Upland City Council
February 28, 2022

U P L A N D C I T Y C O U N C I L

A N D C I T Y O F U P L A N D F I N A N C I N G A U T H O R I T Y

A G E N D A
F e bru a ry 2 8 , 2 0 2 2
C ity C ou n ci l C h a mbe r

B I L L V E L T O, M A Y O R

S H A N N A N M A U S T, M A Y O R P R O T E M

J A N I C E E L L I O T T, C O U N C I L M E M B E R
C A R L O S A . G A R C I A , C O U N C I L M E M B E R

R U D Y Z U N I G A , C O U N C I L M E M B E R

M I C H A E L B L A Y , C I T Y M A N A G E R
S T E P H E N P . D E I T S C H , C I T Y A T T O R N E Y

D I S R U P T I O N O F M E E T I N G S
I n d ivid uals wh o d em onstrate d isru p tive cond uct d urin g C ity C ou ncil m eetin g s th at p revent th e C ity C oun cil from cond ucting its m eeting in an ord erly m ann er are g u ilty of a m isd em ean or as stated in P C 40 3, d isru p tin g a p ub lic m eeting , and are sub ject to rem oval from th e ch am b er or arrest.
* * * * * * * * * * * *
6 :0 0 P M - C losed S ession

1.C A L L T O O R D E R A N D R O L L C A L L

2.A D D I T I O N S -D E L E T I O N S T O A G E N D A

3.O R A L C O M M U N I C A T I O N S
T his is a tim e for an y citizen to c om m en t on it em l is ted on th e cl osed session ag end a on ly. A n yon e wish in g to ad d ress t he leg is lat ive b od y is req u est ed to sub m it a sp eaker card t o th e C ity C l erk at or p rior to sp eaking . T h e sp eakers are req u ested to keep th eir com m en ts to n o m ore t h an th ree (3 ) m inu tes. Th e use of visu al aid s w ill b e in clud ed in the tim e lim it.

4.C L O S E D S E S S I O N

A .C LO S E D S E S S I O N C O N F E R E N C E W I T H L E G A L C O U N S E L - E X I S T I N G

L I T I G A T I O N
G overn m en t C od e S ection 54 95 6.9 (d ) (1 ) (Worker's C om p ensation C laim ) C laim ant:M ike B oyle
A g ency:C ity of U p land
B.C LO S E D S E S S I O N C O N F E R E N C E W I T H R E A L P R O P E RT Y N E G OT I A TO R S C alifornia G overn m en t C od e S ection 54 95 6.8
P rop erty:

Two contig uou s C ity-ow ned p rop erties ap p roxim ately 3.8 A cres is size loc ated on th e n orth s id e of A rrow Route, ap p roxim ately 60 feet wes t of B en son Aven ue; A P N : 10 07 - 27 1-4 5 & 4 7
C ity
N eg otiators:

C ity M an ag er M ich ael B l ay, D evelop m en t S ervic es D irector Rob ert D alq u es t, D evel op m en t S ervic es M anag er Liz C havez, and E con om ic D evelop m ent C oord inator M elecio P icazo N eg otiatin g
Parties:

Poten tial b uyers
Un d er
N eg otiation :

P rice and term s of p aym ent
* * * * * * * * * * * *
7:00 P M

5.I N V O C A T I O N
Pastor N oel A nd erson, F irst P resb yterian C h urch

6.P L E D G E O F A L L E G I A N C E

7.P R E S E N T A T I O N S
P resentation b y A ssistan t F i re C hief B irch fiel d of M erit ori ous Aw ard t o A shley B ilz for her action s that con trib uted to saving a life of another citizen of Up lan d C ertificate of Rec og n it ion to Team Ru b icon for th eir ass is tan ce d urin g t he wind even t of J anu ary 2 1, 2 02 2
C ertificate of Recog n i ti on to U p l and H ig h S chool S t ud ent E th an Taro L iu for a C ong ressional N om ination for the N aval A cad em y C ertificate of Recog n i ti on t o U p l an d H ig h S c h ool S t ud ent Lu cas M orales for a C ong ressional N om ination for the A ir Force A cad em y

8.C I T Y A T T O R N E Y

9.O R A L C O M M U N I C A T I O N S
T his i s a t im e for an y ci ti zen t o com m ent on an y it em li st ed or n ot li st ed on th e ag end a. A nyon e wi sh in g to ad d res s the leg islat ive b od y i s req u es ted t o su b m it a sp eaker card t o th e C i ty C lerk at or p rior to s p eaki n g . T h e sp eakers are req u ested t o keep th eir com m en ts to no m ore t h an three (3) m in u t es. S p eakers will b e g iven fi ve (5 ) m inu tes d u ri n g p ub lic h eari ng s. T h e use of visu al ai d s will b e i n c lu d ed in th e t im e li m i t. P ub li c com m ents an d q u est ion s for t h e p urp ose of h earing curren t m at ters of con cern in ou r com m u n i ty an d to p rovid e c it izen s a m eth od for th e p ub li c to h ear th ose con cerns in an op en ven u e is encourag ed .

H owever, u n d er t he p rovisions of t he B rown A ct , th e C ity C ou n c il is p rohib ited from d iscu ssion of it em s n ot listed on t he ag end a, and th erefore, th e C ity

C oun cil, C ity M an ag er, or C it y A tt orn ey w il l t ake com m u n i cat ion s un d er ad visem en t for consid eration an d ap p rop riate resp on s e or d i sc u s si on at a later tim e.

10.C O N S E N T C A L E N D A R
A ll m at ters list ed u n d er th e C onsent C al en d ar are c on s id ered t o b e rou ti ne and will b e en act ed b y on e roll call vot e. T h ere w i ll b e no sep arat e d is cu ss ion of these i tem s u n l ess m em b ers of t h e l eg i sl ati ve b od y req uest sp ecific item s b e rem oved from th e C on sen t C alen d ar for sep arate action.

A .A P P R O V A L O F M I N U T E S
A p p rove the Reg u lar M eeti ng M in ut es of Feb ru ary 14 , 2 02 2. (S taff Person :

Keri J oh nson)
B.2 N D R E A D I N G O F O R D I N A N C E 19 58 A M E N D I N G U P L A N D M U N I C I PA L C O D E S E C T I O N 2 .02 .10 0(D ) R E G A R D I N G B Y-D I S T R I C T E L E C T I O N S,

A D J U S T I N G T H E B O U N D A R I E S O F C I T Y C O U N C I L E L E C T I O N

D I S T R I C T S A N D C O N F I R M I N G S U C H R E V I S E D C O U N C I L D I S T R I C T

B O U N D A R I E S, A S R E F L E C T E D I N T H E A TTA C H E D M A P H old sec on d read i n g b y n u m b er an d ti tl e on ly, w aive furth er read in g , and ad op t O rd in ance N o. 19 58 am end in g U p lan d M u n i ci p al C od e S ection

2.0 2.1 00 (D ) reg ard in g B y-D istrict E l ect ion s, ad ju s ti n g th e b ou n d ari es of C ity C ou ncil E lection D istricts and confirm in g su ch revised C ou ncil D istrict B ou nd aries, as refl ect ed in t h e attached m ap . (S taff Pers on : Keri J oh nson)
C .T R E A S U R E R 'S R E P O RT J A N U A R Y 2 02 2 Receive an d file the J an uary 2 02 2 Treasu rer's Rep ort. (S taff Person :

S tep h en Parker)
D.A N N U A L W E E D A B A T E M E N T P R O G R A M A d op t a Resolut ion d eclarin g weed s, g ras ses an d veg et ati on t h at are un m aintain ed , d ead , or d ying an d com b ustib le d eb ris on p u b l ic rig h ts-of- w ay and on p rivate p rop erties wi th in the C it y to b e a p ub li c n u i san ce and p rovid e for th e ab at em en t th ereof; au th ori ze t he m ailin g of n ot ic es t o all p erson s wh ere s u c h nu isances exi st ; an d set a p u b li c hearin g d ate for J un e 13 , 20 22 . (S taff Person: Rob ert D alq uest)
E .A W A R D O F B I D F O R P R O J E C T N O. 1 61 50 , A R PA A L L E Y R E H A B I L I TA T I O N P H A S E 1
A p p rove th e sp ecifi cat ion s for P rojec t N o. 1 61 50 ; aw ard t he con stru ction con tract to O N Y X Pavin g C om p an y, I n c . i n th e am ou n t of $4 4 8 ,0 0 0 ; and authorize a construction contin g en cy in th e am ou nt of $67 ,00 0, for a total am ou nt of $5 15 ,00 0. (S taff Person : B rad en Yu) F.C O N S I D E R A T I O N O F A R E S O L U T I O N A D O P T I N G A N OT I F I C A T I O N O F I N T E N T TO C O M P LY W I T H S B 1 38 3 R E G U L A T I O N P U R S U A N T TO S B 61 9 A p p rove a Resolu ti on ad op t in g a n ot ifi cat ion of in ten t to c om p ly with S B 13 83 reg ulations and seeking ad d it ion al t im e to ac h i eve com p liance p u rsuan t to S en ate B ill 6 19 . (S taff Person: B rad en Yu ) G .E V I D E N C E R O O M V E N T I L A T I O N P U R C H A S E - A R PA F U N D S A u th orize th e use of A m eric an Res cu e P l an A ct, 2 02 1 (A R PA ) fun d ing in th e am ou nt of $2 5,0 00 to p urch ase ven tilation eq u ip m en t for th e evid ence room ; and au th orize t he Police C h i ef to execu te all d oc um ent s related th ereto. (S taff Person: D arren G ood m an)

11.P U B L I C H E A R I N G S

12.C O U N C I L C O M M I T T E E R E P O R T S

13.B U S I N E S S I T E M S
A .A P P R O V A L O F T H E I S S U A N C E O F W A T E R R E V E N U E B O N D S A N D

R E L A T E D D O C U M E N T S
Th e C it y C oun ci l an d th e B oard of D irect ors of the C ity of U p l an d F inan cing A u th ority ap p rove certain leg al d ocum ents in conn ection with the issu ance of t h e A ut horit y's Water Reven u e B on d s S eries 2 02 2 i n an am ou n t n ot to exceed $1 6,0 00 ,00 0 to fin ance im p rovem en ts t o the C it y's wat er system and ap p rove all relat ed b on d d ocum ents b y t akin g th e following recom m end ed actions. (S taff Person: S tep hen Parker)

1.) C it y C ou n ci l ad op ti n g a Resol ut ion ap p rovin g an in stallm en t p u rchase ag reem en t, in d en tu re of t ru st , a con ti nu in g d iscl osu re ag reem ent , and a b on d p urch ase ag reem ent w it h resp ect to t h e i ss u an ce b y th e C i ty of Up lan d F inan cing A uthority of b on d s in an ag g reg ate p rin cip al am oun t not to exc eed $1 6,0 00 ,00 0, ap p rovin g a p reli m i nary official s tat em en t and authorizin g p rep arati on of a fi n al official s tat em en t an d oth er m atters p ertaining to thereto, an d

2.) Th e B oard of D irect ors of t he C i ty of U p lan d F in ancin g A uthority ad op ting a Resol ut ion ap p rovin g an i nstal lm ent p u rch ase ag reem ent, in d en tu re of trust, a con tinu in g d i sc los u re ag reem en t, an d a b ond p u rchase ag reem en t wi th resp ect to th e is su an c e of b on d s in an ag g reg ate p rin cip al am ou nt n ot t o exceed $1 6,0 00 ,00 0, ap p oin ting a t ru st ee, ap p rovin g a p relim inary offic ial s tat em en t and au th orizing p rep aration of a fin al official statem ent and oth er m atters p ertaining to thereto.

14.C O U N C I L C O M M U N I C A T I O N S

15.C I T Y M A N A G E R

16.A D J O U R N M E N T
T he n ext reg u larly sch ed u led C ity C oun cil m eeting is M on d ay, M arch 1 4, 2 02 2

N O T E : I f yo u cha l l e ng e t h e p u b l i c h e a ri ng (s ) o r t he re l a t e d e nvi ro nm e n t a l d e t e rm i na t i o ns i n co u rt , yo u m a y b e l i m i t e d t o ra i s i n g o nl y t h o s e i s s ue s yo u o r s o m e o n e e l s e ra i s e d a t t h e p ub l i c h e a ri ng d e s cri b e d i n t h i s no t i ce , o r i n w ri t t e n co rre s p o nd e nce d e l i ve re d t o t he C i t y o f U p l a nd , a t , o r p ri o r t o , t he p ub l i c he a ri n g .

A l l A g e n d a i t e m s a n d b a ck-u p m a t e ri a l s a re a va i l a b l e f o r p u b l i c re vi e w a t t h e U p l a nd P ub l i c L i b ra ry, d o w n s t a i rs re f e re n ce d e s k a t 4 5 0 N o rt h E ucl i d A ve nue , t h e C i t y C l e rk's O f f i ce a t 460 N o rt h E ucl i d A ve nue a nd t h e C i t y w e b s i t e a t w w w.u p l a nd ca .g o v.

I n co m p l i a n ce w i t h t h e A m e ri ca n s w i t h D i s a b i l i t i e s A ct , i f yo u n e e d s p e ci a l a s s i s t a nce t o p a rt i ci p a t e i n t hi s m e e t i n g , p l e a s e co n t a ct t h e C i t y C l e rk's O f f i ce , 931-4 1 2 0 . N o t i f i ca t i o n 48 h o u rs p ri o r t o t h e m e e t i n g w i l l e n a b l e t he C i t y t o m a ke re a s o n a b l e a rra n g e m e n t s t o e n s ure a cce s s i b i l i t y t o t h i s me e t i ng . [2 8 C F R 3 5 .1 0 2 -35.104 A D A T i t l e I I ]

P O S T I N G S T A T E M E N T : O n Fe b ru a ry 23, 2022 a t ru e a n d co rre ct co p y o f t hi s a g e nd a w a s p o s t e d o n t he b ul l e t i n b o a rd s a t 450 N . E ucl i d A ve nue (U p l a n d P ub l i c L i b ra ry) a n d 4 6 0 N . E u cl i d Ave n u e (U p l a nd C i t y H a l l ) a n d t he C i t y w e b s i t e a t w w w.up l a n d ca .g o v.

ORDINANCE NO. 1958

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF

UPLAND AMENDING UPLAND MUNICIPAL CODE SECTION

2.02.100(D) REGARDING BY-DISTRICT ELECTIONS,

ADJUSTING THE BOUNDARIES OF CITY COUNCIL

ELECTION DISTRICTS AND CONFIRMING SUCH REVISED

COUNCIL DISTRICT BOUNDARIES, AS REFLECTED IN THE

ATTACHED MAP

WHEREAS, on July 25, 2016 the City Council of the City of Upland ("City Council") held a final public hearing on establishing Council election district boundaries, received additional public input, and formally selected the voting district map, set forth in Ordinance No. 1909 which established the current Upland City Council election districts codified at Upland Municipal Code section 2.02.100(D), which have been utilized to date in City Council elections; and

WHEREAS, the United States Census Bureau is required by Article I, Section 2, of the United States Constitution to conduct an accurate count of the population every ten years; and

WHEREAS, California Elections Code § 21601 requires that following each decennial federal census, and using that census as a basis, the Council shall, by ordinance or resolution, adjust the boundaries of any or all of the Council election districts of the City so that the districts shall be substantially equal in population as required by the United States Constitution, California Constitution, and the Federal Voting Rights Act. In establishing the boundaries of the districts the Council must give consideration to the following factors in the following priority: (a) contiguity of districts, (b) respecting communities of interest, (c) drawing easily identifiable districts through use of natural or artificial boundaries and (d) compactness of territory in districts; and

WHEREAS, California Elections Code § 21602 requires that the Council adopt an ordinance or pass a resolution amending Council districts no later than April 17, 2022; and

WHEREAS, on September 27, 2021 the Census Bureau sent 2020 Census data to the State of California with an official population estimate of 79,040 residents for the City of Upland; and

WHEREAS, the City Council held four public hearings on September 13, 2021, October 25, 2021, January 10 and February 14, 2022, where the Council received briefings from the City’s demographic consultant relating to the redistricting process and state and federal redistricting criteria, including the California Elections Code, the Federal Voting Rights Act and the United States Constitution, heard public testimony, and directed staff and the City's demographic consultant to prepare draft Council district maps for consideration; and

WHEREAS, In addition, City staff conducted public outreach by way of print and digital advertisements. During the public hearings, public comment was received on redistricting criteria and communities of interest; and

WHEREAS, at the January 10, 2022 and February 14, 2022 public hearings, the Council received a presentation of several draft maps prepared by the City's demographic consultant for compliance with applicable laws and standards and reviewed additional maps submitted by the public; and

WHEREAS, at the February 14, 2022 public hearing, the City Council agreed on Map Plan 111, designating it as the preferred map and directed that it be presented to the Council for adoption by Ordinance; and

WHEREAS, at each of the public hearings on redistricting, the Council heard testimony relating to “communities of interest,” which led the Council to reach the following determinations about communities of interest on the preferred map, as required under federal and state law:

(1) The election districts are geographically contiguous. The districts are arrayed in a simple and logical form without any islands and with minimal intrusions from the area of one district into another;

(2) To the extent practicable, the preferred map respects the geographic integrity of local neighborhoods and local communities of interest. The Council heard testimony about what constitutes communities of interest in the public’s view.

(3) The election districts are easily identifiable and understandable by residents. The districts in the preferred map form a relatively simple pattern.

(4) To the extent practicable, the election districts are geographically compact. Their configurations for the most part are compact, simple shapes, with nearby populations included in the same districts.

(5) The election districts are balanced in terms of total population and voting age population. The districts are well within the one-person/one-vote deviations permitted under federal and state voting rights laws.

(6) The election districts conform to concentration of minority voters. The preferred map creates two majority/minority voting districts.

WHEREAS, all information in the staff reports, maps, presentations, Council debate and public testimony referenced above is hereby incorporated into this decision and serves as evidentiary basis for these findings and legislative decision.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF UPLAND DOES ORDAIN AS FOLLOWS:

Section 1: This Ordinance is adopted following four noticed City Council public hearings as required by California Elections Code section 21607.1.

Section 2. Subsection (D) of Section 2.02.100 (By-District Elections) of Chapter 2.02 (City Council) of Title 2 (Administration and Personnel) of the Upland

Municipal Code is hereby amended as provided in attached Exhibit A.

Section 3. City Council elections shall continue to be conducted "by districts" in four districts as set forth in Exhibit A, with a Mayor separately elected at-large.

The “term ‘by district’ . . . shall mean election of members of the legislative body by voters of the district alone,” as provided in Government Code § 34871(d).

Section 4. All ordinances and resolutions, or parts thereof in conflict with this Ordinance are hereby repealed.

Section 5: The City Manager is directed to take all necessary steps to give effect to this Ordinance. If necessary to facilitate the implementation of this Ordinance, the City Manager or his or her designee is authorized to make technical adjustments to the election district boundaries that do not substantively affect the populations in the districts, the eligibility of candidates, or the residence of elected officials within any district. The City Manager shall consult with the City Attorney concerning any technical adjustments deemed necessary and shall advise the City Council of any such adjustments required in the implementation of the districts.

Section 6. The City Clerk is hereby directed to provide a certified copy of this Ordinance to the San Bernardino County Registrar of Voters for use in subsequent Upland City Council Elections.

Section 7. Compliance with California Environmental Quality Act. This activity is exempt from environmental review under the California Environmental Quality Act (“CEQA”) (Pub. Resources Code, § 21000 et seq.) pursuant to State CEQA Guidelines (Cal. Code Regs., tit. 14, § 15000 et seq.) sections 15061(b)(3), 15320, and 15378(b)(3). The redistricting process is an organizational and administrative activity of the City, does not have the potential to result in either a direct or reasonably foreseeable indirect physical change in the environment, and is therefore not a project for purposes of CEQA. (State CEQA Guidelines, §§ 15061(b)(3); 15378(b)(5).) In the event the transition process does constitute a project, it is categorically exempt under the Class 20 (Changes in the Organization of Local Governments) categorical exemption. (State CEQA Guidelines, § 15320.) None of the exceptions to the exemptions found in State CEQA Guidelines section 15300.2 apply.

Section 8. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional, invalid or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.

Section 9. Effective Date. This Ordinance shall become effective thirty (30) days from its adoption.

Section 10. Publication. The City Clerk shall certify to the adoption of this Ordinance and cause it, or a summary of it, to be published in a newspaper of general circulation printed and published within the City of Upland, pursuant to all legal requirements.

PASSED, APPROVED, AND ADOPTED this 28th day of February, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, California, do hereby certify that the foregoing Ordinance was introduced at a regular meeting of the City Council of the City of Upland held on the 14th day of February, 2022, and was adopted at a regular meeting of the City Council of the City of Upland on the 28th day of February, 2022, by the following roll call vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

Exhibit “A”
Text Amendment to Section 2.02.100(D)

Effective for all by-district Council offices newly elected at the November 8, 2022 General Municipal Election and at each General Municipal Election thereafter, Subsection (D) or Section 2.02.100 (By-District Elections) of Chapter 2.02 (City Council) of Title 2 (Administration and Personnel) of the Upland Municipal Code is hereby amended as follows:

“2.02.100 By-district elections.

D. District Boundaries.

Plan 111 Total Population Demographics
District Total Population Deviation % Deviation
Hispanic % Hispanic
Origin Origin NH White % NH White NH Black % NH Black NH Asian % NH Asian 1 20,235 475 2.40% 6,600 32.62% 9,528 47.09% 1,022 5.05% 2,506 12.38% 2 20,164 404 2.04% 6,932 34.38% 9,174 45.50% 862 4.27% 2,622 13.00% 3 19,678 -82 -0.42% 10,742 54.59% 4,336 22.03% 2,047 10.40% 2,019 10.26% 4 19,292 -468 -2.37% 11,080 57.43% 4,764 24.69% 1,400 7.26% 1,504 7.80% Total 79,369 4.77% 35,354 27,802 5,331 8,651
Plan 111 CVAP Demographics
District Total CVAP Hispanic CVAP % Hisp CVAP
NH White
CVAP
% NH White N
CVAP
H Black
CVAP
% NH Black
CVAP NH Asian CVAP
% NH Asian
CVAP
1 15,200 4,171 27.44% 8,500 55.92% 689 4.53% 1,583 10.41% 2 14,502 4,252 29.32% 8,031 55.38% 625 4.31% 1,509 10.41% 3 12,176 5,648 46.39% 3,868 31.77% 1,414 11.62% 921 7.56% 4 12,466 6,004 48.16% 4,644 37.25% 1,050 8.42% 639 5.12% Total 54,344 20,075 25,043 3,779 4,652

Notwithstanding any other provision of this Section, and pursuant to California Elections Code § 21606 (a) and (b), each of the Council Members currently in office at the time this Ordinance takes effect shall continue in office until the expiration of the full term to which he or she was regularly elected or appointed. Any vacancy in or recall election for a Council term currently in effect shall be filled based on the Council districts in effect at the time the current Council term was last regularly elected.”

S T A F F R E P O R T
I T E M N O . 10.C .

D A T E :Feb ru ary 2 8, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : S T E P H E N PA R K E R , C PA , A S S I S TA N T C I T Y M A N A G E R

LO N D A B O C K-H E L M S C PA , F I N A N C E O F F I C E R S U B J E C T :T R E A S U R E R 'S R E P O R T J A N U A RY 20 22

R E C O M M E N D E D A C T I O N
I t is recom m end ed that th e C ity C oun cil receive and file th e J an uary 20 22 Treasu rer's Rep ort.

G O A L S T A T E M E N T
Th e p rop osed ac ti on su p p ort s the C i ty's g oal to m an ag e th e C it y's resources i n a fiscally resp on sib le m an ner.

B A C K G R O U N D
Per C aliforn ia G overn m en t C od e S ect ion 53 64 6(b ), the C it y's treasu rer or ch ief fi sc al officer m ay rend er a treasu rer's rep ort t o th e C it y C ou n c il on a q uarterly b asi s. Th e C ity has elected to p rovi d e th is rep ort t o C it y C oun ci l m on th ly, b u t t he C ity's I n ves tm en t Policy (ap p roved D ecem b er 13 , 20 21 ) req u ires t he I n ves tm en t O fficers t o p rovid e a rep ort q uarterly t o the F inan ce C om m itt ee at reg u larly sc h ed u l ed m eeting s. Th is rep ort sh all i nc lu d e th e t yp e of in vestm en t, issu er, d ate of m aturity, p ar, and d ollar am ou nt invested on all securities, curren t m arket valu e as of th e d ate of th e rep ort , in vestm en ts an d m onies h el d b y t h e l ocal ag en cy, and s h al l ad d i ti onal ly inclu d e a d es crip ti on of an y of t he local ag en c y's fun d s , in vest m en ts, or p rog ram s, t hat are u n d er the m an ag em ent of con tract ed p art ies, i nclu d i ng l en d in g p rog ram s.

Th e rep ort sh all in clud e a st atem en t of c om p li an c e w ith th e i n ves tm en t p olicy an d shall in clud e a st atem ent n ot in g t h e C ity's ab ilit y to m eet i ts exp end iture req uirem ent s for th e n ext six m on th s.

I S S U E S /A N A L Y S I S
Th e su b m ission of the m onthly Treasu rer's Rep ort is a com p liance m easure.

F I S C A L I M P A C T S
Th ere is n o fiscal im p act associated with th is action .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
J anuary 2022 Treasurer's Report

S T A F F R E P O R T
I T E M N O . 10.D .

D A T E :Feb ru ary 2 8, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : R O B E RT D. D A L Q U E S T, D E V E LO P M E N T S E R V I C E S D I R E C TO R

L I Z C H A V E Z , D E V E LO P M E N T S E R V I C E S M A N A G E R

J U L I E H E R N A N D E Z , W E E D A B A T E M E N T C O O R D I N A TO R S U B J E C T :A N N U A L W E E D A B A T E M E N T P R O G R A M

R E C O M M E N D E D A C T I O N
I t is recom m en d ed t hat the C ity C ou nc il ad op t a Resolu tion d ecl ari ng weed s, g ras ses an d veg etation th at are un m aint ain ed , d ead , or d yin g an d com b ustib le d eb ris on p ub lic rig hts-of- w ay an d on p rivat e p rop ert ies wi th in t h e C i ty to b e a p u b lic n ui san ce an d p rovi d e for the ab atem en t t hereof; au th orize t he m ailing of n ot ic es to al l p erson s wh ere su ch nu is anc es exist; and set a p u b lic hearin g d ate for J u ne 1 3, 2 02 2.

G O A L S T A T E M E N T
Th e p rop osed action sup p orts th e C ity's g oal of red u cing fire hazard s and im p roving p ub lic health an d s afety b y rem ovin g u nm ain tained , d ead , or d yi n g veg et ati on an d accu m u lat ion s of com b u stib le d eb ris w ithin the city.

B A C K G R O U N D
Th e C i ty of U p land h as b een ad m in isterin g a w eed ab at em en t p rog ram for n early fou r d ecad es. Th e p u rp ose of the Weed A b atem en t P rog ram is to en su re p rop erty ow ners m ain tain th eir p rop ert ies free of p u b li c n uisan ces an d h azard s. A n u i san ce m eans a cond ition of a p rop erty t h at c on s ti tu tes b li g h t, a p u b li c h eal th h azard , or a p ub lic safet y h azard . A d op tion of th e Res olu ti on b eg i n s th e first st ep in im p lem ent in g this p rog ram . A li st in g of p rop erties th at m ay req u ire ab atem en t is availab le for viewing at the C ity C lerk’s office. P rop erties that are in violation w ill rec eive a w ritten not ifi cat ion t o ab ate t he n u is an c e. A w ritt en rem in d er of the p rog ram was in cl u d ed in th e u tility b il ls d urin g t he m on t h of Feb ru ary an d p ost ed on t he C ity w eb site for t hos e w h o p ay on line. F urth erm ore, a writ ten rem in d er was also m ai led to ow ners of vacan t lan d w ithin t h e city lim its. A d d i ti on al ly, a m essag e was p ost ed on t h e C i ty H all’s m essag e b oard (m arq uee) ad visin g all resid en ts of th e start of th e p rog ram .

I S S U E S /A N A L Y S I S
E ach year b et w een Feb ru ary an d M ay, st aff i n s p ec ts al l p rop erti es w it hin th e C ity to d eterm ine w hether un m ai nt ain ed , d ead /d ying veg et ati on and com b u st ib le d eb ris exi st on any p rop erties.

Th is insp ection is d one to assess the existen ce of a p u b lic n uisan ce or p otential fire/safety hazard . A ft er th e i n i ti al in sp ect ion h as b een com p let ed and a p u b li c nu is anc e is con firm ed , a violation notice is sen t to th e p rop erty own er of record or resid ent if ap p licab le, ad visin g th em of th e violat ion as w ell as a $72 .00 ad m i ni st rat ive fee for th is survey. P rop erty ow n ers w ill b e g iven a 10 -d ay p eriod for com p l ian ce. S ub seq uen tly, a secon d in sp ect ion is t hen con d u cted and if t he p rop erty is n ot free of t h e p u b l ic n u i san ce, th e ad m i n i st rat ive fees w il l in crease to a m inim u m of $2 7 8 .0 0 an d th e C i ty h as t h e l eg al ri g h t t o ab at e th e un m aintain ed , d ead /d yin g veg etation an d c om b us ti b l e d eb ri s and assess th e cos ts of such ab atem ent as a sp ecial assessm en t with th e S an B ernard ino C oun ty Tax A ssessor’s O ffice.

F I S C A L I M P A C T S
Th e cost of the p rog ram is in clud ed in the curren t year's op erating b u d g et so no ad d itional ap p rop riations are necessary at t hi s tim e. T he p rog ram i s d esig n ed to b e cost n eu tral t o th e city h ow ever th is year t h e ci ty h i red a con su lt an t t o p erform th e weed ab atem ent coord inator’s d ut ies and p u rch ased soft w are to assist w i th th e m ailou t of th e n oti ces and tracking of t he n on -c om p li an t p rop ert ies . A s s oon as t h e ent ire weed ab at em en t p rocess has b een com p leted , staff will d eterm ine if th e curren t ad m in istrative fee is ad eq u ate or req uires an increase for n ext year.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Resolution
Weed Abatement Codes
Notice Insert
City Parcels L ist Page

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UPLAND,

CALIFORNIA DECLARING WEEDS, GRASSES AND VEGETATION

THAT ARE UNMAINTAINED, DEAD OR DYING, AND

COMBUSTIBLE DEBRIS IN THE PUBLIC RIGHT OF WAY AND

PRIVATE PROPERTY WITHIN THE CITY, TO BE A PUBLIC
NUISANCE AND PROVIDE FOR THE ABATEMENT THEREOF.

WHEREAS there are currently existing and now growing and/or being upon those certain streets and/or sidewalks within the City of Upland as hereinafter particularly d escribed, and upon and/or in front of those certain private properties hereinafter particularly described weeds, grasses, and vegetation that are unmaintained dead or dying that create a public nuisance and fire hazard and are dangerous to person and property within said City; and

WHEREAS the weeds, grasses and vegetation that are unmaintained dead or dying that are currently existing or are now growing or have potential to be upon those certain streets and/or sidewalks within the City, as hereinafter particularly described and upon and/or in front of those certain private properties hereinafter particularly described, are seasonal and recurrent nuisances; and

WHEREAS, there are currently existing upon those certain streets and/or sidewalks within the City, and upon and/or front of those certain private properties, hereinafter particularly described, combustible debris and, accordingly, it is the intention and purpose of the properly constituted authorities of the City to cause the abatement of all of the same that have not been destroyed or abated by the owners of such properties; abatement or removal when done by the City shall be assessed upon the parcels and lands from which said weeds, grasses and vegetation that are unmaintained dead or dying and combustible debris are removed and to impose such costs as a lien upon lots and lands until paid.

NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines, and resolves as follows:

Section 1. The above recitals are true and correct and are incorporated herein by this reference.

Section 2. Definitions and Declarations. Weeds, grasses and vegetation unmaintained, dead or dying in this resolution, includes weeds, grasses, and vegetation that when dry are a public nuisance and fire hazard, and weeds which are otherwise noxious or dangerous, poison oak and poison ivy when conditions of growth are such as to constitute a menace to the public health, and weeds, grasses and vegetation that endanger the public safety by creating a public nuisance such as vines and shrubs of every kind overgrowing curb lines or draping over walls or fences along, or projecting into public street, including alleys, thereby interfering with public street use and maintenance and the public safety. The word “combustible debris”, as used in this resolution, includes trash, debris, outside storage of items that deteriorate in weather. Therefore, all such weeds, grasses, vegetation that are unmaintained, dead, or dying and combustible debris are hereby declared to be seasonal and recurrent public nuisances in each case and instance, and the same in each case and instance is hereby ordered to be abated by the respective owners of such lands.

Section 3. Abatement Notice and Fees. The City Clerk shall cause to be mailed written notice of the proposed abatement to all persons owning property where such nuisances exist; advising of an initial inspection fee of $72.00, and additional administrative fees starting at $278.00 plus abatement fees if such abatement is not completed within the 10 days of notice; said notices shall be substantially in the form required by applicable law; and June 13, 2022 at 7:00pm, or as soon as possible thereafter, at the Council C hambers

Resolution No.

within Upland City Hall, or such other location as may be designated by the City Council pursuant to applicable law, is hereby fixed as the date, time and place for hearing and considering any and all objections or protests to the proposed removal of such weeds, grasses, vegetation unmaintained, dead or dying, and combustible debris as a charge and lien upon the property are hereby notified to attend a meeting of the City Council of the City of Upland at the date, time and place as set forth herein, when their objections will be heard and given due consideration. This resolution shall particularly apply to all parcels and streets within the City of Upland’s corporate limits as provided by the County of San Bernardino Assessor’s official records, which is incorporated herein by this reference and available for review in the City Clerk’s Office.

Section 6. Certification. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

Section 7. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid, or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of the fact that any one or more subsections, subdi visions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.

Section 8. Effective Date. This Resolution shall become effective immediately.

PASSED, APPROVED and ADOPTED this 28th day of February, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 28th day of February, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

Weed Abatement Code Sections enforced by the City of Upland Upland Municipal Code Section 8.12.020 Maintenance of property-Nuisances.

It is a public nuisance for any person owning, leasing, occupying, or having charge or possession of any premises in this city to maintain such premises in such manner that any of the following conditions are found to exist anywhere on the property:

B. Discards, Rubbish, Etc.

1. It is unlawful to allow the accumulation on any part of any property, whether improved or unimproved, including adjacent rights-of-way, any discarded items or rubbish. Those items may include but not be limited to any of the following: broken, discarded, useless, unusable, abandoned, etc., items such as but not limited to trash, garbage, waste matter, debris, lumber, wood boxes, furniture, appliances, household equipment, other equipment, offal, feces, or the remains of dead animals.

3. Firewood shall be cut to fireplace size and neatly stacked and stored out of public view, not to exceed two cords of firewood.
***The code sections above apply to weed abatement when addressing combustible debris also known as a fire hazard. *
D. Landscaping: It is unlawful to allow any one or more of the following conditions to exist on improved property:

1. Vegetation that is dead, decayed, diseased, dry or hazardous;

2. Overgrown vegetation that is likely to harbor such nuisances as rats or vermin, or is in a condition to cause unsightliness;

4. Lack of Maintenance of Landscaping. All landscaping shall be maintained in a reasonable manner which shall include, but not be limited to, trimming, weeding, irrigating, fertilizing, mowing, replacing, cleaning, etc.;

5. Weeds as landscaping or areas consisting only of dirt when that dirt area is more than 25 percent of any portion or area of a front or side yard viewable from the public right-of-way.

6. Weeds and wild grasses, ordinarily known as foxtails, tumbleweeds, devil thorn, hoarhound, gourd, vines, and other wild grasses and weeds in or upon any sidewalk, vacant lot or other property within the city is a public nuisance and dangerous to the health and safety of the inhabitants of this city.

California Government Code Title 4, Division 3, Part 2, Chapter 13. Weed and Rubbish Abatement
39501. The legislative body may compel the owner, lessee, or occupant of buildings, grounds, or lots to remove dirt, rubbish, weeds, and rank growths from buildings or grounds and adjacent sidewalks. If the person compelled by the legislative body defaults, after notice prescribed by the legislative body, it may authorize the removal or destruction of the dirt, rubbish, weeds, and rank growths at that person’s expense by a city officer. The legislative body may prescribe a procedure for the removal or destruction and make the expense a lien upon the buildings or grounds. 39561. The legislative body may declare by resolution as public nuisances, and abate:
(a) All weeds growing upon streets, sidewalks, or private property in the city. (b) All rubbish, refuse and dirt upon parkways, sidewalks, or private property in the city. 39561.5 “Weeds,” as used in this article, includes any of the following:
(a) Weeds which bear seeds of a downy or wingy nature.
(b) Sagebrush, chaparral, and any other brush or weeds which attain such large growth as to become, when dry a fire menace to adjacent improved property,
(c) Weeds which are otherwise noxious or dangerous.
(d) Poison oak and poison ivy when the conditions of growth are such as to constitute a menace to the public health.
(e) Dry grass, stubble, brush, litter, or other flammable material which endangers the public safety by creating a fire hazard.

***IMPORTANT INFORMATION***
Weed Abatement Notification

PLEASE READ CAREFULLY

In the interest of public safety, the City of Upland has begun their fire hazard inspections. Legal notifications will be mailed to those properties with public nuisances/fire hazards by mid-April.

Those property owners who receive an ANNUAL NOTICE TO ABATE will be assessed an initial inspection fee of $72.00. If there is no compliance within ten (10) days of the ANNUAL NOTICE TO ABATE, the fee will increase up to $278.00 plus any accrued abatement fees.

The City of Upland Municipal Code designates the following conditions as a public nuisance and fire hazard:

1. Weeds, grasses, or any type of vegetation that is dead, dying or living, overgrown and unmaintained.

2. Accumulation of trash, debris, or flammable items. This includes mattresses, clothing, wood, straw, wood products, etc.

3. Tumbleweeds anywhere on the property.

In order to eliminate a potential Weed Abatement Action against your property, please maintain your property free of fire hazards and public nuisances. It is important that you maintain your entire property including backyard, side yards and all adjacent easement areas (areas between sidewalk and the curb, behind walls, and in alleys).

Fire season is year-round. Please maintain your property clear of fire hazards and public nuisances throughout the year. If you are not the property owner, please contact or forward this notice to the property owner. For additional information please visit our website at www.uplandca.gov/weed-abatement or contact Julie Hernandez or Jennifer Berg, Weed Abatement Coordinators at (909) 931-4134.

IMPORTANT NOTICE
ATTN: PROPERTY OWNERS

THE ANNUAL WEED ABATEMENT PROGRAM IS IN
EFFECT. NOW IS THE TIME TO REVIEW & REMEDY ANY

POSSIBLE VIOLATIONS IN ORDER TO AVOID
CITATIONS.

FOR MORE INFORMATION, SEE REVERSE SIDE OF
NOTICE.

S T A F F R E P O R T
I T E M N O . 10.E .

D A T E :Feb ruary 28 , 20 22
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : B R A D E N Y U, P U B L I C W O R K S D I R E C TO R

B O B C R I TC H F I E L D, E N G I N E E R I N G M A N A G E R S U B J E C T :A W A R D O F B I D F O R P R O J E C T N O. 16 15 0, A R PA A L L E Y R E H A B I L I TA T I O N P H A S E 1

R E C O M M E N D E D A C T I O N
I t is rec om m end ed t h at the C it y C ou ncil ap p rove t h e sp ecifications for P rojec t N o. 16 15 0; aw ard th e con st ru ct ion contract t o O N Y X Paving C om p an y, I nc. in th e am oun t of $4 48 ,00 0; and aut horize a c ons truc ti on con ting ency in the am oun t of $6 7,0 00 , for a total am ou nt of $5 15 ,00 0.

G O A L S T A T E M E N T
Th e p rop osed ac ti on sup p orts t he C i ty's ob ject ive to contin ue to m ai n t ain and i m p rove the C ity's p ub lic alley facilities.

B A C K G R O U N D
Th e C i ty ow ns an d m ain tai ns ap p roxim ately 38 m iles of p u b l ic alleys. I n A p ril of 20 16 , the P u b lic Works C om m it tee an d C it y's E n g ineerin g D ivision b eg an m eeti n g to d is cu ss the con d ition of t h e all eys an d p u b lic in q u iries d irectly relat ed t o t he d esi re for al ley rep avin g .

Recog nizing th e n eed t o ad d res s a g row in g con cern, t h e C om m itt ee req u es ted the d evelop m ent of an im p rovem ent p lan to b e u sed as a g uid an ce d ocu m en t for alley rep airs.

I n J u ly 2 01 7, the P ub lic Works C om m ittee review ed a d raft con cep t p lan alon g with b u d g et scenarios for b ot h all ey reconstructi on an d p reservati on strateg ies. B ased on C om m i tt ee in p u t and t he d esire to m axim ize b enefi ts of t he lim ited fun d s , m od ification s w ere m ad e to en han ce p avem ent p reservati on m et hod s i n th e first t h ree years, c ou p led wi th ad d ressin g s om e of the w orst al leys . D u e t o th e m ag n it ud e of al leys in very p oor c on d it ion in t h e sou th east q uad ran t

of t h e C it y, it w as recom m en d ed t h i s area rec eive at ten tion in th e earl y years of th e p rog ram .

O n S ep tem b er 12 , 20 17 th e P u b lic Works C om m ittee rec om m en d ed C it y C ou ncil ap p rove the alley im p rovem en t g u i d an ce p lan an d on S ep t em b er 2 6, 20 17 , th e C i ty C ou ncil p rovid ed its ap p roval.

I n late 20 18 and early 2 0 1 9 , p reservation st rat eg i es were i m p lem ent ed to alleys i n "g ood " con d ition w it h t he ap p li cat ion of a Typ e I I slu rry s eal, t o b e foll ow ed u p w it h ad d itional alleys in th e S p ring of 20 22 .

O n O ctob er 1 1, 20 21 , the C ity C ou ncil ap p roved th e A m erican Rescue P lan A ct (A R PA ) I n vestm en t P lan , w here $1 ,00 0,0 00 of A R PA fu nd s were allocated to A lleyway I m p rovem ents.

I S S U E S /A N A L Y S I S
Th e C i ty rec en t ly com p l eted c on s tru c ti on d oc u m en t s for th e rehab il it ati on of fou r alleys as sh ow n on the att ach ed m ap . S p ecific i m p rovem en t s wi ll in clud e rep l acem ent of ol d b rick sewer m anh oles; i ns tal lat ion of a new con crete ri b b on g u tt er alon g the flowlin e of th e alleys; and , reconstruction of asp h alt con crete p avem en t.

O n J anu ary 1 9, 2 02 2, the C ity received and op en ed three (3) b id s for P roject N o. 16 15 0 u nd er B id N o. 2 02 2-0 1, as follow s:

B I D D E R B I D A M O U N T
O N Y X Pavin g C om p any, I nc.$4 48 ,00 0.0 0
S eq uel C on tractors, I n c.$4 53 ,42 5.5 0
A ll A m erican A sp halt $7 57 ,00 0.0 0

Th e C it y review ed th e b id in form ati on an d con firm ed th at O N Y X Pavin g C om p any, I n c. of A n aheim , C al iforni a, is t h e low est resp on s ib le an d resp onsive b i d d er. I f award ed b y th e C ity C ou ncil, construction is anticip ated t o b eg i n in A p ri l, an d b e su b stan tially com p let e b y J u ly 20 22 , w eath er p erm itting .

F I S C A L I M P A C T S
Th e estim ated p roject costs and fun d ing are sum m arized b elow:

E stimated P ro ject C o sts

B asic B id A m ou nt $4 48 ,00 0.0 0
C on stru ction C on ting ency $67 ,00 0.0 0
T o tal C o ntract W o rk:$515,000.00

C on stru ction A d m inistration and I n sp ection $38 ,00 0.0 0 M aterial Testin g $3 ,00 0.0 0
T o tal Pro ject C o st:$556,000.00

F unding

F Y 21 -22 C I P A ccoun t N o. 2 29 -75 00 -16 15 0 (A R PA )$5 56 ,00 0.0 0 T o tal Pro ject F unding:$556,000.00

A L T E R N A T I V E S

1. Reject all b i d s an d au th orize th e C it y C lerk to re-ad vert is e P roject N o. 16 15 0. D ue to a su ccessful b id d in g p rocess, staff d oes not recom m end th is altern ative.

2. P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Vicinity M ap

Project No. 16150 Alley Rehabilitation Program

S T A F F R E P O R T
I T E M N O . 10.F .

D A T E :Feb ruary 28 , 20 22
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : B R A D E N Y U, P U B L I C W O R K S D I R E C TO R

K R I S T E N A L M A R A Z , M A N A G E M E N T A N A LY S T S U B J E C T :C O N S I D E R A T I O N O F A R E S O L U T I O N A D O P T I N G A N OT I F I C A T I O N O F I N T E N T TO C O M P LY W I T H S B 13 83 R E G U L A T I O N P U R S U A N T TO S B 6 19

R E C O M M E N D E D A C T I O N
I t i s recom m en d ed th at t he C it y C ou ncil ap p rove a Resol u t ion ad op ti n g a not ificat ion of in ten t to com p l y w it h S B 13 83 reg ul ati ons and s eekin g ad d i ti onal tim e to achieve com p lian ce p u rsuan t to S en ate B ill 6 19 .

G O A L S T A T E M E N T
Th e p rop osed action sup p orts th e C ity's g oal of en su ring com p lian ce u nd er S enate B ill 13 83 .

B A C K G R O U N D
I n 2 0 1 6 , S tat e of C al iforn i a p as sed S en ate B il l 1 38 3 (S B 1 38 3), C aliforn ia's S hort-Lived C lim ate Pollut ant Red u c ti on S t rat eg y, to red u ce m et h an e an d ot her g reen hou se g as em ission s statewid e. To m eet th is g oal, th e b ill req uires a 75 % red uction of statew id e food waste d isp osal from 20 14 levels, and a 2 0% or g reater recovery of ed i b l e food th at i s cu rrently lan d filled ac ros s th e st ate. S B 1 38 3 i s enforced b y th e D ep artm ent of Res ources , Recyclin g , and Recovery (C al Recycle), and ju risd ictions are req u ired to im p lem en t all p rog ram s ad d ressed in th e leg islation. To m eet S B 1 38 3 req u i rem en t s, ju ris d i ct ion s are req u i red to d ivert org anics w aste from resid ents an d b usin esses from land fills to d em on strate com p lian ce.

Un d er th e S B 13 83 reg u lat ion s, if a local ju ris d i ct ion fai ls t o ad op t en forceab le m ech anism s (ord in ances, fran ch ise ag reem en t s, etc.) to im p l em en t the S B 1 38 3 reg u lation s b y J an . 1,

20 22 , C al Recyc le can im p ose ad m i n i st rat ive ci vil p enal ti es ag ainst t h e ju ris d i ct ion . Penalties vary b ased on the severity of the violation . V iolation s that su b stan tially d eviate from the S B 13 83 reg ul ati ons are con si d ered to b e m ajor an d w ill resu lt in p enal ti es b etw een $7,5 00 an d $1 0,0 00 p er violation p er d ay.

O n O ct ob er 7 , 20 21 , S enat e B il l 6 19 (S B 6 19 ) was s ig n ed allow in g L ocal ju ri sd ic ti on s (cities, cou nties and sp eci al d i st ri ct s) t h at fail t o ad op t enforceab le m ech an i sm s to d ivert org anic w aste from l an d fil ls in acc ord an c e w it h S B 1 38 3 reg u lat ion s b efore J an. 1 , 20 22 to b e ab le to seek relief from ad m i n i st rat ive civil p en alt ies for th e 2 02 2 cal en d ar year. A d d i ti onal ly, th e C ity m ay b e eli g i b l e for a b road er an d l on g er-t erm reg ulatory com p li ance p ath , in clud in g su sp end ed ad m inistrative civil p enalties, throug h a corrective action p lan .

I S S U E S /A N A L Y S I S
Th e C ity exp ect s to b e faci n g violat ion s of t h e S B 13 83 reg u l ati on s d urin g t he 2 02 2 calend ar year resulting in p ossib le p enalties. To m itig ate th is issue, th e C ity can ap p ly to C al Recycle for p enalty relief.

Un d er S B 6 19 , th e C ity m u st sub m it a N otification of I n ten t t o C om p ly (N O I C ) b y M arc h 1, 20 22 , to C al Recycle for ap p roval i n ord er to q u al ify for reli ef from ad m i n i st rat ive ci vil p enalties for t he 20 22 cal en d ar year. Th e N O I C m us t b e d u l y ad op ted b y t he ju ri sd ic ti on b y form al w ritten res olu ti on an d m eet th e req ui rem ent s of S B 61 9. T h e ap p roval of t h e resolut ion b y C ou ncil cert ifi es th e im p lem en tat ion of the p rop osed act ion s to rem ed y t h e violation s accord in g t o t h e p rop os ed sc h ed u l e as ap p roved b y C al Recyc le and in accord ance with S B 61 9 and th e S B 13 83 Reg u lation s.

C al Recycle m u st, with in 4 5 b u siness d ays of receiving a notification , ap p rove it, d isap p rove it (w ith a justi ficati on), req u est ad d i ti on al in form ati on or com m it to a p articular ti m el in e for a fin al d ecision on ap p roval or d isap p roval.

I f C al Recycle ap p roves a p art ic u l ar n otification an d th e s u b m i tt in g ju risd iction im p l em en ts its p rop osed acti ons, ad m in is trati ve civi l p en al ti es w ill b e waived an d n ot accru e d u ri n g 2 02 2. I f th e local ju ri sd ic ti on fai ls to correct its viol ati ons or c om p ly w ith an ap p roved n ot ifi cat ion of in ten t to c om p ly, C al Rec ycl e m ay revoke it s ap p roval an d im p ose ad m inist rat ive civil p enalties for vi olat ion s occ urri ng in 2 0 2 2 ret roac ti ve t o the orig in al d at e of vi olat ion . Penalties w ill con tinu e t o acc ru e on J an . 1 , 20 23 if vi olat ion s t hat com m en ced d u ring 20 22 have n ot ab ated . H owever, u p on com p lete com p li ance w it h th e term s of su ch a c orrect ive ac ti on p lan, C al Recycle m ust waive th ose ad m inistrative civil p enalties.

F I S C A L I M P A C T S
Failure to m eet S B 1 38 3 req u irem en t for calend ar year 20 22 can result in m onetary fines.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Resolution
Exhibit A - Notice of Intent to Comply

RESOLUTION NO.

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UPLAND,

CALIFORNIA, ADOPTING A NOTIFICATION OF INTENT TO
COMPLY WITH THE SB 1383 REGULATIONS AND SEEKING

ADDITIONAL TIME TO ACHIEVE COMPLIANCE PURSUANT TO SB
619

WHEREAS, the California Department of Resources Recycling and Recovery (“CalRecycle”) adopted regulations to implement Senate Bill 1383 (Lara, Statutes of 2016) (“SB 1383 Regulations”), to achieve organic waste reduction goals established in Health and Safety Code Section 39730.6 through a 50 percent reduction in the level of the statewide disposal of organic waste from the 2014 level by 2020 and a 75 percent reduction in the level of the statewide disposal of organic waste from the 2014 level by 2025; and

WHEREAS, the City of Upland (“City”) is a local jurisdiction required to comply with the SB 1383 Regulations; and

WHEREAS, the City is or expects to be facing continuing violations of the SB 1383 Regulations during the 2022 calendar year; and

WHEREAS, Senate Bill 619 (Laird, Statutes of 2021) amended Public Resources Code Section 42652.5, created a mechanism called a Notification of Intent to Comply through which a local jurisdiction may secure administrative civil penalty relief from any continuing violations of the SB 1383 Regulations for the 2022 calendar year and may be eligible for a broader and longer-term regulatory compliance path, including suspended administrative civil penalties, through a corrective action plan; and

WHEREAS, the City is a local jurisdiction authorized by SB 619 to submit a Notification of Intent to Comply for CalRecycle approval; and

WHEREAS, CalRecycle shall approve a Notification of Intent to Comply that is duly adopted by the jurisdiction by formal written resolution and meets the requirements of SB 619.

NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves as follows:

Section 1. The foregoing recitals are true and correct and are hereby incorporated and made an operative part of this Resolution.

Section 2. The City Council hereby adopts the Notification of Intent to Comply attached as Exhibit “A” and authorizes and directs the City Clerk to submit the Notification of Intent to Comply to CalRecycle for approval.

Section 3. By submitting the Notification of Intent to Comply pursuant to SB 619, the City represents and certifies that it will implement the proposed actions to remedy the violations according to the proposed schedule as approved by CalRecycle and in accordance with SB 619 and the SB 1383 Regulations.

Section 4. The City agrees to comply with any maximum compliance deadline in any corrective action plan that CalRecycle, in its sole discretion, determines to be necessary and appropriate under the circumstances for the correction of any violation(s) of the SB 1383 Regulations identified in its Notification of Intent to Comply.

Resolution No.

Section 5. Compliance with California Environmental Quality Act. The City Council finds that this Resolution is not subject to the California Environmental Quality Act (“CEQA”) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the State CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Further, if the activity is deemed a project this City Council finds that this Resolution is exempt pursuant to Section 15061(b)(3) of the State CEQA Guidelines.

Section 6. Certification. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.

Section 7. Severability. If any section, subsection, subdivision, sentence, or clause or phrase in this Resolution or any part thereof is for any reason held to be unconstitutional, invalid, or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Resolution or any part thereof. The City Council hereby declares that it would have adopted each section irrespective of th e fact that any one or more subsections, subdivisions, sentences, clauses, or phrases are declared unconstitutional, invalid, or ineffective.

Section 8. This Resolution shall take effect immediately upon its adoption by the City Council.

PASSED, APPROVED and ADOPTED this 28th day of February, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council held on the 28th day of February, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAINED:

ATTEST:

Keri Johnson, City Clerk

46708.00113\34649877.1
Exhibit “A”
Notification of Intent to Comply

Notification of Intent to Comply
Cal Recycle is providing this optional form as a convenience to assist jurisdictions (counties, cities, a county and city, or special districts providing solid waste collection services) for purposes of submitting a notification of intent to comply to CalRecycle [see Public Resources Code (PRC) section 42652.S(c)].

A jurisdiction may submit a notification of intent to comply if it is facing continuing violations of the Short-lived Climate Pollutants: Organic Waste Reductions requirements in Title 14 California Code of Regulations (14 CCR). The written notification of intent to comply, adopted by resolution of the jurisdiction's governing body, shall be sent to CalRecycle no later than March 1, 2022, to [email protected].

A jurisdiction shall, at minimum, include the following in its notification:

1.A description, with specificity, of the continuing violations.

2.A detailed explanation of the reasons, supported by documentation, why the local jurisdiction is unable to comply.

3.A description of the impacts of the COVID-19 pandemic on compliance.

4.A description of the proposed actions the local jurisdiction will take to remedy the violations within the timelines established in 14 CCR section 18996.2 with a proposed schedule for doing so. The proposed actions shall be tailored to remedy the violations in a timely manner.

Upon approval by CalRecycle of a jurisdiction's notification and implementation of the intent to comply, a jurisdiction may be eligible for both of the following:

1.Administrative civil penalty relief for the 2022 calendar year pursuant to PRC section 42652.S(d).

2.A corrective action plan pursuant to 14 CCR section 18996.2. a.CalRecycle may address through a corrective action plan any violations disclosed in a jurisdiction's notification that will take more than 180 days to correct. In this situation, the proposed actions and schedule in the jurisdiction's approved notification will be in effect until a corrective action plan is issued.

CalRecycle will respond in writing to a jurisdiction within 45 business days of receiving its notification with an approval, disapproval, request for additional information, or timeline for a decision on approval or disapproval. CalRecycle will include details about why a jurisdiction did not meet the requirements for a Notification of Intent to Comply when 'disapproving the jurisdiction's notification.

S T A F F R E P O R T
I T E M N O . 10.G .

D A T E :Feb ru ary 2 8, 2 02 2
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R P R E P A R E D B Y : D A R R E N G O O D M A N , P O L I C E C H I E F

A N T H O N Y K A B A YA N , P O L I C E L I E U T E N A N T S U B J E C T :E V I D E N C E R O O M V E N T I L A T I O N P U R C H A S E - A R PA F U N D S

R E C O M M E N D E D A C T I O N
I t is rec om m en d ed th at t he C it y C oun cil au th ori ze t h e use of A m eri can Rescu e P l an A ct , 2 02 1 (A R PA ) fu nd in g in t he am ou n t of $2 5,0 00 to p urch ase ven ti lat ion eq u ip m en t for th e evid en ce room ; and authorize th e Police C hief to execute all d ocum ents related thereto.

G O A L S T A T E M E N T
Th e p rop osed action su p p ort s th e C it y’s g oal to p rovid e safe an d effect ive law en forcem en t for th e Up lan d com m un ity.

B A C K G R O U N D
O n M arch 1 1, 20 21 , th e P resi d en t sig n ed i n t o law th e A m eri can Resc u e P lan A ct , als o kn ow n as “A R PA .” Th e fed eral s ti m u lu s p rog ram allocat es $1.9 trillion over t h e n ext t hree years to help state and local g overn m en ts resp ond to the econ om ic and p ub lic health of im p acts of C O V I D -1 9. U n d er t h e l aw, each local g overn m en t ag en cy nat ion w id e recei ves an al loc ati on of A R PA fu nd s, b ased on a form u la. T he C ity’s share is $1 5.2 m illion .

Th e st im u l u s p rog ram is d esi g n ed to g i ve com m un ities b road lat it ud e on sp en d in g th e fu nd s for elig ib le u ses . T hese us es i n c lu d e (1) resp on d in g to t he p u b li c health em erg en cy or neg ative ec onom ic im p acts for hou seh old s an d b u sinesses, (2 ) resp on d ing t o w orkers p erform in g essen tial work d u ri ng th e em erg en cy b y p rovid in g p rem iu m p ay or p rovid in g g rants t o elig ib le em p l oyers p erform ing ess ent ial work, (3) p rovid in g g overn m en t services, and (4) m akin g n ecessary in vestm en ts in w ater, sewer, or b road b an d infrastru cture.

I S S U E S /A N A L Y S I S
Th e C it y of U p l and Police D ep artm ent w ould li ke to in vest th e req u est ed fu nd s to p urch ase eq u ip m en t t hat w il l en h an ce our ab ility t o p roces s evid ence safely and effic ien tl y. T he req uested eq uip m ent will red u ce th e ris k of con tam in ati n g evi d en ce, exp os in g em p loyees to b lood b orn e p athog ens and oth er d ang erou s chem icals.

Th e S afekeep er series foren si c evi d en ce d rying cab in ets are d es ig n ed to store, d ry, or oth erwise p rocess foren si c evid ence in t he c on t rol led en vironm ent of a t am p er resistan t com p artm ent to m ain tain the chain of custod y.

S afekeep er Foren sic E vid enc e D ryin g C ab inets p rovid e cost -effect ive st orag e an d contain m en t for foren si c evid en ce as i t i s d ried b y a constan t flow of air. A i r S ci en c e d u ct less tech nolog y rem oves airb orn e p ath og en s, p art iculates, fu m es , an d od ors em itted b y th e con ten ts. Usin g in novative fi lt rat ion t ech nol og y, th e foren si c evid en c e d ryi ng cab inet creates a safe w ork environ m en t over th e w id est ran g e of ap p lications in th e in d u stry.

Th e C A p t u re B T fu m ing cham b ers are u sed i n foren sics an d c ri m e lab orat ori es to p rocess evid entiary it em s s u c h as lat en t fi n g erp ri n t s w h i le eli m i nat in g user exp osure to h azard ou s ch em ical fu m es. W it h ou t th is fu m i ng cham b er, em p loyees w ill b e exp osed t o d ifferent typ es of ch em icals that are u sed in th e p rocessing of evid ence.

S taff ob t ain ed t hree q u otes for each of th e m ajor com p onen ts of vent il ati on eq u i p m en t b ein g sou g h t for t he evid en ce room . Th e l ow est b i d on eac h of t he com p on en t s was from A rrowh ead S cien tific, I n c., and th e total cost th rou g h th at ven d or is $2 4,9 98 .25 .

F I S C A L I M P A C T S
Th e tot al A R PA p rog ram fu n d in g for Up lan d i s $1 5,2 13 ,71 6, and w il l b e accoun ted for in the A R PA F u n d (F u n d 2 29 ). T he in frastructu re in vest m en ts allocated to P u b l ic S afety in the A R PA I n vestm en t P l an ap p roved b y C ou n c il tot aled $4 ,20 5,7 13 . O f th at am oun t, $25 ,00 0 is req uested to b e ap p rop ri ated for t h e necessary im p rovem ent s in t he evi d en ce room . T h e total exp en se for th is p roject is anticip ated to b e $2 4,9 98 .25 .

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
Quotes

S T A F F R E P O R T
I T E M N O . 13.A .

D A T E :Feb ruary 28 , 20 22
T O :M A YO R A N D C I T Y C O U N C I L
F R O M : M I C H A E L B L A Y, C I T Y M A N A G E R /E X E C U T I V E D I R E C TO R P R E P A R E D B Y : S T E P H E N PA R K E R , C PA , A S S I S TA N T C I T Y M A N A G E R /F I N A N C I N G

A U T H O R I T Y T R E A S U R E R

R O B E R T TO R R E Z , F I N A N C E C O N S U LTA N T

K I M B Y R E N S, B O N D C O U N S E L
D A N I E L L A V. H E R N A N D E Z , B O N D C O U N S E L S U B J E C T :A P P R O V A L O F T H E I S S U A N C E O F W A T E R R E V E N U E B O N D S A N D

R E L A T E D D O C U M E N T S

R E C O M M E N D E D A C T I O N
I t is recom m end ed that th e C ity C oun cil an d t he B oard of D irect ors of th e C i ty of Up lan d F inan cing A ut horit y ap p rove certai n leg al d ocu m en ts in c onn ect ion w ith th e issu ance of the A u th ority's Wat er Reven ue B ond s S eries 2 0 2 2 in an am oun t n ot to exc eed $16 ,00 0,0 00 to fin ance im p rovem en ts to the C ity's w ater system and ap p rove all related b ond d ocum ents b y:

1.) C ity C ou ncil ad op tin g a Resolu tion ap p roving an installm ent p urch ase ag reem en t, in d en tu re of t ru st , a con ti n u in g d isclosu re ag reem en t, and a b on d p u rc h as e ag reem en t w ith resp ect to th e issuan ce b y th e C ity of Up lan d F inan cing A uthority of b on d s in an ag g reg ate p rin cip al am ou n t n ot to exc eed $1 6,0 00 ,00 0, ap p roving a p relim in ary offi ci al st atem ent an d authorizin g p rep aration of a fin al offic ial s tat em en t an d ot h er m att ers p ert ain in g to thereto, and

2.) Th e B oard of D irect ors of th e C ity of U p lan d F in ancin g A u th ori ty ad op t in g a Resolu tion ap p roving an in stallm en t p u rc h as e ag reem en t, in d en tu re of trus t, a con ti nu in g d isclosu re ag reem en t, an d a b on d p u rchase ag reem en t w it h resp ect t o t he i ss u an ce of b on d s i n an ag g reg ate p ri ncip al am ou n t not to exceed $1 6,0 00 ,00 0, ap p oin ting a t ru st ee, ap p rovi n g a p relim inary official st atem ent an d au t h orizin g p rep aration of a fi n al offic ial st atem en t an d oth er m atters p ertaining to thereto.

G O A L S T A T E M E N T
Th e p rop osed ac ti on sup p orts t he C ou n c il 's g oal t o p rovi d e sou n d fiscal steward shi p for the C ity of U p land .

B A C K G R O U N D
At its D ecem b er 13 , 2 02 1 p ub lic m eeti ng , th e C i ty C ou ncil ap p roved S t aff’s p rop osed B L A S T strateg y d es ig n ed to red u ce th e C ity’s Un fun d ed A cc ru ed Pen sion L iab il it y (U A L ) w ith C al P E R S. A key com p on ent of th e B L A S T s trateg y i s the issu ance of Water B ond s to finan ce w ater sys tem i m p rovem en t s, th ereb y freein g u p W ater F un d reserves. S u b seq u ent to the Water B on d is su e, W ater F u n d reserves w ill b e u s ed to p urch ase in ternal G en eral F u n d lease reven ue b ond s. T he p roceed s of th e G eneral F un d b ond s will b e u sed to p ay d own a p ortion of th e G eneral F un d 's U A L with C al P E R S.

I S S U E S /A N A L Y S I S
S taff p rovid ed an u p d ate t o th e C it y C ou n c il at it s Feb ru ary 14 , 20 22 p u b l ic m eeting . Th at up d ate id entified t he W ater B on d F in anc in g Team wh ic h i n c lu d es b on d u n d erw rit in g fi rm J.P.

M org an S ecurities, L LC , as the C ity’s u nd erwriter for th e Water B ond s.

Th e A uthority p lan s to sell th e B ond s on a n eg otiated b asis u sing J.P. M org an as the un d erw riter. Th e B ond s are exp ec ted to b e rat ed A A or A A + b y S t and ard & Poor’s C orp oration and w il l h ave a t erm of 15 years. B as ed on cu rrent m arket cond it ion s, th e tru e interest cost (w hich fact ors i n th e p rojec t fu n d s as wel l as th e cos ts of is su an c e) i s exp ected t o b e u nd er 3%.

Follow in g aut horizati on of th e B on d s an d ap p roval of th e b on d d oc u m en t s, an d rec eip t of the cred it ratin g from S &P, t he P reli m i nary O ffi ci al S t atem en t (P O S ) w il l b e d i st ri b u ted to p otential investors. A s d iscussed on Feb ru ary 1 4, S taff wi ll m eet w it h S &P on Feb ru ary 2 2.

We exp ect to receive t h e cred it rati n g from S &P on or ab ou t M arch 3 and p l an to s ell the b on d s the w eek of M arch 9 . P roceed s of the b on d s w ill b e availab le ap p roxi m at ely t w o w eeks later, after the closing p rocess is com p lete, on or ab ou t M arch 2 4. P lease b e ad vised th at sh ould m arket c on d it ion s n ot b e favorab le t h e week of M arch 9 , b ased on th e ad vice of J P M org an an d ot h er m em b ers of th e F in an c in g Team , t he b on d issu ance could b e p u t off for a w eek or tw o. S taff w ill u p d ate the C oun cil an d A uthority as n eed ed .

I t i s ap p rop riat e at th is m eet in g to c on s id er ad op t ion b y th e C i ty of a res olu ti on t o ap p rove th e I n s tal lm en t P u rchase A g reem ent an d c ert ain oth er d ocu m en ts i n c on n ect ion w it h the A u th ority’s issu ance of th e B on d s. Th e leg al st ru ct u re of th e B ond s req ui res t he C ity to acq uire th e I m p rovem en ts to th e w ater system from t h e A ut horit y p u rsuan t to an I n stallm en t P u rchase A g reem ent. Th e ann ual in stallm en t p aym en ts p ayab le b y th e C ity thereun d er w ill b e u sed b y t he A u th ority t o p ay t he p rin cip al of an d in terest on t he B on d s. T he B on d p roceed s w i ll b e u sed t o fi n an ce th e I m p rovem ent s and cert ain cost s of issuan ce. Th is leg al stru cture is used in m any en terp rise fun d b orrow in g s in C alifornia, and w as u sed in 20 11 b y th e C ity to fin ance im p rovem en ts to the water system .

G eneral S um m ary o f S ecurity: T he I nstallm ent P u rchase A g reem ent is th e in stru m en t un d er w h i ch t h e C i ty m akes i n s tal lm en t p aym en ts wh ic h rep res en t t he net revenu es of the w ater system . N et reven ues consist of g ross reven u es (all i n c om e from w ater rates an d ch arg es) recei ved from t h e w ater syst em , less th e am ou n t of m ai nt enan ce and op eration costs of th e wat er system . T he i n s tal lm en t p aym en ts are p aid to th e A ut horit y wh ich con cu rrently p ays th e B on d s un d er th e I n d en tu re.

D ocu m en ts to b e ap p roved b y the C ity and th e A u th ority inclu d e:

I ndenture o f T rust: Th e I n d en tu re p rovid es for the m ann er of p aym en t of the B ond s, m aturity d ates an d in terest rat es, early red em p t ion p rovis ion s; an d estab lish es t he fu nd s an d accoun ts sp ecifically p l ed g ed to t he rep aym en t of th e B on d s an d th e rem ed ies up on an even t of d efau lt . T h e I n d en tu re is am ong t he C ity, th e A u th ori ty an d U.S. B an k Tru st C om p any, N ational A ssociation , as b ond trustee.

I nstallment P urchase A greement: T he I nstallm ent P u rchase A g reem ent p rovid es the term s of p aym ent b y the C it y for t he acq u isit ion of th e I m p rovem en ts from th e A u th ority. T he I n stallm en t P urch ase A g reem en t is b etween th e C ity an d the A uthority.

C o ntinuing D isclo sure A greement: Th is A g reem en t i s in clud ed as an ap p en d i x t o the P relim inary O ffi ci al S tat em en t an d ou tl in es t he inform ation th at th e A u th ori ty an d C it y w ill ag ree t o p rovid e, on an ann ual b asis, t o th e m u ni ci p al b on d m arkets. D isclosu re is req u ired ann ually, an d on a tim ely b asis for en um erated m aterial events.

O fficial S tatement: Th e P relim inary O fficial S tatem ent (P O S ) d escrib es the g eneral term s of th e B on d s, secu ri ty for rep aym en t an d d i scloses p oten tial ri sks to p rosp ective in vestors. I t w ill d esc ri b e th e C i ty’s water s yst em an d fin ances, c h aract eri st ic s of th e C ity w ater system , and in herent known risk factors associated with th e B on d s. I t is im p ortan t th at th is d ocu m en t not cont ain an y m aterial m is st atem en t s or om issions. Th e P reli m i n ary O ffi ci al S t atem ent is d istrib u ted t o p rosp ective in vest ors p rior t o th e s ale so t hat th ey c an m ake i nform ed d ecision s on wh eth er to p u rchase th e B on d s. Th e P reli m i nary O fficial S tat em en t sh ould b e as cl ose to fin al as p ossib le with the actual term s of the p ricin g (in terest rates an d p rin cip al am oun ts) left necessarily b lank. T he F i n al O fficial S tatem ent wi ll b e p rep ared s h ortl y after t h e sale an d m u st b e availab le in tim e for closin g .

B o nd P urchase A greem ent: T he A u th ority, th e C ity an d J.P. M org an S ecurities L LC . w ill enter in to a B ond P urch ase A g reem ent wh ich sets forth th e term s and cond ition s p u rsuan t to w hich an u nd erwriter will p u rchase th e B on d s from th e A u th ority.

Prem ium C o upo n S tructure
I n vestors often p refer b on d s w it h hi g h er cou p on rates, b ut low er yi eld s (i.e., a p rem ium rate stru cture), as op p osed to p ar b ond s (sam e coup on/yield ). For exam p le, i f th e cu rrent 10 -year in terest rate is 2 .0%, th e b ond s w ould b e stru ctured w ith a 4 .0% cou p on , b ut sold with a p rem ium of ~1 06 % to com p en sate for th e hi g h er cou p on . T he 2 02 2 Water B ond s are exp ected to b e sold with a p rem ium cou p on stru cture.

Th e act u al am oun t of b ond s s old an d fin al cou p on structu re w i ll n ot b e known u n ti l th e d ay of p ricin g . T h e C it y exp ect s t o s ell b etw een $1 3.0 - $15 .8 m i ll ion in p ar valu e, d ep end in g on the p referen ces of i n ves tors at th e d ay of p ric in g . T he b on d s will b e sold with the cou p on /rates th at are m ost attractive t o in vest ors and g en erates th e lowest tot al cost of b orrow in g . J P M org an w il l sel l th e am ou n t of b on d s n ecessary to g en erat e $15 .5 m il li on in n et b on d p roceed s: after t akin g in to accoun t th e C ost of I s su an c e an d U n d erw ri ter's D i sc ou n t an d ad d in g in the b ond p rem ium .

F I S C A L I M P A C T S
P roceed s of th e Wat er B on d i ss ue w ill b e u sed to fun d n eed ed cap ital im p rovem en ts . T he follow in g i s a d et ail of t h e costs of i ss uan ce - th e leg al, con su lt in g , trustee, an d rat in g ag en cy fees as soc iat ed w ith s truc tu ri ng the b ond issue an d p rep arin g al l th e nec ess ary leg al d ocum ents req u ired to sell the b ond s:

C o st o f I ssuance
Role F irm Fee
B ond C ou nsel B B K $ 5 1,5 00
D isclosure C ou nsel S trad lin g $ 4 0,0 00 M un icip al A d visor U rb an F utures, I nc. $ 4 0,0 00 Ratin g A g en cy S tan d ard & Poors $ 3 9,0 00
C ity S taff & A d visors $ 2 5,0 00
Tru stee U S B ank $ 3 ,30 0
Tru stee C ou nsel $ 2 ,00 0
P rinter I m ag em aster $ 2 ,50 0
C ontin g en cy $ 5 ,70 0
T O T A L $2 09 ,00 0

Th e U nd erwrit er fees, w h i ch are eq u al to $4.6 1 p er b on d , w ill b e p ai d d irectly to J P M org an at closing . B ased on t he G ood Fait h E stim at e of $1 3 ,3 6 0 ,0 0 0 , J P M org an 's fees will b e $6 1,5 03 .89 . H owever, the u n d erwrit er's fee will b e calcu lat ed b ased on the ac tu al am ou nt of th e b on d s sold on th e d ay of p ricing . Th e cost of issuan ce will not ch ang e, however.

A L T E R N A T I V E S
P rovid e altern ative d irection to staff.

AT TAC HM E NT S :

Description
2022 Water Revenue Bonds - City Resolution
2022 Water Revenue Bonds - Authority Resolution
2022 Water Revenue Bonds - Installment P urchase Agreement 2022 Water Revenue Bonds - Indenture of T rust
2022 Water Revenue Bonds - Preliminary Official Statement 2022 Water Revenue Bonds - Bond Purchase Agreement

46708.00807\34752222.4

RESOLUTION NO. ______

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

UPLAND APPROVING AN INSTALLMENT PURCHASE

AGREEMENT, INDENTURE OF TRUST, A CONTINUING

DISCLOSURE AGREEMENT, AND A BOND PURCHASE

AGREEMENT WITH RESPECT TO THE ISSUANCE BY THE

CITY OF UPLAND FINANCING AUTHORITY OF BONDS IN AN

AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED
$16,000,000, APPROVING A PRELIMINARY OFFICIAL

STATEMENT AND AUTHORIZING PREPARATION OF A FINAL

OFFICIAL STATEMENT AND OTHER MATTERS PERTAINING

THERETO
WHEREAS, the City Council (the “City Council”) of the City of Upland (the “City”) has considered financing certain new capital improvements to benefit the City’s Water System in an approximate amount of $16,000,000 (the “Project”); and WHEREAS, the City of Upland Financing Authority (the “Authority”) is a joint powers authority duly organized and existing under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to, among other purposes, borrow money for the purpose of financing the capital improvement needs of the City; and WHEREAS, it has been proposed that the Authority assist the City in providing funds to finance the Project by entering into an Installment Purchase Agreement with the City (the “Installment Purchase Agreement”), and providing for the issuance of the Authority’s Water Revenue Bonds, Series 2022 (the “Bonds”) pursuant to an Indenture of Trust (the “Indenture”), by and among the Authority, the City and U.S.

Bank Trust Company, National Association, as trustee (the “Trustee”); and WHEREAS, the City has determined that it is necessary and desirable to enter into the Installment Purchase Agreement, whereby the Authority will purchase the Project in consideration for providing funds to accomplish financing of the Project and paying the costs of issuance of the Bonds, and the City will purchase the Project from the Authority in consideration for installment payments to be made under the Installment Purchase Agreement in an amount equal in time and amount to the debt service payments on the Bonds; and
WHEREAS, the City is a member of the Authority and the Project is to be located within the boundaries of the City; and
WHEREAS, the City hereby finds that the financing of the Project within the City will enhance the Water System and result in significant public benefits in the form of a safe and reliable Water System and the more efficient delivery of City services to residential and commercial development; and WHEREAS, there has been presented to the City Council a form of Bond Purchase Agreement (the “Bond Purchase Agreement”) whereby J.P. Morgan Securities LLC (the “Underwriter”) will purchase the Bonds; and

Resolution No.

WHEREAS, there has also been presented to the City Council a Preliminary Official Statement (the “Preliminary Official Statement”), in substantially final form, with respect to the Bonds and the City Council has determined that said Preliminary Official Statement should be approved, that the Underwriter should be authorized to distribute said Preliminary Official Statement in connection with the marketing of the Bonds, and that the preparation of a Final Official Statement (the “Final Official Statement”), based on said Preliminary Official Statement, should be authorized; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the issuance of the Bonds hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the City is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such issuance for the purpose, in the manner and upon the terms herein provided.

NOW, THEREFORE, the City Council of the City of Upland hereby finds, determines and resolves as follows:

Section 1. Recitals True and Correct. The foregoing recitals are true and correct and the City Council so finds and determines.

Section 2. Funding Project. The City Council hereby approves the issuance of the Bonds by the Authority for the purpose of financing the Project with the proceeds of the Bonds on the terms and conditions detailed in the documents presented at this meeting. Additionally, the Bonds shall pay costs incurred in connection with the issuance of the Bonds, all in accordance with the provisions of this Resolution and the Indenture of Trust as finally executed and delivered.

Section 3. Approval of Installment Purchase Agreement. The agreement entitled “Installment Purchase Agreement” to be entered into by and between the City and the Authority, which provides generally for (i) the acquisition of the Project by the Authority, (ii) the purchase by the City from the Authority of the Project, and (iii) the payment by the City to the Authority of Installment Payments in amounts which will be sufficient to pay the principal of and interest owing on the Bonds until the Bonds are fully paid, is hereby approved and the Mayor, the City Manager, Assistant City Manager, and City Clerk (each an “Authorized Representative”) are, and each such officer is, authorized and directed to execute, acknowledge and deliver said agreement on behalf of the City in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 4. Approval of Indenture of Trust. The agreement entitled “Indenture of Trust” to be entered into by and among the City, the Authority and the Trustee named therein is hereby approved and any Authorized Representative is authorized and directed to execute, acknowledge and deliver said agreement on behalf of the City in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Resolution No.

Section 5. Approval of Bond Purchase Agreement and Conditions of Approval.

The form of Bond Purchase Agreement presented at this meeting is hereby approved and any Authorized Representative is hereby authorized to accept, for and in the name of the City, such Bond Purchase Agreement in substantially the form hereby approved with such changes therein as the Authorized Representative executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof, provided that the principal amount of Bonds of the Authority to be sold pursuant to the Bond Purchase Agreement shall not exceed $16,000,000 and the Underwriter’s discount or fee (not including any original issue discount or premium on the Bonds) shall not exceed 3.0% of the principal amount of Bonds sold.

Section 6. Approval of Preliminary Official Statement. The Preliminary Official Statement presented at this meeting in substantially final form is approved, and the City Manager and the Assistant City Manager are, and each such officer is, authorized to consent to and assist in the preparation of the Preliminary Official Statement and to deem the information therein final and accurate in all material respects, and the Underwriter is authorized to distribute said Preliminary Official Statement as approved hereby, or as modified with the consent of the City Manager or the Assistant City Manager, to prospective purchasers of the Bonds. The City Manager and the Assistant City Manager are, and each such officer is, authorized to participate in the preparation of the Final Official Statement, based on the Preliminary Official Statement, and to make such modifications thereto as may be necessary in order to make the discussion therein full and accurate in all material respects and agreed to by Bond Counsel and the Underwriter. The City Manager and the Assistant City Manager are, and each such officer is, also hereby authorized and directed to deem the Preliminary Official Statement final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 (the “Rule”), omitting only such information as permitted by the Rule and to execute a certificate stating the City’s determination that the Preliminary Official Statement has been deemed final within the meaning of the Rule. The Underwriter is hereby authorized to distribute the Preliminary Official Statement in the form deemed final and the Official Statement.

Section 7. Continuing Disclosure Agreement. The agreement entitled “Continuing Disclosure Agreement” relating to the Bonds to be executed by City and the dissemination agent named therein in connection with the issuance of the Bonds, is hereby approved and any Authorized Representative is authorized and directed to execute, acknowledge and deliver said agreement on behalf of the City in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 8. Other Acts. The Mayor of the City and any other Authorized Representative of the City are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents, certificates and agreements which they may deem necessary or advisable in order to consummate the issuance of the Bonds and the financing of the Project or otherwise to effectuate the purpose of this Resolution, including obtaining bond insurance, and/or a reserve surety or other guarantee for all or a portion of the Bonds, and such actions previously taken by such officers are hereby ratified and confirmed.

Resolution No.

Section 9. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

Resolution No.

PASSED, APPROVED AND ADOPTED this 28th day of February, 2022.

Bill Velto, Mayor

I, Keri Johnson, City Clerk of the City of Upland, do hereby certify that the foregoing Resolution was adopted, at a regular meeting of the City Council held on the 28th day of February, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST:

______________________________
Keri Johnson, City Clerk

RESOLUTION NO. ______

RESOLUTION OF THE BOARD OF DIRECTORS OF THE CITY

OF UPLAND FINANCING AUTHORITY APPROVING AN

INSTALLMENT PURCHASE AGREEMENT, INDENTURE OF

TRUST, A CONTINUING DISCLOSURE AGREEMENT, AND A

BOND PURCHASE AGREEMENT WITH RESPECT TO THE

ISSUANCE OF BONDS IN AN AGGREGATE PRINCIPAL
AMOUNT NOT TO EXCEED $16,000,000, APPOINTING A

TRUSTEE, APPROVING A PRELIMINARY OFFICIAL

STATEMENT AND AUTHORIZING PREPARATION OF A FINAL

OFFICIAL STATEMENT AND OTHER MATTERS PERTAINING

THERETO
WHEREAS, the City of Upland Financing Authority (the “Authority”) is a joint powers authority duly organized and existing under the provisions of Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California (the “Act”), and is authorized pursuant to Article 4 of the Act to, among other purposes, borrow money for the purpose of financing the capital improvement needs of the City of Upland (the “City”); and
WHEREAS, the City owns and operates a water system (the “Water System”); and
WHEREAS, the City Council (the “City Council”) of the City has considered financing certain new capital improvements (the “Project”) to benefit the Water System in an approximate amount of $16,000,000 (the “Project”); and WHEREAS, it has been proposed that the Authority assist the City in providing funds to accomplish the financing of the Project by entering into an Installment Purchase Agreement with the City (the “Installment Purchase Agreement”), and providing for the issuance of its Water Revenue Bonds, Series 2022 (the “Bonds”) pursuant to an Indenture of Trust (the “Indenture”), by and among the Authority, the City and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”); and
WHEREAS, there has been presented to the Board of Directors of the Authority (the “Board of Directors”) a form of Bond Purchase Agreement (the “Bond Purchase Agreement”) whereby J.P. Morgan Securities LLC (the “Underwriter”) will purchase the Bonds; and
WHEREAS, there has also been presented to the Board of Directors a Preliminary Official Statement (the “Preliminary Official Statement”), in substantially final form, with respect to the Bonds and the Board of Directors has determined that said Preliminary Official Statement should be approved, that the Underwriter should be authorized to distribute said Preliminary Official Statement in connection with the marketing of the Bonds, and that the preparation of a Final Official Statement (the “Final Official Statement”), based on said Preliminary Official Statement, should be authorized; and

Resolution No.

WHEREAS, Section 5852.1 of the California Government Code requires that the Board obtain from an underwriter, financial advisor or private lender and disclose, in a meeting open to the public, prior to authorization of the issuance of the Bonds, good faith estimates of (a) the true interest cost of the Bonds, (b) the sum of all fees and charges paid to third parties with respect to the Bonds, (c) the amount of proceeds of the Bonds expected to be received net of the fees and charges paid to third parties and any reserves or capitalized interest paid or funded with proceeds of the Bonds, and (d) the sum total of all debt service payments on the Bonds calculated to the final maturity of the Bonds, plus the fees and charges paid to third parties not paid with the proceeds of the Bonds; and
WHEREAS, in compliance with Section 5852.1 of the California Government Code, the Board has obtained from Urban Futures, Inc., the Authority’s municipal advisor (the “Municipal Advisor”), the required good faith estimates and such estimates are disclosed and set forth in Exhibit A attached hereto; and WHEREAS, all acts, conditions and things required by the laws of the State of California to exist, to have happened and to have been performed precedent to and in connection with the consummation of the issuance of the Bonds hereby do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the Authority is now duly authorized and empowered, pursuant to each and every requirement of law, to consummate such issuance for the purpose, in the manner and upon the terms herein provided.

NOW, THEREFORE, the Board of Directors of the City of Upland Financing Authority hereby finds, determines and resolves as follows:

Section 1. Recitals True and Correct. The foregoing recitals are true and correct and the Board of Directors so finds and determines.

Section 2. Funding Project. The Board of Directors hereby approves the issuance of the Bonds in the aggregate principal amount not to exceed $16,000,000, for the purpose of financing the Project with the proceeds of the Bonds on the terms and conditions detailed in the documents presented at this meeting. Additionally, the Bonds shall pay costs incurred in connection with the issuance of the Bonds, all in accordance with the provisions of this Resolution and the Indenture of Trust as finally executed and delivered.

Section 3. Approval of Installment Purchase Agreement. The agreement entitled “Installment Purchase Agreement” to be entered into by and between the City and the Authority, which provides generally for (i) the acquisition of the Project by the Authority, (ii) the purchase by the City from the Authority of the Project, and (iii) the payment by the City to the Authority of Installment Payments in amounts which will be sufficient to pay the principal of and interest owing on the Bonds until the Bonds are fully paid, is hereby approved and the Chairman, the Executive Director, Treasurer and Secretary of the Board of Directors (each an “Authorized Representative”) are, and each such officer is, authorized and directed to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the

Resolution No.

same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 4. Approval of Indenture of Trust. The agreement entitled “Indenture of Trust” to be entered into by and among the City, the Authority and the Trustee is hereby approved and any Authorized Representative is authorized and directed to execute, acknowledge and deliver said agreement on behalf of the Authority in substantially the form hereby approved with such changes therein as the officer executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof.

Section 5. Approval of Bond Purchase Agreement and Conditions of Approval.

The form of Bond Purchase Agreement presented at this meeting is hereby approved and any Authorized Representative is hereby authorized to accept, for and in the name of the Authority, such Bond Purchase Agreement in substantially the form hereby approved with such changes therein as the Authorized Representative executing the same may approve, such approval to be conclusively evidenced by the execution and delivery thereof, provided that the principal amount of Bonds to be sold pursuant to the Bond Purchase Agreement shall not exceed $16,000,000 and the Underwriter’s discount or fee (not including any original issue discount or premium on the Bonds) shall not exceed 3.0% of the principal amount of Bonds sold.

Section 6. Appointment of Trustee. U.S. Bank Trust Company, National Association is appointed as Trustee pursuant to the Indenture of Trust to take any and all action provided therein to be taken by the Trustee.

Section 7. Forms of Bonds. The forms of the Bonds set forth in Indenture of Trust are approved, and the Trustee is authorized to authenticate the Bonds and to apply, deposit, invest, administer, and utilize the proceeds. Authorized Representative is authorized to determine the final aggregate principal amount of the Bonds to be purchased by the Underwriter and the final maturity date of the Bonds based on the determination of the Executive Director or Treasurer of the amount needed to finance the Project and achieve the City’s financing objectives.

Section 8. Approval of Preliminary Official Statement. The Preliminary Official Statement presented at this meeting in substantially final form is approved, and the Executive Director and the Treasurer are, and each such officer is, authorized to consent to and assist in the preparation of the Preliminary Official Statement and to deem the information therein final and accurate in all material respects, and the Underwriter is authorized to distribute said Preliminary Official Statement as approved hereby, or as modified with the consent of the Executive Director or the Treasurer, to prospective purchasers of the Bonds. The Executive Director and the Treasurer are, and each such officer is, authorized to participate in the preparation of the Final Official Statement, based on the Preliminary Official Statement, and to make such modifications thereto as may be necessary in order to make the discussion therein full and accurate in all material respects and agreed to by Bond Counsel to the Authority and the Underwriter. The Executive Director and the Treasurer are, and each such officer is, also hereby authorized and directed to deem the Preliminary Official Statement final within the meaning of Rule 15c2-12 of the Securities Exchange Act of 1934 (the “Rule”), omitting only such information as permitted by

Resolution No.

the Rule and to execute a certificate stating the Authority’s determination that the Preliminary Official Statement has been deemed final within the meaning of the Rule.

The Underwriter is hereby authorized to distribute the Preliminary Official Statement in the form deemed final and the Official Statement.

Section 9. Other Acts. The Chairman or any other Authorized Representative of the Authority are hereby authorized and directed, jointly and severally, to do any and all things and to execute and deliver any and all documents, certificates and agreements which they may deem necessary or advisable in order to consummate the issuance of the Bonds, and the financing of the Project or otherwise to effectuate the purpose of this Resolution, including obtaining bond insurance, and/or a reserve surety or other guarantee for all or a portion of the Bonds, and such actions previously taken by such officers are hereby ratified and confirmed.

Section 10. Effective Date. This Resolution shall take effect from and after the date of its passage and adoption.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

Resolution No.

PASSED, APPROVED AND ADOPTED this 28th day of February, 2022.

Bill Velto, Chairman

I, Keri Johnson, Secretary of the City of Upland Financing Authority, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City of Upland Financing Authority held on the 28th day of February, 2022, by the following vote:

AYES:

NOES:

ABSENT:

ABSTAIN:

ATTEST:

______________________________
Keri Johnson, Secretary

Resolution No.

EXHIBIT A

GOOD FAITH ESTIMATES

The good faith estimates set forth herein are provided with respect to the Bonds in accordance with California Government Code Section 5852.1. Such good faith estimates have been provided to the Authority by the Municipal Advisor.

Principal Amount. The Municipal Advisor has informed the Authority that, based on the Authority’s financing plan and current market conditions, its good faith estimate of the aggregate principal amount of the Bonds to be sold is $13,360,000, (the “Estimated Principal Amount”).

All-In True Interest Cost of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the true interest cost of the Bonds, which means the rate necessary to discount the amounts payable on the respective principal and interest payment dates to the purchase price received for the Bonds, is 2.45%.

Finance Charge of the Bonds. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the finance charge for the Bonds, which means the sum of all fees and charges paid to third parties (or costs associated with the Bonds), is $270,504.

Amount of Proceeds to be Received. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the amount of proceeds expected to be received by the Authority for sale of the Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with proceeds of the Bonds, is $15,500,000.

Total Payment Amount. The Municipal Advisor has informed the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the total payment amount, which means the sum total of all payments the Authority will make to pay debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $18,871,275, which excludes any reserves or capitalized interest paid or funded with proceeds of the Bonds (which may offset such total payment amount).

The foregoing estimates constitute good faith estimates only as of February 23, 2022, and are based on market conditions prevailing at the time of preparation of such estimates. The actual principal amount of the Bonds issued and sold, the true

Resolution No.

interest cost thereof, the finance charges thereof, the amount of proceeds received therefrom and total payment amount with respect thereto may differ from such good faith estimates due to (a) the actual date of the sale of the Bonds being different than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds being different than the amortization assumed for purposes of such estimates, (d) the actual market interest rates at the time of sale of the Bonds being different than those estimated for purposes of such estimates, (e) other market conditions, or (f) alterations in the Authority’s financing plan, or a combination of such factors. The actual date of sale of the Bonds and the actual principal amount of the Bonds sold will be determined by the Authority based on the timing of the need for proceeds of the Bonds and other factors. The actual interest rates borne by the Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market interest rates are affected by economic, national, international and other factors beyond the control of the Authority, or the Municipal Advisor.

46708.00807\34752430.3

INSTALLMENT PURCHASE AGREEMENT
by and between

CITY OF UPLAND,
as Purchaser
and

CITY OF UPLAND FINANCING AUTHORITY,
as Seller
Dated as of _______, 2022
Relating to
$___________

CITY OF UPLAND FINANCING AUTHORITY

WATER REVENUE BONDS
SERIES 2022

46708.00807\34752430.3

TABLE OF CONTENTS

Page

i

ARTICLE I DEFINITIONS .......................................................................................................... 1 SECTION 1.01. Definitions .................................................................................................. 1 ARTICLE II REPRESENTATIONS AND WARRANTIES ........................................................ 6 SECTION 2.01. Representations by the Purchaser ............................................................... 6 SECTION 2.02. Representations and Warranties by the Authority ...................................... 6 ARTICLE III ISSUANCE OF BONDS; SALE AND PURCHASE OF THE PROJECT ............ 7 SECTION 3.01. The Bonds ................................................................................................... 7 SECTION 3.02. Appointment of Purchaser as Agent of Authority ...................................... 7 SECTION 3.03. Sale and Purchase of the Improvements ..................................................... 7 ARTICLE IV 2022 INSTALLMENT PAYMENTS ..................................................................... 8 SECTION 4.01. Purchase Price. ........................................................................................... 8 SECTION 4.02. 2022 Installment Payments ........................................................................ 8 SECTION 4.03. Additional Payments .................................................................................. 8 ARTICLE V SECURITY .............................................................................................................. 9 SECTION 5.01. Pledge of Net Revenues ............................................................................. 9 SECTION 5.02. Allocation of Net Revenues ....................................................................... 9 SECTION 5.03. Additional Bonds and Contracts ............................................................... 10 SECTION 5.04. Subordinate Bonds ................................................................................... 11 SECTION 5.05. Permitted Investments .............................................................................. 12 ARTICLE VI COVENANTS OF THE PURCHASER ............................................................... 12 SECTION 6.01. Compliance with Installment Purchase Agreement and Ancillary Agreements ................................................................................................ 12 SECTION 6.02. Against Encumbrances ............................................................................. 12 SECTION 6.03. Against Sale or Other Disposition of Property ......................................... 13 SECTION 6.04. Maintenance and Operation of the Water System .................................... 13 SECTION 6.05. Payment of Claims ................................................................................... 13 SECTION 6.06. Insurance. ................................................................................................. 13 SECTION 6.07. Accounting Records; Financial Statements and Other Records. .............. 15 SECTION 6.08. Protection of Security and Rights of the Authority .................................. 15 SECTION 6.09. Payment of Taxes and Compliance with Governmental Regulations ...... 15 SECTION 6.10. Amount of Rates and Charges, Operating Reserves ................................ 16 SECTION 6.11. Collection of Rates and Charges .............................................................. 17 SECTION 6.12. Eminent Domain Proceeds ....................................................................... 17 SECTION 6.13. Further Assurances ................................................................................... 17 SECTION 6.14. Continuing Disclosure .............................................................................. 17 SECTION 6.15. Tax Exempt Status of Bonds. ................................................................... 17 SECTION 6.16. Access to the Water System ..................................................................... 18

46708.00807\34752430.3

TABLE OF CONTENTS
(continued)
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ARTICLE VII PREPAYMENT OF 2022 INSTALLMENT PAYMENTS ................................ 18 SECTION 7.01. Prepayment. .............................................................................................. 18 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY ............. 18 SECTION 8.01. Events of Default and Acceleration of Maturities .................................... 18 SECTION 8.02. Application of Funds Upon Acceleration ................................................. 20 SECTION 8.03. Other Remedies of the Authority ............................................................. 20 SECTION 8.04. Non-Waiver .............................................................................................. 20 SECTION 8.05. Remedies Not Exclusive .......................................................................... 21 ARTICLE IX DISCHARGE OF OBLIGATIONS...................................................................... 21 SECTION 9.01. Discharge of Obligations .......................................................................... 21 ARTICLE X MISCELLANEOUS .............................................................................................. 22 SECTION 10.01. Liability of Purchaser Limited to Net Revenues .................................... 22 SECTION 10.02. Benefits of Installment Purchase Agreement Limited to Parties ........... 22 SECTION 10.03. Successor Is Deemed Included in all References to Predecessor ........... 22 SECTION 10.04. Waiver of Personal Liability .................................................................. 23 SECTION 10.05. Third Party Beneficiary .......................................................................... 23 SECTION 10.06. Article and Section Headings; Gender and References .......................... 23 SECTION 10.07. Partial Invalidity ..................................................................................... 23 SECTION 10.08. Assignment ............................................................................................. 23 SECTION 10.09. Net Contract ........................................................................................... 23 SECTION 10.10. California Law ........................................................................................ 23 SECTION 10.11. Notices .................................................................................................... 23 SECTION 10.12. Effective Date ......................................................................................... 24 SECTION 10.13. Execution in Counterparts ...................................................................... 24 SECTION 10.14. Indemnification of Authority .................................................................. 24 SECTION 10.15. Amendments Permitted .......................................................................... 24

EXHIBIT A – PURCHASE PRICE ........................................................................................... A-1

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1 INSTALLMENT PURCHASE AGREEMENT
This INSTALLMENT PURCHASE AGREEMENT, made and entered into as of ____________, 2022, by and between the CITY OF UPLAND, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California (the “Purchaser”), and the CITY OF UPLAND FINANCING AUTHORITY, a joint exercise of powers agency duly organized and existing under and by virtue of the laws of the State of California (the “Authority”):

W I T N E S S E T H:

WHEREAS, the Purchaser proposes to finance certain improvements to the Purchaser’s water system, as more particularly described herein (collectively, the “Improvements”); and WHEREAS, the Purchaser and the Authority have duly authorized the execution of this Agreement; and
WHEREAS, all acts, conditions and things required by law to exist, to have happened and to have been performed precedent to and in connection with the execution and delivery of this Agreement do exist, have happened and have been performed in regular and due time, form and manner as required by law, and the parties hereto are now duly authorized to execute and enter into this Agreement.

NOW, THEREFORE, IN CONSIDERATION OF THESE PREMISES AND OF THE

MUTUAL AGREEMENTS AND COVENANTS CONTAINED HEREIN AND FOR OTHER

GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF

WHICH IS HEREBY ACKNOWLEDGED, THE PARTIES HERETO DO HEREBY AGREE AS FOLLOWS:

ARTICLE I

DEFINITIONS
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this section shall for all purposes hereof and of any amendment hereof or supplement hereto 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. All capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Indenture.
“Acquisition and Construction” means, with respect to the Improvements, the acquisition, construction, improvement, equipping, renovation, remodeling or reconstruction thereof. “Acquisition and Construction Costs” means, with respect to any 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:

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2 (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 labor and materials in connection with the Acquisition and Construction of the Improvements;
(c) the cost of performance or other bonds and any and all types 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 and 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 Authority or the Purchaser for advances made for any of the above items or for any 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 Acquisition 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
(g) the interest components of the Installment Payments during the period of Acquisition and Construction of the Improvements, to the extent not paid from the proceeds of the Bonds deposited in the Interest Account pursuant to the Indenture. “Additional Bonds” means all bonds, notes or other obligations (including without limitation long-term contracts, loans, sub-leases or other legal financing arrangements) of the City payable from and secured by a pledge of and lien upon any of the Net Revenues issued or incurred pursuant to Section 5.03 hereof.
“Additional Bonds Instrument” means the resolution, trust indenture or installment sale agreement adopted, entered into or executed and delivered by the City, and under which Additional Bonds are issued.
“Agreement” or “Installment Purchase Agreement” means this Installment Purchase Agreement, dated as of ________, 2022, by and between the Purchaser and the Authority, as originally executed and as it may from time to time be amended or supplemented in accordance herewith.
“Authority” means City of Upland Financing Authority, a joint exercise of powers agency duly organized and existing under and by virtue of the laws of the State of California.

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3 “Authorized Official” means: (a) with respect to the Authority, its Chairman, Executive Director, Treasurer, Secretary or any other officer of the Authority duly authorized by the Board of Directors of the Authority for that purpose; and (b) with respect to the City, its Mayor, City Manager, Assistant City Manager, City Clerk, or any other officer of the City duly authorized by the City Council for that purpose.
“Bond Counsel” means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the Purchaser of nationally recognized standing in matters pertaining to the tax-exempt nature of interest on obligations of states and their political subdivisions and duly admitted to the practice of law before the highest court of any state of the United States of America or the District of Columbia.
“Bonds” means the $_________ aggregate principal amount of City of Upland Financing Authority Water Revenue Bonds Series 2022.
“Contracts” means this Installment Purchase Agreement and all contracts or leases of the Purchaser authorized and executed by the Purchaser under and pursuant to the laws of the State of California, installment or lease payments under which are payable from the Net Revenues on a parity with this Installment Purchase Agreement.
“Debt Service” means, during any period of computation, the amount obtained for such period by totaling the following amounts:
(a) The principal amount of all Outstanding Bonds and Additional Bonds and Contracts payable by their terms in such period;
(b) The interest which would be due during such period on the aggregate principal amount of Bonds and Additional Bonds and Contracts which would be Outstanding in such period if the Bonds are paid or redeemed as scheduled.
“Event of Default” means an event described in Section 8.01. “Fiscal Year” means the period commencing on July 1 of each year and terminating on the next succeeding June 30, or any other twelve-month period selected and designated as the official Fiscal Year of the Purchaser.
“Gross Revenues” means, for any period of computation, all gross charges received for, and all other gross income and revenues derived by the Purchaser from, the ownership or operation of the Water System or otherwise arising from the Water System during such period, including but not limited to (a) all charges received by the Purchaser for use of the Water System, (b) all receipts derived from the investment of funds held by the Purchaser or the Trustee under this Agreement, (c) transfers from (but exclusive of any transfers to) any rate stabilization reserve accounts, (d) property taxes, to the extent permitted by law, and (e) all moneys received by the Purchaser from other public entities whose inhabitants are served pursuant to contracts with the Purchaser, but excluding in all cases: (w) development impact fees imposed pursuant to California Government Code § 66000 et seq.; (x) customers’ deposits or any other deposits or advances subject to refund until such deposits or advances have become the

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4 property of the City; (y) proceeds of taxes or benefit assessments restricted by law to be used by the City to pay amounts due on bonds or other obligations hereafter incurred. “Improvements” means any additions, betterments, extensions or improvements to the Water System, the design, acquisition or construction of which (together with the incidental costs and expenses related thereto) is to be financed by the proceeds of the Bonds. “Indenture” means the Indenture of Trust, dated as of ________, 2022, by and among the Purchaser, the Authority and the Trustee, as originally executed and as it may from time to time be amended or supplemented in accordance with its terms. “Independent Certified Public Accountant” means any accountant or firm of such accountants appointed and paid by the City or the Authority, and who, or each of whom (a) is in fact independent and not under domination of the City or the Authority; (b) does n ot have any substantial interest, direct or indirect, with the City or the Authority; and (c) is not connected with the City or the Authority as an officer or employee of the City or the Authority, but who may be regularly retained to make annual or other audits of the books of or reports to the City or the Authority.
“Installment Payment Date;” “2022 Installment Payment Date” The term “Installment Payment Date” means each date on which Installment Payments are scheduled to be paid by the Purchaser under and pursuant to any Contracts. The term “2022 Installment Payment Date” means the fifth day prior to each Interest Payment Date, or if said date is not a Business Day, then the preceding Business Day. “Installment Payments;” “2022 Installment Payments;” “Interest Component of 2022 Installment Payments;” “Principal Component of 2022 Installment Payments” The term “Installment Payments” means the installment payments of interest and principal scheduled to be paid by the Purchaser under and pursuant to the Contracts. The term “2022 Installment Payments” means the Installment Payments scheduled to be paid by the Purchaser under and pursuant hereto, plus interest on such draws as set forth in the Indenture.

The term “Interest Component of 2022 Installment Payment”, with respect to any 2022 Installment Payment, means the “Amount Attributable to Interest” in respect of such payment as reflected in Exhibit A hereto. The term “Principal Component of 2022 Installment Payment”, with respect to any 2022 Installment Payment, means the “Amount Attributable to Principal” in respect of such payment as reflected in Exhibit A hereto. “Interest Payment Date” means, with respect to the Bonds, April 1 and October 1 in each year, beginning October 1, 2022, and with respect to any Additional Bonds and Contracts, any date on which interest is due and payable thereon, and continuing so long as any Bonds remain Outstanding.
“Maintenance and Operation Costs” means the reasonable and necessary costs spent or incurred by the Purchaser for maintaining and operating the Water System, calculated in accordance with sound accounting principles, and all reasonable and necessary expenses of management and repair and other expenses to maintain and preserve the Water System in good

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5 repair and working order, and including all reasonable and necessary administrative costs of the Purchaser attributable to the Water System and the Bonds, such as salaries and wages and the necessary contribution to retirement of employees, overhead, insurance, taxes (if any), expenses, compensation and indemnification of the Trustee, and fees of auditors, accountants, attorneys or engineers, and including all other reasonable and necessary costs of the Purchaser or charges required to be paid by it to comply with the terms of the Bonds or this Installment Purchase Agreement or the Indenture, but excluding (i) depreciation, replacement and obsolescence charges or reserves therefor and amortization of intangibles or other bookkeeping entries of a similar nature, (ii) payment of debt service on Additional Bonds and Contracts or Subordinate Bonds, and (iii) capital additions, replacements, betterments, extensions, or improvements to the Water System.
“Net Proceeds” when used with reference to any insurance or condemnation award or sale of property, means the gross proceeds from the sale of property or insurance or condemnation award with respect to which that term is used remaining after payment of all expenses (including attorneys’ fees and any extraordinary expenses of the Trustee) incurred in the collection of such gross proceeds.
“Net Revenues” means, for any period of computation, the amount of the Gross Revenues received from the Water System during such period, less the amount of Maintenance and Operation Costs of the Water System becoming payable during such period. “Purchaser” means the City of Upland, a municipal corporation duly organized and existing under and by virtue of the laws of the State of California. “Purchase Price” means the principal amount plus interest thereon owed by the Purchaser to the Authority under the terms hereof as provided in Section 4.01. “Revenue Fund” means the fund by that name established pursuant to Section 5.02 hereof.
“Subordinate Bonds” means all bonds, notes or other obligations (including without limitation long-term contracts, loans, sub-leases or other legal financing arrangements) of the Authority payable from and secured by a pledge of and lien upon any of the Net Revenues, subordinate to the pledge of Net Revenues to p ay the Bonds and any Additional Bonds and Contracts, and issued or incurred pursuant to Section 5.04. “Subordinate Bonds Instrument” means the resolution, trust indenture or installment sale agreement adopted, entered into or executed and delivered by the Authority, and under which Subordinate Bonds are issued.
“Trustee” means U.S. Bank Trust Company, National Association, acting in its capacity as Trustee under and pursuant to the Indenture, and its successors and assigns. “Water Service” means the water distribution service provided by the Purchaser. “Water System” means the existing water system of the City, comprising all facilities, including the recycled water system, for the acquisition, storage, treatment and distribution of

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6 water for residential, commercial and industrial uses in the City (including all additions, improvements, and extensions thereto).
“Written Consent of the Authority or Purchaser,” “Written Order of the Authority or Purchaser,” “Written Request of the Authority or Purchaser,” “Written Requisition of the Authority or Purchaser” means, respectively, a written certificate, request or requisition signed in the name of the Authority or the City by its Authorized Official. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

ARTICLE II

REPRESENTATIONS AND WARRANTIES
SECTION 2.01. Representations by the Purchaser. The Purchaser makes the following representations:
(a) The Purchaser is a municipal corporation duly organized and existing under and pursuant to the laws of the State of California. (b) The Purchaser has full legal right, power and authority to enter into this Agreement and carry out its obligations hereunder, to carry out and consummate all other transactions contemplated by this Agreement, and the Purchaser has compl ied with the provisions of the law in all matters relating to such transactions. (c) By proper action, the Purchaser has duly authorized the execution, delivery and due performance of this Agreement.
(d) The Purchaser will not take or, to the extent within its power, permit any action to be taken as a consequence of which any Interest Component of 2022 Installment Payments would fail to be excluded pursuant to section 103(a) of the Tax Code from the gross income of the Authority or its assigns for purposes of federal income taxation, or to fail to be exempt from State of California personal income taxes. (e) The Purchaser has determined that it is necessary and proper for Purchaser uses and purposes within the terms of the law that the Purchaser finance the Improvements in the manner provided for in this Agreement.

SECTION 2.02. Representations and Warranties by the Authority. The Authority makes the following representations and warranties:
(a) The Authority is a joint exercise of powers agency duly organized and in good standing under the laws of the State of California, has full legal right, power and authority to enter into this Agreement and to carry out and consummate all transactions contemplated by this Agreement and by proper action has duly authorized the execution and delivery and due performance of this Agreement.

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7 (b) The execution and delivery of this Agreement and the consummation of the transactions herein contemplated will not violate any provision of law, any order of any court or other agency of government, or any indenture, material agreement or other instrument to which the Authority is now a party or by which it or any of its properties or assets is bound, or be in conflict with, result in a breach of or constitute a default (with due notice or the passage of time or both) under any such indenture, agreement or other instrument, or result in the creation or imposition of any prohibited lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Authority. (c) The Authority will not take or permit any action to be taken as a consequence of which the interest on any Bond would fail to be excluded pursuant to section 103(a) of the Tax Code from the gross income of the owner thereof for purposes of federal income taxation, or to fail to be exempt from State of California personal income taxes.

ARTICLE III

ISSUANCE OF BONDS; SALE AND PURCHASE OF THE PROJECT
SECTION 3.01. The Bonds. The Authority has authorized the issuance of the Bonds pursuant to the Indenture in the aggregate principal amount of ____________Dollars ($______________). The Authorit y and the Purchaser agree that the proceeds of sale of the Bonds shall be paid to the Trustee on the Closing Date for deposit pursuant to the terms and conditions of the Indenture. The Purchaser hereby approves the Indenture, the assignment to the Trustee of the rights of the Authority assigned under and pursuant to the Indenture, and the issuance of the Bonds by the Authority under and pursuant to the Indenture.

SECTION 3.02. Appointment of Purchaser as Agent of Authority. The Authority hereby appoints the Purchaser as its agent to carry out all phases of the Acquisition and Construction of the additional Improvements to the Water System pursuant to and in accordance with the provisions hereof and the Indenture. The Purchaser hereby accepts such appointment and assumes all rights, liabilities, duties and responsibilities of the Authority regarding the Acquisition and Construction of the Improvements. The Authority, or the Purchaser as agent of the Authority hereunder, shall enter into, administer and enforce all purchase orders or other contracts relating 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 applicable provisions of law relating to the acquisition, construction, improvement, and equipping of like facilities and property by the Purchaser.

SECTION 3.03. Sale and Purchase of the Improvements. As consideration for the proceeds of the Bonds, the Authority hereby agrees to purchase, and the Purchaser hereby agrees to sell, the Improvements. As consideration for the Purchaser’s agreement to make 2022 Installment Payments in accordance with Section 4.02 hereof, the Authority hereby agrees to sell, and the Purchaser hereby agrees to purchase, the Improvements. All right, title and interest in the Improvements shall vest in the Purchaser immediately upon acquisition or construction thereof. Such vesting shall occur without further action by the Authority or the Purchaser; and the Authority shall, if requested by the Purchaser or if necessary to assure such automatic vesting, deliver any and all documents required to assure such vesting.

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8 ARTICLE IV

2022 INSTALLMENT PAYMENTS
SECTION 4.01. Purchase Price.
(a) The Purchase Price to be paid by the Purchaser hereunder to the Authority is the sum of the principal amount of the Purchaser’s obligations hereunder plus the interest to accrue on the unpaid balance of such principal amount from the effective date hereof over the term hereof, subject to prepayment as provided in Article VII. (b) The principal amount of the payments to be made by the Purchaser hereunder on each 2022 Installment Payment Date is set forth in Exhibit A hereto; provided, however, the amount payable by the Purchaser to the Authority on each 2022 Installment Payment Date shall be reduced by the amount, if any, on deposit in the Debt Service Fund and available or to be available for the payment of principal of and interest on the Bonds on such Interest Payment Date as a result of prepayment in accordance with Article VII. (c) The interest to accrue on the unpaid balance of such principal amount is as specified in Section 4.02 and Exhibit A hereto, and shall be paid by the Purchaser as and constitute interest paid on the principal amount of the Purchaser’s obligations hereunder.

SECTION 4.02. 2022 Installment Payments. The Purchaser shall, subject to any rights of prepayment provided in Article VII, pay the Authority the Purchase Price in installment payments of interest and principal in the amounts relating to each 2022 Installment Payment Date as set forth in Exhibit A hereto.

Each 2022 Installment Payment shall be paid to the Authority in lawful money of the United States of America. If the Purchaser fails to make any of the payments required to be made by it under this section, such payment shall continue as an obligation of the Purchaser until such amount shall have been fully paid; and the Purchaser agrees to pay the same with interest accruing thereon at the rate or rates of interest then applicable to the remaining unpaid principal balance of the 2022 Installment Payments if paid in accordance with their terms.

The obligation of the Purchaser to make the 2022 Installment Payments is absolute and unconditional, and until such time as the Purchase Price shall have been paid in full (or provision for the payment thereof shall have been made pursuant to Article IX), the Purchaser will not discontinue or suspend any 2022 Installment Payments required to be made by it under this section when due, whether or not the Water System or any part thereof is operating or operable or has been completed, or its use is suspended, interfered with, reduced, curtailed or terminated in whole or in part and such payments shall not be subject to reduction whether by offset, abatement or otherwise and shall not be conditional upon the performance or nonperformance by any party to any agreement for any cause whatsoever.

SECTION 4.03. Additional Payments. In addition to the 2022 Installment Payments, the Purchaser shall pay when due all costs and expenses incurred by the Authority to comply with the provisions of the Indenture, and shall pay to the Trustee upon request therefor all compensation for fees due to the Trustee and all of its costs and expenses payable as a result of

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9 the performance of and compliance with its duties hereunder or under the Indenture or any related documents, together with all amounts required to indemnify the Trustee pursuant to Section 6.13 of the Indenture, and all costs and expenses of attorneys, auditors, engineers and accountants. The rights of the Trustee and the obligations of the Purchaser under this Section

4.03 shall survive the termination of this Agreement and the resignation and removal of the Trustee.

ARTICLE V

SECURITY
SECTION 5.01. Pledge of Net Revenues. All Net Revenues are hereby irrevocably pledged to the payment of the 2022 Installment Payments as provided herein and Net Revenues shall not be used for any purpose other than as permitted herein while any of the 2022 Installment Payments remain unpaid. This pledge shall constitute a lien on Net Revenues, including Net Revenues in the Revenue Fund established herein, subject to the terms hereof, for the payment of the 2022 Installment Payments and all other obligations in accordance with the terms hereof and the Indenture.

SECTION 5.02. Allocation of Net Revenues. To carry out and effectuate the pledge and lien contained herein, the Purchaser agrees and covenants that all Gross Revenues shall be received by the Purchaser in trust hereunder and shall be deposited when and as received in a special fund designated as the “Revenue Fund,” which fund is hereby created and established and which fund the Purchaser agrees and covenants to maintain and to hold in trust separate and apart from other funds so long as any obligations remain unpaid. Moneys in the Revenue Fund shall be used and applied by the Purchaser as provided in this Agreement. Investment earnings received by the Trustee from the investment of moneys on deposit in the Debt Service Fund are to be retained by the Trustee and applied by it as provided for in the Indenture.

The Purchaser shall, first from the moneys in the Revenue Fund, pay all Maintenance and Operation Costs (including amounts reasonably required to be set aside in contingency reserves for Maintenance and Operation Costs, the payment of which is not then immediately required) as they become due and payable. Thereafter, all remaining moneys in the Revenue Fund shall be set aside by the Purchaser at the following times for the transfer to the following respective special funds in the following order of priority; and all moneys in each of such funds shall be held in trust and shall be applied, used and withdrawn only for the purposes set forth in this Section

5.02. (a) Debt Service Fund. On or before each 2022 Installment Payment Date until the Bonds have been paid or provision for their payment has been made as provided in Section 9.03 of the Indenture, the Purchaser shall, from the moneys in the Revenue Fund, transfer to the Trustee for deposit in the Debt Service Fund the 2022 Installment Payment due and payable on that 2022 Installment Payment Date. Such deposit to the Debt Service Fund shall be reduced to the extent amounts on deposit therein are available for application to the 2022 Installment Payment due and payable on such 2022 Installment Payment Date.

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10 The Purchaser shall also, from the moneys in the Revenue Fund, transfer to the trustee for deposit in the respective payment fund, without preference or priority, and in the event of any insufficiency of such moneys ratably without any discrimination or preference, to pay any other debt service in accordance with the provisions of any Bond or Contract.
(b) Surplus. As long as all of the foregoing payments, allocations and transfers are made at the times and in the manner set forth above, any moneys remaining in the Revenue Fund may at any time be treated as surplus and applied by the Purchaser for any lawful purpose.

SECTION 5.03. Additional Bonds and Contracts. The Purchaser may, by Additional Bonds Instrument, issue Additional Bonds or enter into Contracts, to provide financing for the Water System, in such principal amount as shall be determined by the Authority. The Purchaser may issue or incur any such Additional Bonds and Contracts subject to the following specific conditions, which are hereby made conditions precedent to the issuance and delivery of such Additional Bonds and Contracts:(a) The Purchaser shall be in compliance with all covenants set forth in the Indenture and this Agreement.
(b) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the Purchaser for the latest Fiscal Year or 12-month period in the prior 18 months, plus, at the option of the Purchaser, any or all of the items hereinafter in this paragraph designated (i) and (ii), shall at least equal one hundred twenty-five percent (125%) of Debt Service for such Fiscal Year or twelve (12) month period. The items any or all of which may be added to such Net Revenues for the purpose of issuing or incurring Additional Bonds or Contracts hereunder are the following:
(i) Based on the report of an Independent certified public accountant, an allowance for Net Revenues from any additions to or improvements or extensions of the Water System to be made with the proceeds of such Additional Bonds and Contracts, and also for Net Revenues from any such additions, improvements or extensions which have been made from moneys from any source but in any case which, during all or any part of such Fiscal Year were not in service, all in an amount equal to seventy-five percent (75%) of the estimated additional average annual Net Revenues to be derived from such additions, improvements and extensions for the first thirty-six (36) month period in which each addition, improvement or extension is respectively to be in operation; and (ii) Based on the report of an Independent certified public accountant, an allowance for earnings arising from any increase in the charges which has become effective prior to the incurring of such additional indebtedness but which, during all or any part of such Fiscal Year was not in effect, in an amount equal to the amount by which the Net Revenues would have been increased if such increase in charges had been in effect during the whole of such Fiscal Year. (c) The Additional Bonds Instrument providing for the issuance of such Additional Bonds or the Contract under this Section shall provide that:

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11 (i) The proceeds of such Additional Bonds or Contracts shall be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities, improvements or extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the Purchaser determines are of benefit to the Water System, or for the purpose of refunding any Bonds and Additional Bonds or Contracts in whole or in part, including all costs (including costs of issuing such Additional Bonds or Contracts and including capitalized interest on such Additional Bonds or Contracts during any period which the Authority deems necessary or advisable) relating thereto; (ii) Interest on such Additional Bonds or Contracts shall be payable on an Interest Payment Date unless such Additional Bonds or Contracts are owed to an agency of the State of California, in which case th ey may be payable on any date;
(iii) The principal of such Additional Bonds or Contracts shall be payable on October 1 in any year in which principal is payable unless such Additional Bonds or Contracts are owed to an agency of the State of California, in which case they may be payable on any date; and
(iv) Money or a surety bond may be, but shall not be required to be, deposited in a reserve account for such Additional Bonds or Contracts from the proceeds of the sale of such Additional Bonds or Contracts or otherwise in such amount as may be determined by the Authority.

SECTION 5.04. Subordinate Bonds. Nothing in this Indenture shall prohibit or impair the authority of the Purchaser to issue bonds or other obligations secured by a lien on Gross Revenues or Net Revenues which is subordinate to the lien established hereunder, upon such terms and in such principal amounts as the Purchaser may determine; provided, that the Authority may issue or incur any such Subordinate Bonds subject to the following specific conditions which are hereby made conditions precedent to the issuance and delivery of such Subordinate Bonds:
(a) The Purchaser shall be in compliance with all covenants set forth in this Agreement.
(b) The Net Revenues of the Water System, calculated on sound accounting principles, as shown by the books of the Authority for the latest Fiscal Year, as shown by the books of the Purchaser shall at least equal one hundred percent (100%) of Debt Service for such Fiscal Year.
(c) The Subordinate Bonds Instrument providing for the issuance of such Subordinate Bonds under this Section shall provide that:
(i) The proceeds of such Subordinate Bonds shall be applied to the acquisition, construction, improvement, financing or refinancing of additional facilities, improvements or extensions of existing facilities within the Water System, or otherwise for facilities, improvements or property which the Purchaser

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12 determines are of benefit to the Water System, or for the purpose of refunding any Bonds or Additional Bonds and Contracts in whole or in part, including all costs (including costs of issuing such Subordinate Bonds and including capitalized interest on such Subordinate Bonds during any period which the Purchase r deems necessary or advisable) relating thereto; and
(ii) Principal of and interest on such Subordinate Bonds may be payable on any date.

SECTION 5.05. Permitted Investments. All moneys held by the Purchaser in the Revenue Fund shall be invested in Permitted Investments and the investment earnings thereon shall remain on deposit in such fund, except as otherwise provided herein.

ARTICLE VI

COVENANTS OF THE PURCHASER
SECTION 6.01. Compliance with Installment Purchase Agreement and Ancillary Agreements. The Purchaser will punctually pay the 2022 Installment Payments in strict conformity with the terms hereof, and will faithfully observe and perform all the agreements, conditions, covenants and terms contained herein required to be observed and performed by it, and will not terminate this Agreement for any cause including, without limiting the generality of the foregoing, any acts or circumstances that may constitute failure of consideration, destruction of or damage to the Water System, commercial frustration of purpose, any change in the tax or other laws of the United States of America or of the State of California or any political subdivision of either or any failure of the Authority to observe or perform any agreement, condition, covenant or term contained herein required to be observed and performed by it, whether express or implied, or any duty, liability or obligation arising out of or connected herewith or the insolvency, or deemed insolvency, or bankruptcy or liquidation of the Authority or any force majeure, including acts of God, tempest, storm, earthquake, war, rebellion, riot, civil disorder, acts of public enemies, blockade or embargo, strikes, industrial disputes, lock outs, lack of transportation facilities, fire, explosion, or acts or regulations of governmental authorities.

The Purchaser will faithfully observe and perform all the agreements, conditions, covenants and terms contained in the Indenture required to be observed and performed by it; and it is expressly understood and agreed by and between the parties to this Agreement that, subject to Section 10.07 hereof, each of the agreements, conditions, covenants and terms contained in each of this Agreement and the Indenture is an essential and material term of the purchase of and payment for the Improvements by the Purchaser pursuant to and in accordance with this Agreement.

The Purchaser will faithfully observe and perform all the agreements, conditions, covenants and terms required to be observed and performed by it pursuant to all outstanding Contracts and Bonds as such may from time to time be executed or issued, as the case may be.

SECTION 6.02. Against Encumbrances. The Purchaser will not make any pledge of or place any lien on Net Revenues or the moneys in the Revenue Fund except as provided herein.

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13 The Purchaser may at any time, or from time to time, issue evidences of indebtedness or incur other obligations for any lawful purpose that are payable from and secured by a pledge of and lien on Net Revenues or any moneys in the Revenue Fund as may from time to time be deposited therein (as provided in Section 5.02), provided that such pledge and lien shall be subordinate in all respects to the pledge of and lien thereon provided herein. The Purchaser will not issue any evidences of indebtedness or incur other obligations that are payable from and secured by a pledge of and lien on Net Revenues senior to the pledge of and lien on Net Revenues of the 2022 Installment Payments.

SECTION 6.03. Against Sale or Other Disposition of Property. The Purchaser will not enter into any agreement or lease that impairs the operation of the Water System or any part thereof necessary to secure adequate Net Revenues for the payment of the 2022 Installment Payments, or that would otherwise impair the rights of the Authority hereunder or the operation of the Water System. Any real or personal property that has become nonoperative or that is not needed for the efficient and proper operation of the Water System, or any material or equipment that has become worn out, may be sold if such sale will not impair the ability of the Purchaser to pay the 2022 Installment Payments and if the proceeds of such sale are deposited in the Revenue Fund.

Nothing herein shall restrict the ability of the Purchaser to sell any portion of the Water System if such portion is immediately repurchased by the Purchaser and if such arrangement cannot by its terms result in the purchaser of such portion of the Water System exercising any remedy that would deprive the Purchaser of or otherwise interfere with its right to own and operate such portion of the Water System.

SECTION 6.04. Maintenance and Operation of the Water System. The Purchaser will maintain and preserve the Water System in good repair and working order at all times and will operate the Water System in an efficient and economical manner and will pay all Maintenance and Operation Costs as they become due and payable.

SECTION 6.05. Payment of Claims. The Purchaser will pay and discharge any and all lawful claims for labor, materials or supplies that, if unpaid, might become a lien on the Net Revenues or the funds or accounts created hereunder or under the Indenture or on any funds in the hands of the Purchaser pledged to pay the 2022 Installment Payments or to the Owners prior or superior to the lien of the 2022 Installment Payments or that might impair the security of the 2022 Installment Payments, except that if the Purchaser desires to contest any such lien it may do so. If any such lien shall be reduced to final judgment and such judgment or any process as may be issued for the enforcement thereof is not promptly stayed, or if so stayed and such stay thereafter expires, the Purchaser will forthwith pay or cause to be paid and discharged such judgment.

SECTION 6.06. Insurance.
(a) The Purchaser will procure and maintain or cause to be procured and maintained insurance relating to the Water System with responsible insurers in such amounts and against such risks (including damage to or destruction of the Water System)

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14 as are usually covered in connection with facilities similar to the Water System, so long as such insurance is available from reputable insurance companies at reasonable costs.

In the event of any damage to or destruction of the Water System caused by the perils covered by such insurance, the following shall apply; provided however, the following shall not apply, if (1) the Net Proceeds are less than $50,000, in which case the Purchaser may determine the use of such proceeds; or (2) the Purchaser certifies in a Written Order of the Purchaser delivered to the Trustee that if the damaged or destroyed portion of the Water System is not repaired or replaced, the Water System will generate Net Revenues equal to at least 125% of the amount described in clause (b) of Section 6.10 for each future fiscal year that the Bonds are scheduled to remain outstanding without a rate increase triggering a noticed Proposition 218 rate hearing:
(i) The Net Proceeds thereof shall be applied to the reconstruction, repair or replacement of the damaged or destroyed portion of the Water System.

The Purchaser shall begin such reconstruction, repair or replacement promptly after such damage or destruction shall occur, and shall continue and properly complete such reconstruction, repair or replacement as expeditiously as possible, and shall pay out of such Net Proceeds all costs and expenses in connection with such reconstruction, repair or replacement so that the same shall be completed and the Water System shall be free and clear of all claims and liens. (ii) If such Net Proceeds are sufficient to enable the Purchaser to retire the entire obligation evidenced hereby prior to the final due date of the 2022 Installment Payments as well as the entire obligations evidenced by Additional Bonds and Contracts then remaining unpaid prior to their final respective due dates, the Purchaser may elect not to reconstruct, repair or replace the damaged or destroyed portion of the Water System, and/or not to construct other additions, betterments, extensions or improvements to the Water System; and thereupon such Net Proceeds shall be applied to the payment of the 2022 Installment Payments or prepayment of 2022 Installment Payments as provided in Article VII in a manner determined by the Purchaser plus payment of Additional Bonds and Contracts.
(iii) If such Net Proceeds exceed the costs of such reconstruction, repair or replacement portion of the Water System, and/or the cost of the construction of additions, betterments, extensions or improvements to the Water System, then the excess Net Proceeds may, in the Purchaser’s discretion, be applied in part to the payment of 2022 Installment Payments or the prepayment of 2022 Installment Payments as provided in Article VII and in part to pay off Additional Bonds and Contracts.
(b) The Purchaser will procure and maintain such other insurance as it shall deem advisable or necessary to protect its interests and the interests of the Authority, which insurance shall afford protection in such amounts and against such risks as are usually covered in connection with municipal water systems similar to the Water System.

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15 (c) Any insurance required to be maintained by paragraph (a) above and, if the Purchaser determines to procure and maintain insurance pursuant to paragraph (b) above, such insurance, may be maintained under a self-insurance program so long as such self-insurance is maintained in the amounts and manner usually maintained in connection with water systems similar to the Water System and is, in the opinion of an accredited actuary, actuarially sound.

All policies of insurance required to be maintained herein shall provide that the Authority and the Trustee shall be given thirty (30) days written notice of any intended cancellation thereof or reduction of coverage provided thereby.

The Trustee shall not be responsible for the sufficiency or adequacy of the insurance maintained by the Purchaser.

SECTION 6.07. Accounting Records; Financial Statements and Other Records. (a) The Purchaser will keep appropriate accounting records in which complete and correct entries shall be made of all transactions relating to the Water System, which records shall be available for inspection by the Authority and the Trustee at reasonable hours and under reasonable conditions.
(b) The Purchaser will prepare and file with the Authority and, upon request of the Trustee, annually within two hundred and seventy (270) days after the close of each Fiscal Year (commencing with the Fiscal Year ending June 30, 2022); (i) financial statements of the Purchaser for the preceding Fiscal Year prepared in accordance with generally accepted accounting principles, together with a report of an Independent Certified Public Accountant thereon; and (ii) a detailed report as to all insurance policies maintained and self- insurance programs maintained by the Purchaser with respect to the Water System, as of the close of such Fiscal Year, including the names of the insurers that have issued the policies and the amounts thereof and the property or risks covered thereby and a statement that all such policies comply with Section 6.06 hereof.

The Trustee shall have no duty to review, verify or analyze the documents provided to it pursuant to Section 6.07(b)(i) and shall hold such documents solely as a repository for the benefit of the Owners. The Trustee shall not be deemed to have notice of any information contained therein or default or Event of Default which may be disclosed therein in any manner.

SECTION 6.08. Protection of Security and Rights of the Authority. The Purchaser will preserve and protect the security hereof and the rights of the Authority to the 2022 Installment Payments hereunder and will warrant and defend such rights against all claims and demands of all persons.

SECTION 6.09. Payment of Taxes and Compliance with Governmental Regulations.

The Purchaser will pay and discharge all taxes, assessments and other governmental charges that

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16 may hereafter be lawfully imposed upon the Water System, or any part thereof or upon the Gross Revenues when the same shall become due. The Purchaser will duly observe and conform with all valid regulations and requirements of any governmental authority relative to the operation of the Water System, or any part thereof, but the Purchaser 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 6.10. Amount of Rates and Charges, Operating Reserves. (a) The Purchaser shall fix, prescribe, revise and collect charges for the Water System during each Fiscal Year which are at least sufficient, after making allowances for contingencies and error in the estimates, to pay the following amounts in the following order:
(i) all Maintenance and Operation Costs of the Water System estimated by the Purchaser to become due and payable in such Fiscal Year; (ii) all Installment Payments and payments of principal of and interest on the Bonds and any Additional Bonds and Contracts as they become due and payable during such Fiscal Year, without preference or priority, except to the extent Installment Payments or interest on the Bonds and any Additional Bonds and Contracts are payable from proceeds of such Bonds or Additional Bonds and Contracts deposited for such purpose;
(iii) all other payments required for compliance with this Installment Purchase Agreement and the Additional Bonds Instruments pursuant to which any Additional Bonds and Contracts relating to the Water System shall have been issued as they become due and payable during such Fiscal Year; and (iv) all payments required to meet any other obligations of the Purchaser which are charges, liens, encumbrances upon or payable from the Gross Revenues of the Water System or the Net Revenues of the Water System during such Fiscal Year.
(b) In addition, the Purchaser shall fix, prescribe, revise and collect charges for the Water System (exclusive of connection fees and transfers to the Revenue Fund from a rate stabilization fund) during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to one hundred percent (100%) of the amounts payable under the preceding clause (a)(ii) in such Fiscal Year for Bonds and Additional Bonds and Contracts which have a lien on such Net Revenues. (c) In addition, the Purchaser shall fix, prescribe, revise and collect charges for the Water System (inclusive of all Gross Revenues) during each Fiscal Year which are sufficient to yield Net Revenues of the Water System at least equal to one hundred twenty-five percent (125%) of the amounts payable under the preceding clause (a)(ii) in such Fiscal Year for Bonds and Additional Bonds and Contracts which have a lien on such Net Revenues.

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17 SECTION 6.11. Collection of Rates and Charges. The Purchaser will have in effect at all times rules and regulations requiring each customer to pay the rates, fees and charges applicable to the Water Services and providing for the billing thereof and for a due date and a delinquency date for each bill.

SECTION 6.12. Eminent Domain Proceeds. If all or any part of the Water System shall be taken by eminent domain proceedings, the Net Proceeds realized by the Purchaser therefrom shall be deposited by the Purchaser with the Trustee in a special fund in trust and applied by the Purchaser to the cost of acquiring or constructing or financing improvements to the Water System if (A) the Purchaser first secures and files with the Trustee a Written Certificate of the Purchaser showing (i) the estimated loss in annual Net Revenues, if any, suffered, or to be suffered, by the Purchaser by reason of such eminent domain proceedings, (ii) a general description of the improvements to the Water System then proposed to be acquired or constructed by the Purchaser from such Net Proceeds, and (iii) an estimate of the additional Net Revenues to be derived from such improvements; and (B) the Purchaser determines that such additional Net Revenues will sufficiently offset the loss of Net Revenues, resulting from such eminent domain proceedings so that the ability of the Purchaser to meet its obligations hereunder will not be substantially impaired, which determination shall be final and conclusive. If the foregoing conditions are met, the Purchaser shall then promptly proceed with the acquisition or construction or financing of such improvements substantially in accordance with such Written Certificate of the Purchaser and payments therefor shall be made by the Trustee from such Net Proceeds and from other moneys of the Purchaser lawfully available therefor, and any balance of such Net Proceeds not required by the Purchaser for the purposes afores aid shall be transferred to the Purchaser and deposited in the Revenue Fund. If the foregoing conditions are not met, then such Net Proceeds shall be held in trust by the Trustee and applied to the payment of the Bonds in a manner determined by the Purchaser, and, pending such application, such remaining moneys may be invested by the Trustee in the manner provided in the Indenture.

SECTION 6.13. Further Assurances. The Purchaser 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 Authority of the rights and benefits provided to it herein.

SECTION 6.14. Continuing Disclosure. The Purchaser will comply with the continuing disclosure requirements promulgated under U.S. Securities and Exchange Commission Rule 15c2-12 and will also comply with the terms of the Continuing Disclosure Agreement.

SECTION 6.15. Tax Exempt Status of Bonds.
(a) Private Activity Bond Limitation. The Purchaser and the Authority shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private business tests of section 141(b) of the Tax Code. (b) Private Loan Financing Limitation. The Purchaser and the Authority shall assure that the proceeds of the Bonds are not so used as to cause the Bonds to satisfy the private loan financing test of section 141(c) of the Tax Code.

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18 (c) Federal Guarantee Prohibition. The Purchaser and the Authority shall not take any action or permit or suffer any action to be taken if the result of the same would be to cause any of the Bonds to be "federally guaranteed" within the meaning of section 149(b) of the Tax Code.
(d) No Arbitrage. The Purchaser and the Authority shall not take, or permit or suffer to be taken by the Trustee or otherwise, any action with respect to the proceeds of the Bonds which, if such action had been reasonably expected to have been taken, or had been deliberately and intentionally taken, on the date of issuance of the Bonds would have caused the Bonds to be "arbitrage bonds" within the meaning of section 148 of the Tax Code.
(e) Maintenance of Tax-Exemption. The Purchaser and the Authority shall take all actions necessary to assure the exclusion of interest on the Bonds from the gross income of the Owners of the Bonds to the same extent as such interest is permitted to be excluded from gross income under the Tax Code as in effect on the date of issuance of the Bonds, including compliance with the requirements of the code relating to rebate of excess arbitrage earnings to the federal government.

SECTION 6.16. Access to the Water System. The Purchaser agrees that the Authority and the Trustee, and any duly Authorized Official thereof, shall have the right at all reasonable times to enter upon and to examine and inspect the Water System. The Purchaser further agrees that the Authority, and any duly Authorized Official thereof, and the Trustee shall have such rights of access to the Water System as may be reasonably necessary to cause the proper maintenance of the Water System in the event of failure by the Purchaser to perform its obligations hereunder.

ARTICLE VII

PREPAYMENT OF 2022 INSTALLMENT PAYMENTS
SECTION 7.01. Prepayment.

The Purchaser may exercise its option to prepay the principal components of the 2022 Installment Payments in whole or in part (in integral multiples of $5,000) to the extent the Authority has the ability to effect an optional redemption of the Bonds under the Indenture. The Purchaser shall give the Trustee and the Authority written notice of its intention to exercise its option under this Section not less than forty (40) days in advance of the date of exercise (or such lesser period of time as shall be consented to by the Trustee and the Authority).

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES OF THE AUTHORITY
SECTION 8.01. Events of Default and Acceleration of Maturities. If one or more of the following Events of Default shall happen, that is to say --

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19 (a) if default shall be made in the due and punctual payment of any 2022 Installment Payment or any Contract or Additional Bond when and as the same shall become due and payable;
(b) if default shall be made by the Purchaser in the performance of any of the agreements or covenants required herein to be performed by it, and such default shall have continued for a period of sixty (60) days after the Purchaser shall have been given notice in writing of such default by the Authority; provided, however, if in the reasonable opinion of the Purchaser the failure stated in the notice can be corrected, but not within such sixty (60) day period, such failure shall not constitute an Event of Default if corrective action is instituted by the Purchaser within such sixty (60) day period and the Purchaser shall thereafter diligently and in good faith cure such failure in a reasonable period of time, which period shall not extend more than one hundred eighty (180) days from the date of the default notice; or
(c) if the Purchaser 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 Purchaser 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 Purchaser or of the whole or any substantial part of its property; then and in each and every such case during the continuance of such Event o f Default specified in clause (c) above, the Authority shall, and for any other such Event of Default the Authority may, by notice in writing to the Purchaser, declare the entire principal amount of the unpaid 2022 Installment Payments and the accrued interest thereon to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable, anything contained herein to the contrary notwithstanding. This subsection however, is subject to the condition that if at any time after the entire principal amount of the unpaid 2022 Installment Payments and the accrued interest thereon shall have been so declared due and payable and before any judgment or decree for the payment of the moneys due shall have been obtained or entered the Purchaser shall deposit with the Authority a sum sufficient to pay the unpaid principal amount of the 2022 Installment Payments or the unpaid payment of any other Contract or Additional Bond referred to in clause (a) above due prior to such declaration and the accrued interest thereon, with interest on such overdue installments, at the rate or rates applicable to the remaining unpaid principal balance of the 2022 Installment Payments or such Contract or Additional Bond if paid in accordance with their terms, and the reasonable expenses of the Authority, and any and all other defaults known to the Authority (other than in the payment of the entire principal amount of the unpaid 2022 Installment Payments and the accrued interest thereon due and payable solely by reason of such declaration) shall have been made good or cured to the satisfaction of the Authority or provision deemed by the Authority to be adequate shall have been made therefor, then and in every such case the Authority, by written notice to the Purchaser, may rescind and annul such declaration and its consequences; but no such rescission and

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20 annulment shall extend to or shall affect any subsequent default or shall impair or exhaust any right or power consequent thereon.

SECTION 8.02. Application of Funds Upon Acceleration. Upon the date of the declaration of acceleration as provided in Section 8.01, all Net Revenues thereafter received shall be applied in the following order –
First, to the payment of the fees, costs and expenses of the Trustee, if any, in carrying out the provisions of this article, including reasonable compensation to its accountants, advisors and legal counsel and then to the payment of the fees, costs and expenses of the Authority, if any, in carrying out the provisions of this article, including reasonable compensation to its accountants, advisors and legal counsel; and
Second, to the payment of the entire principal amount of the unpaid 2022 Installment Payments and the unpaid principal amount of all Additional Bonds and Contracts and the accrued interest thereon, with interest on the overdue installments at the rate or rates of interest applicable to the 2022 Installment Payments and such Additional Bonds and Contracts if paid in accordance with their respective terms.

SECTION 8.03. Other Remedies of the Authority. The 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 Purchaser or any director, officer or employee thereof, and to compel the Purchaser or any such director, officer or employee to perform and carry out its or his duties under the law and the agreements and covenants required to be performed by it or him contained herein;
(b) by suit in equity to enjoin any acts or things that are unlawful or violate the rights of the Authority or the Trustee; or
(c) by suit in equity upon the happening of an Event of Default to require the Purchaser and its directors, officers and employees to account as the trustee of an express trust.

Notwithstanding anything contained herein, the Authority shall have no security interest in or mortgage on the Improvements or the Water System or any other real property of the Purchaser and no default hereunder shall result in the loss of the Improvements or the Water System or any other real property of the Purchaser.

SECTION 8.04. Non-Waiver. Nothing in this article or in any other provision hereof shall affect or impair the obligation of the Purchaser, which is absolute and unconditional, to pay the 2022 Installment Payments to the Authority at the respective due dates or upon prepayment from the Net Revenues, the Revenue Fund and the other funds herein pledged for such payment, or shall affect or impair the right of the Authority, which is also absolute and unconditional, to institute suit to enforce such payment by virtue of the contract embodied herein.

A waiver of any default or breach of duty or contract by the Authority shall not affect any subsequent default or breach of duty or contract or impair any rights or remedies on any such

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21 subsequent default or breach of duty or contract. No delay or omission by the 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 suc h default or breach of duty or contract or an acquiescence therein, and every right or remedy conferred upon the Authority by the law or by this article may be enforced and exercised from time to time and as often as shall be deemed expedient by the Authority.

If any action, proceeding or suit to enforce any right or exercise any remedy is abandoned or determined adversely to the Authority, the Purchaser and the Authority 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. Remedies Not Exclusive. No remedy herein conferred upon or reserved to the Authority or the Bond Owners, or as provided in the Indenture, 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 under the Indenture or now or hereafter existing in law or in equity or by statute or otherwise and may be exercised without exhausting and without regard to any other remedy conferred by the law.

ARTICLE IX

DISCHARGE OF OBLIGATIONS
SECTION 9.01. Discharge of Obligations. When:
(a) all or any portion of the 2022 Installment Payments shall have become due and payable in accordance herewith or a written notice of the Purchaser to prepay all or any portion of the 2022 Installment Payments shall have been filed with the Trustee; and (b) there shall have been deposited with the Trustee at or prior to the 2022 Installment Payment Dates or date (or dates) specified for prepayment, in trust for the benefit of the Authority or its assigns and irrevocably appropriated and set aside to the payment of all or any portion of the 2022 Installment Payments, sufficient moneys and Permitted Investments, in the amounts required by Section 9.03 of the Indenture, described in paragraph (a) of the definition thereof, the principal of and interest on which when due will provide money sufficient to pay all principal, prepayment pr emium, if any, and interest of such 2022 Installment Payments to their respective 2022 Installment Payment Dates or prepayment date or dates as the case may be; and (c) provision shall have been made for paying all fees and expenses of the Trustee,
then and in that event, if an opinion of Bond Counsel is filed with the Trustee to the effect that the actions authorized by and taken pursuant to this Article IX shall not adversely affect the tax exempt status of the interest portion of the 2022 Installment Payments payable to the Bonds, the right, title and interest of the Authority herein and the obligations of the Purchaser hereunder shall, with respect to all or such portion of the 2022 Installment Payments as have been so provided for, thereupon cease, terminate, become void and be completely discharged and

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22 satisfied (except for the right of the Trustee and the obligation of the Purchaser to have such moneys and such Permitted Investments applied to the payment of such 2022 Installment Payments).

In such event, upon request of the Purchaser the Trustee shall cause an accounting for such period or periods as may be requested by the Purchaser to be prepared and filed with the Purchaser and shall execute and deliver to the Purchaser all such instruments as may b e necessary or desirable to evidence such total or partial discharge and satisfaction, as the case may be, prepared by or on behalf of and at the expense of the Purchaser, and, in the event of a total discharge and satisfaction, the Trustee shall pay over to the Purchaser, after payment of all amounts due the Trustee pursuant to the Indenture, as an overpayment of 2022 Installment Payments, all such moneys or such Permitted Investments held by it pursuant hereto other than such moneys and such Permitted Investments as are required for the payment or prepayment of the 2022 Installment Payments, which moneys and Permitted Investments shall continue to be held by the Trustee in trust for the payment of the 2022 Installment Payments and shall be applied by the Trustee to the payment of the 2022 Installment Payments of the Purchaser.

ARTICLE X

MISCELLANEOUS
SECTION 10.01. Liability of Purchaser Limited to Net Revenues. Notwithstanding anything contained herein, the Purchaser shall not be required to advance any moneys derived from any source of income other than the Net Revenues, the Revenue Fund and the other funds provided herein and in the Indenture for the payment of the 2022 Installment Payments or for the performance of any agreements or covenants required to be performed by it contained herein.

The Purchaser may, however, advance moneys for any such purpose so long as such moneys are derived from a source legally available for such purpose and may be legally used by the Purchaser for such purpose.

The obligation of the Purchaser to make the 2022 Installment Payments is a special obligation of the Purchaser payable solely from Net Revenues, the Revenue Fund and other funds described in this Agreement and in the Indenture, and does not constitute a debt of the Purchaser or of the State of California or of any political subdivision thereof in contravention of any constitutional or statutory debt limitation or restriction.

SECTION 10.02. Benefits of Installment Purchase Agreement Limited to Parties.

Except as provided in Section 10.05 hereto, nothing contained herein, expressed or implied, is intended to give to any person other than the Purchaser or the Authority 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 Purchaser or the Authority shall be for the sole and exclusive benefit of the other party.

SECTION 10.03. Successor Is Deemed Included in all References to Predecessor.

Whenever either the Purchaser or the 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 Purchaser or the Authority, and all agreements and covenants required hereby to be

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23 performed by or on behalf of the Purchaser or the Authority shall bind and inure to the benefit of the respective successors thereof whether so expressed or not.

SECTION 10.04. Waiver of Personal Liability. No director, officer or employee of the Purchaser shall be individually or personally liable for the payment of the 2022 Installment Payments, but nothing contained herein shall relieve any director, officer or employee of the Purchaser from the performance of any official duty provided by any applicable provisions of law or hereby.

SECTION 10.05. Third Party Beneficiary. The Trustee shall be and is hereby made a third party beneficiary hereunder with all rights of a third party beneficiary and may enforce the provisions of this Agreement as if it were a party hereto.

SECTION 10.06. Article and Section Headings; Gender 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, and words of any gender shall be deemed and construed to include all genders. 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” and other words of similar import refer to this Agreement as a whole and not to any particular article, section, subdivision or clause hereof.

SECTION 10.07. 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 Purchaser or the Authority 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. The Purchaser and the Authority hereby declare that they would have executed this 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, 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 10.08. Assignment. This Agreement and any rights hereunder may be assigned by the Authority to the Trustee, as a whole or in part, without the necessity of obtaining the prior consent of the Purchaser.

SECTION 10.09. Net Contract. This Agreement shall be deemed and construed to be a net contract, and the Purchaser shall pay absolutely net during the term hereof the 2022 Installment Payments and all other payments required hereunder, free of any deductions and without abatement, diminution or set-off whatsoever.

SECTION 10.10. California Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California.

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:

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24 If to the Purchaser: City of Upland
460 North Euclid Avenue
Upland, CA 91785-0460
Attention: City Manager

If to the Authority: City of Upland Financing Authority 460 North Euclid Avenue
Upland, CA 91785-0460
Attention: Executive Director

SECTION 10.12. Effective Date. This Agreement shall become effective upon its execution and delivery, and shall terminate when the Purchase Price shall have been fully paid (or provision for the payment thereof shall have been made to the written satisfaction of the Authority).

SECTION 10.13. Execution in Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all of which shall constitute but one and the same instrument.

SECTION 10.14. Indemnification of Authority. The Purchaser hereby agrees to indemnify and hold harmless the Authority if and to the extent permitted by law, from and against all claims, advances, damages and losses, including legal fees and expenses, arising out of or in connection with the acceptance or the performance of its duties hereunder and under the Indenture; provided that no indemnification will be made for willful misconduct, negligence or breach of an obligation hereunder or under the Indenture by the Authority.

SECTION 10.15. Amendments Permitted. (a) This Agreement and the rights and obligations of the Authority, the Purchaser, the Owners of the Bonds and of the Trustee may be modified or amended at any time, by an amendment hereto that shall become binding when the written consents of the Owners of a majority in aggregate principal amount of the Bonds then Outstanding, exclusive of Bonds disqualified as provided in Section 7.02 of the Indenture, shall have been filed with the Trustee. No such modification or amendment shall – (1) extend the stated maturities of the Bonds, or reduce the rate of interest represented thereby, or extend the time of payment of interest, or reduce the amount of principal represented thereby, or reduce any premium payable on the prepayment thereof, without the consent of the Owner of each Bond so affected, or (2) reduce the aforesaid percentage of Owners of Bonds whose consent is required for the execution of any amendment or modification of this Agreement, or (3) modify any of the rights or obligations of the Trustee or the Authority without its respective written consent thereto.
(b) This Agreement and the rights and obligations of the Authority, the Purchaser and of the Owners of the Bonds may also be modified or amended at any time, by an amendment hereto that shall become binding upon adoption, without the consent of the Owners of any

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25 Bonds, but only to the extent permitted by law and only for any one or more of the following purposes-
(1) to add to the covenants and agreements of the Authority or the Purchaser contained in this Agreement other covenants and agreements thereafter to be observed or to surrender any right or power herein reserved to or conferred upon the Authority or the Purchaser so long as such limitation or surrender of such rights or powers shall not materially adversely affect the Owners of the Bonds;
(2) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provision contained in this Agreement, or in any other respect whatsoever as the Authority or the Purchaser may deem necessary or desirable, provided under any circumstances that such modifications or amendments shall not materially adversely affect the interests of the Owners of the Bonds in the reasonable judgment of the Authority;
(3) to maintain the exclusion of interest on the Bonds from gross income for federal income tax purposes under the Tax Code, if applicable; and (4) to make such other amendments or modifications that do not materially adversely affect the interests of the Owners of the Bonds. (c) No amendment without consent of the Owners may modify any of the rights or obligations of the Trustee without its written consent thereto. (Signature page follows)

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S-1

IN WITNESS WHEREOF, the parties hereto have executed and attested this Installment Purchase Agreement by their officers thereunto duly authorized as of the day and year first written above.

CITY OF UPLAND

By:

Michael Blay
City Manager

CITY OF UPLAND FINANCING

AUTHORITY

By:

Michael Blay
Executive Director

-Signature Page-
Installment Purchase Agreement

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A-1

EXHIBIT A

PURCHASE PRICE

1. The principal amount of payments to be made by the Purchaser hereunder is $___________.

2. The installment payments of principal and interest are payable ten days prior to each Interest Payment Date in the amounts set forth as follows:

Interest Payment
Dates
Amount
Attributable
to Principal
Amount
Attributable
to Interest Total

Total

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2

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INDENTURE OF TRUST
by and among the

CITY OF UPLAND FINANCING AUTHORITY
and

CITY OF UPLAND
and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
Dated as of __________, 2022
Relating to
$___________

CITY OF UPLAND FINANCING AUTHORITY

WATER REVENUE BONDS
Series 2022

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TABLE OF CONTENTS

Page

i

ARTICLE I DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS; EQUAL SECURITY ....................................................................................... 2 SECTION 1.01. Definitions.............................................................................................. 2 SECTION 1.02. Rules of Construction .......................................................................... 10 SECTION 1.03. Equal Security ...................................................................................... 10 ARTICLE II AUTHORIZATION AND ISSUANCE OF BONDS ............................................ 10 SECTION 2.01. Authorization of Bonds ........................................................................ 10 SECTION 2.02. Terms of Bonds .................................................................................... 10 SECTION 2.03. Redemption of Bonds. ......................................................................... 11 SECTION 2.04. Forms of Bonds .................................................................................... 14 SECTION 2.05. Execution of Bonds .............................................................................. 14 SECTION 2.06. Transfer and Exchange of Bonds. ........................................................ 14 SECTION 2.07. Registration Books ............................................................................... 15 SECTION 2.08. Issuance in Temporary Form ............................................................... 15 SECTION 2.09. Bonds Mutilated, Lost, Destroyed or Stolen ........................................ 15 SECTION 2.10. Book-Entry System; Limited Obligation ............................................. 16 SECTION 2.11. Representation Letter ........................................................................... 17 SECTION 2.12. Transfers Outside Book-Entry System ................................................ 17 SECTION 2.13. Payments and Notices to the Nominee ................................................ 18 SECTION 2.14. Initial Depository and Nominee ........................................................... 18 ARTICLE III ISSUANCE OF BONDS AND APPLICATION OF PROCEEDS ...................... 18 SECTION 3.01. Issuance of Bonds ................................................................................ 18 SECTION 3.02. Application of Proceeds of Sale of Bonds ........................................... 18 SECTION 3.03. Omitted. ............................................................................................... 18 SECTION 3.04. Costs of Issuance Fund ........................................................................ 18 SECTION 3.05. Acquisition and Construction Fund ..................................................... 19 SECTION 3.06. Validity of Bonds ................................................................................. 19 ARTICLE IV REVENUES; FLOW OF FUNDS ........................................................................ 19 SECTION 4.01. Collateral Assignment of Revenues and of the Installment Purchase Agreement ............................................................................................ 19 SECTION 4.02. Receipt, Deposit and Application of Revenues ................................... 20 SECTION 4.03. Investments .......................................................................................... 21 SECTION 4.04. Valuation; Investments. ....................................................................... 22 ARTICLE V COVENANTS OF THE AUTHORITY; SPECIAL TAX COVENANTS ........... 23 SECTION 5.01. Punctual Payment; Compliance With Documents ............................... 23 SECTION 5.02. Extension of Payment of Bonds ........................................................... 23 SECTION 5.03. Against Encumbrances......................................................................... 23 SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment ................... 23 SECTION 5.05. Accounting Records and Financial Statements.................................... 24

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TABLE OF CONTENTS
(continued)
Page

ii

SECTION 5.06. No Additional Obligations ................................................................... 24 SECTION 5.07. Tax Covenants. .................................................................................... 24 SECTION 5.08. Installment Purchase Agreement ......................................................... 25 SECTION 5.09. Waiver of Laws .................................................................................... 25 SECTION 5.10. Further Assurances............................................................................... 25 SECTION 5.11. Continuing Disclosure ......................................................................... 25 ARTICLE VI THE TRUSTEE .................................................................................................... 26 SECTION 6.01. Appointment of Trustee ....................................................................... 26 SECTION 6.02. Payment of Bonds; Registration Books ............................................... 26 SECTION 6.03. Acceptance of Trusts ............................................................................ 26 SECTION 6.04. Fees, Charges and Expenses of Trustee ............................................... 30 SECTION 6.05. Notice to Bond Owners of Default ...................................................... 30 SECTION 6.06. Intervention by Trustee ........................................................................ 30 SECTION 6.07. Removal of Trustee .............................................................................. 30 SECTION 6.08. Resignation by Trustee ........................................................................ 30 SECTION 6.09. Appointment of Successor Trustee ...................................................... 31 SECTION 6.10. Merger or Consolidation ...................................................................... 31 SECTION 6.11. Concerning any Successor Trustee ...................................................... 31 SECTION 6.12. Appointment of Co-Trustee ................................................................. 32 SECTION 6.13. Indemnification; Limited Liability of Trustee ..................................... 32 ARTICLE VII MODIFICATION AND AMENDMENT OF THIS INDENTURE ................... 33 SECTION 7.01. Amendment by Consent of Bond Owners ........................................... 33 SECTION 7.02. Disqualified Bonds............................................................................... 34 SECTION 7.03. Endorsement or Replacement of Bonds After Amendment ................ 34 SECTION 7.04. Amendment by Mutual Consent .......................................................... 34 ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS ................ 34 SECTION 8.01. Events of Default and Acceleration of Maturities ............................... 34 SECTION 8.02. Application of Funds Upon Acceleration ............................................ 35 SECTION 8.03. Other Remedies: Rights of Bond Owners ............................................ 36 SECTION 8.04. Power of Trustee to Control Proceeding .............................................. 37 SECTION 8.05. Appointment of Receivers ................................................................... 37 SECTION 8.06. Non-Waiver.......................................................................................... 37 SECTION 8.07. Rights and Remedies of Bond Owners ................................................ 38 SECTION 8.08. Termination of Proceedings ................................................................. 38 ARTICLE IX MISCELLANEOUS ............................................................................................. 38 SECTION 9.01. Limited Liability of Authority ............................................................. 38 SECTION 9.02. Benefits of Indenture Limited to Parties .............................................. 39 SECTION 9.03. Discharge of Indenture ......................................................................... 39 SECTION 9.04. Successor Is Deemed Included in All References to Predecessor ....... 40 SECTION 9.05. Execution of Documents by Bond Owners .......................................... 40

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TABLE OF CONTENTS
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Page

iii

SECTION 9.06. Waiver of Personal Liability ................................................................ 40 SECTION 9.07. Partial Invalidity .................................................................................. 40 SECTION 9.08. Destruction of Canceled Bonds ........................................................... 41 SECTION 9.09. Funds and Accounts ............................................................................. 41 SECTION 9.10. Notices ................................................................................................. 41 SECTION 9.11. Unclaimed Moneys .............................................................................. 42 SECTION 9.12. Execution in Several Counterparts ...................................................... 42 SECTION 9.13. Governing Law .................................................................................... 42

EXHIBIT A – FORM OF SERIES A BOND ............................................................................ A-1 EXHIBIT B – REQUISITION OF THE AUTHORITY ........................................................... B-1 EXHIBIT C – REQUISITION OF THE CITY ......................................................................... C-1

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1 INDENTURE OF TRUST
THIS INDENTURE OF TRUST, is dated as of __________, 2022, by and among the CITY OF UPLAND FINANCING AUTHORITY, a joint exercise of powers agency organized and existing under the laws of the State of California (the “Authority”), the CITY OF UPLAND, a municipal corporation, duly organized and existing under the laws of the State of California (the “City”), and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, and being qualified to accept and administer the trusts hereby created, as Trustee (the “Trustee”).

W I T N E S S E T H:

WHEREAS, the Authority is a joint powers authority authorized to borrow money for the purpose of financing and refinancing public capital improvements; and WHEREAS, the City owns and operates that certain water system referred to herein as the “Water System”; and
WHEREAS, the City desires to finance new capital improvements to the Water System, as further described herein (collectively, the “Improvements”); and WHEREAS, for the purpose of providing funds to the City to finance the Improvements, the Authority has determined to issue its Water Revenue Bonds, Series 2022 (the “Bonds”) in the aggregate principal amount of $__________, all pursuant to and secured by this Indenture in the manner provided herein; and
WHEREAS, the City and the Authority have determined that it is necessary and desirable to enter into an Installment Purchase Agreement, dated the date hereof (the “Installment Purchase Agreement”), pursuant to which the Authority will sell the Improvements to the City in consideration for Installment Payments equal in time and amount to the debt service on the Bonds; and
WHEREAS, the Authority has determined that to provide for the authentication and delivery of the Bonds, to establish and declare the terms and conditions upon which the Bonds are to be issued and secured and to secure the payment of the principal thereof and interest and premium (if any) thereon, the Authority has authorized the execution and delivery of this Indenture; and
WHEREAS, the City and the Authority have determined that all acts and proceedings required by law necessary to make the Bonds, when executed by the Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding and legal special obligations of the Authority, and to constitute this Indenture a valid and binding agreement for the uses and purposes herein set forth, in accordance with its terms, have been done and taken; and the execution and delivery of this Indenture have been in all respects duly authorized.

NOW, THEREFORE, THIS INDENTURE WITNESSETH, that to secure the payment of the principal of and the interest and premium (if any) on all Bonds at any time issued and Outstanding under this Indenture, according to their tenor, and to secure the performance and

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2 observance of all the covenants and conditions therein and herein set forth, and to declare the terms and conditions upon and subject to which the Bonds are to be issued and received, and in consideration of the premises and of the mutual covenants herein contained and of the purchase and acceptance of the Bonds by the owners thereof, and for other valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Authority does hereby covenant and agree with the Trustee, for the benefit of the respective Owners from time to time of the Bonds, as follows:

ARTICLE I

DEFINITIONS; AUTHORIZATION AND PURPOSE OF BONDS;

EQUAL SECURITY
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in this Section shall for all purposes of this Indenture and of any Supplemental Indenture and of the Bonds and of any certificate, opinion, request or other documents herein mentioned have the meanings herein specified, to be equally applicable to both the singular and plural forms of any of the terms herein defined. In addition, all capitalized terms used herein and not otherwise defined in this Section 1.01 shall have the respective meanings given such terms in the Installment Purchase Agreement.
“Acquisition and Construction Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.05.
“Additional Payments” means the payments so designated and required to be paid by the City pursuant to Section 4.03 of the Installment Purchase Agreement. “Authority” means the City of Upland Financing Authority, a joint exercise of powers agency duly organized and existing under and by virtue of the laws of the State of California. “Authorized Official” means: (a) with respect to the Authority, its Chairman, Executive Director, Treasurer, Secretary or any other officer of the Authority duly authorized by the Board of Directors of the Authority for that purpose; and (b) with respect to the City, its Mayor, City Manager, Assistant City Manager, City Clerk, or any other officer of the City duly authorized by the City Council for that purpose.
“Bond Counsel” means (a) Best Best & Krieger LLP, or (b) any other attorney or firm of attorneys appointed by or acceptable to the City of nationally recognized experience in the issuance of obligations the interest on which is excludable from gross income for federal income tax purposes under the Tax Code.
“Bond Law” means the Marks-Roos Local Bond Pooling Act of 1985, constituting Article 4 (commencing with Section 6584) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State, as in existence on the Closing Date or as thereafter amended from time to time.

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3 “Bond Year” means any twelve-month period commencing on October 2 in a year and ending on the next succeeding October 1, both dates inclusive; except that the first Bond Year shall commence on the Closing Date and end on October 1, 2022. “Bonds” means the City of Upland Financing Authority Water Revenue Bonds, Series 2022, issued in the amount of $____________.
“Business Day” means any day other than a Saturday, Sunday or a day on which the Trustee is authorized by law to remain closed.
“City” means the City of Upland, California.
“City Council” means the City Council of the City or any other le gislative body of the City hereafter provided for pursuant to law.
“Closing Date” means the date upon which there is an exchange of the Bonds for the proceeds representing the purchase of such Bonds by the Original Purchaser thereof. “Costs of Issuance” means all items of expense directly or indirectly relating to the authorization, issuance, sale and delivery of the Bonds, including but not limited to printing expenses, rating agency fees, filing and recording fees, fees, expenses and charges of the City, the Authority, the Trustee, and their respective counsel, including the Trustee’s first annual administrative fee, costs of obtaining Permitted Investments for monies held in the funds and accounts created and held hereunder, fees, charges and disbursements of bond counsel, disclosure counsel and other attorneys, municipal advisors, accounting firms, consultants and other professionals, fees and charges for preparation, execution and safekeeping of the Bonds and any other cost, charge or fee in connection with the original issuance of the Bonds and the execution and delivery of the Installment Purchase Agreement. “Costs of Issuance Fund” means the fund by that name established and held by the Trustee pursuant to Section 3.04.
“Debt Service Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.02 hereof.
“Depository” means DTC and its successors and assigns or if (a) the then Depository resigns from its functions as securities depository of the Bonds, or (b) the Authorit y discontinues use of the Depository pursuant to Section 2.12 hereof, any other securities depository which agrees to follow the procedures requested to be followed by a securities depository in connection with the Bonds and which is selected by the Authority with notice to the Trustee. “Depository Participant” means a member of, or participant in, the Depository. “DTC” means The Depository Trust Company, New York, New York, and its successors and assigns.
“Event of Default” means any of the events described in Section 8.01.

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4 “Fair Market Value” means the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, arm’s length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of section 1273 of the Tax Code) and, otherwise, the term “Fair Market Value” means the acquisition price in a bona fide arm’s length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Tax Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Tax Code, (iii) the investment is a United States Treasury Security—State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) any commingled investment fund in which the Authority and related parties do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of the investment. “Improvements” means any addition, extension, improvement, equipment, machinery or other facilities to or for the Water System that may be financed by the proceeds of any Bonds. “Indenture” means this Indenture of Trust, as originally executed or as it may from time to time be supplemented, modified or amended by any Supplemental Indenture pursuant to the provisions hereof.
“Independent Accountant” means any accountant or firm of such accountants appointed and paid by the City or the Authority, and who, or each of whom (a) is in fact independent and not under domination of the City or the Authority; (b) does not have any subst antial interest, direct or indirect, with the City or the Authority; and (c) is not connected with the City or the Authority as an officer or employee of the City or the Authority, but who may be regularly retained to make annual or other audits of the books of or reports to the City or the Authority. “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 Bonds as the Authority may designate in writing to the Trustee. “Installment Payments” means the payments required to be paid by the City pursuant to Section 4.02 of the Installment Purchase Agreement, including all prepayments thereof. “Installment Purchase Agreement” means that certain Installment Purchase Agreement by and between the Authority and the City, with respect to the sale of the Improvements, dated as of ___________, 2022, as originally executed and as it may from time to time be supplemented, modified or amended in accordance with the terms thereof and of this Indenture. “Interest Account” means the account by that name in the Debt Service Fund established and held by the Trustee pursuant to Section 4.02.

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5 “Interest Payment Date” means, with respect to the Bonds, April 1 and October 1 in each year, beginning October 1, 2022 and continuing so long as any Bonds remain Outstanding. “Moody’s” means Moody’s Investors Service, a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Authority. “Nominee” means the nominee of the Depository, which may be the Depository, as determined from time to time pursuant hereto.
“Office” means the corporate trust office of the Trustee in Los Angeles, California, or at such other or additional offices as may be specified in writing to the Authority and the City except that with respect to presentation of Bonds for payment or for registration of transfer and exchange such term shall mean the designated corporate trust office or agency of the Trustee. “Original Purchaser” means the original purchaser of the Bonds upon their delivery by the Trustee on the Closing Date.
“Outstanding,” when used as of any particular time with reference to Bonds, means (subject to the provisions of Section 7.02 all Bonds theretofore executed, issued and delivered by the Authority under this Indenture except –
(a) Bonds theretofore cancelled by the Trustee or surrendered to the Trustee for cancellation;
(b) Bonds paid or deemed to have been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for which other Bonds shall have been executed, issued and delivered by the City pursuant to this Indenture. “Owner,” means the registered owner of any Bonds. The initial Owner of the Bonds is the Original Purchaser.
“Permitted Investments” means any of the following, but only to the extent that the same are acquired at Fair Market Value, which at the time of investment are legal investments under the laws of the State of California for the moneys proposed to be invested therein:
(a) direct obligations of (including obligations issued or held in book entry form on the books of) the Department of the Treasury of the United States of America; (b) obligations of any of the following federal agencies which obligations represent full faith and credit of the United States of America, including: (i) Export- Import Bank; (ii) Farm Credit System Financial Assistance Corporation, (iii) Farmers Home Administration; (iv) General Services Administration; (v) U.S. Maritime Administration; (vi) Small Business Administration; (vii) Government National Mortgage Association (GNMA); (viii) U.S. Department of Housing & Urban

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6 Development (PHA’s); (ix) Federal Housing Administration and (x) Federal Financing Bank;
(c) senior debt obligations rated “Aa” by Moody’s and “AA” by S&P issued by the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, senior debt obligations of other government-sponsored agencies and senior debt obligations of other government sponsored agencies; (d) U.S. dollar denominated deposit accounts, federal funds and banker’s acceptances with domestic commercial banks (including the Trustee and its affiliates) which have a rating on their short term certificates of deposit on the date of purchase of “P-1” by Moody’s and “A-1” or “A-1+” by S&P and maturing no more than 360 days after the date of purchase, provided that ratings on holding companies are not considered as the rating of the bank;
(e) commercial paper which is rated at the time of purchase, and retains a rating in the single highest classification, “P-1” by Moody’s and “A-1+” by S&P, and which matures not more than 270 days after the date of purchase; (f) investments in a money market mutual fund rated “AAAm” or “AAAm- G” or better by S&P, including such funds for which the Trustee, its affiliates or subsidiaries provide investment advisory or other management services or for which the Trustee or an affiliate of the Trustee serves as investment administrator, shareholder servicing agent, and/or custodian or subcustodian, notwithstanding that (i) the Trustee or an affiliate of the Trustee receives and retains fees for services provided to the fund, (ii) the Trustee collects fees for services rendered pursuant to this Indenture, which fees are separate from the fees received from such funds, and (iii) services performed for such funds and pursuant to this Indenture may at times duplicate those provided to such funds by the Trustee or an affiliate of the Trustee;
(g) 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 (i) which are rated, based upon an irrevocable escrow account or fund (the “escrow”), in the highest rating category of Moody’s and S&P or any successors thereto; or (ii)(A) 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 (a) 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 (B) 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 other obligations described in this paragraph on the maturity date or dates thereof or on the redemption date or dates specified in the irrevocable instructions referred to above, as appropriate;

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7 (h) investment agreements, supported by appropriate opinions of counsel, between the Trustee and a financial institution whose long-term debt has a Minimum Rating;
(i) Repurchase agreements (“Repos”) that provide for the transfer of securities from a dealer bank or securities firm (seller/borrower) to the Trustee (buyer/lender), and the transfer of cash from the Trustee to the dealer bank or securities firm with an agreement that the dealer bank or securities firm will repay the cash plus a yield to the Trustee in exchange for the securities at a specified date. Repurchase Agreements must satisfy the following criteria:

1. Repos must be between the Trustee and a dealer bank or securities firm.
a. Primary dealers on the Federal Reserve reporting dealer list which fall under the jurisdiction of the SIPC and which are rated A or better by S&P and Moody’s, or
b. Banks rated “A” or above by S&P and Moody’s.

2. The written repo contract must include the following:
a. Securities which are acceptable for transfer are:
(1) Direct U.S. governments
(2) Federal agencies backed by the full faith and credit of the U.S. government (and FNMA and FHLMC)
b. The term of the repo may be up to 30 days
c. The collateral must be delivered to the Trustee (if the Trustee is not supplying the collateral) or third party acting as agent for the Trustee (if the Trustee is supplying the collateral) before/simultaneous with payment (perfection by possession of certificated securities). d. The Trustee has a perfected first priority security interest in the collateral.
e. Collateral is free and clear of third-party liens and in the case of an SIPC broker was not acquired pursuant to a repo or reverse repo.
f. Failure to maintain the requisite collateral percentage, after a two day restoration period, will require the Trustee to liquidate collateral.
g. Valuation of Collateral

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8 (1) The securities must be valued by such dealer bank or securities firm weekly, marked-to-market at current market price plus accrued interest.
(a) The value of collateral must be equal to
104% of the amount of cash transferred by the Trustee to the dealer bank or security firm under the repo plus accrued interest. If the value of securities held as collateral slips below 104% of the value of the cash transferred by the
Trustee, then additional cash and/or acceptable securities must be transferred. If, however, the securities used as collateral are FNMA or FHLMC, then the value of
collateral must equal 105%.

3. A legal opinion must be delivered to the Trustee to the effect that the Repo meets guidelines under state law for legal investment of public funds; and
(j) the Local Agency Investment Fund maintained by the State of California. “Principal Account” means the account by that name in the Debt Service Fund established and held by the Trustee pursuant to Section 4.02. “Record Date” means, with respect to the Bonds, the fifteenth (15th) calendar day of the month preceding such Interest Payment Date.
“Redemption Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.02(b).
“Registration Books” means the books maintained by the Trustee pursuant to Section

2.07 for the registration and transfer of ownership of the Bonds. “Responsible Officer” means any President, Managing Director, Vice President, Assistant Vice President, Treasurer, Assistant Treasurer, Assistant Secretary, Associate, Senior Associate or any other officer of the Trustee in the Office of the Trustee in Los Angeles, California (or any successor corporate trust office) having regular responsibility for corporate trust matters and having direct responsibility for the administration of this Indenture. “Revenue Fund” means the fund by that name established and held by the Trustee pursuant to Section 4.02.
“Revenues” means (a) all amounts received by the Authority or the Trustee pursuant, or with respect, to the Installment Purchase Agreement, including, without limiting the generality of the foregoing, all of the Installment Payments (including both timely and delinquent payments, any late charges, and whether paid from any source), prepayments, insurance proceeds, and condemnation proceeds, but excluding any Additional Payments; (b) all moneys and amounts held in the funds and accounts established hereunder; and (c) investment income with respect to any moneys held by the Trustee hereunder.

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9 “S&P” means S&P Global Ratings, a corporation organized and existing under the laws of the State of New York, its successors and assigns, or, if such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities rating agency, any other nationally recognized securities rating agency designated by the Authority. “Securities Depositories” means The Depository Trust Company, New York, New York and its successors and assigns or if (i) the then Securities Depository resigns from its functions as depository of the Bonds or (ii) the Authority discontinues use of the then Securities Depository pursuant to Section 2.12, any other securities depository which agrees to follow the procedures required to be followed by a securities depository in connection with the Bonds and which is selected by the Authority.
“Sinking Account” means the account by that name established and held by the Trustee pursuant to Section 4.02.
“State” means the State of California.
“Supplemental Indenture” means any indenture, agreement, resolution or other instrument hereafter duly adopted or executed in accordance with the provisions of Section 7.01 of this Indenture.
“Tax Certificate” means the Tax Exemption Certificate or similar federal tax certificate entered into with respect to the issuance of the Bonds. “Tax Code” means the Internal Revenue Code of 1986 as in effect on the date of issuance of the Bonds or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the date of issuance of the Bonds, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Tax Code.
“Term Bonds” means the Bonds maturing on October 1, 20__, and any other Bonds for which portions of the principal are scheduled to be retired before maturity from mandatory Sinking Account payments pursuant to the terms of the Indenture. “Trustee” means U.S. Bank Trust Company, National Association, appointed by the Authority to act as trustee hereunder pursuant to Section 6.01, and its assigns or any other corporation or association which may at any time be substituted in its place, as provided in Section 6.01.
“Water System” means the existing water system of the City, comprising all facilities, including the recycled water system, for the acquisition, storage, treatment and distribution of water for residential, commercial and industrial uses in the City (including all additions, improvements, and extensions thereto).
“Written Certificate”, “Written Request” and “Written Requisition” of the Authority or the City mean, respectively, a written certificate, request or requisition signed in th e name of the Authority or the City by its Authorized Official. Any such instrument and supporting opinions or representations, if any, may, but need not, be combined in a single instrument with any other

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10 instrument, opinion or representation, and the two or more so combined shall be read and construed as a single instrument.

SECTION 1.02. Rules of Construction. All references in this Indenture to “Articles,” “Sections,” and other subdivisions are to the corresponding Articles, Sections or subdivisions of this Indenture; and the words “herein,” “hereof,” “hereunder,” and other words of similar import refer to this Indenture as a whole and not to any particular Article, Section or subdivision hereof.

SECTION 1.03. Equal Security. In consideration of the acceptance of the Bonds by the Owners thereof, this Indenture shall be deemed to be and shall constitute a contract among the Authority, the City, the Trustee and the Owners from time to time of the Bonds; and the covenants and agreements herein set forth to be performed on behal f of the Authority shall be for the equal and proportionate benefit, security and protection of all Owners of the Bonds without preference, priority or distinction as to security or otherwise of any of the Bonds over any of the others by reason of the number or date thereof or the time of sale, execution or delivery thereof, or otherwise for any cause whatsoever, except as expressly provided therein or herein.

ARTICLE II

AUTHORIZATION AND ISSUANCE OF BONDS
SECTION 2.01. Authorization of Bonds. The Authority has reviewed all proceedings heretofore taken relative to the authorization of the Bonds and has found, as a result of such review, and hereby finds and determines that, as of the date of issuance of the Bonds, all things, conditions, and acts required by law to exist, happen and be performed precedent to and in the issuance of the Bonds do exist, have happened and have been performed in due time, form and manner as required by law, and the Authority is now authorized, pursuant to the Bond Law and each and every requirement of law, to issue the Bonds in the manner and form provided in this Indenture. Accordingly, the Authority hereby authorizes the issuance of the Bonds pursuant to the Bond Law and this Indenture.

SECTION 2.02. Terms of Bonds. (a) The Bonds authorized to be issued by the Authority under and subject to the Bond Law and the terms of this Indenture shall be designated the “City of Upland Financing Authority Water Revenue Bonds, Series 2022” and shall be issued in the original principal amount of $____________.
(b) The Bonds shall be issued in fully registered form without coupons in denominations of $5,000 or any integral multiple thereof, so long as no Bond shall have more than one maturity date. The Bonds shall be dated the Closing Date, shall mature on October 1 in each of the years and in the amounts, and shall bear interest at the rates, as follows:

Maturity Date
(October 1)
Principal
Amount
Interest Rate
Per Annum

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11 (c) Interest on the Bonds shall be payable semiannually calculated based on a 360- day year of twelve (12) thirty-day months on each Interest Payment Date to the person whose name appears on the Registration Books as the Owner thereof as of the Record Date immediately preceding each such Interest Payment Date, such interest to be paid by check of the Trustee mailed on the Interest Payment Date by first class mail to the Owner at the address of such Owner as its appears on the Registration Books; provided however, that payment of interest will be made by wire transfer in immediately available funds to an account at a financial institution in the United States of America to any Owner of Bonds in the aggregate principal amount of $1,000,000 or more who shall furnish written wire instructions to the Trustee before the applicable Record Date. Any such written request shall remain in effect until rescinded in writing by the Owner. Principal of any Bond and any premium upon redemption shall be paid by check or wire of the Trustee upon presentation and surrender thereof at the Office of the Trustee.

Principal of and interest and premium (if any) on the Bonds shall be payable in lawful money of the United States of America.

Each Bond shall bear interest from the Interest Payment Date next preceding the date of authentication thereof, unless (a) it is authenticated after a Record Date and on or before the following Interest Payment Date, in which event it shall bear interest from such Interest Payment Date, or (b) unless it is authenticated on or before the first Record Date, in which event it shall bear interest from the Closing Date; provided, however, that if, as of the date of authentication of any Bond, interest thereon is in default, such Bond shall bear interest from the Interest Payment Date to which interest has previously been paid or made available for payment thereon.

SECTION 2.03. Redemption of Bonds.
(a) Optional Redemption from Prepayments of Installment Payments. The Bonds maturing on or before October 1, 20__ shall not be subject to optional redemption prior to maturity. The Bonds maturing on October 1, 20__ shall be subject to redemption prior to their maturity date, at the option of the Authority, at random within a maturity on any date on or after October 1, 20__, from prepayment of Installment Payments made at the option of the City at the redemption price equal to the principal amount of the Bonds to be redeemed, plus accrued interest thereon to the date of redemption, without premium. (b) Mandatory Sinking Account Redemption. The Bonds maturing on October 1, 20__ are also subject to redemption prior to their stated maturity, on October 1 in each year, commencing October 1, 20__, 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

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12 amounts and on the respective dates as set forth in the following tables; provided, however, that if some but not all of such Bonds have been redeemed pursuant to optional or special mandatory redemption provisions of the Indenture, the total amount of all future Sinking Account payments shall be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such Sinking Account payments on a pro rata basis as nearly as possible in integral multiples of $5,000. The City shall provide the Trustee with a revised Sinking Account schedule.

Schedule of Mandatory Sinking Account Redemptions
2022 Term Bonds Maturing October 1, 20__
Redemption Date
(October 1)
Principal
Amount

______________________
(1) Maturity.

The Bonds maturing on October 1, 20__ are also subject to redemption prior to their stated maturity, on October 1 in each year, commencing October 1, 20__, 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 Bonds have been redeemed pursuant to optional or special mandatory redemption provisions of the Indenture, the total amount of all future Sinking Account payments will be reduced by the aggregate principal amount of such Bonds so redeemed, to be allocated among such Sinking Account payments on a pro rata basis in integral multiples of $5,000. The City will provide the Trustee with a revised Sinking Account schedule.

Schedule of Mandatory Sinking Account Redemptions
2022 Term Bonds Maturing October 1, 20__
Redemption Date
(October 1)
Principal
Amount

(1)
_________________

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13 (1) Final Maturity.
(c) Notice of Redemption. The Trustee on behalf and at the expense of the Authority shall send (by first class mail or other means acceptable to the recipient thereof) notice of any redemption to: (i) the respective Owners of any Bonds designated for redemption, at least twenty (20) but not more than sixty (60) days prior to the redemption date, at their respective addresses appearing on the Registration Books, and (ii) the Securities Depositories and to one or more Information Services, at least twenty (20) but not more than sixty (60) days prior to the redemption; provided, however, that neither failure to receive any such notice so mailed nor any defect therein shall affect the validity of the proceedings for the redemption of such Bonds or the cessation of the accrual of interest thereon. In addition to mailed notice, the notice to the Securities Depositories and Information Service shall be given by telephonically confirmed facsimile transmission or overnight delivery service or by such other means approved by such institutions. Such notice shall state the series of Bonds to be redeemed, the date of the notice, the redemption date, the redemption place and the redemption price and shall designate the CUSIP numbers, the bond numbers and the maturity or maturities (in the event of redemption of all of the Bonds of such maturity or maturities in whole) of the Bonds to be redeemed, and shall require that such Bonds be then surrendered at the Office of the Trustee for redemption at the redemption price, giving notice also that further interest on such Bonds will not accrue from and after the redemption date. Neither the Authority nor the Trustee shall have any responsibility for any defect in the CUSIP number that appears on any Bond or in any redemption notice with respect thereto, and any such redemption notice may contain a statement to the effect that CUSIP numbers have been assigned by an independent service for convenience of reference and that neither the Authority nor the Trustee shall be liable for any inaccuracy in such CUSIP numbers.

Any notice given pursuant to this paragraph may be conditional and/or rescinded by written notice given to the Trustee by the Authority and the Trustee shall provide notice of such rescission as soon thereafter as practicable in the same manner, and to the same recipients, as notice of such redemption was given pursuant to this Section. (d) Selection of Bonds for Redemption. Whenever provision is made in the foregoing subsection (a) or (b) of this Section for the redemption of Bonds of more than one maturity, the Bonds to be redeemed shall be selected among series of Bonds in a manner determined in writing by the Authority and in inverse order of maturity or, at the election of the Authority evidenced by a Written Request of the Authority filed with the Trustee at least sixty (60) days prior to the date of redemption, on a pro rata basis among maturities as nearly as possible given authorized denominations (provided that, in any event, the principal and interest due on the Bonds Outstanding following such redemption shall be equal in time and amount to the unpaid payments due under the Installment Purchase Agreement); and in each case, the Trustee shall select the Bonds to be redeemed within any maturity randomly in any manner which the Trustee in its sole discretion shall deem appropriate. For purposes of such selection, all Bonds shall be deemed to be comprised of separate $5,000 portions and such portions shall be treated as separate Bonds which may be separately redeemed. (e) Partial Redemption of Bonds. In the event only a portion of any Bond is called for redemption, then upon surrender of such Bond the Authority shall execute and the Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Authority, a new Bond

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14 or Bonds of the same series and maturity date, of authorized denominations in aggregate principal amount equal to the unredeemed portion of the Bond to be redeemed. (f) Effect of Redemption. From and after the date fixed for redemption, if funds available for the payment of the principal of and interest (and premium, if any) on the Bonds so called for redemption shall have been duly provided, such Bonds so called shall cease to be entitled to any benefit under this Indenture other than the right to receive payment of the redemption price, and no interest shall accrue thereon from and after the redemption date specified in such notice. All Bonds redeemed pursuant to this Section shall be canceled and shall be destroyed by the Trustee.

SECTION 2.04. Forms of Bonds. The Bonds, the form of Trustee’s certificate of authentication, and the form of assignment to appear thereon, shall be substantially in the respective forms set forth in Exhibit A attached hereto and by this reference incorporated herein, with necessary or appropriate variations, omissions and insertions, as permitted or required by this Indenture.

SECTION 2.05. Execution of Bonds. The Bonds shall be signed in the name and on behalf of the Authority with the manual or facsimile signature of its Authorized Official and attested by the manual or facsimile signature of its Secretary. The Bonds shall then be delivered to the Trustee for authentication by it. In case any officer who shall have signed any of the Bonds shall cease to be such officer before the Bonds so signed shall have been authenticated or delivered by the Trustee or issued by the Authority, such Bonds may nevertheless be authenticated, delivered and issued and, upon such authentication, delivery and issue, shall be as binding upon the Authority as though the individual who signed the same had continued to be such officer of the Authority. Also, any Bond may be signed on behalf of the Authority by any individual who on the actual date of the execution of such Bond shall be the proper officer although on the nominal date of such Bond such individual shall not have been such officer.

Only those Bonds that bear thereon a certificate of authentication in substantially the forms set forth in Exhibit A, manually or electronically executed by the Trustee, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee shall be conclusive evidence that the Bonds so authenticated have been duly authenticated and delivered hereunder and are entitled to the benefits of this Indenture.

SECTION 2.06. Transfer and Exchange of Bonds.
(a) Transfer of Bonds. The registration of any Bond may, in accordance with its terms, be transferred upon the Registration Books by the person in whose name it is registered, in person or by his or her duly authorized attorney, upon surrender of such Bond for cancellation at the Office of the Trustee, accompanied by delivery of a written instrument of transfer in a form acceptable to the Trustee, duly executed. Whenever any Bond or Bonds shall be surrendered for registration of transfer, the Trustee shall execute and deliver a new Bond or Bonds of the same series, maturity, interest rate and aggregate principal amount, in any authorized denominations.

The Authority shall pay all costs of the Trustee incurred in connection with any such transfer, except that the Trustee may require the payment by the Bond Owner of any tax or other governmental charge required to be paid with respect to such transfer.

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15 Prior to any transfer of the Bonds outside of the book-entry system (including, but not limited to, the initial transfer outside the book-entry system) the transferor shall provide or cause to be provided to the Trustee all information necessary to allow the Trustee to comply with any applicable tax reporting obligations, including without limitation any cost basis reporting obligations under Internal Revenue Code Section 6045 as amended. The Trustee shall conclusively rely on the information provided to it and shall have no responsibility to verify or ensure the accuracy of such information.
(b) Exchange of Bonds. Bonds may be exchanged at the Office of the Trustee, for a like aggregate principal amount of Bonds of other authorized denominations of the same series, interest rate and maturity. The Authority shall pay all costs of the Trustee incurred in connection with any such exchange, except that the Trustee may require the payment by the Bond Owner requesting such exchange of any tax or other governmental charge required to be paid with respect to such exchange.
(c) Limitations on Transfer or Exchange. The Trustee may refuse to transfer or exchange either (i) any Bond during the period established by the Trustee for the selection of Bonds for redemption pursuant to Section 2.03, or (ii) the portion of any Bond which the Trustee has selected for redemption pursuant to the provisions of Section 2.03.

SECTION 2.07. Registration Books. The Trustee will keep or cause to be kept, at its Office, sufficient records for the registration and transfer of the Bonds, which shall at all times during normal business hours, and upon reasonable notice, be open to inspection by the City and the Authority; and, upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on the Registration Books, Bonds as hereinbefore provided.

SECTION 2.08. Issuance in Temporary Form. The Bonds may be issued initially in temporary form exchangeable for definitive Bonds when ready for delivery. The temporary Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be determined by the Authority and may contain such reference to any of the provisions of this Indenture as may be appropriate. Every temporary Bond shall be executed by the Authority and be registered and authenticated by the Trustee upon the same conditions and in substantially the same manner as the definitive Bonds. If the Authority issues temporary Bonds, i t will execute and furnish definitive Bonds without delay, and thereupon the temporary Bonds may be surrendered, for cancellation, in exchange therefor at the Office of the Trustee, and the Trustee shall authenticate and deliver in exchange for such temporary Bonds an equal aggregate principal amount of definitive Bonds of authorized denominations. Until so exchanged, the temporary Bonds shall be entitled to the same benefits under this Indenture as definitive Bonds authenticated and delivered hereunder.

SECTION 2.09. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond shall become mutilated, the Authority, at the expense of the Owner of said Bond, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like series, tenor and authorized denomination in exchange and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the Bond so mutilated. Every mutilated Bond so surrendered to the Trustee shall be canceled by it and delivered to, or upon the order of, the Authority. If any Bond issued

46708.00807\34757905.3

16 hereunder shall be lost, destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the Trustee and, if such evidence be satisfactory to the Trustee and indemnity for the Authority and the Trustee satisfactory to the Trustee shall be given, the Authority, at the expense of the Bond Owner, shall execute, and the Trustee shall thereupon authenticate and deliver, a new Bond of like maturity and tenor in lieu of and in substitution for the Bond so lost , destroyed or stolen (or if any such Bond shall have matured or shall have been called for redemption, instead of issuing a substitute Bond the Trustee may pay the same without surrender thereof upon receipt of indemnity for the Authority and the Trustee satisfactory to the Trustee).

The Authority may require payment of a reasonable fee for each new Bond issued under this Section and of the expenses which may be incurred by the Authority and the Trustee. Any Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed or stolen shall constitute an original contractual obligation on the part of the Authority whether or not the Bond alleged to be lost, destroyed or stolen be at any time enforceable by anyone, and shall be equally and proportionately entitled to the benefits of this Indenture with all other Bonds secured by this Indenture.

SECTION 2.10. Book-Entry System; Limited Obligation. The Bonds shall be initially executed, authenticated and delivered in the form of a separate single fully registered Bond (which may be typewritten) for each of the maturities of the Bonds. Upon initial execution, authentication and delivery, the ownership of each such global Bond shall be registered in the Bond Register in the name of the Nominee as nominee of the Depository. Except as provided in Section 2.12 hereof, all of the Outstanding Bonds shall be registered in the Bond Register kept by the Trustee in the name of the Nominee and the Bonds may be transferred, in whole but not in part, only to the Depository, to a successor Depository or to another nominee of the Depository or of a successor Depository. Each global Bond shall bear a legend substantially to the following effect: “UNLESS THIS BOND IS PRESENTED BY AN AUTHORIZED OFFICIAL OF THE

DEPOSITORY (AS DEFINED IN THE INDENTURE) TO THE TRUSTEE FOR

REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY BOND ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME

AS IS REQUESTED BY AN AUTHORIZED OFFICIAL OF THE DEPOSITORY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED

BY AN AUTHORIZED OFFICIAL OF THE DEPOSITORY), ANY TRANSFER, PLEDGE,

OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HER EOF, CEDE & CO., HAS AN INTEREST HEREIN.”
With respect to Bonds registered in the Bond Register in the name of the Nominee, the Authority and the Trustee shall have no responsibility or obligation to any Depository Participant or to any person on behalf of which such a Depository Participant holds a beneficial interest in the Bonds. Without limiting the immediately preceding sentence, the Authority and the Trustee shall have no responsibility or obligation with respect to (a) the accuracy of the records of the Depository, the Nominee or any Depository Participant with respect to any beneficial ownership interest in the Bonds, (b) the delivery to any Depository Participant, beneficial owner or any other person, other than the Depository, of any notice with respect to the Bonds, including any redemption notice, (c) the selection by the Depository and the Depository Participants of the beneficial interests in the Bonds to be redeemed in part, or (d) the payment to any Depository Participant, beneficial owner or any other person, other than the Depository, of any amount with

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17 respect to principal of, interest on, or premium, if any, of the Bonds. The Authority and the Trustee may treat and consider the person in whose name each Bond is registered in the Bond Register as the holder and absolute Owner of such Bond for the purpose of payment of principal of, premium, if any, and interest on, the Bond, for the purpose of giving redemption notices with respect to the Bonds and other notices with respect to the Bonds, and for all other purposes whatsoever, including, without limitation, registering transfers with respect to the Bonds.

The Trustee shall pay all principal of, premium, if any, and interest on, the Bonds only to or upon the order of the respective Bond Owners, as shown in the Bond Register kept by the Trustee, or their respective attorneys duly authorized in writing, and all such payments shall be valid hereunder with respect to payment of principal of, premium, if any, and interest on, the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner, as shown in the Bond Register, shall receive a Bond evidencing the obligation to make payments of principal of, premium, if any, and interest on, such Bond pursuant to this Indenture. Upon delivery by the Depository to the Trustee and the Authority of written notice to the effect that the Depository has determined to substitute a new nominee in place of the Nominee, and subject to the provisions herein with respect to Record Dates, the word Nominee in this Indenture shall refer to such new nominee of the Depository.

SECTION 2.11. Representation Letter. To qualify the Bonds for the Depository’s book- entry system, each Authorized Official is hereby authorized to execute, countersign and deliver on behalf of the Authority to such Depository a letter from the Authority representing such matters as shall be necessary to so qualify the Bonds (the “Representation Letter”). The execution and delivery of the Representation Letter shall not in any way limit the provisions of Section 2.10 hereof or in any other way impose upon the Authority or the City any obligation whatsoever with respect to persons having beneficial interests in the Bonds other than the Owners, as shown in the Bond Register kept by the Trustee. In the written acceptance by the Trustee of the Representation Letter, the Trustee shall agree, and hereby agrees, to take all actions necessary for all representations of the Trustee in the Representation Letter with respect to the Trustee to at all times be complied with. In addition to the execution and delivery of the Representation Letter, the Authorized Officials and all other officers of the Authority, and their respective deputies and designees, each is hereby authorized to take any other actions, not inconsistent with this Indenture, to qualify the Bonds for the Depository’s book-entry program.

SECTION 2.12. Transfers Outside Book-Entry System. If at any time the Depository notifies the Authority that it is unwilling or unable to continue as Depository with respect to the Bonds or if at any time the Depository shall no longer be registered or in good standing under the Securities Exchange Act or other applicable statute or regulation and a su ccessor Depository is not appointed by the Authority within ninety (90) days after the Authority receives notice or becomes aware of such condition, as the case may be, Section 2.10 hereof shall no longer be applicable and the Authority shall execute and t he Trustee shall authenticate and deliver bonds representing the Bonds as provided below. In addition, the Authority may determine at any time that the Bonds shall no longer be represented by global bonds and that the provisions of Section

2.10 hereof shall no longer apply to the Bonds. In any such event the Authority shall execute and the Trustee shall authenticate and deliver bonds representing the Bonds as provided below.

Bonds executed, authenticated and delivered in exchange for global bonds pursuant to this Section 2.12 shall be registered in such names and delivered in such Authorized Denominations

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18 as the Depository, pursuant to instructions from the Depository Participants or otherwise, shall instruct the Authority and the Trustee. The Trustee shall deliver such bonds representing the Bonds to the persons in whose names such Bonds are so registered.

If the Authority determines to replace the Depository with another qualified securities depository, the Authority shall prepare or cause to be prepared a new fully-registered global bond for each of the maturities of the Bonds, registered in the name of such successor or substitute securities depository or its nominee, or make such other arrangements as are acceptable to the Authority, the Trustee and such securities depository and not inconsistent with the terms of this Indenture.

SECTION 2.13. Payments and Notices to the Nominee. Notwithstanding any other provision of this Indenture to the contrary, so long as any Bond is registered in the name of the Nominee, all payments of principal of, premium, if any, and interest on such Bond and all notices with respect to such Bond shall be made and given, respectively, as provided in the Representation Letter or as otherwise instructed by the Depository.

SECTION 2.14. Initial Depository and Nominee. The initial Depository under this Indenture shall be DTC. The initial Nominee shall be Cede & Co., as nominee of DTC.

ARTICLE III

ISSUANCE OF BONDS AND APPLICATION OF PROCEEDS
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this Indenture, the Authority shall execute and deliver Bonds in the aggregate principal amount of $______, and shall deliver the Bonds to the Trustee for authentication and delivery to the Original Purchaser upon the Written Request of the Authority.

SECTION 3.02. Application of Proceeds of Sale of Bonds . Upon the receipt of payment for the Bonds on the Closing Date, the Trustee shall deposit the net amount of the proceeds of the Bonds as follows:
(a) The Trustee shall deposit into the Costs of Issuance Fund the amount of $_______.
(b) The Trustee shall deposit into the Acquisition and Construction Fund the amount of $__________.

The Trustee may, in its discretion, establish a temporary fund or account or subaccount in its books and records to facilitate such deposits.

SECTION 3.03. Omitted.

SECTION 3.04. Costs of Issuance Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the “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. The Trustee shall disburse moneys in the Costs of Issuance Fund from

46708.00807\34757905.3

19 time to time to pay Costs of Issuance (or to reimburse the Authority for payment of Costs of Issuance) upon receipt by the Trustee of a Written Request of the Authority, substantially in the form attached hereto as Exhibit B. Each such Written Request of the Authority shall be sufficient evidence to the Trustee of the facts stated therein and the Trustee shall have no duty to confirm the accuracy of such facts. On the 120th day after the Closing Date of the Bonds, or upon the earlier Written Request of the Authority, the Trustee shall transfer all amounts remaining in the Costs of Issuance Fund to the Debt Service Fund to cover staff time and administrative expenses incurred by the Authority in connection with the issuance of the Bonds.

SECTION 3.05. Acquisition and Construction Fund. The Trustee shall establish, maintain and hold in trust a separate fund to be known as the “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 Installment Purchase Agreement. Before any payment from the Acquisition and Construction Fund shall be made, the City shall file or cause to be filed with the Trustee, a Written Requisition of the City which shall be substantially in the form attached hereto as Exhibit C. The Trustee shall be entitled to rely on the representations of the City contained in such Written Requisition and shall not be required to independently verify the contents of such Written Requisition.

Within five (5) Business Days following receipt of each such Written Requisition, the Trustee shall pay the amount set forth in such Written Requisition as directed by the terms thereof out of the Acquisition and Construction Fund. Upon the Written Request of the City accompanied by a Written Certificate of the City 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 Water System, provided that in the opinion of Bond Counsel such use of the proceeds of the Bonds shall not adversely affect the exclusion of interest on the 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 Costs which are not used to pay the cost of other improvements to the Water System shall be transferred to the Debt Service Fund upon receipt by the Trustee of a Written Request of the City accompanied by a Written Certificate of the City stating that all Acquisition and Construction Costs have been paid or provision made for their payment, and the Acquisition and Construction Fund shall then be closed.

SECTION 3.06. Validity of Bonds. The validity of the authorization and issuance of the Bonds shall not be affected in any way by any proceedings taken by the Authority or the Trustee with respect to or in connection with the Installment Purchase Agreement and the recital contained in the Bonds that the same are issued pursuant to the Bond Law shall be conclusive evidence of their validity and of the regularity of their issuance.

ARTICLE IV

REVENUES; FLOW OF FUNDS
SECTION 4.01. Collateral Assignment of Revenues and of the Installment Purchase Agreement. The Authority hereby assigns to the Trustee, on behalf of the Owners, as additional

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20 security for its obligations hereunder, all of the Authority’s right, title and interest to and in the Revenues and all of the right, title and interest (but none of the obligations) of the Authority in the Installment Purchase Agreement (other than the rights of the Authority under Sections 8.02 and 10.14 thereof and the Authority’s rights to give consents and approvals thereunder, including, without limitation, to amendments thereof); provided, that should the Authority well and truly pay or cause to be paid the principal of the Bonds with interest thereon in accordance with the terms thereof, and perform all other obligations of the Authority hereunder, then such assignment shall cease, determine and become void and the Trustee shall acknowledge and deliver to the Authority such instruments of satisfaction or release thereof as may reasonably be prepared and requested by or on behalf of the Authority. Subject to Section 4.03, all Revenues the Trustee collects and receives shall be applied to the payment of principal of and interest and premium (if any) on the Bonds equally, without priority for series, issue, number or date, in accordance with the terms hereof. So long as any of the Bonds are Outstanding, the Revenues and such moneys shall not be used for any other purpose; except that a portion of the Revenues may be used for purposes as expressly permitted by Section 4.02 hereof.

The assignment under this section to the Trustee is solely in the Trustee’s capacity as Trustee under this Indenture and the duties, powers and liabilities of the Trustee in acting pursuant to such assignment shall be subject to the provisions of this Indenture, including, without limitation, the provisions of Article VI hereof. The Trustee shall not be responsible for any representations, warranties, covenants or obligations of the Authority.

SECTION 4.02. Receipt, Deposit and Application of Revenues. Except as provided in Section 4.03 hereof with regard to the deposit of earnings on investments, all of the Revenues shall be deposited by the Trustee immediately upon receipt in the Revenue Fund (which the Trustee shall establish and hold in trust hereunder) or as otherwise instructed by the Authority.

Amounts in the Revenue Fund shall be applied solely for the uses and purposes set forth herein.

The Trustee shall withdraw amounts on deposit in the Revenue Fund and apply such amounts at the times and for the purposes, and in the priority, as follows:
(a) Debt Service Fund. The Debt Service Fund, as a special fund, is hereby created.

The Debt Service Fund shall be held and maintained by the Trustee. All Revenues shall be held in trust by the Authority in the Revenue Fund and shall be applied, transferred, used and withdrawn only for the purposes hereinafter authorized in this Article. (1) Debt Service Payments. Not later than three Business Days preceding each date on which principal of or interest on the Bonds becomes due and payable, the Trustee shall transfer from the Debt Service Fund and deposit into the following respective accounts (each of which the Trustee shall establish and maintain within the Debt Service Fund), the following amounts in the following order of priority, the requirements of each such account at the time of deposit to be satisfied before any transfer is made to any account subsequent in priority:
(i) The Trustee shall deposit in the Interest Account an amount required to cause the aggregate amount on deposit in the Interest Account to be at least equal to the amount of interest becoming due and payable on such Interest Payment Date on all Bonds then Outstanding.

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21 (ii) The Trustee shall deposit in the Principal Account an amount required to cause the aggregate amount on deposit in the Principal Account to equal the principal amount of the Bonds coming due and payable on such Interest Payment Date.
(iii) The Trustee shall deposit in the Sinking Account an amount equal to the aggregate principal amount of the Term Bonds required to be redeemed on such date, if any.
(2) If after all of the Bonds have been paid or deemed to have been paid, there are moneys remaining in the Debt Service Fund, such moneys shall be transferred by the Trustee to the City, after the payment of any outstanding fees and expenses of the Trustee.
(3) Application of Debt Service Fund.
(i) Application of Interest Account. All amounts in the Interest Account shall be used and withdrawn by the Trustee solely for the purpose of paying interest on the Bonds as it shall become due and payable (including accrued interest on any Bonds purchased or redeemed prior to maturity pursuant to this Indenture).
(ii) Application of Principal Account. All amounts in the Principal Account shall be used and withdrawn by the Trustee solely to pay the principal amount of the Bonds at their respective maturity dates. (iii) Application of Sinking Account. All moneys on deposit in the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of redeeming or purchasing (in lieu of redeeming) Term Bonds pursuant to Section 2.03(b).
(b) Redemption Fund. The Trustee shall deposit into the Redemption Fund all amounts required to redeem any Bonds which are subject to redemption pursuant to Sections

2.03(a) when and as such amounts become available. Amounts in the Redemption Fund shall be applied by the Trustee solely for the purpose of paying the redemption price of Bonds to be redeemed pursuant to Sections 2.03(a). Following any redemption of all of the Bonds, any moneys remaining in the Redemption Fund shall be transferred by the Trustee to the City.

SECTION 4.03. Investments. All moneys in any of the funds or accounts established with the Trustee pursuant to this Indenture shall be invested by the Trustee solely in Permitted Investments, as directed pursuant to the Written Request of the City filed with the Trustee at least two (2) Business Days in advance of the making of such investments. In the absence of any such directions from the City, the Trustee may (but shall not be required to) any such moneys in money market funds described in paragraph (f) of the definition of Permitted Investments; provided, however, that any such investments shall be made by the Trustee only if, prior to the date on which such invest is to be made, the Trustee shall have received a Written Request of the City specifying a specific money market fund and, if no such Written Request of the City is so received, the Trustee shall hold such moneys uninvested. The Trustee shall be entitled to rely

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22 upon any investment Written Request of the City as conclusive certification to the Trustee that the investments described therein are so authorized under the laws of the State of California and comply with the City’s investment policy. Obligations purchased as an investment of moneys in any fund shall be deemed to be part of such fund or account. All interest or gain derived from the investment of amounts in any of the funds or accounts established hereunder shall be deposited in the fund or account from which such investment was made. For purposes of acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder.

The Trustee or any of its affiliates may act as sponsor, principal or agent in the acquisition or disposition of any investment. The Trustee shall incur no liability for losses arising from any investments made pursuant to this Section. The Trustee may rely conclusively upon the investment direction of the City as to the suitability and legality of the directed investments.

The Trustee may sell, or present for prepayment, any Permitted Investment so purchased by the Trustee whenever it shall be necessary to provide moneys to meet any required payment, transfer, withdrawal or disbursement from the fund to which such Permitted Investment is credited, and the Trustee shall not be liable or responsible for any loss resulting from any such Permitted Investment.

The Trustee shall furnish the City and Authority with periodic cash transaction statements which include detail for all investment transactions effected by the Trustee or brokers selected by the City. Upon the City’s election, such statements will be delivered via the Trustee’s online service and upon electing such service, paper statements will be provide only upon request. The City and Authority waive the right to receive brokerage confirmations of security transactions effected by the Trustee as they occur, to the extent permitted by law. The City and Authority further understands that trade confirmations for securities transactions effected by the Trustee will be available upon request and at no additional cost and other trade confirmations may be obtained from the applicable broker.

The Authority (and the City by its execution of the Installment Purchase Agreement) acknowledge that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the Authority or the City the right to receive brokerage confirmations of security transactions as they occur, at no additional cost, the Authority and the City specifically waive receipt of such confirmations to the extent permitted by law. The Trustee will furnish the Authority and the City periodic cash transaction statements which include detail for all investment transactions made by the Trustee hereunder.

SECTION 4.04. Valuation; Investments.
(a) Method of Valuation and Frequency of Valuation. In computing the amount in any fund or account, Permitted Investments shall be valued at Fair Market Value. With respect to all funds and accounts, valuation shall occur annually. (b) Additional Limitations. Except as otherwise provided in the following sentence, the City covenants that all investments of amounts deposited in any fund or account created by or pursuant to this Indenture, or otherwise containing gross proceeds of the Bonds (within the meaning of section 148 of the Tax Code) shall be acquired, disposed of, and valued (as of the date that valuation is required by this Indenture or the Tax Code) at Fair Market Value.

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23 Investments in funds or accounts (or portions thereof) that are subject to a yield restriction under applicable provisions of the Tax Code and (unless valuation is undertaken at least annually) shall be valued at their present value (within the meaning of section 148 of the Tax Code). The Trustee shall not be liable for verification of the application of any sections of the Tax Code o r for any determination of Fair Market Value or present value. The Trustee’s pricing service, as reflected on its monthly trust statements, satisfies the determination of Fair Market Value.

ARTICLE V

COVENANTS OF THE AUTHORITY; SPECIAL TAX COVENANTS
SECTION 5.01. Punctual Payment; Compliance With Documents. The Authority shall punctually pay or cause to be paid the interest and principal to become due with respect to all of the Bonds in strict conformity with the terms of the Bonds and of this Indenture, and will faithfully observe and perform all of the conditions, covenants and requirements of this Indenture and all Supplemental Indentures.

SECTION 5.02. Extension of Payment of Bonds. The Authority shall not directly or indirectly extend or assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for interest by the purchase of such Bonds or by any other arrangement, and in case the maturity of any of the Bonds or the time of payment of any such claims for interest shall be extended, such Bonds or claims for interest shall not be entitled, in case of any default hereunder, to the benefits of this Indenture, except subject to the prior payment in full of the principal of all of the Bonds then Outstanding and of all claims for interest thereon whi ch shall not have been so extended. Nothing in this Section 5.02 shall be deemed to limit the right of the Authority to issue bonds for the purpose of refunding any Outstanding Bonds, and such issuance shall not be deemed to constitute an extension of maturity of the Bonds.

SECTION 5.03. Against Encumbrances. The Authority shall not create, or permit the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and other assets pledged or assigned under this Indenture while any of the Bonds is Outstanding, except the pledge and assignment created by this Indenture. Subject to this limitation, the Authority expressly reserves the right to enter into one or more other indentures for any of its corporate purposes, and reserves the right to issue other obligations for such purposes.

SECTION 5.04. Power to Issue Bonds and Make Pledge and Assignment. The Authority is duly authorized pursuant to law to issue the Bonds and to enter into this Indenture and to pledge and assign the Revenues and other assets purported to be pledged and assigned, respectively, under this Indenture in the manner and to the extent provided in this Indenture. The Bonds and the provisions of this Indenture are and will be the legal, valid and binding special obligations of the Authority in accordance with their terms, and the Authority and the Trustee shall at all times, subject to the provisions of Article VI and to the extent permitted by law, defend, preserve and protect such pledge and assignment of Revenues and other assets and all the rights of the Bond Owners under this Indenture against all claims and demands of all persons whomsoever.

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24 SECTION 5.05. Accounting Records and Financial Statements. The Trustee shall at all times keep, or cause to be kept, proper books of record and account, prepared in accordance with corporate trust industry standards, in which complete and accurate entries shall be made of all transactions made by it relating to the proceeds of Bonds, the Revenues, the Installment Purchase Agreement, and all funds and accounts held by the Trustee under this Indenture. Such books of record and account shall be available for inspection by the Authority and the City, during business hours and under reasonable circumstances with reasonable notice.

SECTION 5.06. No Additional Obligations. The Authority covenants that no additional bonds, notes or other indebtedness shall be issued or incurred which are payable out of the Revenues in whole or in part.

SECTION 5.07. Tax Covenants.
(a) General. The Authority and the City hereby covenant with the owners of the 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 Bonds under Section 103 of the Tax Code.

Neither the Authority nor the City, directly or indirectly, shall use or permit the use of proceeds of the Bonds or any of the property financed or refinanced with proceeds of the Bonds, or any portion thereof, by any person other than a governmental person (as such term is used in Section 141 of the Tax 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 Bonds.
(b) Use of Proceeds. Neither the Authority nor the City shall take any action, or fail to take action, if any such action or failure to take action would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Tax Code and applicable Treasury Regulations, and in furtherance thereof, shall not make any use of the proceeds of the Bonds or any of the property financed or refinanced with proceeds of the Bonds, or any portion thereof, that would cause the Bonds to be “private activity bonds” within the meaning of Section 141 of the Tax Code. So long as any Bonds are outstanding, the Authority and the City, with respect to such proceeds and property, will comply with the requirements of the Tax Code and the Treasury Regulations, to the extent such requirements are, at the time, applicable and in effect. The City shall establish reasonable procedures necessary to ensure continued compliance with Section 141 of the Tax Code and the continued qualification of the Bonds as “governmental bonds.” (c) Arbitrage. Neither the Authority nor the City shall directly or indirectly use or permit the use of any proceeds of any Bonds, or of any property financed or refinanced thereby, or of other funds of the Authority or the City, that would cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Tax 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 Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Tax Code and applicable Treasury Regulations. The Authority and the City shall comply with all requirements of Section 148 of the Tax Code and the Treasury Regulations to the extent such requirements are, at the time, in effect and applicable to the Bonds.

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25 (d) Federal Guarantee. Neither the Authority nor the City shall make any use of the proceeds of the Bonds, or of any other funds of the Authority or the City, that would cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code, and shall not otherwise take any action, or fail to take action, when such action or failure to take action would cause the Bonds to be “federally guaranteed” within the meaning of Section 149(b) of the Tax Code.
(e) Compliance with Tax Certificate. In furtherance of the foregoing tax covenants of this Section 5.07, the Authority and the City each covenant 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 Bonds.

SECTION 5.08. Installment Purchase Agreement. The Trustee shall promptly collect all amounts due from the City pursuant to the Installment Purchase Agreement. Subject to the provisions of Article VI and Article VIII the Trustee may enforce, and take all steps, actions and proceedings which the Trustee determines to be reasonably necessary for the enforcement of all of its rights thereunder as assignee of the Authority and for the enforcement of all of the obligations of the City under the Installment Purchase Agreement with respect to the timely collection of the Installment Payments.

SECTION 5.09. Waiver of Laws. The Authority shall not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or extension law now or at any time hereafter in force that may affect the covenants and agreements contained in this Indenture or in the Bonds, and all benefit or advantage of any such law or laws is hereby expressly waived by the Authority to the extent permitted by law.

SECTION 5.10. Further Assurances. The Authority will adopt, make, execute and deliver any and all such further resolutions, instruments and assurances as may be reasonably necessary or proper to carry out the intention or to facilitate the performance of this Indenture, and for the better assuring and confirming unto the Trustee and Owners of the Bonds the rights and benefits provided in this Indenture.

SECTION 5.11. Continuing Disclosure. The City covenants and agrees that it will comply with the continuing disclosure requirements with respect to the Bonds promulgated under U.S. Securities and Exchange Commission Rule 15c2-12 and the terms of the Continuing Disclosure Agreement (the “Continuing Disclosure Agreement”). The Authority shall have no liability to the Owners or to any other person with respect to such disclosure matters.

Notwithstanding any other provisions of this Indenture, failure of the City to comply with the Continuing Disclosure Agreement shall not be considered an Event of Default; however, any Owner or Beneficial Owner may take, and the Trustee shall take, at the request of the holders of at least 25% aggregate principal amount of Outstanding Bonds, and upon receipt of satisfactory indemnification, 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 the Continuing Disclosure Agreement.

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26 ARTICLE VI

THE TRUSTEE
SECTION 6.01. Appointment of Trustee. U.S. Bank Trust Company, National Association, with an office in Los Angeles, California, a national banking association organized and existing under and by virtue of the laws of the United States of America, is hereby appointed Trustee by the Authority for the purpose of receiving all moneys required to be deposited with the Trustee hereunder and to allocate, use and apply the same as provided in this Indenture. The Authority agrees that it will maintain a Trustee having a corporate office in California with a combined capital and surplus of at least Seventy-Five Million Dollars ($75,000,000), and subject to supervision or examination by federal or State authority, so long as any Bonds are Outstanding. If such bank, national banking association 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 6.01 the combined capital and surplus of such bank, national banking association 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.

SECTION 6.02. Payment of Bonds; Registration Books. The Trustee is hereby authorized to pay the Bonds when duly presented for payment at maturity, or on redemption or purchase prior to maturity, and to cancel all Bonds upon payment thereof. The Trustee shall keep accurate records of all funds administered by it and of all Bonds paid and discharged. The Trustee will keep or cause to be kept at its Office sufficient books for the registration and transfer of the Bonds, which shall at all times during regular business hours upon reasonable notice be open to inspection by the City and the Authority. Upon presentation for such purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said books, as provided in this Indenture with respect to the Bonds.

SECTION 6.03. Acceptance of Trusts. The Trustee hereby accepts the trusts imposed upon it by this Indenture, and agrees to perform said trusts, but only upon and subject to the following express terms and conditions:
(a) The Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture. Prior to the time that an Event of Default hereunder has occurred or after the curing of all Events of Default which may have occurred, the Trustee shall perform such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants or duties shall be read into this Indenture against the Trustee. In case an Event of Default hereunder has occurred (which has not been cured or waived) the Trustee may exercise such of the rights and powers vested in it by this Indenture, and shall use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs. (b) The Trustee may execute any of the trusts or powers hereof and perform the duties required of it hereunder by or through attorneys, agents, or receivers, and shall be entitled to rely conclusively on advice of counsel of its choice concerning all matters of trust and its duty

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27 hereunder and the Trustee shall not answerable for the willful misconduct or negligence on the part of any such attorneys, agents or receivers selected by it with reasonable care.. (c) The Trustee shall not be responsible for any recital herein, or in the Bonds, or for any of the supplements thereto or instruments of further assurance, or for the sufficiency of the security for the Bonds issued hereunder or intended to be secured hereby and the Trustee shall not be bound to ascertain or inquire as to the observance or performance of any covenants, conditions or agreements on the part of the Authority hereunder. The Trustee shall not be responsible or liable for any loss suffered in connection with any investment of funds made by it in accordance with the City’s investment direction or as otherwise provided in this Indenture. (d) The Trustee shall not be accountable for the use of any proceeds of sale of the Bonds delivered hereunder. The Trustee may become the Owner of Bonds secured hereby with the same rights which it would have if not the Trustee; may acquire and dispose of other bonds or evidence of indebtedness of the Authority with the same rights it would have if it were not the Trustee; and may act as a depository for and permit any of its officers or directors to act as a member of, or in any other capacity with respect to, any committee formed to protect the rights of Owners of Bonds, whether or not such committee shall represent the Owners of the majority in principal amount of the Bonds then Outstanding.
(e) In the absence of bad faith on its part, the Trustee shall be protected in acting upon any notice, request, consent, certificate, order, affidavit, letter, telegram, requisition, facsimile transmission, electronic mail or other paper or document believed by it to be genuine and correct and to have been signed or sent by the proper person or persons. Any action taken or omitted to be taken by the Trustee pursuant to this Indenture upon the request or authority or consent of any person who at the time of making such request or giving such authority or consent is the Owner of any Bond, shall be conclusive and binding upon all future Owners of the same Bond and upon Bonds issued in exchange therefor or in place thereof. The Trustee shall not be bound to recognize any person as an Owner of any Bond or to take any action at his request unless the ownership of such Bond by such person shall be reflected on the Registration Books. (f) As to the existence or non-existence of any fact or as to the sufficiency or validity of any instrument, paper or proceeding, the Trustee shall be entitled to rely upon a Written Certificate of the City or a Written Certificate of the Authority as sufficient evidence of the facts therein contained and prior to the occurrence of an Event of Default hereunder of which the Trustee has been given notice or is deemed to have notice, as provided in Section 6.03(h) hereof, shall also be at liberty to accept a similar certificate to the effect that any particular dealing, transaction or action is necessary or expedient, but may at its discretion secure such further evidence deemed by it to be necessary or advisable, but shall in no case be bound to secure the same. The Trustee may accept a Written Certificate of the Authority to the effect that an authorization in the form therein set forth has been adopted by the Authority, as conclusive evidence that such authorization has been duly adopted and is in full force and effect. (g) The permissive right of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and it shall not be answerable for other than its negligence or willful default. The immunities and exceptions from liability of the Trustee shall extend to its officers, directors, employees and agents. In acting under the Installment Purchase Agreement or any

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28 other document executed in connection herewith or therewith, the Trustee shall have the same rights, protections and indemnities as afforded to it hereunder. (h) The Trustee shall not be required to take notice or be deemed to have notice of any Event of Default hereunder or under the Installment Purchase Agreement, except failure by the City to make any of the payments to the Trustee required to be made by the City pursuant to the Installment Purchase Agreement, or failure by the Authority to file with the Trustee any document required by this Indenture to be so filed subsequent to the issuance of the Bonds by a certain date, unless a Responsible Officer of the Trustee shall be specifically notified in writing of such default by the Owners of at least twenty-five percent (25%) in aggregate principal amount of the Bonds then Outstanding and all notices or other instruments required by this Indenture or under the Installment Purchase Agreement to be delivered to the Trustee must, to be effective, be delivered at the Office of the Trustee, and in the absence of such notice so delivered the Trustee may conclusively assume there is no Event of Default hereunder or thereunder except as aforesaid.
(i) At any and all reasonable times the Trustee, and its duly authorized agents, attorneys, experts, engineers, accountants and representatives, shall have the right (but not the duty) fully to inspect the Water System, all books, papers and records of the City or the Authority pertaining to the Water System and the Bonds, and to take such memoranda from and with regard thereto as may be desired but which is not privileged by statute or by law. (j) The Trustee shall not be required to give any bond or surety in respect of the execution of the said trusts and powers or otherwise in respect of the premises. (k) Notwithstanding anything elsewhere in this Indenture with respect to the execution of any Bonds, the withdrawal of any cash, the release of any property, or any action whatsoever within the purview of this Indenture, the Trustee shall have the right, but shall not be required, to demand any showings, certificates, opinions, appraisals or other information, or corporate action or evidence thereof, as may be deemed desirable for the purpose of establishing the right of the Authority to the execution of any Bonds, or the right of the City or the Authority to the withdrawal of any cash, or the taking of any other action by the Trustee. (l) Before taking the action referred to in Section 8.03 or any other actions besides making payments of principal of and interest on the Bonds, the Trustee may require that a satisfactory indemnity bond be furnished for the reimbursement of all expenses to which it may be put and to protect it against all liability, except liability which is adjudicated to have resulted from its negligence or willful default in connection with any such action. (m) All moneys received b y the Trustee shall, until used or applied or invested as herein provided, be held in trust for the purposes for which they were received but need not be segregated from other funds except to the extent required by law. The Trustee shall not be under any liability for interest on any moneys received hereunder except such as may be agreed upon in writing.
(n) The Trustee shall have the right to accept and act upon instructions, including funds transfer instructions (“Instructions”) given pursuant to this Indenture and delivered using