
General
The 2020 Installment Payments are payable solely from Net Parki ng Revenues. If for any of the reasons described below, or for any other reason, the City does not collect sufficient System Revenues to pay Operation and Maintenance Costs, the City will not be oblig ated to utilize any other of its funds, other than amounts available in the 2020 Reserve Account and ce rtain other amounts on deposit in the funds and accounts established under the 2020 Indenture to pay debt service on the 2020 Bonds. See also “S
ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–2020 Reserve Account.”
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30 Rate Covenant is Not a Guarantee of Sufficient Net Parking Revenues The ability of the Authority to pay the 2020 Installment Paymen ts depends on the ability of the Parking Authority to generate Net Parking Revenues in the level s required by the 2020 Installment Purchase Agreement to pay the principal of and interest on the 2020 Bonds. Although the Parking Authority has covenanted in the 2020 Installment Purchase Agreement to impose rates, fees and charges as more particularly described herein under “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–Rate Covenant,” and expects that such rates, fees, and charges will generate Net Parking Revenues in the amounts required by the 2020 Installment Purchase Agreement, there is no assurance that sufficient Net Parking Revenues will result. The covenants of the Parking Authority does not constitute a guarantee that sufficient Net Parking Revenues will be available to pay the 2020 Installment Payments.
System Expenses
There can be no assurance that the projected Operation and Main tenance Costs will be consistent with the descriptions in this Official Statement. Increases in expenses including, but not limited to, labor costs, changes in technology, cou ld require an increase in rate s and charges in order to comply with the rate covenant. Increases in Operating and Maintenance Costs co uld reduce, without corresponding increases in rates and charges could reduce Net Parking Revenue s available to make the 2020 Installment Payments.
Parking Demand
There can be no assurance that the demand for Parking will be c onsistent with the levels contemplated in this Official Statement. A reduction in the de mand for parking in the downtown area of the City could require increases in rates or charges in order t o comply with the rate covenant in the 2020 Installment Purchase Agreement.
Limited Recourse on Default
If the Parking Authority defaults on its obligation to pay the 2020 Installment Payments or other Parity Obligations, the Trust ee has the right to accelerate the total unpaid principal amount of the 2020 Installment Payments outstanding and interest accrued thereon. In the event of a default there can be no assurance that the Parking Authority will have sufficient funds to pay the debt service from Net Parking Revenues. For so long as the 2020 Bonds are outstanding, Parit y Obligations, including the 2020 Installment Payments, cannot be accelerated without the prior w ritten consent of the insurer of the 2020 Bonds. The Authority and the Parking Authority may agree with other bond insurers or financial institutions that Parity Obligations cannot be accelerated without the consent of such insurer or financial institution.
Risk Factors Relating to the Parking Facilities
General Operating Risks. Future revenues and expenses relating to the Parking Facilitie s are generally subject to, among other things, the capabilities of m anagement, demand for parking, [competition from other parking facility providers in the downt own area of the City,] rates, costs, governmental regulation, and othe r factors, including economic developments in City and changes in the general economy which could adversely affect the revenues of th e Parking Authority and, consequently, the availability of Net Parking Revenues available to pay the p rincipal of and interest on the 2020 Bonds.
The future financial condition of the Parking Authority could a lso be adversely affected by, among other things, legislation, zoning changes, regulatory actions, reduced demand for parking facilities arising from
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31 demographic changes, and a number of other conditions which are unpredictable, including the risk factors set forth herein.
General Real Estate Risks. There are many risks involved in the operation of the Parking Facilities which may substantially affect the generation of Net Parking Revenues. Such risks include possible adverse use of adjoining land, fires or other casualty , condemnation, changes in the demand for such facilities, competing development outside of the downtown area of the City, and general economic conditions.
Risks of Damage and Destruction. If a Parking Facility is damaged or destroyed by earthquake, fire or other events, and such d amage or destruction substantia lly interferes with the operation of such parking garage, the Gross Revenues could be adversely affected. The terms of the 2020 Installment Sale Agreement require the Parking Authority to procure and maintain fire and extended coverage, earthquake insurance (if the City in its discretion determines that earthq uake insurance is available on the open market from reputable insurance companies at reasonable cost), business interruption insurance and public liability insurance at certain stated minimum coverage levels on the Parking Facilities while any of the 2020 Bonds are Outstanding. The proceeds of such insurance and the proceeds of any condemnation awards with respect to a parking garage will be deposited into the Insurance and Condemnation Proceeds Fund under the Indenture and used to either repair or replace the damaged, destroyed or taken property, or if the City elects not to repair or replace damaged, destroyed or taken property, to redeem the 2020 Bonds.
Local Economy and Tourism. The transient use of the Parking Facilities is and will be dir ectly related to the level of business, leisure, and shopping activit y in the downtown area of the City. The level of business and shopping activity could be adversely affected b y a downturn in the general economic condition within the region or the City. To the extent that the regional economy suffers a long-term or severe recession, business, leisure, and shopping activity in t he downtown area of the City could decrease significantly, thereby reducing the transient use of the Parking Facilities and the Net Parking Revenues.
[Competing Facilities.] [Description, if any - To Come]
Constitutional and Statutory Restrictions on Fees and Charges The City is subject to State and federal laws that restrict its operations. Such laws may be amended at any time. Several c onstitutional and statutory limitations on taxes, revenues and expenditures exist under State law that could limit the ability of the City to impose and rates and charges for its Parking Facilities. A summary of the currently effective limitations is set forth below.
General. On November 5, 1996, Califor nia voters approved Proposition 2 18, known as the “Right to Vote on Taxes Act.” Proposition 218 added Articles X III C and XIII D to the State Constitution, which affect the ability of local governments, i ncluding charter cities such as the City, to levy and collect both existing and future taxes, assessments, a nd property-related fees and charges.
Proposition 218, which generally became effective on November 6 , 1996, changed, among other things, the procedure for the imposition of any new or increased proper ty-related “fee” or “charge,” which is defined as “any levy other than an ad valorem tax, a special ta x or an assessment, imposed by a local government upon a parcel or upon a person as an incident of pro perty ownership, including user fees or charges for a property related service” (and referred to in thi s section as a “property-related fee or charge”).
On
November 2, 2010, California voters approved Proposition 26, known as the “Supermajority Vote to Pass New Taxes and Fees Act.” Section 1 of Proposition 26 declares that Proposition 26 is
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32 intended to limit the ability of the State Legislature and loca l government to circumvent existing restrictions on increasing taxes by defining the new or expande d taxes as “fees.” Proposition 26 amended Articles XIII A and XIII C of the State Constitution. The amen dments to Article XIII A limit the ability of the State Legislature to impose higher taxes (as defined in Proposition 26) without a two-thirds vote of the Legislature. Proposition 26’s amendments to Article XIII C broadly define “tax,” but specifically exclude, among other things:
(i) A charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege. (ii) A charge imposed for a specific government service or prod uct provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.
(iii) A charge imposed as a condition of property development. (iv) Assessments and property-related fees imposed in accordance with the provisions of Article XIII D.
Property-Related Fees and Charges. Under Article XIII D, before a municipality may impose or increase any property-related fee or charge, the entity must give written notice to the record owner of each parcel of land affected by that fee or charge. The municipalit y must then hold a hearing upon the proposed imposition or increase at least 45 days after the writ ten notice is mailed, and, if a majority of the property owners of the identified parcels present written prote sts against the proposal, the municipality may not impose or increase the property-related fee or charge.
Further, under Article XIII D, revenues derived from a property-related fee or charge may not exceed the funds required to provide the “property-related service” and the entity may not use such fee or charge for any purpose other than that for which it imposed the fee or charge. The amount of a property- related fee or charge may not exceed the proportional cost of t he service attributable to the parcel, and no property-related fee or charge may be imposed for a service unl ess that service is actually used by, or is immediately available to, the owner of the property in question.
Initiative Power . In addition, Article XIII C states that “the initiative power shall not be prohibited or otherwise limited in matters of reducing or repea ling any local tax, assessment, fee or charge. The power of initiative to affect local taxes, assessm ents, fees and charges shall be applicable to all local governments and neither the Legislature nor any local government charter shall impose a signature requirement higher than that applicable to statewide statutory initiatives.” Parking Facility Rates and Charges . The Parking Authority believes the rates and charges for the Parking Facilities do not constitute “taxes” under Article XIII C as revised by Proposition 26 because, as described in subsection 1(e)(7) of Article XIII C, they are “property-related fees imposed in accordance with the provisions of Article XIII D” (and are also charges fo r a “property-related service” as defined in subsection 2(g) of Article XIII D) and because, as described in subsection 1(e)(2) of Article XIII C, they are charged for parking, “a specific government service or prod uct provided directly to the payor that is not provided to those not charged.”
The Parking Authority and the City cannot predict the future im pact of Proposition 218 on the finances of the Parking Authority, and no assurance can be given that, due to subsequent interpretations of Proposition 218 by the courts, Proposition 218 will not have a material adverse impact on the Net Parking
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33 Revenues of the Parking Authority. The Parking Authority and th e City believe that they have complied with the required procedures in connection with establishing and imposing parking rates and charges.
Climate Change
The adoption by the State of the California Global Warming Solu tions Act of 2006 (AB 32) and subsequent companion bills demons trate the commitment by the St ate to take action and reduce greenhouse gases (“GHG”) to 1990 levels by 2020 and 80% below 1 990 levels by 2050. The State Attorney General’s Office, in accordance with SB 375, now requi res that local governments examine local policies and large-scale planning efforts to determine how to reduce greenhouse gas emissions.
Additionally, in 2006, the State adopted Senate Bill No. 32, wh ich established a revised Statewide GHG emission reduction target of 40% below 1990 levels by 2030.
Following the adoption of its 2035 General Plan, which outlined development goals and stipulations for the reduction of City -wide GHG emissions, the City was sued by the Sierra Club allegi ng that the City had violated CEQA in approving the 2035 General Plan. In order to avoid further litigation, in October 2008, the City entered into a settlement agreement with the Sierra Club and the Attorney General, who also raised concer ns about the adequacy of the EIR under CEQA, including but not limited to the failure of the EIR to incorporate enforceable measures to mitigate GHG emission impacts that would result for the adoption of the 2035 General Plan. The se ttlement agreement required the City to address GHG reductions in a variety of ways, including through the preparation of a Climate Action Plan (discussed below) and programs to support the development of 18 ,400 new housing units within the City as it existed in 2008 with at least 4,400 of those units located within the greater downtown area. As a result, the City enacted the Envision Stockton 2040 General Plan (the “2040 General Plan”) on December 4, 2018. The 2040 General Plan represents substantial changes in policy framework for future development in the City compared to the 2035 General Plan, with a fundamental shift from emphasizing growth in “outfill” areas on the periphery of the City to focus ing new construction a nd redevelopment in existing “infill” neighborhoods. A copy of the 2040 General Plan is available on the City’s website.
During the development of its C limate Action Plan (a “CAP”), the City evaluated the effect of the State’s reduction measures and evaluated a wide range of potential local GHG reduction measures to examine the feasibility, cost, and benefits of potentially meeting the interim reduction target. Although technically feasible to meet the interim reduction target, it was City’s judgment that meeting the target would require some measures or actions that were infeasible und er then-current economic conditions in the City, would result in short- and near-term financial impacts that could affect economic recovery in t he City, and would affect the ability of the City to invest in ene rgy efficiency and other GHG reduction strategies in the long run.
The City designed the CAP to rely, for the most part, on voluntary, incentive -based measures for existing development, flexible performance -based measures for new development, and only uses mandatory measures for new development where required by prior State or local mandates (such as for water conservation) or where advantageous to the City. By providing flexibility, the intent is that the City government, residences, and businesses would employ the most co st-effective methods to reduce GHG emissions.
The City approved a CAP on December 2, 2014 that includes an i nterim GHG emissions reduction goal for the purposes of initial CAP development of 15% below 2005 levels by 2020, and the City certified the Final EIR for the 2040 General Plan on December 4, 2018.
Climate change concerns are leading to new laws and regulations at the federal, State and local levels. Research suggests that the State will experience hotte r and drier conditions, reductions in winter
ATTACHMENT B
34 snow and increases in winter rains, sea level rise, significant changes to the water cycle, increased occurrences of extreme and unpredictable weather events, and in creased catastrophic wildfires and severity of flood events. See al so “–Risk of Earthquake and Ot her Natural Disasters–Flooding.” The compound impacts of which will affect economic systems throughout the State, including within the City.
The City is unable to predict the impact that such laws and regulations, if adopted, and the effects of climate change will have on the Net Parking Revenues, however, the effects could be material.
Risk of Earthquake and Other Natural Disasters
Earthquake. There are several active geological faults in the State that have potential to cause serious earthquakes that could result in damage within the City to the Parking Facilities, buildings, roads, bridges, and other property. The City is located in a zone 3 seismic area. Seismic zones aid in identifying and characterizing certain geological conditions and the risk o f seismic damage at a particular location, and are used in establishing building codes to minimize seismic damage. The five seismic zones are:
zone 0 (no measurable damage), zone 1 (minor damage), zone 2 (m oderate damage), zone 3 (major damage) and zone 4 (major damage and greater proximity than zon e 3 to certain major fault systems).
While the City is not located in any existing special study zon e delineated by the State Division of Mines and Geology as an area of known active faults, it is possible that new geological faults could be discovered in the area and that an earthquake occurring on such faults could result in damage of varying degrees of seriousness to property and infrastructure in the City, including the Parking Facilities.
In the event of a severe seismic event in or around the City, t here could be substantial damage to the Parking Facilities resulting in a reduction of Net Parking Revenues. Such reduction of Net Parking Revenues could have a material adverse effect on the City’s abi lity to make timely payments of 2020 Installment Payments with respect to the 2020 Bonds.
Flooding
General. The City is located within the San Joaquin Valley, a nd as a result, is subject to flooding.
Levees protect much of the City from potential flooding threats . The design and scope of these levees are subject to review by the Federal Emergency Management Agency (“ FEMA”), which periodically issues Flood Insurance Rate Maps (“FIRMs”), and the State which has im posed additional flood risk considerations through the State of California Central Valley Flood Protection Act of 2008. See “–Senate Bill 5.”
Past flooding disasters, such as Hurricane Katrina and Superst orm Sandy, resulted in FEMA reevaluating local flood risk and protection requirements, and in 2009, FEMA completed a comprehensive update of the FIRMs for San Joaquin County, inclu ding all the incorporated cities in the County, under the Map Moderniza tion Program. The final FIRM pl aced approximately 5,000 parcels in the County within a 100-year floodplain and decertified the Smith Canal, a man-made backwater slough of the San Joaquin River adjacent to the Sacramento-San Joaquin Delta located in the central part of the City. The downtown area of the City that is protected by levees providing 100-year flood protection.
Senate Bill 5. The State of Calif ornia Central Valley Flood Pr otection Act of 2008, commonly referred to as SB 5, adds additio nal flood risk considerations for land use planning and sets a higher, 200- year level of flood protection for the Sacramento-San Joaquin Valley. A 200-year flood event statistically occurs on average once every 200 years or has a 0.5% chance of occurring in any given year.
A 200-year floodplain map has been developed for the Stockton area showing anticipated depth of flooding throughout the Stockton metropolitan area. This map includes a significant portion of the
ATTACHMENT B
35 western side of the City near Interstate 5 and some areas in th e central and eastern side of the City that would experience flooding during a 200-year flood event.
Pursuant to SB 5, cities and counties within the Central Valle y, including the City, were required to amend their General Plans by July 2, 2015 and amend their zo ning ordinances by July 2, 2016 to provide for this “urban level of flood protection.”
In June 2015, the City Council adopted amendments to the Genera l Plan to comply with SB 5.
The amendments included, among other things, increased building setbacks for flood fighting along levees, requirements to elevate buildings above the floodplain or use flood-resistant building materials for development in areas identified as flood hazard zones on federa l flood maps, and streamlining the process of making specific findings for development of residential and commercial land uses.
The City is participating in a joint exercise of powers authority with other communities to finance and construct the improvements ne cessary to satisfy the 200-year floodplain requirement. These levee improvements are being undertaken by the United States Army Cor p of engineers under Congressional authorization and are being funded from a combination of federal grants, bonds secured by assessments levied within various flood control districts, and impact fees and other financial requirements imposed on developers in certain areas.
The City does not believe that the costs of maintaining 100-yea r floodplain status and achieving compliance with the 200-year floodplain requirement of SB 5 wil l materially impact the ability or willingness of customers to patronize the Parking Facilities. There can be no assurance that FEMA will not revise its maps in a manner that jeopardizes the City’s existing 100-year floodplain status.
Risk Management and Insurance
The Deputy Director of Human Resources of the City serves as th e City’s Risk Manager, who oversees City personnel that handle claims and loss control act ivities, for the prevention and mitigation of property, liability, and employee claims for injury or damage. The City has maintained a program of self- insurance for many years. The City participates in two public entity insurance risk pools: the California Joint Powers Risk Management Authority (“CJPRMA”) and the California State Association of Counties- Excess Insurance Authority (CSAC-EIA) for various risk pooling and financing. For Fiscal Year 2019-20, excess pooled coverage for the self-insured general liability p rogram is provided through the CJPRMA with an excess policy limit of $40,000,000 subject to a self-in sured retention (SIR) of $1,000,000; auto damage coverage is provided through Alliant Insurance Company a nd has a policy deductible of $25,000 per claim; and property coverage is provided through an insured p r o g r a m w i t h C J P R M A w i t h a deductible of $250,000 per occurrence (excluding earthquake dam age to any of its facilities). The Parking Facilities are covered by the CJPRMA and CSAC-EIA Insurance Programs.
Limitations on Remedies
The ability of the Parking Authority to comply with its covenan ts under the 2020 Installment Purchase Agreement and to generate Net Parking Revenues suffici ent to pay principal of and interest on the 2020 Bonds 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 vo ters, property owners, taxpayers or persons obligated to pay assessments, fees and charges. See “–C onstitutional and Statutory Restrictions on Fees and Charges; Change in Law.” Furthermore, the remedies available to the owners of the 2020 Bonds upon the occurrence of an event of default under the 2020 Installment Purchase Agreement are in many respects dependent upon judicial actions which are often s ubject to discretion and delay and could prove both expensive and time consuming to obtain.
ATTACHMENT B
36 In addition, enforcement of remedies may be limited by equity p rinciples; 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 p olice 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 federa l or state government, if initiated, could subject the Owners of the 2020 Bonds to judicial discretion and interpretation of their rights in bankruptcy or otherwise, and consequently may entail risks of d elay, limitations, or modification of their rights.
In addition to the limitations on remedies contained in the 2020 Installment Purchase Agreement, the rights and obligations under the 2020 Installment Purchase Agreement may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable pr inciples, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies again st cities in the State. The opinion delivered by Bond Counsel, in connection with the issuance of the 2020 Bo nds, is subject to such limitations. See APPENDIX G–“PROPOSED FORM OF OPINION OF BOND COUNSEL.” In the event the City fails to comply with its covenants under the 2020 Installment Purchase Agreement or the Authority fails to pay principal of and interest on the 2020 Bonds, there can be no assurance of the availability of remedies adequate to protect the interest of the holders of the 2020 Bonds.
Cybersecurity
The City and the Parking Facilities, like many other public and private entities, rely on computer and other digital technology a nd systems to conduct its operati ons. The City and its departments, including the Parking Authority, are potentially subject to multiple cyber threats including, but not limited to, hacking, viruses, malware, ransomware, and other attacks on computers and other sensitive digital networks and systems. Entities or individuals may attempt to gain unauthorized access to City systems for the purposes of misappropriating assets or information or causi ng operational disruption or damage. The City has adopted security awarene ss training, incident response reporting protocols, and security policies, which are reviewed annually, to identify potential vulnerabilities and proactively mitigate them. The City maintains insurance coverage for cyber threat losses if a succe ssful breach occurs, however, the City makes no representation that such insurance would be sufficient to cover all losses in the event of a material and sustained cyber breach. There have been, however, only limited cyber-attacks on the computer systems of the City and the Parking Authority. [Confirm] No assurances can be given that the security and operational co ntrol measures of the City and the Parking Authority will be successful in guarding against any and each cyber threat and attack. The results of any attack on the computer and information technology system s of the City could have a material adverse impact on the operations and finances of the City and t he Parking Authority and damage the digital networks and systems. The resulting impacts on the ope rations of the City and of the Parking Authority and the costs of remedying any such damage could be m aterial and result in a delay of payments of the 2020 Installmen t Payments or the ability of the City to comply with its reporting obligations under the Continuing Disclosure Certificate.
Bankruptcy
The Parking Authority, being an enterprise department of the Ci ty, likely cannot itself file for bankruptcy. While an involuntary bankruptcy petition cannot be filed against the City, the City is authorized to file for bankruptcy under certain circumstances. Should the City file for bankruptcy, there could be adverse effects on the holders of the 2020 Bonds.
ATTACHMENT B
37 To the extent that Net Parking Revenues are “special revenues” under the United States Bankruptcy Code (the “Bankruptcy Code”), then Net Parking Reven ues collected after the date of the bankruptcy filing should be subject to the lien of the 2020 Ins tallment Purchase Agreement. If any or all of the Net Parking Revenues are determined not to be “special r evenues,” then any such amounts collected after the commencement of the bankruptcy case will li kely not be subject to the lien of the 2020 Installment Purchase Agreement. The holders of the 2020 Bonds may not be able to assert a claim against any property of the City other t han the Net Parking Revenues, a nd if any or all of the Net Parking Revenues are no longer subject to the lien of the 2020 Installment Purchase Agreement, then there may be limited, if any, funds from which the holders of the 2020 Bonds are entitled to be paid.
The Bankruptcy Code provides that “special revenues” can be applied to necessary operating expenses of the project or system, before they are applied to other obligations. This rule applies regardless of the provisions of the transaction documents. It is not clear precisely which expenses would constitute necessary operating expenses, and any definition in the transaction documents may not be applicable.
If the City is in bankruptcy, the parties (including the Truste e and the holders of the 2020 Bonds) may be prohibited from taking any action to collect any amount from the City or to enforce any obligation of the City, unless the permission of the bankruptcy court is o btained. These restrictions may also prevent the Trustee from making payments to the holders of the 2020 Bon ds from funds in the Trustee’s possession. The rate covenants (see “S
ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS–Rate
Covenant”) may not be enforceable in bankruptcy by the Trustee or the holders of the 2020 Bonds.
Net Parking Revenues are deposited with and in the City Treasur y and may be commingled with other City funds. See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS.” If the City goes into bankruptcy, the City may not be required to turn over to t he Trustee any Net Parking Revenues that are in its possession at the time of the bankruptcy filing. In addition, if the City has possession of Net Parking Revenues (whether collected before or after commencement of the bankruptcy) and if the City does not voluntarily turn over such Net Parking Revenues to the Trustee, it is not clear what procedures the Trustee and the holders of the 2020 Bonds would have to fol low to attempt to obtain possession of such Net Parking Revenues, how m uch time it would take for such procedures to be completed, or whether such procedures would ultimately be successful.
The City may be able to borrow a dditional money that is secured by a lien on any of its property (including the Net Parking Revenues), which lien could have priority over the lien of the 2020 Installment Purchase Agreement, or to cause so me of the Net Parking Revenue s to be released to it, free and clear of lien of the 2020 Installment Purchase Agreement, in each case a s long as the bankruptcy court determines that the rights of the Trustee and the holders of the 2020 Bonds will be adequately protected.
If the City is in bankruptcy it may be able, without the consent and over the objection of the Trustee and the holders of the 2020 Bonds, to alter the priorit y, interest rate, principal amount, payment terms, collateral, maturity dates, payment sources, covenants, and other terms or provisions of the Indenture, 2020 Installment Purchase Agreement, and the 2020 Bonds, or the 2020 Installment Payments, as long as the bankruptcy court determines that the alterations are fair and equitable.
There may be delays in payments on the 2020 Bonds while the court considers any of these issues. There may be other possible effects of a bankruptcy of the City that could result in delays or reductions in payments on the 2020 Bonds, or result in losses t o the holders of the 2020 Bonds.
Regardless of any specific adverse determinations in a City ban kruptcy proceeding, the fact of a City bankruptcy proceeding could have an adverse effect on the liquidity and value of the 2020 Bonds.
ATTACHMENT B
38 The City invests Net Parking Revenues in the City Pool. Should those investments suffer losses, Net Parking Revenues may be lower than expected, and there may be delays or reductions in payments on the 2020 Bonds.
Secondary Market
There can be no guarantee that there will be a secondary market for the 2020 Bonds or, if a secondary market exists, that the 2020 Bonds can be sold for an y particular price. Occasionally, because of general market conditions or because of adverse history or e conomic prospects connected with a particular issue, secondary marketing practices are suspended o r 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.
[Risks Associated with Bond Insurance]
[In the event of default of the payment of principal or intere st with respect to the 2020 Bonds when all or some becomes due, any owner of the 2020 Bonds shall have a claim under the Policy for such payments. See “B OND INSURANCE” and A PPENDIX H–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY.” However, in the event of any acceleration of the due date of such principal by reason of optional redemption or acceleration resulting from default or o therwise, the payments are to be made in such amounts and at such times as such payments would have been due had there not been any such acceleration. The Policy does not insure against redemption pr emium, if any. The payment of principal and interest in connection with optional prepayment of the 2020 Bonds by the Authority which is recovered by the Authority from the bond owner as a voidable pr eference under applicable bankruptcy law is covered by the insurance policy, however, such payments will be made by the Bond Insurer at such time and in such amounts as would have been due absence such pr epayment by the Authority unless the Bond Insurer chooses to pay such amounts at an earlier date.
Under most circumstances, defau lt of payment of principal and interest does not obligate acceleration of the obligations of the Bond Insurer without app ropriate consent. The Bond Insurer may direct and must consent to any remedies and the consent of the Bond Insurer may be required in connection with amendments to any applicable bond documents.
In the event the Bond Insurer is unable to make payment of principal and interest as such payments become due under the Po licy, the 2020 Bonds are payabl e solely from the moneys received pursuant to the applicable bond documents. In the event the Bo nd Insurer becomes obligated to make payments with respect to the 2020 Bonds, no assurance is given that such event will not adversely affect the market price of the 2020 Bonds or the marketability (liquidity) for the 2020 Bonds.
The long-term insured rating on the 2020 Bonds is dependent in part on the financial strength of the Bond Insurer and its claim paying ability. The financial s trength and claims paying ability of the Bond Insurer are predicated upon a number of factors which coul d change over time. No assurance is given that the long-term ratings of the Bond Insurer and of the ratings on the 2020 Bonds insured by the Bond Insurer will not be subject to downgrade and such event co uld adversely affect the market price of the 2020 Bonds or the marketability (liquidity) for the 2020 Bonds. See “R ATINGS.”
The obligations of the Bond Insurer are contractual obligation s and in an event of default by the Bond Insurer, the remedies available may be limited by applicab le bankruptcy law or state law related to insolvency of insurance companies.
ATTACHMENT B
39 None of the Authority or the Underwriter have made independent investigation into the claims paying ability of the Bond Insur er and no assurance or represen tation regarding the financial strength or projected financial strength of the Bond Insurer is given. Thus, when making an investment decision, potential investors should carefully consider the ability of th e Authority to pay principal and interest on the 2020 Bonds and the claims pa ying ability of the Bond Insure r, particularly over the life of the investment. See “B
OND INSURANCE” for further information provided by the Bond Insurer and APPENDIX H–“SPECIMEN MUNICIPAL BOND INSURANCE POLICY” for the Policy, which includes further instructions for obtaining current financial information concerning the Bond Insurer.]
Initiatives; Changes in Law
In recent years several initiative measures have been proposed or adopted which affect the ability of local governments to increase taxes and rates. Proposition 2018 which added Article XIII C and Article XIII D to the State Constitution was adopted as a measu re that qualified for the ballot through California’s initiative process. From time to time, other init iative measures could be adopted, which may place further limitations on the ability of the State, the City , or local districts to increase revenues or to increase appropriations which may affect the City’s revenues or its ability to expend its revenues. There is no assurance that the electorate or the State Legislature wi ll not at some future time approve additional limitations which could affect the ability of the Parking Autho rity to implement rate increases which could reduce Net Parking Revenues and adversely affect the security for the 2020 Bonds.
CITY
City is a municipal corporation and charter city incorporated i n 1850. The City is the county seat of San Joaquin County and is located in California San Joaquin Valley, 78 miles east of the San Francisco Bay Area, 345 miles north of Los Angeles and 45 miles south of Sacramento. San Joaquin County is bounded by Sacramento County on the north, Stanislaus County on the south, Contra Costa County and Alameda County on the west and Amador County, Calaveras County and Stanislaus County on the east.
Certain economic and demographic information with respect to th e City is contained in A
PPENDIX A–“GENERAL ECONOMIC AND DEMOGRAPHIC INFORMATION CONCERNING THE CITY OF STOCKTON.” This information concerning the City is presented as general ba ckground information only. The 2020 Bonds are secured solely by the 2020 Installment Payme nts and funds and accounts established under the 2020 Indenture, and not by the general fund of the City. See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS.”
THE AUTHORITY
The Authority was created by a Joint Exercise of Powers Agreeme nt, dated June 18, 1990 (the “JPA Agreement”), between the C ity and the former Redevelopment Agency of the City of Stockton.
The JPA Agreement was entered into pursuant to the Joint Exercise of Powers Act, Chapter 5 of Division 7 of Title 1 of the Government Code of the State. The Authority was created for the purpose of facilitating the financing or refinancing public improvement facilities within the City.
Pursuant to the terms and conditions of an Associate membership Agreement, dated as of _______ 1, 2020 (the “Associate Membership Agreement”), by and between the Authority and the Parking Authority, the Parking Authority is an Associate member of the Authority. The purpose of the Associate Membership Agreement is to facilitate financing of th e acquisition by the Parking Authority of
ATTACHMENT B
40 Public Improvements (as defined in the JPA Agreement}necessary for the governmental operation of the Parking Authority.
THE PARKING AUTHORITY
The Parking Authority is a public body established by the City Council by the Parking Authority Resolution No. 2013-12-17-1209 adopted by the City Council of the City on December 17, 2013 pursuant to the State Streets and Highways Code to operate, maintain and construct the parking facilities in the downtown area of the City. The Parking Authority was established by the City in 2013 as part of the City’s Settlement of its obligations with respect to the 2004 P arking Bonds. “See “P LAN OF FINANCE –
Background.”
The Mayor and the City Council of the City serve as the Chair and Members of the Parking Authority. All revenues derived from the operation of the Park ing Facilities are collected by the City on behalf of the Parking Authority and are deposited into the [Par king Enterprise Fund], which is operated as an enterprise fund of the City within the Economic Development Department.
For Fiscal Year 2019-20, the Parking Authority has five budgeted full-time equivalent employees.
The Parking Authority also receives services from other departm ents within the City, including engineering, administration, construction, development and environmental control.
PARKING FACILITIES
Description
The City long operated parking facilities in the downtown area including open parking lots, parking garages and on-street parking facilities. The Parking Authority also operates parking meters in the downtown and nearby areas. The City’s downtown features a movie theatre, as well as other visitor attractions such as a minor league ballpark, arena, and marina which offer a variety of activities, requiring a comprehensive and customer focused approach to parking.
Parking Facilities consist of [103] on-street pay-by-plate mach ines that accept coins and credit cards, five parking garages, 11 surface parking lots and five leased parking lots.
A total of 6,295 parking spaces consisting metered parking (1,2 00 spaces ), Parking Authority owned garages and lots (4,232 spaces), and City leased lots (86 3 spaces) cover an approximately 10 square block area of the downtown area of the City. For the lo cation of the garages and lots, see the map on page __.
ATTACHMENT B
41 Parking Garages and Lots . The majority of the parking spaces are owned by the Parking Authority. A summary description of each parking facility and the location is summarized below:
Table 8
City of Stockton Parking Authority
Parking Facilities
Facility Name Location
Total
Spaces Use
Hourly
Rate
Monthly
Rate
Event
Rate
Parking Meters Various Downtown Area Locations 1,200 $1
Parking Authority Owned Garages
Arena Garage 310 W Fremont Stree t 5 91 Event Garage 2 $35 Channel Garage 350 East Channel Stree t 3 31 Pay Garage Monthly only 27 5 Coy Garage 103 North Hunter Stree t 569 Public Monthly & Hourly 27 5 Market Garage 430 East Market Stree t 782 Public Monthly & Hourly 27 5 SEB Garage 15 North El Dorado Street 721 Public Monthly & Hourly 2 75 Subtotal Garages 2,994
Parking Authority Owned Lots
Civic Lot 601 & 603 North Center Stree t 102 Free Lot, Pay per Event 2 __ Edison Lot 425 North Edison Stree t 1 60 Pay per Event 2 10 Fremont East Lot 205-345 West Fremont Stree t 133 Pay per Event 2 15 Fremont West Lot 401-447 West Fremont Stree t 50 Pay per Event 2 15 Lot F 359 East Market Street 7 8 Pay Public Lot 2 55
Lot J 29 North California Street 41 Pay Public Lot 2 55 Lot/Garage K 31 North American Stree t 37 Pay Public Lot 2 75 Lot L 24 North American Street 90 Pay Public Lot 2 47
Lot Z 345 North Hunter Street 4 0 City Staff Only 2 Free North Lot 404 West Fremont Stree t 1 82 Pay per Event, Ports & Heat use during games 2 15 West Lot 300 West Harrison Street 325 Port’s Primary users, Pay per Event 2 15 Subtotal Lots 1,238
SUBTOTAL PARKING AUTHORITY OWNED PARKING 5,432
Leased Parking
Lot N S side of Washington between Hunter & San Joaquin 124 Permit Lo t 25 6 Lot O S side of Washin gton between San Joaquin & Sutter 226 Pay Public Lot 2 44 Lot R S side of Washington between California & American 287 Permit Lo t 24 4 Lot S S side of Washin gton between Sutter and California 90 Reserved Lo t 2 44 EDD Lot W side of Commerce between Oak & Fremont 136 Reserved Lot, Pay per Event 2 15 SUBTOTAL LEASED PARKING 8 63
TOTAL SPACES AND METERS 6 ,295
_______________
Source: Parking Authority.
ATTACHMENT B
42 The following is a location map of the Downtown Parking garages and lots operated by the Parking Authority. [Revised map in process]
ATTACHMENT B
43 Parking Meters
Parking at meters is enforced, Monday through Friday, from 9 a. m. to 6 p.m. Meters have limits ranging from 30 minutes to 10 hours, depending on the location; signs are posted to indicate limitation.
Effective September 1, 2015, use of PayPal and credit cards to purchase time on parking meters using a cell phone mobile app became availa ble. Meters are marked with stickers displaying the website address to download the app toll-free number. [Currently, coins can also be used in meters.] [City to Confirm]
During Fiscal Year 2016-17 through Fiscal Year 2017-18 more nea rly 1,600 coin-only parking meters in the downtown area were stolen or vandalized. The the f t o f t h e m e t e r s r e s u l t e d i n a l o s s o f approximately $700,000 in revenues to the Parking Authority. I n [Month] 2019, the City completed the replacement of the coin-only meters with the 105 pay-by-plate p arking machines, so called “smart meters.” These smart meter pay stations are [solar powered]. [Describe acquisition costs]
Management of the Parking Facilities
The Parking Facilities are manage d by SP Plus Corporation (the “Parking Operator”) pursuant to the terms and conditions of a _________, dated ______ (the “Par king Agreement”) by and between the Parking Operator and the Parking Authority. The Parking Operat or is responsible for and manages all parking (garages, lots, and meters) in the Downtown area of the City and is responsible [for managing, operating, and administering the Parking Facilities; collecting revenue; maintaining the Pay-by-plate parking systems; administering th e monthly and residential parking permits; customer service, coordinating parking matters for juror parking, with local businesses, and for events; and providing advisory services to the Parki ng Authority, including recommend ations on rates, service enhancements, and implementation of municipal parking “best practice.”] [Summary of current compensation agreement. – To Come] The term of the Parking agreement expires on _______, 2019. [City to Review and Update]
On October 24, 2019, the City issued a Request for Proposals to qualified parking management firms to manage, operate, and administer the Parking System for an initial term of five-years, with up to two, three-year extensions. Proposals are due no later than De cember 5, 2019 and the City expects to award the contact [to the lowest responsible bidder] in late January 2020, with a contract commencement date of April 1, 2020. The responsibilities of the new parking operator are expected to be substantially similar to those in the current Parking Agreement.
The Parking Authority receives administrative and overhead supp ort services from the [Economic Development Department] of the City and the City and is charged for these services through an interdepartmental cost allocation system.
Capital Improvement Program
The City maintains a five-year capital plan (the “CIP”) for the budgeting and planning of public projects throughout the City. The adoption of the Citywide CIP is governed by the City Charter. The CIP is updated annually by the City Council based upon available fu nding sources, anticipated capital needs and project priority.
The most recent CIP for 2019-2024 includes approximately $500,000 in Parking Facilities projects, excluding the 2020 Improvements [and projects for whi ch funds have already been appropriated but have not been expended]. The Parking Authority expects to fund the Parking Facilities projects included in the CIP for 2019-2024 with Parking Revenues availab le after the payment of Operation and Maintenance Costs, and the 2020 Installment Payments. [Confirm]
ATTACHMENT B
44 Employee Benefits
The City contributes to two pension plans on behalf of Parking Facilities employees: The Miscellaneous Plan of the City of Stockton (the “Miscellaneous Plan”), an agent multiple–employer defined benefit plan administered by the California Employees’ Retirement System (“CalPERS”) and the City of Stockton Retirement Enha ncement Plan (the “REP”) administered by Public Agency Retirement Services (“PARS”), a multiple-emp loyer agency trust that acts a s a common investment and administrative agent for participating public entities in the State.
General. Substantially all full-time City employees, including the fiv e employees of the Parking Authority, are eligible to participate in retirement benefit plans through a contract with the CalPERS.
CalPERS provides retirement, disability, and death benefits to plan members and beneficiaries. CalPERS benefits are payable monthly for life in an amount equal to a c ertain percent of the employees highest annual salary. Benefit provisions and all other requirements a re established by contract with CalPERS, State statue, and City ordinance. CalPERS acts as a common inve stment and administrative agent for participating public entities within the State. CalPERS is a contributory plan deriving funds from employee contributions as well as from employer contributions and earnings from investments.
The REP is a closed retirement plan that provides retirement be nefits for Stockton MUD employees for the period when they worked for OMI-Thames Water Stockton, Inc. to cover retirement benefits between 2003 and 2008. See “–PARS Retirement Enhancement Plan.” California Public Employees’ Retirement System . The following information concerning the California Public Employees’ Retirement System is excerpted from publicly available sources, which the City believes to be accurate. CalPERS is not obligated in any manner for payment of debt service on the 2020 Bonds and the assets of CalPERS are not available for such payment. CalPERS should be contacted directly at California Public Employees’ Retirement System, Lincoln Plaza Complex, 400 Q Street, Sacramento, California 95814, Telephone: 888-225 7377 for other information, including information relating to its financial position and investments.
Set forth below is information with respect to the Miscellaneous Plan for the entire City.
CalPERS does not prepare nor are separate reports av ailable for the Parking Authority. The City can only allocate costs of the Miscellaneous Plan to th e Parking Authority to the extent such costs are allocable to employees of the Parking Authority.
The Miscellaneous Plan is available to full-time employees not enrolled in the Safety Plan. Part- time employees must meet specific criteria for participation. Parking employees are eligible for service or normal retirement at age 55 or older with a minimum of five yea rs CalPERS service. The contribution requirements of the plan members and the City are established by CalPERS and may be amended.
For Fiscal Year 2019-20, there are a total of 936 budgeted full -time equivalent City employees participating in the Miscellaneous Plan of which five (or appro ximately 0.53%) were employed by the Parking Authority.
ATTACHMENT B
45 Benefits Provided. CalPERS provides service retirement and dis ability benefits, the annual cost of living adjustments and death benefits to plan members, who m ust be public employees and beneficiaries. The provisions and benefits for the Miscellaneou s Plan in effect at June 30, 2016, are summarized as follows:
Miscellaneous Plan
Hire Date Prior to January 1, 2014 After January 1, 2014 Benefit Vesting Schedule 5 years service 5 years service Benefit Formula Tier I: 2% @ 55 years of age
Tier II: 2% @ 60 years of age
2% @ 62 years
Benefit Payments monthly for life monthly for life
Required Employee Contribution Rates 7.00% 6.25%
Required Employe
r Contribution Rates 23.859% 23.859%
____________
Source: Audited Financial Statments of the City of Stockton for the Year Ended June 30, 2019.
Employees Covered. At June 30, 2017 the following Miscellaneou s Plan employees were covered under benefit terms:
Inactive employees o
r beneficiaries currently receivingbenefits 1,413
Inactive employees entitled tobut not yet receiving benefits 552 Active employees 970
T OTAL 2,935
Contributions. The City establishes rates based on an actuaria lly determined rate recommended by an independent actuary. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by the employee during the year, w ith an additional amount to finance any unfunded accrued liability. The C ity is required to contribute the difference between the actuarially determined rate and the contri bution rate of employees. For the year ended June 30, 2018, the total Miscellaneous Plan employer contribution rate was 25.084% of wa ges and for Fiscal Year 2018-19, the employer contribution rate is estimated to be 26.652% using a d iscount rate of 7.375%. See “–Discount Rate.”
Net Pension Liability. The City’s net pension liability was me asured as of June 30, 2015, using an annual actuarial valuation as of June 30, 2014, rolled forward to June 30, 2015, using standard update procedures.
ATTACHMENT B
46 Actuarial Assumptions. The total pension liability on June 30, 2014, the actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:
Miscellaneous Plan
Valuation Date 6/30/2015
Measurement Date 6/30/2016
Actuarial Cos
t Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 7.65%
Inflation 2.75%
Payroll Growth 3.00%
Projected Salary Increase Varies(1)
Investment Rate of Return 7.50%(2)
Mortality see note (3)
_____________
(1) Depending on age, servi ce and type of employment
(2) Net of pension plan invest ment expenses, including inflation (3) The mortality table used wa s developed based on CalPERS sp ecific data. The table includes 20 years of mortality improvements using Society of Actuaries BB. For more details on this table, refer to the 2014 experience study report.
Source: Audited Financial Statments of the City of Stockton for the Year Ended June 30, 2018.
The actuarial assumptions used on June 30, 2014, valuation were based on the results of an actuarial experience study for the period from 1997 to 2011. T he actuarial experience study can be obtained by contacting CalPERS.
Discount Rate. The discount rate used to measure the total pen sion liability was 7.65%. The projection of cash flows used to determine the discount rate as sumed that employee contributions will be made at the current contribution rate and that the City contrib utions will be made at rates equal to the difference between actuarially determined contribution rates an d the employee rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of curre ntly active and inactive employ ees. Therefore, the long-term expected rate of return on pension plan investments was applied to all p eriods of projected benefit payments to determine the total pension liability.
The long-term expected rate of return on pension plan investmen ts was determined using a building-block method in which best-estimate ranges of expected future real rates of return are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the targe t asset allocation percentage and by adding expected inflation.
ATTACHMENT B
47 The target allocation and best estimates of real arithmetic rates of return for each major asset class are summarized in the following table:
Miscellaneous Plan
Asset Class
New Strategic
Allocation
Real Return
Years
1-10(a)
Real Return
Years
11+(b)
Global Equity 51.9% 5.25% 5.75%
Global Fixed Income 20.3 0.99 2.43
Inflation Sensitive 6.0 0.45 3.36
Private Equity 9.0 6.83 6.95
Real Estate 10.8 4.50 5.13
Infrastructure and Forestland 0.5 4.50 5.09
Liquidity 1.5 (0.55) (1.05)
TOTAL 100.0%
____________
Source: Audited Financial Statments of the City of Stockton for the Year Ended June 30, 2018.
On December 21, 2016, the CalPER S Board of Adminisration lowered the discount rate from
7.50% to 7.00% using a three year phase-in beginning with the J une 30, 2016 actuarial valuations. The discount rate will be 7.25% for the 2017 valuation and 7.00% for the 2018 valuation.
Changes in the Net Pension Liability. As of June 30, 2016, after employer contributions of $13,879,482, employee contributions of $3,971,482, and investme nt income of $2,491,249, the Net Pension Liability for the Miscellaneous Plan increased to $162, 194,089 from $133,763,663 as of June 30, 2015. Details in the changes in Net Pension Liability are presented in Note 11 of the City’s Fiscal Year 22017-28Comprehensive Annual Financial Report. See APPENDIX B–“AUDITED FINANCIAL STATEMENTS OF THE CITY OF STOCKTON FOR THE YEAR ENDED JUNE 30, 2019.”
Sensitivity of the Net Pension Liability to Changes in the Disc ount Rate. The following table presents the Net Pension Liability of the City for the Miscella neous Plan, calculated using the discount rate of 7.65%, as well as what the Net Pension Liability of the City would be it were calculated using a discount rate that is one-percentage point lower (6.75%) or one -percentage point higher (8.75%) than the current rate.
Miscellaneous Plan
1% Decrease Current Discount 1% Increase
Rate = 6.65%
Rate = 7.65% Rate = 8.65%
Net pension liability $247,563,708 $162,194,089 $91,400,450 ____________
Source: Audited Financial Statments of the City of Stockton for the Year Ended June 30, 2019.
Miscellaneous Plan Fiduciary Net Position. Detailed informatio n about the fiduciary net position for the Miscellaneous Plan is available from CalPERS in the separately issued CalPERS financial report.
Deferred Outflows of Resources and Deferred Inflows of Resource s Related to Pensions.
Information on the deferred out flows of resources and deferred inflows of resources related to pensions for the Miscellaneous Plan is presented in Note 11 of the City’ s Fiscal Year 2016-17 Comprehensive
ATTACHMENT B
48 Annual Financial Report. See A PPENDIX B–“AUDITED FINANCIAL STATEMENTS OF THE CITY OF STOCKTON FOR THE YEAR ENDED JUNE 30, 2019.”
Health Insurance Premiums. The Parking Authority also provides health benefits to certai n employees and their dependents for medical, dental and vision care. For Fiscal Years 2016-17, 2017-18, and 2018-19, the Parking Authority paid premiums in the amount of $_______, _______, and $_______, respectively for Parking Authority employees. For Fiscal Year 2019-20, the amount paid for premiums for Parking Authority employees is budgeted to be $614,796. Ea ch employee and dependent is covered by a life insurance policy and the employee also is covered by a long-term disability policy.
Post Employment Health Care Benefits. The Parking Authority does not provide post- employment health care benefits to its retirees, and does not h ave any liability listed in its financials to account for such a benefit.
PARKING AUTHORITY FINANCES
Rate Setting, Fines, Enforcement, and Collection Procedures Rate Setting. The City Council establishes the ma ximum rates that can be char ged by the Parking Authority. The Parking Authority has the discretion to fix, alter, change, amend or revise any rates, fees, and charges related to the Parking Facilities within the parameters established by the City Council. Annual rates are set as part of the City’s annual budget approval process. No other governmental authority, board, body or commission has jurisdict ion over or is required to approve the parking rates established by the City Council. [Parking Authority to Review]
[Additional Details – To Come]
Enforcement. All proceeds from enforcement of parking violations in the P arking Facilities are deposited in the Parking Authority fund. The City contracts wi th a third party vendor to process parking violations. Payment of citations can be made online through the third party processor or in person at City, or are collected by the Department of Motor Vehicles through fines added to annual vehicle registration or by the Franchise Tax Board through annual assessments [Explanation to come]
Collections. All revenues generated by the Pa rking Facilities are collected by the Parking Operator and deposited daily in __________. Pursuant to the Parking Agreement, the Parking Operator is required to transfer all Parking Revenues, net of its [Administ ration Fee] no later than each ______ to the Parking Authority. See “–Management of the Parking Facilities.” For a description of the levy, collection, and enforcement of the CFD Revenues, see “T HE PARKING CFD.”
[Over the last several years] / [From Fiscal Year ____ to Fisca l Year ____], parking operations and revenues were challenged by maintenance and operations issues, staffing and enforcement challenges and revenue on-street, declines.
ATTACHMENT B
49 Revenues by Parking Facility
A summary of Parking Revenues by Facility for Fiscal Years 201 4-15 through 2018-19 and budgeted for Fiscal Year 2019-20 is se t forth below . For a location map of each Parking Facility see the map on page __.
Table 9
City of Stockton Parking Authority
Revenues by Parking Facility
Name Facility 2014-15 2015-16 2016-17 2017-18 2018-19
Budget
2019-20
Parking Authority Owned Parking
Parking Meters(1) $460,734 $548,849 $362,143 $55,618 $149,787 $500,000 Arena Garage 315,585 316,368 328,522 274,504 354,657 335,000 Channel Garage 241,038 337,718 294,333 262,718 274,423 319,700 Coy Garage 880,794 926,772 885,107 872,073 885,747 897,979 Market Garage 402,558 677,455 670,559 591,917 593,587 663,804 Stewart-Eberhardt Building (SEB) Garage 377,814 604,510 620,693 622,994 568,386 630,303 SUBTOTAL GARAGES 2,217,789 2,862,823 2,799,214 2,624,206 2,676,800 2,846,786 Civic Lot 12,105 12,537 9,455 5,795 9,030 10,700
Edison Lot(2) – – – – – 6,000
Fremont East Lot 33,870 69,006 76,790 73,714 83,560 88,120 Fremont West Lot 21,870 16,027 18,209 11,410 12,067 14,400 Lot F 99,369 138,504 147,022 113,518 97,487 100,227
Lot J 39,696 55,664 58,180 56,212 59,067 55,175
Lot K(3) – – – – 2,753 12,300
Lot L 50,178 79,701 74, 305 30,745 21,001 24,000
Lot Z(4) – 390 – – – –
North Lot 9,660 14,469 21,269 14,425 13,521 16,000
West Lot(5) – – – – 690 700
SUBTOTAL LOTS 266,748 386,298 405,230 305,819 299,176 327,622 SUBTOTAL PARKING AUTHORITY OWNED PARKING 2,945,271 3,797,970 3,566,587 2,985,643 3,125,763 3,674,408 Leased Parking
Lot N(6) – – 226,970 172,411 198,985 177,450
Lot O 88,461 128,855 147,202 135,776 108,418 153,196
Lot R 102,975 150,826 134,643 116,461 99,017 138,500
Lot S 26,862 35,977 43, 122 43,456 41,385 39,800
EDD Lot 35,802
59,272 66,780 56,860 58,961 59,800
SUBTOTAL LEASED PARKING 2 54,100 374,930 618,717 524,964 506,766 568,746 TOTAL $3,199,371 $4,172,900 $4,185,304 $3,510,607 $3,632,529 $4,243,154 _____________
(1) Over the course of two years nearly 1,600 coin-only parking meters were stolen or vandalized resulting in a significant reduction in revenues. See “–Parking Meters.” (2) Used primarily for overflow parking from events.
(3) Lot K was unavailable for se veral years due to construction of an adjacent property. (4) Used primarily for overflow parking from events used primarily by City employees during the week and occasional use for private events on weekends. (5) Parking at the West Lot is subject to contractual use by the Ports Baseball organization during baseball season plus 50 events annually thereafter. (6) Lot N [Explanation for lack of revenues in Fiscal Year 2014-15 and 2015-16 – To Come] Source: Parking Authority.
ATTACHMENT B
50 Historical Operating Results
The historical connection fee revenues received by the City are set forth in the table below.
Table 10
City of Stockton Parking Authority
Statement of Net Position
(Fiscal Year Ended June 30)
($ in thousands)
2014-15 2015-16 2016-17 2017-18 2018-19
Current Assets:
Cash and investments $1,063,011 $2,758,927 $3,164,860 $3,262,807 Receivables, net:
Interest – 5,795 9,555 13,453
Account and other receivables 3 68,427 423,098 500,220 519,836 Prepaids 22,654 – – 22
TOTAL CURRENT ASSETS 1,454,092 3,187,820 3,674,635 3,796,118
Noncurrent assets:
Restricted assets:
Cash and investments with fiscal agents 184,552 2 334 13,383 Capital assets, net:
Nondepreciable 5,291,660 5,291,660 3,945,273 3,890,273
Depreciable, net 23,555,052 22,841,848 22,128,644 21,415,439 TOTAL NONCURRENT ASSETS 29,031,264 28,133,510 26,074,251 25,319,095 TOTAL ASSETS 30,485,356 31,321,330 29,748,886 29,115,213
Current Liabilities:
Accounts payable 184,574 221,989 23,064 20,209
Accrued payroll 17,503 22,860 23,754 18,088
Due to other governments – – 16,809 14,203
Deposits and other liabilities 132,601 62,752 63,264 62,752 Accrued interest 436,708 434,840 423,881 430,820
Compensated absences – current – 11,198 12,204 11,678
Other long-term debt – current 107,878 113,534 119,487 301,540 TOTAL CURRENT LIABILITIES 887,306 867,173 691,463 859,290
Noncurrent Liabilities:
Compensated absences – long-term – 6,258 2,198 2,303
Bonds payable 25,203,470 25,089,936 24,970,449 24,668,909 TOTAL NONCURRENT LIABILITIES 25,203,470 25,096,194 24,972,647 24,671,212 TOTAL LIABILITIES 26,090,776 25,963,367 25,664,110 25,530,502
Net Position:
Net investment in capital assets 3,535,364 2,930,040 984,315 335,26 3 Restricted in capital projects – 23 3 4 –
Restricted for debt service 184,552 – – 13,383
Unrestricted 674,664 2,427,921 3,100,127 3,236,065
TOTAL NET POSITION $4,394,580 $5,357,963 $4,084,776 $3,584,711 ____________
Source: City of Stockton Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2019.
ATTACHMENT B
51 Table 11
City of Stockton Parking Authority
Statement of Revenues, Expenses and Changes in Net Position (Fiscal Year Ended June 30)
($ in thousands)
2014-15 2015-16 2016-17 2017-18 2018-19
Operating Revenues:
Charges for Services $3,941,402 $4, 931,998 $5,116,446 $4,433,929 Miscellaneous 228,324 39,202 24,460 13,224
TOTAL OPERATING REVENUES 4,169,726 4,971,200 5,140,906 4,447,153
Operating Expenses:
Operation and maintenance 2,936,797 3,290,096 3,626,626 3,300,149 General and administrative 28,912 73,722 – –
Depreciation and amortization 1,206,323 713,204 713,204 713,204 TOTAL OPERATING EXPENSES 4,172,032 4,077,022 4,339,830 4,013,353
OPERATING INCOME (LOSS) (2,306) 894,178 801,076 433,800
Non-Operating Revenues (Expenses):
Taxes 973,634 1,238,709 1,292,249 1,270,684
Investment income:
Interest income 26,213 43,814 1,082
–
Gain (loss) from disposal of capital assets (3,300,151) – (1,156,388) 19,525 Interest expense and fiscal charges (854,178) (1,306,859) (1,301,112) (1,296,602) TOTAL NON-OPERATING REVENUES (EXPENSES) (3,154,482) (24,336) (1,164,169) (6,393)
INCOME (LOSS) BEFORE CAPITAL
CONTRIBUTIONS, TRANSFERS AND SPECIAL ITEMS
(3,156,788) 869,842 (363,093) 427,407
Transfers in 813,115 1,000,000 –
Transfers out (909,166) (906,459) (910,094) (927,472)
Total contributions, transfers and special items (96,051) 963,38 3 (1,273,187) (927,472)
Extraordinary Items:
Gain on bankruptcy settlements 7,764,379 – – –
CHANGES IN NET POSITION 4,511,540 – – (500,065)
Net Position:
Beginning of year, as previously reported (116,960) 4,394,580 5,357,963 4,084,776 End of year $4,394,580 $5,357,963 $4,084,776 $3,584,711
ATTACHMENT B
52 2014-15 2015-16 2016-17 2017-18 2018-19
Cash Flows from Operating Activities:
Receipts from customers and users $3,889,359 $4,916 ,529 $5,063,784 $4,414,313 Payments to suppliers (1,515,622) ( 2,894,856) (3,808,230) (3,312,23 1) Payments to employees (892,474) (463,971) (2,160) –
Miscellaneous receipts – – – 13,224
Net cash provided by (used in) operating
activities
1,481,263 1,557,702 1,253,394 1,115,306
Cash flows from Noncapital Financing Activities:
Transfers in 813,115 1,000,000 – –
Transfers out (909,166) (906,459) (910,094) (927,472)
Due to other funds (197,327) – – –
Advances received from other funds (1,533,572) – – –
Proceeds from taxes 973,634 1,238,709 1,292,249 1,270,684 Net cash provided by noncapital financing
activities
(853,316) 1,332,250 382,155 343,212
Cash Flows from Capital and Related Financing
Activities:
Proceeds from bond insurance 1,486,585
– – –
Proceeds from sale of capital assets – – 998,158 74,526 Purchases of capital assets (94,464) – (808,159) –
Principal paid on debt (1,885,014) (107,878) (113,534) (119,487) Interest paid on debt (942,975) (1,308,727) (1,303,071) (1,298,663) Net cash provided by (used for) capital and
related financing activities
(1,439,868) (1,416,605) (1,226,606) (1,343,624)
Cash Flows from Investing Activities:
Investment earnings 26,215
38,019 (2,678) (3,898)
Net cash provided by (used in) investing activities 26,215 38,019 (2,678) (3,898)
Net Increase (Decrease) in Cash and Cash
Equivalents
(785,706) 1,511,366 406,265 110,996
Cash and Cash Equivalents:
Beginning of year 2,033,269
1,247,563 2,758,929 3,165,194
End of year $1,247,563 $1,758,929 $3,165,194 $3,276,190 ____________
Source: City of Stockton Comprehensive Annual Financial Report for the Fiscal Years Ended June 30, 2015 through June 30, 2019.
ATTACHMENT B
53 Historical Debt Service Coverage
The following table sets forth audited historical revenues, exp enses and debt service coverage for Fiscal Years 2014-15 through 2018-19.
Table 12
City of Stockton Parking Authority
Historical Revenues, Expenses and Debt Service Coverage (Fiscal Years Ended June 30)
Actual Actual Actual Actual Unaudited
Revenue 2014-15 2015-16 2016-17 2017-18 2018-19
Monthly Parking $1,975,679 $2,286,897 $2, 326,504 $2,115,878 $2,109,087 General Parking 1,005,844 984,024 925,238 820,470 842,977 Metered parking 646,332 562,113 364,501 52,342 148,423
Enforcement Revenue – 569,490 793,787 763,890 791,690
Special Events 360,923 513,056 564,413 474,245 569,603
Interest Earnings 25,781 9,828 25,610 30,752 53,708
Miscellaneous Revenue 180,948 55,620 166,462 220,328 130,161 TOTAL REVENUE $4,195,507 $4,981,028 $5,166 ,516 $4,477,905 $4,645,648
O p e r a t i n g E x p e n d i t u r e s
Operatin
g Expenditures (2) 2,965,709 3,363,818 3,626,626 3,300,149 3,294,560 Less: CFD Revenues (Offset to Operating
Expenditures) (973,634)
(1,238,709) (1,292,249) (1,270,684) (1,341,407)
NET OPERATING EXPENDITURES $1,992,075 $2,125,109 $2,334 ,377 $2,029,465 $1,953,153
Net System Revenue $2,203,433 $2 ,855,919 $2,832,138 $2,448,440 $2,692,495
D e b t S e r v i c e
2015 Settlement A
greement 1,195,740 1,306,859 1,303,070 1,295,057 1,590,148 2020 Bonds – – – – –
TOTAL DEBT SERVICE $1,195,740 $1,306,859 $1,303 ,070 $1,295,057 $1,590,148
Debt Service Coverage (4) 3.51 3.81 3.96 3.46 2.92
Debt Service Coverage (5)
Debt Service Coverage (6)
Available Net System Revenue
(Capital and Other) $1,007,693 $1,549,060 $1,529,068 $1,153,383 $1,102,347 _______________
(1) Excludes Unrealized Gains from GASB31 Fair Market Value Ad justment and Accrued Interest Earning and Not Received as of June 30.
(2) Excludes Depreciation, Capital Expenditures, Debt Service and GASB68 Non-Cash Pension Adjustment. (3) Compiled from Parking Operat or Reports and Adjusted to Comprehensive Annual Financial Report. (4) Debt Service Coverage Calcu lated Using Pledge of Gross Revenues Per 2015 Settlement Agreement. (5) Debt Service Coverage Calcu lated Using Pledge of Net System Revenue for 2020 Bonds. (6) Debt Service Coverage Cal culated Excluding CFD Revenues.
Sources: City of Stockton for revenues and expenses based upon the audited financial statemen ts, and Del Rio Advisors, LLC, for debt service coverage information.
The audited financial statements for the Parking Facilities for the Fiscal Year Ended June 30, 2019 are attached as A PPENDIX B–“AUDITED FINANCIAL STATEMENTS OF THE CITY OF STOCKTON FOR THE YEAR ENDED JUNE 30, 2019.”
ATTACHMENT B
54 Projected Debt Service Coverage
Revenues, expenses and debt service coverage for Fiscal Years 2 019-20 (budgeted) through 2023-24 (projected) are set forth in the following table based on certain assumptions as described in the footnotes. The following table assumes no optional redemption of the 2020 Bonds. The following projections are based on the current circumstances of the Parking Authority and currently available information and are believed to be reasonable. The pr ojections may be affected by various factors and there can be no assurance that they will be achieved and any variation from projected operating results may be material.
Table 13
City of Stockton Parking Authority
Projected Pro Forma and Debt Service Coverage Calculation ($ in thousands)
Projected Projected Proje cted Projected Projected
Revenue 2019-20 2020-21 2021-22 2022-23 2023-24
Monthly Parking $2,278,974 $2,506,974 $2, 557,114 $2,633,827 $2,686,504 General Parking 806,127 822,250 846,918 872,325 907,218 Metered parking 480,000 400,000 500,000 600,000 700,000 Enforcement Revenue 802,321 816,116 897,728 1,032,387 1,135,626 Special Events 545,120 572,376 600,995 619,025 637,595
Interest Earnings 54,782 55,878 56,995 58,135 59,298
Miscellaneous Revenue 141,219 51,601 52,442 52,814 48,206 TOTAL REVENUE $5,108,544 $5,225,195 $5,512 ,192 $5,868,513 $6,174,447
Operating Expenditures
Operating Expenditures (2) 3,811,039 3,765,623 4,087,387 4,329,236 4,543,557 Less: CFD Revenues (Offset to
Operating Expenditures) (1,229,478) (1,254,068) (1,279,149) (1,304,732) (1,330,827) NET OPERATING EXPENDITURES $2,581,561 $2,511,556 $2,808 ,238 $3,024,504 $3,212,730
Net System Revenue
Debt Service
2015 Settlement Agreement 1,596,659 – – – –
2020 Bonds – 1,294,471 1,518,250 1,626,000 1,802,750
TOTAL DEBT SERVICE $1,596,659 $1,294,471 $1,518 ,250 $1,626,000 $1,802,750
Debt Service Coverage (4) 3 .20
Debt Service Coverage (5) 2.10 1.78 1.75 1.64
Debt Service Coverage (6) 1.13 0.94 0.95 0.90
Available Net System Revenue
(Capital and Other) $930,323 $1,419,169 $1,185,704 $1,218,009 $ 1,158,967 ________________
(1) Excludes Unrealized Gains from GASB31 Fair Market Value Ad justment and Accrued Interest Earning and Not Received as of June 30.
(2) Excludes Depreciation, Capital Expenditures, Debt Service and GASB68 Non-Cash Pension Adjustment. (3) Compiled from Parking Operat or Reports and Adjusted to Comprehensive Annual Financial Report. (4) Debt Service Coverage Calcu lated Using Pledge of Gross Revenues Per 2015 Settlement Agreement. (5) Debt Service Coverage Calcu lated Using Pledge of Net System Revenue for 2020 Bonds. (6) Debt Service Coverage Cal culated Excluding CFD Revenues.
Sources: City of Stockton for revenues and expenses and Del Rio Advisors, LLC, for debt service coverage information.
ATTACHMENT B
55 TAX MATTERS
[To Come From Bond Counsel]
LEGAL MATTERS
The validity of the 2020 Bonds and certain other legal matters are subject to the approving opinion of Norton Rose Fulbright US LLP, Bond Counsel to the Au thority. A complete copy of the proposed form of Bond Counsel opinion is contained in A PPENDIX G to this Official Statement. Bond
Counsel undertakes no responsibility for the accuracy, completeness or fairness of this Official Statement.
Certain legal matters will be passed upon for the Authority and the City by the City Attorney and by Schiff Hardin LLP, San Francisco, California, Disclosure Counsel, and for the Underwriter by Jones Hall, A Professional Corporation, San F rancisco, California, Underwri ter’s Counsel. Payment of the fees of Bond Counsel, Disclosure Counsel and Underwriter’s Counsel are contingent upon the issuance and delivery of the 2020 Bonds.
LITIGATION
At the time of delivery of the 2020 Bonds, the City Attorney as counsel to the Authority and the Parking Authority will deliver opinions to the initial underwri ters of the 2020 Bonds that there is no action, suit, litigation, inquiry or investigation before or by any court, governmental agency, public board or body served, or to the best knowledge of the Authority or th e Parking Authority threatened, against the Authority or the Parking Authority in any material respect affe cting the existence of the Authority or the Parking Authority or the titles of their officers to their respective offices or seeking to prohibit, restrain or enjoin the sale or delivery of the 2020 Bonds, the execution an d delivery of the 2020 Indenture, the 2020 Installment Purchase Agreement or the payment of 2020 Installme nt Payments or challenging, directly or indirectly, the proceedings of the Authority and the Parking Authority with respect to the 2020 Bonds.
The Authority
No litigation is pending with service of process having been ac complished or, to the knowledge of the Authority, threatened, concerning the validity of 2020 I ndenture or 2020 Installment Purchase Agreement.
The Parking Authority
General. There is no litigation pending with service of process having b een accomplished or, to the knowledge of the Parking Authority, threatened, questioning the existence of the Parking Authority, or the title of the offices of the Parking Authority to their r espective offices. Except as otherwise disclosed in this Official Statement, there is no litigation pe nding or, to the knowledge of the Parking Authority, threatened, questioning or affecting in any material respect the financial condition of the Parking System or the validity of the 2020 Bonds, the 2020 Inst allment Purchase Agreement, or the 2020 Indenture.
Various legal actions are pending against the Parking Authority . The aggregate amount of the uninsured liability of the Parking Authority that may result fr om legal claims currently pending or threatened will not, in the opinion of the Parking Authority, m aterially affect Net Parking Revenues or
ATTACHMENT B
56 impair the ability of the Parking Authority to make the 2020 Installment Payments that secure payment of the principal of and interest on the 2020 Bonds.
CONTINUING DISCLOSURE
The Authority has determined t hat no financial or operating da ta concerning the Authority is material to an evaluation of the offering of the 2020 Bonds or to any decision to purchase, hold or sell the 2020 Bonds and the Authority will not provide any such information. The Parking Authority, will covenant for the benefit of own ers of the 2020 Bonds to provide certain financial information and operating data relating to the Parking Authority (the “Annual R eport”) by not later than the March 31 following the end of the City’s fiscal year, commencing March 3 1, 2020, with the report for the fiscal year ended June 30, 2019, and to provide notices of the occurre nce of certain listed events (“Specified 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 is set forth in A
PPENDIX E.
The City and related governmental entities – specifically thos e entities, like the Parking Authority, for whom City staff is responsible for undertaking c ompliance with continuing disclosure undertakings – have previously entered into numerous disclosure undertakings under the Rule in connection with the issuance of long-term obligations. The City hired Digital Assurance Certification (“DAC”) to do a detailed review of all of the City’s postings o n EMMA for the preceding five years. That audit was completed on or about June 30, 2018.
In the preceding five years, the City failed to timely comply in certain respects with its previous undertakings with regard to the Rule to provide annual reports, adopted budgets, or notices of Specified Events, and in some instances in formation was not associated wi t h t h e c o r r e c t C U S I P n u m b e r . I n addition, on several occasions during the last five years the C ity failed to provide its audited or unaudited financial statements in the time required by its continuing dis closure undertakings, including the audited financial statements for Fi scal Year 2016-17. The City’s compl iance with its previous undertakings for Fiscal Years 2011-12 and 2012-13 was complicated by the bankrup tcy proceedings, and while the City filed with EMMA detailed inform ation as and when available with respect to the bankruptcy, the completion of its audited financia l statements demanded more ti me into past years than expected and agreed in its previous undertakings.
The City has an ongoing contract with Willdan Financial Servic es as Dissemination Agent. The City believes it has established procedures in policies adopted by the City Council to ensure that the City will make all required continuing disclosure filings on a timely basis in the future.
FINANCIAL STATEMENTS
The financial statements for the City for the Fiscal Year Ended June 30, 2019, included in Appendix B, have been audited by The Pun Group, LLP (the “Indep endent Auditor”), as stated in its report appearing in Appendix B and are included for background information only. The Independent Auditor has not undertaken to update its report or to take any action intended or likely to elicit information concerning the accuracy, completeness or fairness o f the statements made in this Official Statement, and no opinion is e xpressed by the Independent Audit or with respect to any event subsequent t o t h e d a t e o f i t s r e p o r t . S e e A PPENDIX B–“AUDITED FINANCIAL STATEMENTS OF THE CITY OF
STOCKTON FOR THE YEAR ENDED JUNE 30, 2019.”
ATTACHMENT B
57 The audited financial statements include information concerning the City’s General Fund and other funds. The 2020 Bonds are limited obligations of the Auth ority payable solely from installment payments to be made by the Parking Authority to the Authority, for which the City has pledged Net Parking Revenues derived from the operation of the Parking Facilities and are reflected under “Proprietary Fund Financial Statements” of the audited financial statements as a major enterprise fund of the City. See “S
ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS.” No other funds of the City other are available for payment of the 2020 Bonds.
The report of the Independent Auditor states that in the opinion of the Independent Auditor, the financial statements referred to therein present fairly, in all material respects, the financial position of the City, including the Parking Authority as of June 30, 2019, and the respective changes in financial position for the year then ended in conformity with generally accepted accounting principles in the United States of America.
RATINGS
S&P Global Services (“S&P”) has issued [insured ratings on the 2020 Bonds of “__,” assuming that the Policy is issued by the Bond Insurer. S&P has also is sued underlying] ratings on the 2020 Bonds of “__”.
A rating reflects only the view of the agency giving such rating and is not a recommendation to buy, sell or hold the 2020 Bonds. An explanation of the signif icance of each rating may be obtained from the rating agencies at the following addresses: Standard & Poo r’s Ratings Group, a Division of McGraw- Hill Companies, 55 Water Street, New York, New York 10041. There is no assurance that the ratings will be retained for any given period of time or that the same will not be revised downward or withdrawn entirely by either rating agency if, in its judgment, circumsta nces so warrant. The Authority and the City undertake no responsibility to oppose any such revision or withdrawal but the Authority and the City will comply with notification requirements. Any such downward revis ion or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the 2020 Bonds.
In providing a rating on the 2020 Bonds, certain rating agencies may have performed independent calculations of coverage ratios using their own internal formul as and methodology which may not reflect the provisions of the 2020 Indenture. The Authority and the Ci ty make no representation as to any such calculations, and such calculations should not be construed as a representation by the Authority or the City as to past or future compliance with any bond covenants, t he availability of particular revenues for the payment of debt service on the 2020 Bonds or for any other purpose.
The City will covenant in the Continuing Disclosure Certificate to file on EMMA, notices of any ratings changes on the 2020 Bonds. See “C
ONTINUING DISCLOSURE” and A PPENDIX E–“PROPOSED
FORM OF CONTINUING DISCLOSURE CERTIFICATE.” Notwithstanding such covenants, information relating to ratings changes on the 2020 Bonds may be publicly a vailable from the rating agencies prior to such information being provided to the City and prior to the da te notice of such rating change is obligated to be filed on EMMA. Purchasers of the 2020 Bonds are directed to the rating agencies and their respective websites and official media outlets for the most cur rent ratings changes with respect to the 2020 Bonds following the initial issuance of the 2020 Bonds.
ATTACHMENT B
58 UNDERWRITING
Stifel Nicolaus & Co., Inc. (the “Underwriter”) have agreed to purchase the 2020 Bonds at a purchase price equal to $_________ which represents the par amo unt of the 2020 Bonds, less an Underwriter’s discount in the amount of $_________. The bond purchase agreement relating to the 2020 Bonds provides that the Underwriter will purchase all of the 20 20 Bonds if any are purchased, the obligation to make such purchase being subject to certain terms and conditions set forth in said bond purchase agreement, the approval of certain legal matters by counsel and certain other conditions.
The Underwriter and its affiliates are full-service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, municipal advisory, brokerage and asset management. In the ordinary course of business, the Underwriter and its affiliates may actively trade debt and, if applicable, equity securities ( or related derivative securities) and provide financial instruments (which may include bank loans, credit sup port or interest rate swaps). The Underwriter and its affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offering of the Authority and the City.
The Underwriter and its affiliates may make a market in credit default swaps with respect to municipal securities in the future. The Underwriter and its affiliates ma y also communicate independent investment recommendations, market color or trading ideas and publish inde pendent research views in respect of this securities offering or other offerings of the Authority and the City.
MUNICIPAL ADVISOR
The Authority has retained Del Rio Advisors, LLC of Modesto, Ca lifornia, as municipal advisor (the “Municipal Advisor”) in connection with the offering of th e 2020 Bonds. All financial and other information presented in this Official Statement has been provi ded by the Authority and others from their records. Unless otherwise footnoted, the Municipal Advisor take s no responsibility for the accuracy or completeness of the data provided by the 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 Muni cipal Advisor has assisted the Authority with the structure, timing and terms for the sale of the 2020 Bonds. The Municipal Advisor provides municipal advisory services only and does not engage in the und erwriting, marketing, or trading of municipal securities or other negotiable instruments. The fee of the Municipal Advisor is contingent upon the successful closing of the 2020 Bonds.
VERIFICATION OF MATHEMATICAL COMPUTATIONS
Upon delivery of the 2020 Bonds, ___________, [City], [State] (the “Verification Agent”), will deliver a report stating that it has reviewed and confirmed the mathematical accuracy of certain computations relating to the adequacy of the funds and/or secur ities deposited in the Escrow Funds and the interest thereon, if any, to pay, when due, the principal o f and interest on and redemption price of the Refunded Bonds on the specified respective payment and redemption dates thereof.
ATTACHMENT B
59 MISCELLANEOUS
This Official Statement is not to be construed as a contract or agreement between the Authority, the City and the Underwriter. Any statements made in this Offi cial Statement involving matters of opinion or of estimates, whether or not so expressly stated, ar e set forth as such and not as representations of fact, and no representation is made that any of the estimate s will be realized. The information and expressions of opinion herein are subject to change without not ice and neither the delivery of the Official Statement nor any sale made hereunder shall, under any circumst ances, create any implication that there has been no change in the affairs of the Authority or the City since the date hereof.
References are made herein to certain documents and reports whi ch are brief summaries thereof which do not purport to be complete or definitive and reference is made to such documents and reports for full and complete statements of the contents thereof. Copies of such documents and reports are available for inspection at the office of the Chief Financial Officer, Ci ty of Stockton, 425 North El Dorado Street, Stockton California 95202.
The execution and delivery of the Official Statement has been d uly authorized by the Board of Directors of the Authority and by the Parking Authority.
STOCKTON PUBLIC FINANCING AUTHORITY
By:
Matt Paulin
Treasurer
PARKING AUTHORITY
By:
Matt Paulin
Chief Financial Officer
ATTACHMENT B
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APPENDIX A
GENERAL, ECONOMIC AND DEMOGRAPHIC INFORMATION RELATING
TO THE CITY OF STOCKTON
The following information con cerning the City and surrounding areas is included only for the purpose of supplying general information regarding th e community. The 2020 Bonds are not a debt of the City, the State or any of its political subdivisions and neither the City, the State, nor any of its political subdivisions is liable therefor. The 2020 Bonds are limited obligations of the Authority payable from 2020 Installment Payments made by the Parking Authority. See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS.”
General
The City is a municipal corporation and charter city incorporat ed in 1850. The City is the county seat of the County and is located in California’s San Joaquin Valley, approximately 78 miles east of the San Francisco Bay Area, approximately 345 miles north of Los An geles and approximately 45 miles south of Sacramento. The County covers approximately 1,400 square miles. The County is bounded by Sacramento County on the north, Stanislaus County on the south, Contra Costa County and Alameda County on the west and Amador County, Calaveras County and Stan islaus County on the east. The land area of the City is 61.7 square miles.
Governing Body
The City operates under a Council/Manager form of government, with a seven-member City Council (current members were elected by district voting) for staggered four-year terms. Under this form of government, policy making and legislative authority is entrusted to the City Council. The Mayor is elected by City-wide election, and the representatives of the City Council are elected from six districts for staggered four-year terms, with a two-term limit. Newly electe d representatives are sworn in on the first Tuesday of January of each odd-numbered year.
The City Manager is responsible for carrying out policies and ordinances of the City Council for appointing heads of departments and overseeing the operation of the City. The City Manager, the City Attorney, the City Auditor and the City Clerk are appointed by the City Council.
The Mayor, current m embers of the City Council and key administrative personnel of the City are listed in Table A-1 and Table A-2, respectively.
TABLE A-1
CITY OF STOCKTON
Mayor and City Councilmembers
Name
Office
Term Expiration
(December 31) Occupation
Michael D. Tubbs Mayo r 2020 Educato r
Daniel Wright Vice Mayor, District 2 2020 Retired – law enforcement Sol Jobrack Councilmember, District 1 2022 Commercial Appraise r Paul Canepa Councilmember, District 3 2022 Businessman
Susan Lenz Councilmember, District 4 2020 Business Owne r Christina Fugazi Councilmem ber, District 5 2022 Educato r Jesús J. Andrade Councilmember, District 6 2020 Businessman
ATTACHMENT B
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TABLE A-2
CITY OF STOCKTON
Key Administrative Personnel
Name Position
Laurie Montes Interim City Manager
John M. Luebberke City Attorney
Matt Paulin Chief Financial Officer
Kevin Beltz Program Manager II – Debt and Treasury
Moss Adams LLP City Auditor
Eliza R. Garza City Clerk
The City provides a full range of municipal services. As provi ded in the City Charter, these services include public safety (police, fire, paramedics, water rescue and building inspection), sanitation (solid waste disposal, wastewater and stormwater utilities), wa ter utility, community development, library, parks and recreation and general administrative services.
Population
Population information is set forth in Table A-3.
TABLE A-3
CITY OF STOCKTON, COUNTY OF SAN JOAQUIN
AND STATE OF CALIFORNIA
Population
(As of January 1)
Year
City of Stockton County of San Joaquin State of California 2015 306,602 724,859 38,952,462
2016 310,108 736,027 39,214,803
2017 312,289 747,579 39,504,609
2018 313,822 757,279 39,740,508
2019 316,410 770,385 39,927,215
_____________
Source: California State Departme nt of Finance, E-4 Population Estimates for Cities, Counties, and the State—2011-2019 with 2010 Benchmark.
ATTACHMENT B
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Labor Force and Employment
Table A-4 compares estimates of the labor force, civilian empl oyment, and unemployment for City residents, County residents, State residents, and United S tates residents between 2014 and 2018. For [October] 2019 (the most recent month for which data is available for all areas), the preliminary estimated unemployment rate (not seasonally a djusted) for the City, the C ounty, the State and the United States were __%, __%, __% and __%, respectively.
Table A-4
CITY OF STOCKTON, COUNTY OF SAN JOAQUIN
STATE OF CALIFORNIA AND UNITED STATES
Civilian Labor Force, Employment, and Unemployment
2014 through 2018
†
(Not Seasonally Adjusted)
Year and Area Labor Force Employment Unemployment
Unemployment
Rate
2018†
City 131,300 122,200 9,000 6.9%
County 326,387 306,816 19,571 6.0
State 19,398,200 18,582,800 815,400 4.2
United States 162,075,000 155,761,000 6,314,000 3.9
2017
City 130,900 122,300 8,600 6.6
County 324,900 302,200 22,600 7.0
State 19,312,000 18,393,100 918,900 4.8
United States 160,320,000 15,337,000 6,982,000 4.4
2016
City 129,400 118,100 11,300 8.7
County 319,500 293,500 26,000 8.1
State 19,093,700 18,048,800 1,044,800 5.5
United States 159,187,000 151,436,000 148,976,000 4.9
2015
City 127,900 115,700 12,200 9.6
County 315,300 287,300 28,000 8.9
State 18,896,500 17,724,800 1,171,700 6.2
United States 157,130,000 148,834,000 8,296,000 5.3
2014
City 127,500 113,000 14,500 11.3
County 312,800 279,800 33,000 10.5
State 18,758,400 17,351,300 1,407,100 7.5
United States 155,922,000 146,305,000 9,617,000 6.2
_______________
† Preliminary.
Sources: California State Employment Development Department and U.S. Department of Labor, Bureau of Labor Statistics.
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Employment and Industry
Approximately 3,000 acres in the City are zoned for light and h eavy industry. Included in this acreage are 15 industrial parks with all on/site improvements. Six industrial parks are rail served.
The principal employers in the City, based upon the best availa ble information, as of Fiscal Year 2017-18 are set forth in Table A-5.
Table A-5
CITY OF STOCKTON
Principal Employers
Fiscal Year 2017-18
(As of August 2018)
Company
Product/Service Employees
Percent of
Total City
Employers
St. Joseph’s Medical Center Health Care 4,600 1.45%
Stockton Unified School District Public Education 3,54 1.22 City of Stockton City Government 1,933 0.61
Dameron Hospital Health Care 1,200 0.38
Kaiser Permanente Health Care 1,065 0.34
Amazon Warehouse 1,000 0.32
San Joaquin Delta College Education 967 0.31
University of the Public Education 900 0.28
Lincoln Unified School District Education 803 0.25
O’Reilly Auto Parts Automotive 600 0.19
TOTAL 5.35%
_______________
Source: City of Stockton Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2018.
(Remainder of this Page Intentionally Left Blank)
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The Industry Employment and Labor Force for the Stockton-Lodi M etropolitan Statistical Area (MSA) are set forth in Table A-6. The principal city within the Stockton-Lodi MSA is the City.
Table A-6
STOCKTON-LODI MSA
Industry Employment† and Labor Force
By Annual Average
March 2017 Benchmark
2014 2015 2016 2017 2018
Total All Industries† 226,700 234,900 242,600 251,600 257,300 Total Farm 15,700 16,700 16,600 16,300 16,100
Total Non-Farm 211,000 218,200 226,000 235,200 241,300
Mining, Logging, and Construction 9,000 10,200 11,200 11,800 12,80 0 Manufacturing 18,600 18,700 18,900 19,400 19,700
Trade, Transportation and Utilities 55,000 57,700 61,600 65,400 67 ,600 Information 2,100 1,900 2,000 1,800 1,800
Financial Activities 7,500 7,400 7,500 7,800 8,100
Professional and Business Services 18,300 19,400 19,600 19,200 19, 600 Education and Health Services 35,900 36,500 36,400 38,200 38,500 Leisure and Hospitality 19,100 19,700 20,500 21,500 22,000 Other Services 6,900 7,200 7,500 7,600 7,600
Government 38,600 39,600 40,800 42,400 43,500
Federal Government 3,100 3,000 3,000 3,100 3,100
State Government 5,800 6,200 6,400 6,600 6,700
Local Government 29,600 30,400 31,400 32,800 33,700
_______________
† Industry employment is by pla ce of work; excludes business ow ners, self-employed people, unpaid volunteers or family workers and private household workers.
Source: State of California Employment Development Department, Labor Market Information Division.
Personal Income
The United State Department of Commerce, Bureau of Economic Ana lysis (the “BEA”) produces economic accounts statistics that enable government and business decision-makers, researchers, and the public to follow and understand the performance of the national economy.
The BEA defines “personal inco me” as income received by persons from all sources, including income received from participa tion in production as well as fro m government and business transfer payments. Personal income represents the sum of compensation o f employees (received), supplements to wages and salaries, proprietors’ income with inventory valuatio n adjustment (IVA) and capital consumption adjustment (CCAdj), rental income of persons with CCAdj, personal income receipts on assets, and personal current transfer receipts, less contributions for government social insurance. Per capita personal income is calculated as the personal income divided by the resident population based upon the Census Bureau’s annual midyear population estimates.
ATTACHMENT B
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Table A-7 summarizes the total personal income and per capita i ncome for the Stockton-Lodi Metropolitan Statistical Area (an “MSA”), the State and the Uni ted States for the calendar years 2013 through 2017 (the most recent annual data available). The principal city within the Stockton MSA is the City.
Table A-7
STOCKTON-LODI MSA, STATE OF CALIFORNIA AND UNITED STATES Personal Income
Year and Area
Total
Personal Income
(millions of dollars)
Per Capita
Personal Income
(dollars)
2017†
Stockton MSA
State
United States
$31,920
2,364,129
16,820,250
$42,822
60,004
51,640
2016
Stockton MSA
State
United States
30,103
2,259,414
16,115,630
40,996
57,625
49,831
2015
Stockton MSA
State
United States
28,835
2,173,300
15,711,634
39,835
55,793
48,940
2014
Stockton MSA
State
United States
26,774
2,021,640
14,983,140
36,836
52,340
47,025
2013
Stockton MSA
State
United States
25,015
1,885,672
14,175,503
35,545
49,259
44,826
_______________
† The most recent annual data available for Stockton MSA, State, and United States.
Source: U.S. Department of Comm erce, Bureau of Economic Analysis. Per capita personal income was computed using Census Bureau midyear population estimates. Estimates reflect county population estimates available as of March 2018.
ATTACHMENT B
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Construction Activity
Building activity for the past five calendar years for which da ta is available in the City is shown in Table A-8.
Table A-8
CITY OF STOCKTON
Total Building Permit Valuations
†
($ in thousands)
Permit Valuation 2014 2015 2016 2017 2018
New Single Family $19,135 $32,955 $58,735 $65,566 $104,468 New Multiple Family 1,011 29,605 14,797 13,037 0
Residential Alterations/Additions 13,577 12,860 75,506 62,938 61,592 TOTAL RESIDENTIAL 33,724 75,421 149,038 141,541 166,060 TOTAL NONRESIDENTIAL 87,732 78,556 122,975 255,824 200,503 TOTAL $121,456 $153,978 $270,013 $397,365 $366,563
Net Dwelling Units 2014 2015 2016 2017 2018
Single Family 75 123 215 238 324
Multiple Family 4 257 25 115 0
TOTAL 79 380 240 353 324
______________
† Certain columns may not total due to rounding.
Sources: Construction Industry Research Board: “Building Permit Summary” for years 2014 through 2018.
Transportation
The City is located on Interstate 5, the West Coast’s major rou te from Canada to Mexico. The City’s cross-town freeway connects Interstate 5 with State Rout e 99, the State’s other principal north- south freeway, and State Route 99, California’s other principal north-south highway. The City also benefits from direct highway connections to the San Francisco Bay Area via Interstate 580, and to the Reno-Lake Tahoe area via Intersta te 80. Thirty-five major transcontinental truck lines and nearly 200 contract carriers serve the City and provide overnight delivery to Los Angeles, San Francisco and Reno.
The City is also served by Greyhound and the San Joaquin Regional Transit District.
The City is served by the rail services of Santa Fe, Southern Pacific, and Union Pacific systems in addition to three short line railroads: Central California Traction Company, Tidewater Southern, and Stockton Terminal and Eastern Railroad. Passenger service is provided by Amtrak.
The Stockton Metropolitan Airport, located on 1,449 acres on th e southern boundary of the City, is a general aviation facility offering both passenger and frei ght transport services. It has six air carrier gates adjoining a 44,355 square foot terminal building.
The Port of Stockton is the largest inland deep water port in t h e S t a t e . I t i s l o c a t e d o n t h e Stockton deepwater ship channel and encompasses a 2,000 acre operating area. The Port has berthing space for 17 vessels, 1.1 million square feet of dockside trans it sheds and shipside rail trackage, and
7.7 million square feet of warehousing, and is 75 nautical miles east of the Golden Gate Bridge.
Railroad service is provided to the City by Burlington Northern , Santa Fe and the Union Pacific railroads. Daily passenger service by Amtrak is available to San Francisco, Los Angeles and Sacramento.
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Education and Recreation
Education. Within the City, there are five post-secondary institutions: San Joaquin Delta Community College, California Sta te University Stanislaus-Stock ton (extension), University of the Pacific, Humphrey’s College and School of Law and National University (private).
The majority of students living within City limits attend schools operated by one of four unified school districts providing kindergarten through grade 12 educat ion: the Stockton Unified School District, the Lodi Unified School District, the Lincoln Unified School Di strict and the Manteca Unified School District.
The Escalon Unified School District, the Holt Union Elementary School District, the Linden Unified School District, the Tr acy Unified School District and the County Office of Education also operate schools located within the City.
There are also more than 20 private schools located within the City offering elementary and secondary education.
There is also one central library, five branch libraries and tw o mobile library units holding more than one million books in the collection.
Recreation. The City is situated along the San Joaquin Delta waterway whi ch connects to the San Francisco Bay and the Sacramento and San Joaquin Rivers and is also located in close proximity to Lake Tahoe and Yosemite National Park. There are approximately 619 acres of parkland located within the City.
The Stockton Children’s Museum is located in downtown Stockton and offers educational experiences based upon hands-on, play-based exhibits that enhance a child’s understanding of how the world works. The Museum features more than a dozen different c hild-sized environments that recreate the ambience of a small city where merchants, bankers and docto rs might mingle among the grocery shoppers, fast food customers and canning crew.
The 5,000 seat Banner Island Ballpark is the home of the Stockt on Ports single A minor league team for the Oakland Athletics features four luxury suites, law n seating, a family recreation area and a barbeque area with umbrella seating behind the outfield.
The City Centre Cinema Complex in downtown Stockton offers a 16 -screen movie theater, restaurants and retail shopping.
The 220,000 square foot, 10,000 seat Stockton Arena is home of the Stockton Thunder Minor League Hockey Team.
The 2,042-seat Bob Hope Theater is located in the historic form er Fox Theater that was constructed in 1930. This perfo rming arts center hosts national and local theatrical, musical, comedy and dance productions.
The Gary & Janice Podesto IMPACT Teen Center, located in downto wn Stockton, features four bowling lanes, a half-court basketball area, stage, meeting roo ms, game rooms, classrooms, a computer lab, snack bar, and a climbing wall.
The City also operates a Skate Park and Ice Arena and offers va rious other sports and recreational opportunities through the City Park and Recreation Department.
ATTACHMENT B
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APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CITY OF STOCKTON
FOR THE YEAR ENDED JUNE 30, 2019
The audited financial statements include inform ation concerning the City’s General Fund and other funds and are included for background information only.
The 2020 Bonds are limited obligations of the Aut hority payable solely from installment payments to be made by the Parking Authority to the Author ity, for which the Parking Authority has pledged Net Parking Revenues derived from the operation of the Parking Facilities and are reflected under “Proprietary Fund Financial Statements” of the audited financial statements as a major enterprise fund of the City. See “S ECURITY AND SOURCES OF PAYMENT FOR THE 2020 BONDS” in the front of this Official Statement. No other funds of the City are available for payment of the 2020 Bonds.
The Independent Auditor has not undertaken to update its report or to take any action intended or likely to elicit information concerni ng the accuracy, completeness or fa irness of the statements made in this Official Statement, and no opi nion is expressed by the Independen t Auditor with respect to any event subsequent to the date of its report.
ATTACHMENT B
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APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE PRINCIPAL LEGAL DOCUMENTS
ATTACHMENT B
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APPENDIX D
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
ATTACHMENT B
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APPENDIX E
PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (the “Disclosure Certificate”) is executed and delivered by the City of Stockton Parking Authority (the “Parking Authority”) in connection with the issuance of $___,___,000 Stockton Public Financing Authority Parking Revenu e Bonds, Series 2020 (the “Bonds”).
The Bonds are being issued pursuant to an Indenture dated as of February 1, 2020 (the “Indenture”), by and between the Stockton Public Financing Authority (the “Authority”) and Wells Fargo Bank, National Association, as trustee (the “Trustee”). The Parking Authority covenants and agrees as follows:
SECTION 1. Purpose of the Discl osure Certificate. This Disclosure Certificate is being executed and delivered by the Parking Authority for the benefit of the H olders 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 f orth 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 Parking Authority purs uant to, and as described in, Section 3 and Section 4 of this Disclosure Certificate.
“Beneficial Owner” means any person which (a) has the power, directly or indirect ly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries).
“ City” means the City of Stockton, a municipal corporation and charter city.
“Disclosure Representative” means the Chief Financial Officer of the City or a designee, o r such other officer or employee as the City shall designate in writin g to the Dissemination Agent from time to time.
“Dissemination Agent” means initially Willdan Financial Services, acting in its capa city as Dissemination Agent hereunder, or any successor Dissemination A gent designated in writing by the Parking Authority and which has filed with the Parking Authority written evidence of such designation.
“ EMMA” means the Electronic Municipal Marketplace Access site maintained by the MSRB, currently located at http://emma.msrb.org.
“Filing Date” means March 31 following the end of each Fiscal Year of the City (or t he next succeeding business day if such day is not a business day), com mencing with the filing for Fiscal Year 2019-20 due March 31, 2021.
“Financial Obligation” means a debt obligation; derivative instrument entered into in connection with, or pledged as security or a source of payment for, an exi sting or planned debt obligation; or a guarantee of a debt obligation or derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation. The term financial obligation excludes municipal securities for which a final offering memorandum has been provided to the MSRB consistent with the Rule.
ATTACHMENT B
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“Fiscal Year” means with respect to the City, the period beginning on July 1 of each year and ending on the next succeeding June 30, or any 12-month or 52-week period thereafter selected by the City with notice of such selection of change in fiscal year to be provided as set forth in Section 3(a).
“Holders” means either the registered owne rs of the Bonds, or, if the Bo nds are registered in the name of The Depository Trust Company or another recognized depo sitory, any applicable participant in its depository.
“ MSRB” means the Municipal Securities Rulemaking Board, which has be en 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 ma y be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
“Official Statement” means the Official Statement dated ________, 2020 relating to the Bonds.
“Parking Authority” means the Parking Authority of the City of Stockton.
“Parking CFD” means City of Stockton Community Facilities District No. 2001- 1 (Downtown Parking).
“Participating Underwriter” means any of the original underwriters of the Bonds required t o comply with the Rule in connection with offering of the Bonds.
“Rule” means Rule 15c2-12(b)(5) adopte d by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time.
“Specified Event” means any of the events listed in Section 5(a) or Section 5(b) of this Disclosure Certificate and any other event legally required to be reported pursuant to the Rule.
SECTION 3. Provision of Annual Reports.
(a) The Parking Authority shall provide, or shall cause the Di ssemination Agent to provide to the MSRB, not later than the Filing Date, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate. The Annual Report sh all be submitted in electronic format, accompanied by such identifying information as is prescribed by the MSRB. The Annual Report may be submitted as a single document or as separate documents compris ing 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 Parking Authority may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not av ailable by that date. If the Fiscal Year of the City changes, it shall give notice of such change in the sa me manner as for a Specified Event under this Disclosure Certificate. The Parking Authority shall provi de a written certification 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 Parking Authority hereunder.
(b) Not later than 15 Business Days prior to the Filing Date, the Parking Authority shall provide the Annual Report to the Dissemination Agent (if other than the Parking Authority). The Parking Authority shall provide, or cause the preparer of the Annual Re port to 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 to it hereunder. The Dissemination Agent may conclusively rely upon such certification and shall have no dut y or obligation to review such Annual Report.
ATTACHMENT B
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(c) If the Parking Authority is unable to provide to the Annual Report to the MSRB by the date required in Section 3(a), the Parking Authority shall send a notice in a timely manner to the MSRB in substantially the form attached as Exhibit A.
(d) The Dissemination Agent shall:
(i) Provided it has received the Annual Report from the Parki ng Authority pursuant to Section 3(a), file the Annual Report the MSRB by the Filing Date, and file any notice of a Specified Event, if requested by the Parking Authority, as soon as practicable following receipt from the Parking Authority of such notice; and
(ii) Provided it has received the Annual Report from the Park ing Authority pursuant to Section 3(a), file a report with the Parking Authority certi fying 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 Parking Authority’s Annual Report shall contain or incorporate by reference the following:
(a) The Statement of Net Assets, the Statement of Revenues, Expenditures and Changes in Fund Net Assets, and the Statement of Cash Flows for the Parking Authority for the prior Fiscal Year, prepared in accordance with gen erally-accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Acc ounting Standards Board. If such financial reports are not available by the time the Annual Repo rt is required to be filed pursuant to Section 3(a), the Annual Report shall contain unaudited financi al statements relating to the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
(b) To the extent not presented in the audited financial state ments:
(i) A maturity schedule for the outstanding Bonds;
(ii) The balance in each of the following funds established pu rsuant to the Indenture as of the close of the prior Fiscal Year:
(A) total deposits in the 2020 Installment Payment Fund for the prior Fiscal Year (with a statement of debt service requirement discharged b y the 2020 Installment Payment Fund in the prior Fiscal Year);
(B) the 2020 Reserve Account (with a statement of the current 2 020 Reserve Requirement and the name of the guaranteed investment contract provider, if any).
(iii) Debt service schedules for any Parity Debt.
(iv) Information for the prior Fiscal Year is substantially si milar to that provided in the following tables of the Official Statement with respect to the Parking CFD:
(A) Table 5–Top 10 Taxpayers;
(B) Table 6–Historical Principal Taxpayers; and
(C) Table 7–Historical Delinquency Information.
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(v) Information for the prior Fiscal Year substantially simila r to that provided in Table 9–“Revenues by Parking Authority” of the Official Statement;
SECTION 5. Reporting of Specified Events.
(a) Pursuant to the provisions of this Section 5, the Parking Authority shall give, or cause to be given, notice of the occurrence of any of the following events with respect to the 2020 Bonds:
(i) Principal and interest payment delinquencies on the 2020 Bonds; (ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting fin ancial difficulties; (iv) Unscheduled draws on credit enhancements reflecting financial difficulties; (v) Substitution of credit or liquidity providers, or their failure to perform; (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed (Iss ue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax stat us of the 2020 Bonds, or other material events affecting the tax status of the 2020 Bonds; (vii) Modifications to rights of the 2020 Bond Holders, if mate rial; (viii) Bond calls, if material, and tender offers;
(ix) Defeasances;
(x) Release, substitution, or sale of property, if any, securin g repayment of the 2020 Bonds, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the Parking Authority or other obligated person;
(xiii) The consummation of a merger, consolidation, or acquisit ion involving the Parking Authority or an obligated person, or the sale of all or substantially all of the assets of the Parking Authority 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; (xiv) Appointment of a successor or additional trustee or the c hange of name of a trustee, if material;
(xv) Incurrence of a Financial O bligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority r ights, or other similar terms of a Financial Obligation of the obligated person, any of which affect security holders, if material; and
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(xvi) Default, event of acceleration, termination event, modif ication of terms, or other similar events under the terms of a Financial Obligation of the obligated person, any of which reflect financial difficulties.
(b) The Trustee shall, promptly upon obtaining actual knowledge at its principal corporate trust office as specified in Section 12 hereof of the occurrenc e of any of the Specified Events and notify the Parking Authority of such Specified Events; provided, that failure by the Trustee to so notify the Parking Authority shall not relieve the Parking Authority of its duty to report Specified Events as required in this Section 5. For the purpose of this Disclosure Agreemen t “actual knowledge” means actual knowledge at the corporate trust office of the Trustee by an of ficer of the Trustee with responsibility for matters related to the administration of the Trust Agreement. (c) Wherever the Parking Authority obtains knowledge of the oc currence of Specified Event, the Parking Authority shall, or shall cause the Dissemination A gent (if not the Parking Authority) to, file a notice of such occurrence with the MSRB, in an electronic for mat as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Specified Event. (d) The Parking Authority acknowledges that the events describe d in subparagraphs (a)(ii), (a)(vii), (a)(x), (a)(xiii), (a)(xiv), (a)(xiv), and (a)(xv) of this Section 5 contain the qualifier “if material.” The Parking Authority shall cause a notice to be filed as set f orth in this Section 5 with respect to any such event only to the extent that it determines the event’s oc currence is material for purposes of U.S. federal securities law. Whenever the Parking Authority obtains knowledge of the occurrence of any of these Specified Events, the Parking Authority will as soon as p ossible determine if such event would be material under applicable federal securities law. If such even t is determined to be material, the Parking Authority will cause a notice to be filed as set forth in Section 5(c). (e) If in response to a request under Section 5(b), the Parking Authority determines that the Specified Event would not be material under applicable federal securities laws, the Parking Authority shall so notify the Trustee in writing and instruct the Dissemination Agent not to report the occurrence. (f) If the Dissemination Agent has been instructed by the Parking Authority to report the occurrence of a Specified Event , the Dissemination Agent shall file a notice of such occurrence with the MSRB. Notwithstanding the foregoing, notice of Specified Events described in Section 5(a)(viii) and (ix) need not be given under this subsection any earlier than the no tice (if any) of the underlying event is given to Holders of affected Bonds pursuant to the Trust Agreement. (g) For purposes of this Disclosure Agreement, any event described in Section 5(a)(xii) above is considered to occur when any of the following occur: t he appointment of a receiver, fiscal agent, or similar officer for the Parking Authority 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 Parking Authority, 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 l iquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Parking Authority.
(h) The Dissemination Agent may conclusively rely on an opinion of counsel that the Parking Authority’s instructions to the Dissemination Agent und er this Section 5 comply with the requirements of the Rule.
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SECTION 6. Identifying Information for Filings with EMMA. Al l 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 obligati ons of the Parking Authority 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 Parking Authority shall give notice of suc h termination in the same man ner as for a Specified Event under Section 5(c).
SECTION 8. Dissemination Agent. The Parking Authority may, f rom time to time, appoint or engage a Dissemination Agent to assist it in carrying out its o bligations under this Disclosure Certificate, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. The Dissemination Agent may resign at any time upon delivery of wri tten notice thereof to the Parking Authority at least 30 days prior to the effective date of such resignation. If at any time there is not any other designated Dissemination Agent, the Parking Authority shall be the Dissemination Agent. The Dissemination Agent, if other than the Parking Authority, shall not be responsible in any manner for the content of any notice or report prepared by the Parking Authority pursuant to this Disclosure Certificate.
The initial Dissemination Agent shall be Willdan Financial Ser vices.
SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Parking Authority may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied with respect to such amendment or waiver:
(a) If the amendment or waiver relates to the provisions of Se ction 3(a), Section 4, or Section 5(a), it may only be made in connection with a change i n circumstances that arises from a change in legal requirements, change in law or a change in the nature, identity or status of an obligated person with respect to the Bonds or the type of business conducted by such person;
(b) The undertaking in this Disclosure Certificate, as amended or taking into account such waiver, would, in the opinion of nationally recognized bond cou nsel, have complied with the requirements of the Rule at the time of the original issuance o f the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) The amendment or waiver either: (i) is approved by the Hol ders of the Bonds in the same manner as provided in the Indenture for amendments to such 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.
(d) Any amendment that modifies or increases the duties or obl igations of the Dissemination Agent shall be agreed to in writing by the Dissemination Agent.
(e) In the event of any amendment or waiver of a provision of this Disclosure Certificate, the Parking Authority shall describe such amendment in the next Ann ual Report, and shall include, as applicable, a narrative explanation of the reason for the amend ment or waiver and its impact on the type (or, in the case of a change of accounting principles, on the p resentation) of financial information or operating data being presented by the Parking Authority. In ad dition, if the amendment relates to the accounting principles to be followed in preparing financial statements, (i) notice of such change shall be given in the same manner as for a Specified Event, and (ii) the Annual Report for the year in which the
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change is made shall present a comparison (in narrative form and also, if feasible, in quantitative form) between the financial statements as prepared on the basis of th e new accounting principles and those prepared on the basis of the former accounting principles.
(f) Notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for the occurrence of a Specified Event under Section 5(c).
SECTION 10. Additional Information. Nothing in this Disclosu re Certificate shall be deemed to prevent the Parking Authority from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any o ther means of communication, or including any other information in any Annual Report or notice of occurrence of a Specified Event, in addition to that which is required by this Disclosure Certificate. If the P arking Authority chooses to include any information in any Annual Report or notice of occurrence of a Specified Event in addition to that which is specifically required by this Disclosure Certificate, the Parki ng Authority 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 Specified Event.
SECTION 11. Default. This Disclosure Certificate shall be so lely for the benefit of the holders and beneficial owners from time to time of the Bonds. In the event of a failure of the Parking Authority to comply with any provision of this Disclosure Certificate, th e Trustee may (and, at the request of the Participating Underwriter or the Holders of at least 25% aggregate principal amount of Outstanding Bonds and upon receipt of indemnity satisfactory to the Trustee , shall), or any Holder or Beneficial Owner of the Bonds may take such actions as may be necessary an d appropriate, including seeking mandate or specific performance by order of a court of competen t jurisdiction in the County of San Joaquin, California, to cause the Parking Authority to comply with its obligations under this Disclosure Certificate, provided that any holder or beneficial owner seeking to require the Par king Authority to comply with this Disclosure Certificate shall first provide at least thirty (30) days prior written notice to the Parking Authority of the failure of the Parking Authority, giving reasonable detail of such failure.
Failure by the Parking Authority to comply with any provision o f this Disclosure Certificate shall not be deemed an Event of Default under the Indenture, and the sole re medy under this Disclosure Certificate in the event of any failure of the Parking Authority to comply wit h the terms of this Disclosure Certificate shall be an action to compel performance. No person or entity shall be entitled to recover monetary damages under this Disclosure Certificate.
SECTION 12. Duties, Immunities and Liabilities of Disseminati on Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Parking Authority agrees to indemnify and save the Disseminatio n Agent, its officers, directors, employees and agents, harmless against any loss, expense and li abilities 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 l iability, but excluding liabilities due to the negligence or willful misconduct of the Dissemination Agent. T he Dissemination Agent shall be paid compensation by the Parking Authority for its services provided hereunder in accordance with its schedule of fees as amended from time to time and all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties her eunder. The obligations of the Parking Authority under this Section 12 shall survive resignation or re moval of the Dissemination Agent and payment of the Bonds.
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SECTION 13. Notices. Any notice or other communication to be given by the Parking Authority or the Dissemination Agent under this Disclosure Certificate may be given by delivering the same by first class mail, postage prepaid, mess enger, or overnight delivery t o the addresses set forth below (until another address is filed by the Parking Authority or the Dissemination Agent with the Trustee):
To the Parking Authority: City of Stockton Parking Authority c/o City of Stockton
425 North El Dorado Street
Stockton, California 95202
Attention: Chief Financial Officer
If to the Trustee: Wells Fargo Bank, N.A.
Corporate Trust Services
333 Market Street, 18th Floor
San Francisco, California 94105
If to the Dissemination Agent: Willdan Financial Services 27368 Via Industria, Suite 200
Temecula, California 92590
SECTION 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the Parking Authority, the Dissemination Agent, the Participating U nderwriter and Holders and Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 15 Record Keeping. The Parking Authority shall maintain records of Annual Reports and notices of Specified Events, including the content of such disclosure, the name of the entities with which such disclosure was filed and the date of filing of such disclosure.
SECTION 16. Governing Law. The laws of the State of California shall govern this Disclosure Certificate, the interpretation thereof and any right or liabil ity arising hereunder. Any action or proceeding to enforce or interpret any provision of this Disclo sure Certificate shall be brought, commenced or prosecuted in any courts of the State located in the County of San Joaquin, California.
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SECTION 17. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be an original and all of whi ch shall constitute but one and the same instrument.
Dated: February __, 2020
CITY OF STOCKTON PARKING
AUTHORITY
B y :
C h i e f F i n a n c i a l O f f i c e r
The undersigned hereby agrees to act as
Dissemination Agent pursuant to the terms
and conditions of this Continuing Disclosure Certificate
WILLDAN FINANCIAL SERVICES
By:______________________________
Authorized Officer
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EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING BOARD
OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Stockton Public Financing Authority