44 The City is also reliant on other entities and service providers in connection with the administration of Bonds, including without limitation the County tax collector for the levy and collection of Special Taxes, the Fiscal Agent, and the dissemination agent. No assurance can be given that the City and these other entities will not be affected by cyber threats and attacks in a manner that may affect the Bond Owners.
CONTINUING DISCLOSURE
City Continuing Disclosure
Pursuant to the City Continuing Disclosure Certificate, the City will agree to provide, or cause to be provided, to the EMMA system of the Municipal Securities Rulemaking Board, which can be found on the Internet at www.emma.msrb.org , on an annual basis certain financial information and operating data concerning the District and to provide notices of the occurrence of certain listed events as required by the Rule. This covenant is being made by the City in order to assist the Underwriter in complying with the Rule.
The City and its related entities have previously entered into continuing disclosure undertakings under the Rule in connection with the issuance of municipal obligations. The City was late in filing the annual landowner report for City of Upland Community Facilities District 2016-1 (Harvest at Upland). The Successor Agency to the Upland Community Redevelopment Authority (“Authority”) was late in filing continuing disclosure reports in 2020 for the Upland Community Redevelopment Project (A Merged Project) Tax Allocation Refunding Bonds, Issue of 2013 and 2016. The City and the Authority have remedied and filed the necessary information and is current in its continuing disclosure obligations.
Property Owner Continuing Disclosure
Although the Property Owner is not considered to be an obligated person under the Rule, the Property Owner has agreed to enter into a Property Owner Continuing Disclosure Certificate in connection with the issuance of the Bonds, pursuant to which it will provide semi-annual reports containing updated information with respect to the development within the District. Pursuant to the Property Owner Continuing Disclosure Certificate, the Property Owner will provide semi-annual reports not later than June 1 and December 1 of each year beginning December 1, 2023, until satisfaction of certain conditions set forth in the Property Owner Continuing Disclosure Certificate. The semi-annual reports to be provided by the Property Owner will contain updates regarding the development within the District as outlined in Section 4 of the Property Owner Continuing Disclosure Certificate attached as APPENDIX E. In addition to its semi-annual reports, the Property Owner will agree to provide notices of certain events set forth in the Property Owner Continuing Disclosure Certificate.
The Property Owner’s obligations under the Property Owner Continuing Disclosure Certificate will terminate upon the earliest to occur of: (a) the legal defeasance, prior redemption or payment in full of all of the Bonds, or (b) the date on which the Property Owner and its Affiliates (as defined in the Property Owner Continuing Disclosure Certificate) collectively own 38 or less residential lots in the District.
None of the District, the City or the Fiscal Agent is a party to the Property Owner Continuing Disclosure Certificate, and none of the District, the City or the Fiscal Agent has any obligation or responsibility to monitor, nor any right or obligation to enforce, compliance by the Property Owner with its undertaking pursuant to the Property Owner Continuing Disclosure Certificate, and none of the District, the City or the Fiscal Agent will be so monitoring or enforcing such compliance.
Property Owner Continuing Disclosure Compliance. To the actual knowledge of the Property Owner, other than as disclosed in this Official Statement, in the last five years, the Property Owner has not failed to comply in any material respects with its previous continuing disclosure undertakings, specifically regarding its requirement to provide developer periodic reports or to provide notice of occurrence of enumerated events.
However, (i) in connection with a continuing disclosure obligation entered into with respect to the $12,850,000 County of El Dorado District No. 2014-1 (Carson Creek) Special Tax Bonds Series 2016, the Property Owner
45 was late in filing the periodic reports due on April 1, 2017 and October 1, 2017; the oversight was discovered in late January, 2018, and the Property Owner promptly filed a curative report on February 1, 2018; (ii) in connection with the $16,780,000 California Municipal Finance Authority Special Tax Revenue Bonds BOLD Program Series 2020B, the Property Owner inadvertently failed to file the initial semi -annual report by the due date of May 1, 2021, but filed a curative report on May 21, 2021; and (iii) in connection with the $5,795,000 City of Rancho Cordova Grantline 208 Community Facilities District No. 2018-1 Special Tax Bonds, Series 2021B, the Property Owner inadvertently failed to file the initial annual report by the due date of April 1, 2022, but filed a curative report on September 21, 2022.
LEGAL MATTERS
Tax Exemption
In the opinion of Best & Krieger LLP, Riverside California, Bond Counsel, under existing statutes, regulations, rulings and judicial decisions, interest on the Bonds is excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Bonds is exempt from State of California personal income tax. Bond Counsel notes that interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however for tax years beginning after December 31, 2022, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations.
Bond Counsel’s opinion as to the exclusion from gross income for federal income tax purposes of interest on the Bonds is based upon certain representations of fact and certifications made by the City, on behalf of the District, the Underwriter and others and is subject to the condition that the City complies with all requirements of the Code and the regulations adopted pursuant to the Code (the “Treasury Regulations”) that must be satisfied subsequent to the issuance of the Bonds to assure that interest on the Bonds will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code and the Treasury Regulations might cause interest on the Bonds to be included in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. The City will covenant in the Fiscal Agent Agreement and the Tax Certificate to be delivered in connection with the issuance of the Bonds to comply with all such requirements.
Should the interest on the Bonds become includable in gross income for federal income tax purposes, the Bonds are not subject to early redemption as a result of such occurrence and will remain outstanding until maturity or until otherwise redeemed in accordance with the Fiscal Agent Agreement.
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond Owners from realizing the full current benefit of the tax status of such interest. For example, legislative proposals are announced from time to time which generally would limit the exclusion from gross income of interest on obligations like the Bonds to some extent for taxpayers who are individuals and whose income is subject to higher marginal income tax rates. Other proposals have been made that could significantly reduce the benefit of, or otherwise affect, the exclusion from gross income of interest on obligations like the Bonds. The introduction or enactment of any such legislative proposals, clarification of the Code or court decisions may also affect, perhaps significantly, the market price for, or marketability of, the Bonds.
Prospective purchasers of the Bonds should consult their own tax advisors regardi ng any pending or proposed federal or state tax legislation, regulations or litigation, and regarding the impact of future legislation, regulations or litigation, as to which Bond Counsel expresses no opinion.
Bond Counsel’s opinion may be affected by action taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds. Bond Counsel has not undertaken to determine, or to inform any person, whether any such action or events are taken or do occur, or whether such actions or events may adversely affect the value or tax treatment of a Bond, and Bond Counsel expresses no opinion with respect thereto.
46 Although Bond Counsel will render an opinion that interest on the Bonds is excluded from gross income for federal income tax purposes provided the City continues to comply with certain requirements of the Code, the accrual or receipt of interest on the Bonds may otherwise affect the tax liability of the recipient. The extent of these other tax consequences will depend upon the recipient’s particular tax status and other items of income or deductions. Bond Counsel expresses no opinion regarding any such consequences. Accordingly, all potential purchasers should consult their tax advisors before purchasing any of the Bonds.
A copy of the proposed form of Bond Counsel opinion is attached hereto as APPENDIX F.
Legal Opinion
The legal opinion of Bond Counsel, approving the validity of the Bonds in substantially the form set forth as APPENDIX F, will be made available to the original purchaser at the time of original delivery. A copy of the legal opinion for the Bonds will be provided with each definitive bond. Certain legal matters will be passed upon for the City and the District by the City Attorney’s Office, and by Best Best & Krieger LLP, Riverside, California, as Disclosure Counsel, and for the Underwriter by Kutak Rock LLP, Irvine, California, as counsel to the Underwriter.
Litigation
[No litigation is pending or threatened concerning the validity of the Bonds, the pledge of Sp ecial Tax Revenues to repay the Bonds, the powers or authority of the City with respect to the Bonds, or seeking to restrain or enjoin development of the land within the District and a certificate of the City to that effect will be furnished to the Underwriter at the time of the original delivery of the Bonds.] No Rating
The District has not made and does not contemplate making application to any rating agency for the assignment of a rating of the Bonds.
Underwriting
The Bonds are being purchased by Hilltop Securities Inc. (the “Underwriter”). The Underwriter has agreed to purchase the Bonds at a price of $_________ (being $______ aggregate principal amount thereof, less Underwriter’s discount of $_______ and minus the original issue discount of $______). The purchase agreement relating to the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased. The obligation to make such purchase is subject to certain terms and conditions set forth in such purchase agreement, the approval of certain legal matters by counsel and certain other conditions.
Under certain circumstances, the Underwriter may offer and sell the Bonds to certain dealers and others at prices lower or yields greater than the offering prices or yields stated on the inside cover page of this Official Statement. The offering prices or yields may be changed from time to time by the Underwriter.
Municipal Advisor
The District has retained Urban Futures, Inc., Tustin, California, as municipal advisor (the “Municipal Advisor”) for the sale of the Bonds. The Municipal Advisor is not obligated to undertake, and has not undertaken to make, an independent verification or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Official Statement.
The Municipal Advisor, is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal or other public securities.
47 Financial Interests
The fees being paid to the Municipal Advisor, the Underwriter and Underwriter’s Counsel are contingent upon the issuance and delivery of the Bonds. From time to time, Bond Counsel and Disclosure Counsel represent the Underwriter on matters unrelated to the Bonds.
Pending Legislation
The District is not aware of any significant pending legislation which would have material adverse consequences on the Bonds or the ability of the District to pay the principal of and interest on the Bonds when due.
Additional Information
The purpose of this Official Statement is to supply information to prospective buyers of the Bonds.
Quotations and summaries and explanations of the Bonds and documents contained in this Official Statement do not purport to be complete, and reference is made to such documents for full and complete statements and their provisions.
48 The execution of this Official Statement by the City Manager of the City and the delivery thereof have been duly authorized by the City Council acting in its capacity as the legislative body of the District.
THE CITY OF UPLAND
By:
City Manager of the City of Upland
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APPENDIX A
RATE AND METHOD OF APPORTIONMENT OF SPECIAL TAX
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APPENDIX B
APPRAISAL REPORT
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APPENDIX C
SUPPLEMENTAL INFORMATION CONCERNING
CITY OF UPLAND AND COUNTY OF SAN BERNARDINO
The Bonds will not be secured by any pledge of ad valorem taxes or City General Fund revenues but will be payable solely from Special Taxes to levied on and collected from the owners of certain taxable land within the District. The information set forth below is included in the Official Statement for background purposes only.
General Description and Background
Incorporated in 1906, the City of Upland (the “City”) is a general law city that functions under a Council- Manager form of government. The governance structure is comprised of an at-large elected Mayor and four Council Members elected by constituents in the specific ward. Each elected official serves a four-year term.
San Bernardino County (the “County”), which encompasses 20,105 square miles, is the largest county in the contiguous United States. On April 26, 1853, the County was created from parts of Los Angeles, San Diego and Mariposa Counties. Located in the southeastern portion of California, the County is bordered on the south by Riverside County, on the east by the State of Arizona and Nevada, on the north by Inyo and Tulare Counties, and on the west by Los Angeles and Kern Counties. There are 24 incorporated cities in the County.
The County’s varying topology includes desert, valley and mountain areas as well as gently rolling terrain.
Three distinct geographical areas characterize the County: the valley region, the mountain region and the desert region. The valley region contains the majority of the County’s incorporated areas and is the most populous region. The mountain region is primarily comprised of public lands owned and managed by federal and state agencies. The desert region is the largest region and includes parts of the Mojave Desert.
Population
The following sets forth the City, the County and the State population estimates as of January 1, for the years 2018 to 2022:
CITY OF UPLAND, SAN BERNARDINO COUNTY AND STATE OF CALIFORNIA Estimated Population
Year
(January 1)
City of
Upland
San Bernardino
County
State of
California
2018 78,139 2,150,017 39,519,535
2019 78,550 2,165,876 39,605,361
2020 78,769 2,175,424 39,648,938
2021 78,891 2,182,343 39,303,157
2022 79,139 2,187,665 39,185,605
Source: State of California Department of Finance, Demographic Research Unit. March 2020 and 2010 Benchmark.
Commerce
A summary of historic taxable sales within the City for the years 2017 to 2021 is shown in the following table. Total taxable sales during calendar year 2021 in the City were reported to be $1,516,988,256, a 27.4% increase over the total taxable sales of $1,190,634,276 reported during calendar year 2020.
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CITY OF UPLAND
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Total Retail and Food Services Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2017 1,614 $979,418,322 2,601 $1,207,122,624
2018 1,629 1,016,232,097 2,711 1,246,906,340
2019 1,719 996,433,059 2,937 1,232,380,098
2020 1,848 969,984,212 3,207 1,190,634,276
2021 1,750 1,145,477,574 3,065 1,516,988,256
Source: California State Board of Equalization, Taxable Sales in California – Cities by Type of Business.
A summary of historic taxable sales within the County during for the years 2017 to 2021 is shown in the following table. Total taxable sales during calendar year 2021 in the County were reported to be $55,378,096,658, a 28% increase over the total taxable sales of $43,265,512,311 reported during calendar year 2020.
COUNTY OF SAN BERNARDINO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions Total Retail and Food Service Total All Outlets
Number of
Permits
Taxable
Transactions
Number of
Permits
Taxable
Transactions
2017 39,067 $25,603,171,101 58,956 $38,399,372,700
2018 39,837 26,905,783,745 61,838 40,554,023,790
2019 40,964 27,585,905,470 64,771 41,768,747,848
2020 44,330 28,745,277,036 71,145 43,265,512,311
2021 40,801 38,345,912,017 66,585 55,378,096,658
Source: California State Board of Equalization, Taxable Sales in California – Counties by Types of Business.
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Employment and Industry
The City is included in the Riverside-San Bernardino-Ontario labor market area. The unemployment rate in the Riverside-San Bernardino-Ontario MSA was 3.6% in December 2022, down from a revised 4.2% in November 2022, and below the year-ago estimate of 5.0%. This compares with an unadjusted unemployment rate of 3.7% for California and 3.3 % for the nation during the same period. The unemployment rate was 3.7% in Riverside County and 3.6% in San Bernardino County.
The following table shows the average annual estimated numbers of wage and salary workers by industry.
The table does not include proprietors, the self-employed, unpaid volunteers or family workers, domestic workers in households, and persons in labor management disputes.
RIVERSIDE-SAN BERNARDINO-ONTARIO METROPOLITAN STATISTICAL AREA (SAN BERNARDINO COUNTY)
Industry Employment & Labor Force
(Annual Averages)
2017 2018 2019 2020 2021
Civilian Labor Force 942,000 955,000 966,800 971,400 988,600 Civilian Employment 895,300 915,500 929,000 877,000 915,100 Civilian Unemployment 46,800 39,500 37,700 94,400 73,500 Civilian Unemployment Rate 5.0% 4.1% 3.9% 9.7% 7.4%
Total Farm 2,200 2,200 2,500 2,300 2,300
Total Nonfarm 748,800 770,500 798,500 773,100 809,200
Goods Producing 92,100 95,100 95,200 91,200 90,900
Mining and Logging 600 800 700 900 1,000
Construction 35,200 37,800 39,000 38,100 38,600
Manufacturing 56,300 56,600 55,400 52,200 51,300
Durable Goods 35,000 34,900 34,600 31,900 30,300
Nondurable Goods 21,400 21,700 20,800 20,300 21,000
Service Providing 656,700 675,400 703,300 681,900 718,300 Trade, Transportation and Utilities 206,600 216,000 224,800 233,700 255,300 Wholesale Trade 38,700 40,500 41,500 41,100 41,400
Retail Trade 88,200 88,300 87,000 81,800 86,300
Transportation, Warehousing and Utilities 79,600 87,100 96,300 110,800 127,600 Information 5,200 5,300 5,000 4,100 4,300
Financial Activities 22,400 21,700 23,400 23,100 23,800 Professional and Business Services 80,300 80,900 85,000 83,900 91,500 Educational and Health Services 119,700 124,500 135,000 129,100 129,300 Leisure and Hospitality 75,200 76,900 78,100 63,700 70,800 Other Services 22,800 23,000 22,900 20,300 21,500
Government 124,600 127,100 129,100 124,000 122,000
Total, All Industries 750,900 772,700 801,000 775,400 811,500
Note: Does not include proprietors, self-employed, unpaid volunteers or family workers, domestic workers in households and persons involved in labor-management trade disputes. Employment reported by place of work. Items may not add to total due to independent rounding. The “Total, All Industries” data is not directly comparable to the employment data found in this Appendix C. Numbers reflected in the table may not add up due to rounding.
Source: State of California, Employment Development Department, March 2021 Benchmark.
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Principal Employers
The table below shows the 10 principal employers in the City as of June 30, 2021.
CITY OF UPLAND
LARGEST EMPLOYERS
(As of June 30, 2021)
Rank Employer
Number of
Employees
1 San Antonio Regional Hospital 2,178
2 Upland Unified School District 1,037
3 Home Depot 350
4 WalMart 315
5 Lewis Group 313
6 Upland Rehabilitation & Care Center 291
7 Target 265
8 City of Upland 258
9 Holliday Rock Co. Inc. 250
10 VCI Construction 227
Source: City of Upland, Annual Comprehensive Financial Report for the year ending June 30, 2021.
The table below shows the 10 principal employers in the County as of June 30, 2021.
COUNTY OF SAN BERNARDINO
PRINCIPAL EMPLOYERS
(As of June 30, 2021)
Rank Name of Business Employees
Percentage of Total
Employment
1. San Bernardino County >10,000 1.11%
2. Loma Linda University Medical Center >10,000 1.11
3. Amazon 5,000-9,999 0.55-1.11
4. Ontario International Airport 5,000-9,999 0.55-1.11
5. Plaxicon Holding Corporation 5,000-9,999 0.55-1.11
6. California State University San Bernardino 5,000-9,999 0.55-1.11
7. James Jones Company 2,500-4,999 0.28-0.55
8. Barret Business Services Inc. 2,500-4,999 0.28-0.55
9. Damao Luggage International Inc. 2,500-4,999 0.28-0.55
10. San Manuel Indian Bingo and Casino 2,500-4,999 0.28-0.55
Source: San Bernardino County State of California Annual Comprehensive Financial Report for the year ending June 30, 2021.
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APPENDIX D
SUMMARY OF FISCAL AGENT AGREEMENT
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATES OF THE CITY AND THE PROPERTY OWNER
CONTINUING DISCLOSURE CERTIFICATE OF THE CITY
This Continuing Disclosure Certificate, dated as of ______ 1, 2023 (the “Disclosure Certificate”), is executed and delivered by the City of Upland (the “City”) in connection with the issuance and delivery by the City of its $4,260,000* Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland 2023 Special Tax Bonds (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement, dated as of ________ 1, 2023 (the “Fiscal Agent Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The City covenants as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the City for the benefit of the Owners and Beneficial Owners of the Bonds and in order to assist the Participating Underwriter in complying with the Rule.
SECTION 2. Definitions. In addition to the definitions set forth in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” shall mean any Annual Report provided by the City pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate.
“Annual Report Date” means the 1st of April after the end of the City’s fiscal year, commencing April 1, 2024.
“Beneficial Owner” shall mean any person which: (a) has the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries); or (b) is treated as the owner of any Bonds for federal income purposes.
“Disclosure Representative” shall mean the City Manager or the Finance officer of the City, or their designee, or such other officer or employee as the City shall designate in writing from time to time. “Dissemination Agent” shall mean, initially, the City, acting in its capacity as Dissemination Agent hereunder, or any successor Dissemination Agent designated in writing by the City and which has filed with the then current Dissemination Agent a written acceptance of such designation. “Fiscal Year” shall mean the period from July 1 to June 30, or any other period selected by the City as its fiscal year.
“Listed Events” shall mean any of the events listed in Section 5(a) of this Disclosure Certificate. “MSRB” shall mean the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information for purposes of the Rule, or any other repository of disclosure information that may be designated by the Securities and Exchange Commission as such for purposes of the Rule in the future.
* Preliminary, subject to change.
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“Official Statement” shall mean the final official statement executed by the City in connection with the issuance of the Bonds.
“Participating Underwriter” shall mean the original underwriter of the Bonds that is required to comply with the Rule in connection with offering of the Bonds. “Rule” shall mean Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time. “State” shall mean the State of California.
SECTION 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the Annual Report Date, commencing April 1, 2024, with the report for the 2022-23 Fiscal Year, provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that is consistent with the requirements of Section 4 of this Disclosure Certificate; provided, however, that the audited financial statements for Fiscal Year 2022-23 will be filed when available. The first Annual Report shall consist solely of the Official Statement. Not later than 15 Business Days prior to the Annual Report Date, the City shall pro vide the Annual Report to the Dissemination Agent (if other than the City). If by 15 Business Days prior to the Annual Report Date the Dissemination Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination Agent shall contact the City to determine if the City is in compliance with the previous sentence. The Annual Report may be submitted as a single document or as separate documents comprising a package, and may include by reference other information as provided in Section 4 of this Disclosure Certificate; provided that the audited financial statements of the City may be submitted separately from the balance of the Annual Report, and later than the Annual Report Date, if not available by that date. If the City’s Fiscal Year changes, it shall give notice of such change in the same manner as for a Listed Event under Section 5(b). The City shall provide a written certification with each Annual Report furnished to the Dissemination Agent to the effect that such Annual Report constitutes the Annual Report required to be furnished by the City hereunder.
(b) If the City does not provide (or cause the Dissemination Agent to provide) an Annual Report by the Annual Report Date, the City shall provide (or cause the Dissemination Agent to provide) in a timely manner to the MSRB, in an electronic format as prescribed by the MSRB, a notice in substantially the form attached as Exhibit A to this Disclosure Certificate.
(c) With respect to each Annual Report, the Dissemination Agent shall. (i) determine prior to each Annual Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of annual continuing disclosure reports; and (ii) if the Dissemination Agent is other than the City, file a report with th e City certifying that the Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided.
SECTION 4. Content of Annual Report. The City’s Annual Report shall contain or include by reference the following:
(a) The City’s audited financial statements prepared in accordance with generally accepted accounting principles as promulgated to apply to governmental entities from time to time by the Governmental Accounting Standards Board. If the City’s audited financial statements are not available by the Annual Report Date, the Annual Report shall contain unaudited financial statements in a format similar to the financial statements contained in the Official Statement, and the audited financial statements shall be filed in the same manner as the Annual Report when they become available.
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(b) The following information, unless otherwise specified, as of September 30 of the preceding year:
(i) Principal amount of all outstanding bonds.
(ii) Balance in the Improvement Fund, until such time as the fund is closed. (iii) Balance in the Reserve Fund, statement of the Reserve Requirement as of the immediately preceding April 1 and statement of projected draws on the Reserve Fund. (iv) Update of Table 1.
(v) Update of Table 5, using assessed values instead of appraised values (overlapping general obligation debt information needed not be included in the update). (vi) Update of Table 6, using assessed values instead of appraised values (overlapping general obligation debt information needed not be included in the update). (vii) A table showing the total dollar amount of delinquencies and number of delinquent parcels, if any, in the District.
(viii) Notwithstanding the September 30 reporting date, the following information shall be reported as of February 1 immediately preceding the date of the Annual Report rather than as of September 30 :
(x) the identity of each delinquent taxpayer responsible for five percent (5%) or more of total Special Tax levied; (y) the assessor parcel number, assessed value of applicable properties, amount of Special Tax levied, amount delinquent by parcel number and status of foreclosure proceedings; and (z) if any foreclosure has been completed, a summary of results of foreclosure sales or transfers. (c) In addition to any of the information expressly required to be provided under this Disclosure Certificate, the City shall provide such further material information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading. (d) Any or all of the items listed above may be included by specific reference to other documents, including official statements of debt issues of the City or related public entities, which are available to the public on the MSRB’s Internet web site or filed with the Securities and Exchange Commission. The City shall clearly identify each such other document so included by reference.
SECTION 5. Reporting of Significant Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to the Bonds:
(i) Principal and interest payment delinquencies.
(ii) Non-payment related defaults, if material.
(iii) Unscheduled draws on debt service reserves reflecting financial difficulties. (iv) Unscheduled draws on credit enhancements reflecting financial difficulties. (v) Substitution of credit or liquidity providers, or their failure to perform. (vi) Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701 -TEB) or other material notices or
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determinations with respect to the tax status of the security, or other material events affecting the ta x status of the security.
(vii) Modifications to rights of security holders, if material. (viii) Bond calls, if material, and tender offers.
(ix) Defeasances.
(x) Release, substitution, or sale of property securing repayment of the securities, if material . (xi) Rating changes.
(xii) Bankruptcy, insolvency, receivership or similar event of the City or other obligated person.
(xiii) The consummation of a merger, consolidation, or acquisition involving the City or an obligated person, or the sale of all or substantially all of the assets of the City or an obligated person (other than in the ordinary course of business), the entry into a definitive agreement to undertake such an action, or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material. (xiv) Appointment of a successor or additional fiscal agent or the change of name of the fiscal agent, if material.
(xv) Incurrence of a financial obligation of the City, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the City, any of which affect security holders, if material (for the definition of “financial obligation,” see clause (e)). (xvi) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the City, any of which reflect financial difficulties (for the definition of “financial obligation,” see clause (e)).
(b) Whenever the City obtains knowledge of the occurrence of a Listed Event, the City shall, or shall cause the Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 business days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of a Listed Event described in subsection (a)(viii) above need not be given under this subsection any earlier than the notice (if any) of the underlying event is given to holders of affected Bonds under the Fiscal Agent Agreement. (c) The City acknowledges that the events described in subparagraphs (a)(ii), (a)(vii), (a)(viii) (if the event is a bond call), (a)(x), (a)(xiii), (a)(xiv) and (a)(xv) of this Section 5 contain the qualifier “if material” and that subparagraph (a)(xi) also contains the qualifier “material” with respect to certain notices, determinations or other events affecting the tax status of the Bonds. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect to any such event only to the extent that it determines the event ’s occurrence is material for purposes of U.S. federal securities law. Whenever the City obtains knowledge of the occurrence of any of these Listed Events, the City will as soon as possible determine if such event would be material under applicable federal securities law. If such event is determined to be material, the City will cause a notice to be filed as se t forth in paragraph (b) above. The Dissemination Agent shall not be responsible for determining whether an event is material.
(d) For purposes of this Disclosure Certificate, any event described in paragraph (a)(xii) above is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent, or similar officer for the City in a proceeding under the United States Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets
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or business of the City, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a cour t or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement, or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(xv) and (xvi), “financial obligation” means a (i) debt obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term financial obligation shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.
SECTION 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB pursuant to this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
SECTION 7. Termination of Reporting Obligation. The City’s obligations under this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds, the City shall give notice of such termination in the same manner as for a Listed Event under Section 5(b).
SECTION 8. Dissemination Agent. The City may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any Dissemination Agent, with or without appointing a successor Dissemination Agent. Any Dissemination Agent may resign by providing 30 days’ written notice to the City.
SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature, or status of an obligated person with respect to the Bonds, or type of business conducted;
(b) the undertakings herein, as proposed to be amended or waived, would, in the opinion of nationally recognized bond counsel, have complied with the requirements of the Rule at the time of the primary offering of the Bonds, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement for amendments to the Fiscal Agent Agreement with the co nsent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual R eport is amended pursuant to the provisions hereof, the first Annual Report filed pursuant hereto containing the amended operating data or financial information shall explain, in narrative form, the reasons for the amendment and the impact of the change in the type of operating data or financial information being provided.
If an amendment is made to this Disclosure Certificate modifying the accounting principles to be followed in preparing financial statements, the Annual Report for the year in which the ch ange is made shall present a comparison between the financial statements or information prepared on the basis of the new accounting principles and those prepared on the basis of the former accounting principles. The comparison shall include a qualitative discussion of the differences in the accounting principles and the impact of the change in the accounting principles
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on the presentation of the financial information, in order to provide information to investors to enable them to evaluate the ability of the City to meet its obligations. To the extent reasonably feasible, the comparison shall be quantitative.
A notice of any amendment made pursuant to this Section 9 shall be filed in the same manner as for a Listed Event under Section 5(b).
SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the City from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or includi ng any other information in any Annual Report or notice of occurrence of a Listed Event, in addition to that which is required by this Disclosure Certificate. If the City chooses to include any information in any Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the City shall have no obligation under this Disclosure Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Listed Event.
SECTION 11. Default. If the City fails to comply with any provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the City to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. (a) The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents, harmless against any loss, expense and liabilities which they may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding liabilities due to the Dissemination Agent’s negligence or willful misconduct. The Dissemination Agent shall have no duty or obligation to review any information provided to it by the City hereunder and shall not be deemed to be acting in any fiduciary capacity for the City, the Bond holders, or any other party. The obligations of the City under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds. (b) The Dissemination Agent shall be paid compensation by the City for its services provided hereunder in accordance with its schedule of fees as amended from time to time, and shall be reimbursed for all expenses, legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder.
SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the City, the Dissemination Agent, the Participating Underwriter and the holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity.
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SECTION 14. Counterparts. This Disclosure Certificate may be executed in several counterparts, each of which shall be regarded as an original, and all of which shall constitute one and the same instrument .
CITY OF UPLAND, for and on behalf of COMMUNITY
FACILITIES DISTRICT NO. 2022-1 (ENCLAVE AT
UPLAND) OF THE CITY OF UPLAND, COUNTY OF
SAN BERNARDINO, STATE OF CALIFORNIA
By:
City Manager
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EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE ANNUAL REPORT Name of Issuer: City of Upland
Name of Bond Issue: $_______ Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland 2023 Special Tax Bonds
Date of Issuance: _______, 2023
NOTICE IS HEREBY GIVEN that the City of Upland (the “City”) on behalf of Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland has not provided an Annual Report with respect to the above-named Bonds as required by the Fiscal Agent Agreement dated as of ______1, 2023, by and between the City and U.S. Bank Trust Company, National Association, as Fiscal Agent. The City anticipates that the Annual Report will be filed by __________, ,20__.
Dated:
CITY OF UPLAND, for and on behalf of
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(ENCLAVE AT UPLAND) OF THE CITY OF
UPLAND, COUNTY OF SAN BERNARDINO,
STATE OF CALIFORNIA
By:
City Manager
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FORM OF CONTINUING DISCLOSURE CERTIFICATES OF THE CITY AND THE PROPERTY OWNER
CONTINUING DISCLOSURE CERTIFICATE OF THE PROPERTY OWNER This Continuing Disclosure Certificate of the Property Owner (this “Disclosure Certificate”), dated as of _______ 1, 2023, is executed and delivered by Lennar Homes of California, LLC, a California limited liability company (the “Property Owner”), in connection with the issuance by the Community Facilities District No. 2022- 1 (Enclave at Upland) of the City of Upland, County of San Bernardino, State of California (the “Bonds”). The Bonds are being issued pursuant to a Fiscal Agent Agreement dated _______ 1, 2023 (the “Fiscal Agent Agreement”) by and between the City of Upland (the “City”) and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”). The Property Owner covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being executed and delivered by the Property Owner for the benefit of the holders and beneficial owners of the Bonds.
SECTION 2. Definitions. In addition to the definitions set forth above and in the Fiscal Agent Agreement, which apply to any capitalized term used in this Disclosure Certificate unless otherwise defined herein, the following capitalized terms shall have the following meanings. “Affiliate” means any person presently directly (or indirectly through one or more intermediaries) under managerial control of the Property Owner, and about whom information could be material to potential investors in their investment decision regarding the Bonds (including without limitation information relevant to the proposed development of the Property or to the Property Owner ’s ability to pay the Special Taxes levied on the Property prior to delinquency).
“Assumption Agreement” means an undertaking of a Major Owner, for the benefit of the holders and beneficial owners of the Bonds, containing terms substantially similar to this Disclosure Certificate (as modified for such Major Owner’s development and financing plans with respect to the property in the District acquired by the Major Owner), whereby such Major Owner agrees to provide semi-annual reports and notices of significant events, setting forth the information described in Sections 4 and 5 hereof, respectively, with respect to the portion of the property in the District owned by such Major Owner and, at the option of the Property Owner or such Major Owner, agrees to indemnify the Dissemination Agent (if any) pursuant to a provision substantially in the form of Section 12 hereof.
“Dissemination Agent” means the Property Owner, or any successor Dissemination Agent designated in writing by the Property Owner, which is experienced in providing dissemination agent services such as those required under this Disclosure Certificate, and which has filed with the Property Owner, the District and the Participating Underwriter, a written acceptance of such designation and acceptance. “District” means Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland, County of San Bernardino, State of California.
“Listed Events” means any of the events listed in Section 5(a) of this Disclosure Certificate. “Major Owner” means, as of any date of determination, a Person that, together with the Person’s Affiliates, owns 39 or more residential lots in the District. “MSRB” means the Municipal Securities Rulemaking Board, which has been designated by the Securities and Exchange Commission as the sole repository of disclosure information. “Official Statement” means the Official Statement dated _____, 2023, executed by the City in connection with the issuance of the Bonds.
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“Participating Underwriter” means Hilltop Securities Inc., the original underwriter of the Bonds. “Property” means (i) the property owned by the Property Owner or an Affiliate in the District and subject to the Special Taxes as of the date of determination, and (ii) the property in the District that the Property Owner or an Affiliate sold to a Major Owner who has not assumed the undertakings of this Disclosure Certificate under Section 7(b) that is owned by such Major Owner as of the date of determination. “Report Date” means (a) June 1 of each year, and (b) December 1 of each year. “Semi-Annual Report” means any Semi-Annual Report provided by the Property Owner pursuant to, and as described in, Sections 3 and 4 of this Disclosure Certificate. “Special Taxes” means the special taxes levied by the District on the Property.
SECTION 3. Provision of Semi-Annual Reports.
(a) Until such obligations are terminated pursuant to Section 7 herein, the Property Owner shall, or upon written direction of the Property Owner the Dissemination Agent shall, not later than the Report Date, commencing December 1, 2023, provide to the MSRB, in an electronic format as prescribed by the MSRB, a Semi-Annual Report which is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15 calendar days prior to the Report Date, the Property Owner shall provide the Semi-Annual Report to the Dissemination Agent (if different from the Property Owner). The Property Owner shall provide a written certification with (or included as a part of) each Semi -Annual Report furnished to the Dissemination Agent (if different from the Property Owner), to the effect that such Semi -Annual Report constitutes the Semi-Annual Report required to be furnished by it under this Disclosure Certificate. The Dissemination Agent may conclusively rely upon such certification of the Property Owner and shall have no duty or obligation to review the Semi-Annual Report. The Semi-Annual Report may be submitted as a single document or as separate documents comprising a package, and may incorporate by reference other information as provided in Section 4 of this Disclosure Certificate.
(b) If the Dissemination Agent is not the Property Owner and it does not receive a Semi -Annual Report by 15 calendar days prior to the Report Date, the Dissemination Agent shall send a reminder notice to the Property Owner that the Semi -Annual Report has not been provided as required under Section 3(a) above. The reminder notice shall instruct the Property Owner to determine whether its obligations under this Disclosure Certificate have terminated (pursuant to Section 7 below) and, if so, to provide the Dissemination Agent with a notice of such termination in the same manner as for a Listed Event (pursuant to Section 5 below). If the Property Owner does not provide, or cause the Dissemination Agent to provide, a Semi -Annual Report to the MSRB by the Report Date, as required in subsection (a) above, the Dissemination Agent shall send a notice in a timely manner to the MSRB in substantially the form attached hereto as Exhibit A, with a copy to the District and the Participating Underwriter.
(c) The Dissemination Agent shall:
(i) determine prior to each Report Date the then-applicable rules and electronic format prescribed by the MSRB for the filing of continuing disclosure reports; and (ii) to the extent the Semi-Annual Report has been furnished to it, file a report with the Property Owner (if the Dissemination Agent is other than the Property Owner), the District, and the Participating Underwriter certifying that the Semi-Annual Report has been provided pursuant to this Disclosure Certificate, and stating the date it was provided to and filed with the MSRB.
SECTION 4. Content of Semi-Annual Reports. Each Semi-Annual Report shall contain or incorporate by reference the information set forth in Exhibit B, any or all of which may be included by specific reference to other documents which are available to the public on the MSRB’s internet website or filed with the Securities and
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Exchange Commission. The Property Owner shall clearly identify each such other document so included by reference.
In addition to any of the information expressly required to be provided in Exhibit B, each Semi-Annual Report shall include such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
SECTION 5. Reporting of Significant Events.
(a) Until such obligations are terminated pursuant to Section 7 herein, the Property Owner shall give, or cause to be given, notice of the occurrence of any of the following Listed Events with respect to itself or the Property, if material:
(i) bankruptcy or insolvency proceedings commenced by or against the Property Owner and, if known, any bankruptcy or insolvency proceedings commenced by or against any Affiliate of the Property Owner that is reasonably likely to have a significant i mpact on the Property Owner’s ability to develop the Property as described in the Official Statement or a more recently filed Semi -Annual Report or to pay Special Taxes due with respect to the Property (to the extent the responsibility of the Property Owner) prior to delinquency;
(ii) failure of the Property Owner to pay any taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property on or prior to the delinquency date, to the extent such failure is not promptly cured by the Property Owner upon discovery thereof; (iii) filing of a lawsuit against the Property Owner or, if known, an Affiliate of the Property Owner, seeking damages which, if successful, could have a material and adverse impact on the Property Owner’s ability to develop the Property as described in the Official Statement or a more recently filed Semi-Annual Report or to pay Special Taxes due with respect to the Property (to the extent the responsibility of the Property Owner) prior to delinquency; (iv) material damage to or destruction of any of the improvements on the Property; and (v) any payment default or other material default by the Property Owner that continues to exist beyond any applicable notice and cure periods on any loan with respect to the construction of improvements on the Property that would have a material adverse effect on the Property Owner’s most recently disclosed development plan or financing with respect to the Property, or the ability of the Property Owner or any Affiliate to pay its Special Taxes prior to delinquency. (b) Whenever the Property Owner obtains knowledge of the occurrence of a Listed Event, the Property Owner shall as soon as possible determine if such event would be material under applicable Federal securities law.
(c) If the Property Owner determines that knowledge of the occurrence of a Listed Event would be material under applicable Federal securities law, the Property Owner shall, or shall cause the Dissemination Agent to, within 10 business days after obtaining knowledge of the Listed Event, file a notice of such occurrence of the Listed Event with the MSRB, in an electronic format as prescribed by the MSRB, with a copy to the District and the Participating Underwriter.
SECTION 6. Identifying Information for Filings with the MSRB. All documents provided to the MSRB under this Disclosure Certificate shall be accompanied by identifying information as prescribed by the MSRB.
SECTION 7. Duration of Reporting Obligation.
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(a) All of the Property Owner’s obligations hereunder shall commence on the date hereof and shall terminate (except as provided in Section 12) on the earliest to occur of the following:
(i) upon the legal defeasance, prior redemption or payment in full of all the Bonds, or (ii) at such time as (A) the Property Owner is no longer a Major Owner and (B) the Property Owner no longer has any obligations under this Disclosure Certificate with respect to any Major Owner as a result of such obligations having been assumed under one or more Assumption Agreements entered into pursuant to Section 7(b) below; or
(iii) the date on which all of the Special Taxes attributable to the Property are paid in full.
The Property Owner shall give notice of the termination of its obligations under this Disclosure Certificate in the same manner as for a Listed Event under Section 5. (b) If a portion of the Property is conveyed to a person or entity that, upon such conveyance, will be a Major Owner, the obligations of the Property Owner hereunder with respect to the proper ty conveyed to such Major Owner shall be assumed by such Major Owner, and if so assumed the Property Owner’s obligations hereunder with respect to the property conveyed will be terminated. In order to effect such assumption, such Major Owner shall enter into an Assumption Agreement in form and substance substantially similar to this Disclosure Certificate. However, a Major Owner shall not be required to enter into an Assumption Agreement if such Major Owner is already a party to a continuing disclosure certificate in form and substance similar to this Disclosure Certificate with respect to the Bonds, and under which the property conveyed to such Major Owner will become subject to future Semi-Annual Reports. If not so assumed, the Property Owner shall use commercially reasonable efforts to report the information, as applicable to the transferee, required herein so long as the transferee is a Major Owner.
SECTION 8. Dissemination Agent. The Property Owner may, from time to time, appoint or engage a Dissemination Agent to assist the Property Owner in carrying out its obligations under this Disclosure Certificate, and may discharge any such Dissemination Agent with or without appointing a successor Dissemination Agent.
The initial Dissemination Agent shall be the Property Owner. The Dissemination Agent may resign by providing 30 days’ written notice to the Property Owner.
SECTION 9. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Certificate, the Property Owner may amend this Disclosure Certificate, and any provision of this Disclosure Certificate may be waived, provided that the following conditions are satisfied (provided, however, that the Dissemination Agent shall not be obligated under any such amendment that modifies or increases i ts duties or obligations hereunder without its written consent thereto):
(a) if the amendment or waiver relates to the provisions of sections 3(a), 4 or 5(a), it may only be made in connection with a change in circumstances that arises from a change in legal requirements, or change in law; and
(b) the proposed amendment or waiver either (i) is approved by holders of the Bonds in the manner provided in the Fiscal Agent Agreement with the consent of holders, or (ii) does not, in the opinion of nationally recognized bond counsel, materially impair the interests of the holders or beneficial owners of the Bonds.
SECTION 10. Additional Information. Nothing in this Disclosure Certificate shall be deemed to prevent the Property Owner from disseminating any other information, using the means of dissemination set forth in this Disclosure Certificate or any other means of communication, or including any other information in any Semi - Annual Report or notice of occurrence of a Listed Event, in addition to that which is r equired by this Disclosure Certificate. If the Property Owner chooses to include any information in any Semi -Annual Report or notice of occurrence of a Listed Event in addition to that which is specifically required by this Disclosure Certificate, the
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Property Owner shall have no obligation under this Disclosure Certificate to update such information or include it in any future Semi-Annual Report or notice of occurrence of a Listed Event.
SECTION 11. Default. In the event of a failure of the Property Owner to comply with any provision of this Disclosure Certificate, the Participating Underwriter, the District, and any holder or beneficial owner of the Bonds may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the Property Owner to comply with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not be deemed an Event of Default under the Fiscal Agent Agreement, and the sole remedy under this Disclosure Certificate in the event of any failure of the Property Owner to comply with this Disclosure Certificate shall be an action to compel performance.
SECTION 12. Duties, Immunities and Liabilities of Dissemination Agent. The Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Certificate, and the Property Owner agrees to indemnify and save the Dissemination Agent, its officers, directors, employees and agents (each, an “Indemnified Party”), harmless against any loss, expense and liabilities which it may incur arising out of or in the exercise or performance of its powers and duties hereunder, including the reasonable costs and expenses (including attorneys’ fees) of defending against any claim of liability, but excluding any loss, expense and liabilities due to an Indemnified Party’s negligence or willful misconduct or failure to perform its duties hereunder. If the Dissemination Agent is not the Property Owner, the Dissemination Agent shall be paid compensation for its services provided hereunder from the Administrative Expense Fund established under the Fiscal Agent Agreement in accordance with the Dissemination Agent’s schedule of fees as amended from time to time, which schedule, as amended, shall be reasonably acceptable, and all reasonable expenses, reasonable legal fees and advances made or incurred by the Dissemination Agent in the performance of its duties hereunder. The Dissemination Agent shall have no duty or obligation to review any information provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the District, the Property Owner, the Participating Underwriter, the Bond owners, or any other party. The obligations of the Property Owner under this Section shall survive resignation or removal of the Dissemination Agent and payment of the Bonds.
SECTION 13. Notices. Any notice or communications to be among any of the parties to the Disclosure Certificate may be given by regular, overnight, or electronic mail as follows:
To the Issuer: City of Upland
460 N Euclid Ave,
Upland, CA 91786
Attn: City Manager
Email: [email protected]
To the Participating Underwriter: Hilltop Securities Inc. 2533 South Coast Highway 101, Suite 250
Cardiff, CA 92007
Attn: Mike Cavanaugh, Managing Director
Email: [email protected]
To the Property Owner: Lennar Homes of California, LLC 980 Montecito Drive, Suite 300
Corona, CA 92879
Attn: Geoff Smith
Email: [email protected]
Attn: Karl Reichmuth
Email: [email protected]
Any person may, by written notice to the other persons listed above, designate a different address or telephone number(s) to which subsequent notices or communications should be sent.
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SECTION 14. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the District, the Property Owner (its successors and assigns), the Dissemination Agent (if any), the Participating Underwriter and holders and beneficial owners from time to time of the Bonds, and shall create no rights in any other person or entity. All obligations of the Property Owner hereunder shall be assumed by any legal successor to the obligations of the Property Owner as a result of a sale, merger, consolidation or other reorganization. (Signature page follows)
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IN WITNESS WHEREOF, the Property Owner has executed this Disclosure Certificate as of the date first above written.
PROPERTY OWNER:
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
By ___________________________________
Name:
Title:
-Signature Page-
Continuing Disclosure Certificate
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EXHIBIT A
NOTICE TO REPOSITORIES OF FAILURE TO FILE PERIODIC REPORT
Name of Issuer: Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland, County of San Bernardino, State of California
Name of Bond Issue: $______ Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland, 2023 Special Tax Bonds
Date of Issuance: ______, 2023
NOTICE IS HEREBY GIVEN that Lennar Homes of California, LLC, a California limited liability company (the “Property Owner”), has not provided a Semi-Annual Report with respect to the above-named Bonds as required by the Disclosure Certificate. The Property Owner anticipates that the applicable Semi-Annual Report will be filed by _____________, 20__.
Dated: _______________
Dissemination Agent
By: __________________________________
Its: __________________________________
cc: Property Owner
District
Participating Underwriter
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EXHIBIT B
SEMI-ANNUAL REPORT
JUNE 1, ____/ DECEMBER 1, ____
COMMUNITY FACILITIES DISTRICT NO. 2022-1
(ENCLAVE AT UPLAND) OF THE CITY OF UPLAND
OF 2023 SPECIAL TAX BONDS
This Semi-Annual Report is hereby submitted under Section 4 of the Continuing Disclosure Certificate of the Property Owner (the “Disclosure Certificate”) dated as of _______ 1, 2023, executed by the undersigned (the “Property Owner”) in connection with the issuance by the City of Upland (the “City”) of the bonds captioned above (the “Bonds”) for Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland (the “District”).
Capitalized terms used in this Semi-Annual Report but not otherwise defined have the meanings given to them in the Disclosure Certificate.
I. Property Ownership and Development
The information in this section is provided as of __________, 20__ (this date must be not more than 60 days before the Report Date of this Semi-Annual Report).
A. Description of the Property currently owned by the Property Owner in the District (the “Property”) in substance and form similar to such information in the Official Statement for the Bonds under the caption “THE DISTRICT—The Development” or the Semi-Annual Report last filed in accordance with the Disclosure Certificate.
B. Updated information regarding land development construction of backbone infrastructure and home construction activities with respect to the Property described in the Official Statement for the Bonds under the caption “THE DISTRICT—The Development” or the Semi-Annual Report last filed in accordance with the Disclosure Certificate.
C. Status of any building permits and material changes to the description of land use or development entitlements for the Property in the Official Statement for the Bonds under the caption “THE DISTRICT—The Development” or the Semi-Annual Report last filed in accordance with the Disclosure Certificate.
D. Status of any land purchase contracts with regard to the Property, whether acquisition of land in the District by the Property Owner or sales of land to other property owners (other than individual homeowners).
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II. Legal and Financial Status of Property Owner
Unless such information has previously been included or incorporated by reference in a Semi -Annual Report, describe any material change in the legal structure of the Property Owner or the financial condition and financing plan of the Property Owner that would materially and adversely interfere with its ability to complete its development plan described in the Official Statement. To the extent that the ownership of the Property Owner has changed, describe all material terms of the new ownership structure.
III. Change in Development or Financing Plans
Unless such information has previously been included or incorporated by reference in a Semi-Annual Report, describe any development plans or financing plans relating to the Property that are materially different from the proposed development and financing plan described in the Official Statement.
IV. Status of Tax Payments
Describe status of payment of taxes, special taxes (including the Special Taxes) or assessments due with respect to the Property owned by the Property Owner and its Affiliates.
V. Other Material Information
In addition to any of the information expressly required above, provide such further information, if any, as may be necessary to make the specifically required statements, in the light of the circumstances under which they are made, not misleading.
Certification
On behalf of the Property Owner, the undersigned officer or representative, based on actual knowledge after reasonable inquiry of employees of Property Owner and its Affiliates, hereby certifies that this Semi -Annual Report constitutes the Semi-Annual Report required to be furnished by the Property Owner under the Disclosure Certificate.
ANY OTHER STATEMENTS REGARDING THE PROPERTY OWNER, THE DEVELOPMENT OF THE PROPERTY, THE PROPERTY OWNER’S FINANCING PLAN OR FINANCIAL CONDITION, OTHER
THAN STATEMENTS MADE BY THE PROPERTY OWNER IN AN OFFICIAL RELEASE, OR FILED
WITH THE MUNICIPAL SECURITIES RULEMAKING BOARD, ARE NOT AUTHORIZED BY THE PROPERTY OWNER. THE PROPERTY OWNER IS NOT RESPONSIBLE FOR THE ACCURACY, COMPLETENESS OR FAIRNESS OF ANY SUCH UNAUTHORIZED STATEMENTS.
THE PROPERTY OWNER HAS NO OBLIGATION TO UPDATE THIS SEMI-ANNUAL REPORT OTHER THAN AS EXPRESSLY PROVIDED IN THE DISCLOSURE CERTIFICATE.
Dated:
PROPERTY OWNER:
LENNAR HOMES OF CALIFORNIA, LLC,
a California limited liability company
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By ___________________________________
Name:
Title:
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APPENDIX F
PROPOSED FORM OF BOND COUNSEL OPINION
______, 2023
City Council
City of Upland
460 N Euclid Ave.
Upland, CA 91786
Re: $______ Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland 2023 Special Tax Bonds
Ladies and Gentlemen:
We have acted as bond counsel in connection with the issuance by the City of Upland (the “City”) for and on behalf of Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland, County of San Bernardino, State of California (the “District”), of $_____ aggregate principal amount of the Community Facilities District No. 2022-1 (Enclave at Upland) of the City of Upland 2023 Special Tax Bonds (the “Bonds”). The Bonds are issued pursuant to the provisions of the Mello-Roos Community Facilities Act of 1982, as amended, being Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code of the State of California (the “Act”), a resolution adopted by the City Council of the City on __________, 2023 (the “Resolution”), and a Fiscal Agent Agreement, dated as of _______ 1, 2023 (the “Agreement”), by and between the City and U.S. Bank Trust Company, National Association, as fiscal agent (the “Fiscal Agent”).
We have examined the Act, the Resolution, the Agreement and certified copies of the proceedings taken for the issuance and sale of the Bonds. As to questions of fact which are material to our opinions, we have relied upon the representations of the City contained in the Agreement, and in certificates of its authorized officers which have been delivered to us for the purpose of supplying such facts, without having undertaken to verify the accuracy of any such representations by independent investigation.
Based upon such examination, we are of the opinion, as of the date hereof, that the proceedings referred to above have been taken in accordance with the laws and the Constitution of the State of California, and that the Bonds, having been issued in duly authorized form and executed by the proper officials and delivered to and paid for by the purchaser thereof, and the Agreement, having been duly authorized and executed by the proper officials, constitute the legally valid and binding obligations of the City and District enforceable in accordance with their terms subject to the qualifications specified below. Except where funds are otherwise available, as may be permitted by law, the Bonds are payable, as to both principal and interest, solely from certain special taxes to be levied and collected within the District and other funds available therefor held under the Agreement.
The Internal Revenue Code of 1986, as amended (the “Code”) sets forth certain investment, rebate and related requirements which must be met subsequent to the issuance and delivery of the Bonds for the interest on the Bonds to be and remain exempt from federal income taxation. Noncompliance with such requirements could cause the interest on the Bonds to be subject to federal income taxation retroactive to the date of issuance of the Bonds. Pursuant to the Agreement, the City has covenanted to comply with the requirements of the Code and applicable regulations promulgated thereunder.
We are of the opinion that, under existing statutes, regulations, rulings and court decisions, and assuming compliance by the City with the aforementioned covenants, the interest on the Bonds is excluded from gross
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income for purposes of federal income taxation and is exempt from personal income taxation imposed by the State of California.
We are further of the opinion that interest on the Bonds is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations; however, for tax years beginning after December 31, 2022, interest on the Bonds is taken into account in determining the annual adjusted financial statement income of certain corporations for the purpose of computing the alternative minimum tax imposed on certain corporations. Although interest on the Bonds is excluded from gross income for purposes of federal income taxation, the accrual or receipt of interest on the Bonds may otherwise affect the federal income tax liability of the recipient. The extent of these tax consequences will depend on the recipient’s particular tax status or other items of income or deduction. We express no opinion regarding any such consequences.
The opinions expressed herein may be affected by actions which may be taken (or not taken) or events which may occur (or not occur) after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions or events are taken or occur or are not taken or do not occur.
The rights of the owners of the Bonds and the enforceability of the Bonds and the Agreement may be subject to bankruptcy, insolvency, moratorium and other similar laws affecting creditors’ rights heretofore or hereafter enacted, and their enforcement may be subject to the exercise of judicial discretion in accordance with general principles of equity.
Respectfully submitted,
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APPENDIX G
INFORMATION CONCERNING DTC
The information in this section concerning DTC and DTC’s book-entry only system has been obtained from sources that the City believes to be reliable, but the City takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with r espect to beneficial ownership interests in the Bonds, payment of principal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC to the City which the City believes to be reliable, but the City and the Underwriter do not and cannot make any independent representations concerning these matters and do not take responsibility for the accuracy or completeness thereof. Neither the DTC, Direct Participants, Indirect Participants nor the Beneficial Owners should rely on the foregoing information with respect to such matters, but should instead confirm the same with DTC or the DTC Participants, as the case may be.
The Depository Trust Company (“DTC”), New York, New York, will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully- registered Bond will be issued for each annual maturity of the Bonds, each in the aggregate principal amount of such maturity, and will be deposited through the facilities of DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.6 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organi zations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of “AA+.” The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com .
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not r eceive Bonds representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.
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To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not affect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Bonds, such as prepayments, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being prepaid, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Bonds will be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the City or the Fiscal Agent, on payable date in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Fiscal Agent, or the City, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the City or the Fiscal Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
A Bond Owner shall give notice to elect to have its Bonds purchased or tendered, through its Participant, to the Fiscal Agent, and shall effect delivery of such Bonds by causing the Direct Participant to transfer the Participant’s interest in the Bonds, on DTC’s records, to the Fiscal Agent. The requirement for physical delivery of Bonds in connection with an optional tender or a mandatory purchase will be deemed satisfied when the ownership rights in the Bonds are transferred by Direct Participants on DTC’s records and followed by a book- entry credit of tendered Bonds to the Fiscal Agent’s DTC account.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the City or the Fiscal Agent. Under such circumstances, in the event that a successor depository is not obtained, physical certificates are required to be printed and delivered.
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The City may decide to discontinue use of the system of book-entry only transfers through DTC (or a successor securities depository). In that event, Bonds will be printed and delivered to DTC.
THE FISCAL AGENT, AS LONG AS A BOOK-ENTRY ONLY SYSTEM IS USED FOR THE
BONDS, WILL SEND ANY NOTICE OF REDEMPTION OR OTHER NOTICES TO OWNERS ONLY TO DTC. ANY FAILURE OF DTC TO ADVISE ANY DTC PARTICIPANT, OR OF ANY DTC PARTICIPANT
TO NOTIFY ANY BENEFICIAL OWNER, OF ANY NOTICE AND ITS CONTENT OR EFFECT WILL NOT
AFFECT THE VALIDITY OF SUFFICIENCY OF THE PROCEEDINGS RELATING TO THE REDEMPTION
OF THE BONDS CALLED FOR REDEMPTION OR OF ANY OTHER ACTION PREMISED ON SUCH NOTICE.