HomeMy WebLinkAbout2011-02-23 Packet - SpecialCITY OF UKIAH
CITY COUNCIL AGENDA
Ukiah Valley Conference Center
200 S. School Street, Chenin Blanc Room
Ukiah, CA 95482
February 23, 2011
6:00 p.m. -SPECIAL MEETING
ROLL CALL
2. AUDIENCE COMMENTS ON NON-AGENDA ITEMS
The City Council welcomes input from the audience. If there is a matter of business on the agenda that you are
interested in, you may address the Council when this matter is considered. If you wish to speak on a matter that is not
on this agenda, you may do so at this time. In order for everyone to be heard, please limit your comments to three (3)
minutes per person and not more than ten (10) minutes per subject. The Brown Act regulations do not allow action to be
taken on audience comments in which the subject is not listed on the agenda.
3. RIGHT TO APPEAL DECISION
Persons who are dissatisfied with a decision of the City Council may have the right to a review of that decision by a court.
The City has adopted Section 1094.6 of the California Code of Civil Procedure, which generally limits to ninety days (90)
the time within which the decision of the City Boards and Agencies may be judicially challenged.
4.
APPROVAL OF MINUTES
5.
CONSENT CALENDAR
6.
PUBLIC HEARING
7.
UNFINISHED BUSINESS
8. NEW BUSINESS
a. Discussion and possible adoption of resolution approving issuance by the Ukiah
Redevelopment Agency of two separate series of bonds to finance capital projects
by the Agency and low income housing activities by the Agency.
9. COMMISSIONERS REPORTS
10. EXECUTIVE DIRECTOR REPORTS
11. CLOSED SESSION - Closed Session may be held at any time during the meeting
12. ADJOURNMENT
Please be advised that the City needs to be notified 72 hours in advance of a meeting if any specific accommodations or
interpreter services are needed in order for you to attend. The City complies with ADA requirements and will attempt to
reasonably accommodate individuals with disabilities upon request. Materials related to an item on this Agenda submitted to the
City Council after distribution of the agenda packet are available for public inspection at the front counter at the Ukiah Civic
Center, 300 Seminary Avenue, Ukiah, CA 95482, during normal business hours, Monday through Friday, 8:000 am to 5:00 pm.
I hereby certify under penalty of perjury under the laws of the State of California that the foregoing agenda was posted on the
bulletin board at the main entrance of the City of Ukiah City Hall, located at 300 Seminary Avenue, Ukiah, California, not less than
72 hours prior to the meeting set forth on this agenda.
Dated this 18th day of February, 2011
JoAnne Currie, City Clerk
City of Ukiah
ITEM NO..
MEETING DATE.
URA 7a CC 8a
February 23, 2011
UKIAH CITY COUNCIL AND UKIAH REDEVELOPMENT AGENCY
AGENDA SUMMARY REPORT
SUBJECT: (1) Discussion and possible adoption of resolution approving issuance by the
Ukiah Redevelopment Agency of two separate series of bonds to finance capital projects by
the Agency and low income housing activities; and (2) Discussion and possible adoption of
Resolution of Ukiah Redevelopment Agency (i) authorizing two separate series of bonds, (ii)
approving, authorizing and directing the execution of an indenture of trust and a first
supplement to a 2007 indenture of trust relating to both series of bonds, (iii) authorizing the
sale of such bonds at public sale, (iv) approving official statement and official notice of sale
and (v) providing for other matters properly related thereto.
BACKGROUND: Over the past few months, the Agency has been working toward the development of a
redevelopment bond issuance to fund necessary and planned public infrastructure projects that will support
economic development activities for the community.
However, the Governor's proposal to eliminate Redevelopment and take local tax dollars from local
jurisdictions to supplant State expenditures and obligations could significantly jeopardize the City's
continued efforts to promote jobs, services, and economic development. The vagueness of the Governor's
proposal along with sporadic reports is fostering an environment of uncertainty and speculation which is
making it very difficult for local governments to function effectively. Redevelopment Agencies across the
State are rushing to protect and secure local revenues.
Continued on Paae 2
Recommended Action(s):
Ukiah Redevelopment Agency:
1. Provide direction with regard to a bond issuance and authorize the Executive Director to take all
necessary steps for issuance;
2. Approve the resolution attached as Attachment 1.
City Council
1. Authorize the City Manager to take all necessary steps for a redevelopment bond issuance;
2. Approve resolution attached as Attachment 2.
Alternative Council Option(s): Remand to staff.with an alternate direction.
Citizens advised:
N/A
Requested by:
Agency Board
Prepared by:
Sage Sangiacomo, Assistant City Manager and Guy Mills, Project & Grant
Administrator
Coordinated with:
Jane Chambers, Executive Director, David Rapport, City/Agency Attorney, and
Public Financial Management (PFM), URA's Specialized Financial Advisor
Attachments:
1. Redevelopment Agency resolutions issuing bonds and taking related actions;
2. City Council resolution authorizing Agency to issue two series of redevelopment
bonds.
Approved:
Ja a Chamfers, City Manager/Executive Director
City/Agency staff will provide the most up to date information regarding the Governor's proposal in the
presentation to the City Council and Redevelopment Agency Board at the February 23 meeting. In
response to this information, the Agency may discuss and consider a variety of alternatives to secure
Agency revenue against a potential State taking.
Despite the uncertainty created by the State, the Ukiah Redevelopment Agency has maintained its focus
and commitment to moving forward with the economic development goals and objectives identified in the
Agency's planning documents. This effort has continued to net successful results including, but not limited
to, an exclusive negotiating agreement with Costco Wholesale, steps towards retention of the Courthouse in
the Downtown, a work plan for environmental closure of the Depot property, and millions of dollars in private
investment as well as infrastructure and housing grants.
In a continued effort to move forward, the Agency is seeking a bond issuance in two series: (1) tax exempt
bonds to fund capital projects and (2) a taxable series to fund low income housing projects. In fact, the
bond issuance is critical to managing the Agency's objectives and cash flow. The suggested plan is to
utilize bond proceeds of between $4 to $6 million for the well defined public infrastructure projects in and
around the Redwood Business Park. The proceeds from the sale of properties owned by the Agency within
the Redwood Business Park, estimated at up to $3 million, could be utilized for the emerging projects within
the downtown core. The actual use of funds and the funds available for any given project will be dependent
on the final amount of bond proceeds, project costs, and State action. Furthermore, the additional property
tax increment generated by the substantial development of the vacant property in the Redwood Business
Park will generate a significant ongoing revenue stream for additional projects within the downtown or other
priority project areas.
The Agency's financial advisor, Public Financial Management (PFM), is contracted as the Agency's lead
advisor to assist with and manage the issuance of bonds, including assistance in hiring a finance team,
scheduling of team activities, analysis of financing alternatives, coordination and production of bond
documents, management of timing of transactions relative to market conditions, management of credit
enhancement and rating strategy, pricing of bonds, and management of bond sale and closing.
The Agency has contracted the required professional services, including the fiscal consultant (Seifel
Consulting), bond counsel (Jones Hall), and underwriter (Piper Jaffray). With the exception of the fiscal
consultant, who has to be paid separately to ensure the objectivity of their analysis for the investors, costs
are rolled into the bond issue.
DISCUSSION: At the February 16 meeting, the Agency discussed the parameters and size of a
potential bond issuance. The following table illustrates the funding scenarios presented for consideration
and discussion.
O&M and Pay
-Go)
Fund
Principal
Project Funds
Economic Development
$5,020,000
$3,972,576
Housing
S
i
2
C
-
$2,465,000
API
d O&M
$ 2,108,216
cenar
o
(
-
Hind'
an
)
Principal
Project Funds
Economic Development
$7,360,000
$5,849,211
Housing
Maxiiiiiiin l3c)
di
C
$2,465,000
it
N
O&M
$2,129,785
C
ng
xi
Hind
apac
y (
o
Principal
osts)
Project Funds
Economic Development
$18,805,000
$16,555,318
Housing
$2,465,000
$2,166,910
At the February 23 meeting, the City Council/Redevelopment Agency is requested to provide additional
direction to staff regarding the bond issuance, and, if appropriate, to approve the necessary documents
which are currently being produced by the Bond Team. Draft bond documents will be distributed and
made available on the City's website for review and consideration as they become available. In addition,
hard copies of the documents will be able at the Ukiah Civic Center.
Attachment 1
RESOLUTION NO. 2011-
RESOLUTION OF THE UKIAH REDEVELOPMENT AGENCY AUTHORIZING TWO
SEPARATE ISSUES OF BONDS WITH RESPECT TO THE UKIAH REDEVELOPMENT
PROJECT, APPROVING AND AUTHORIZING AND DIRECTING EXECUTION OF AN
INDENTURE OF TRUST AND A FIRST SUPPLEMENT TO INDENTURE OF TRUST
RELATING THERETO, AUTHORIZING SALE OF SUCH BONDS AT PUBLIC SALE,
APPROVING OFFICIAL STATEMENT AND OFFICIAL NOTICE OF SALE AND PROVIDING
OTHER MATTERS PROPERLY RELATING THERETO
WHEREAS, the Ukiah Redevelopment Agency (the "Agency") is a redevelopment
agency, and public body, corporate and politic, duly established and authorized to transact
business and exercise powers under and pursuant to the provisions of the Community
Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health
and Safety Code of the State (the "Law"), including the power to issue bonds for any of its
corporate purposes;
WHEREAS, a Redevelopment Plan for the redevelopment project designated the "Ukiah
Redevelopment Project", in the City of Ukiah, California (the "Redevelopment Project"), has
been adopted in compliance with all requirements of the Law;
WHEREAS, the Agency has previously issued its $5,595,000 initial principal amount of
Ukiah Redevelopment Agency Ukiah Redevelopment Project 2007 Tax Allocation Bonds
(the"2007 Bonds") for the purpose of financing of redevelopment projects of benefit to the
Redevelopment Project; and;
WHEREAS, the 2007 Bonds were issued pursuant to the Law and an Indenture of
Trust, dated as of April 1, 2007 (the "Indenture") by and between The Bank of New York Trust
Company, N.A. as trustee, and the Agency; and;
WHEREAS, the Indenture permits the issuance of Parity Debt (as defined in the
Indenture) payable from Tax Revenues (as defined in the Indenture) secured on parity with the
2007 Bonds, subject to certain terms and conditions; and
WHEREAS, for the purpose of financing additional redevelopment projects of benefit to
the Redevelopment Project, the Agency proposes to issue its not to exceed $8,250,000
aggregate principal amount of Ukiah Redevelopment Agency Ukiah Redevelopment Project
2011 Tax Allocation Bonds (the "2011 Bonds") pursuant to the Indenture, as amended and
supplemented by a First Supplement to Indenture of Trust, dated as of March 1, 2011, by and
between the Agency and the Trustee (the "First Supplement");
WHEREAS, the First Supplement is entered into pursuant to and in accordance with the
provisions of Section 3.05 of the Indenture for the purpose of prescribing the terms and
conditions applicable to the issuance of the 2011 Bonds as Parity Debt under the Indenture,
and for the purposes of amending and supplementing the Indenture with respect thereto; and
WHEREAS, in addition, for the purpose of financing low and moderate income housing
with respect to the Redevelopment Project the Agency proposes to issue on a federally taxable
basis its not to exceed $3,250,000 aggregate principal amount of Ukiah Redevelopment
Agency Ukiah Redevelopment Project 2011 Taxable Housing Tax Allocation Bonds (the "2011
Housing Bonds" and, together with the 2011 Bonds, the "Bonds") pursuant to an Indenture of
Trust, dated as of March 1, 2011, by and between the Agency and the Trustee (the "Housing
Indenture");
WHEREAS, the Agency proposes to sell the Bonds to a financing authority. (the
"Authority") to be selected by staff, which Authority will concurrently sell the Bonds to Piper
Jaffray & Co., as purchaser of the Bonds (the "Underwriter"), all on the terms and conditions
herein set forth and as provided in the form of a Purchase Contract (the "Purchase Contract")
on file with the Secretary; and
WHEREAS, the Agency has caused to be prepared an Official Statement for each
series of Bonds, describing the Bonds, the preliminary forms of which are on file with the
Secretary (the "Official Statement"); and
WHEREAS, the Agency, with the aid of its staff, has reviewed the First Supplement, the
Housing Indenture and the Official Statements, and the Agency wishes to approve and confirm
the foregoing, as well as the other matters set forth below, in the public interests of, and for
significant public benefits to, the Agency and the City of Ukiah;
NOW, THEREFORE, BE IT RESOLVED by the Ukiah Redevelopment Agency, as
follows:
Section 1. Issuance of the 2011 Bonds; Approval of First Supplement. The
Agency hereby authorizes the issuance of the 2011 Bonds, under and pursuant to the Law and
the Indenture, as amended and supplemented by the First Supplement, in the aggregate
principal amount of not to exceed $8,250,000. The Agency hereby approves the First
Supplement in substantially the form thereof on file with the Secretary together with any
additions thereto or changes therein deemed necessary or advisable by the Executive Director,
Finance Director of the Agency or Finance Director of the City including, without limitation, the
addition to the First Supplement of the final principal amount and annual maturities of the 2011
Bonds and any insertions that may be required by any issuer of an insurance policy with respect
to the 2011 Bonds, and execution of the First Supplement shall be deemed conclusive evidence
of the approval of such additions or changes. The Executive Director, Finance Director of the
Agency or Finance Director of the City and Secretary of the Agency are hereby authorized and
directed to execute, attest and affix the seal of the Agency to the First Supplement for and in
the name and on behalf of the Agency. The Agency hereby authorizes the delivery and
performance of the First Supplement.
Section 2. Issuance of the 2011 Housing Bonds; Approval of Housing Indenture.
The Agency hereby authorizes the issuance of the 2011 Housing Bonds, under and pursuant to
the Law and the Housing Indenture in the aggregate principal amount of not to exceed
$3,250,000. The Agency hereby approves the Housing Indenture in substantially the form
thereof on file with the Secretary together with any additions thereto or changes therein deemed
necessary or advisable by the Executive Director, Finance Director of the Agency or Finance
Director of the City including, without limitation, the addition to the Housing Indenture of the final
principal amount and annual maturities of the 2011 Housing Bonds and any insertions that may
be required by any issuer of an insurance policy with respect to the 2011 Housing Bonds, and
execution of the Housing Indenture shall be deemed conclusive evidence of the approval of
such additions or changes. The Executive Director, Finance Director of the Agency or Finance
Director of the City and Secretary of the Agency are hereby authorized and directed to execute,
2
attest and affix the seal of the Agency to the Housing Indenture for and in the name and on
behalf of the Agency. The Agency hereby authorizes the delivery and performance of the
Housing Indenture.
Section 3. Sale of the Bonds. The form of the Bond Purchase Contract relating to
the Bonds, be and is hereby approved in the form thereof, with such changes as may be
approved by a Designated Officer; said Designated Officer's execution thereof to constitute
conclusive evidence of said officer's approval of such changes. Any Designated Officer is
hereby authorized to execute and deliver the Purchase Contract and to insert in the First
Supplemental Indenture and the Housing Indenture the dollar amount which reflects the
provisions of the Purchase Contract; provided, however, that the aggregate principal amount of
the Bonds shall not exceed $11,500,000 and the true interest cost of the Bonds is not more
than 10%, with an initial underwriter's discount of no more than I% of the par amount thereof.
Section 4. Notice to State. Jones Hall, the Bond Counsel to the Agency has, pursuant
to Section 8855 of the. California Government Code, caused a notice of the Agency's intent to
sell the Bonds to be given to the California Debt Advisory Commission, such notice being
substantially in the form required by the Commission and such notice being hereby approved
and confirmed.
Section 5. Approval of the Preliminary Official Statements. The preliminary Official
Statements relating to the Bonds are approved for distribution by the Underwriter to members
of the general public who may be interested in purchasing the Bonds. The preliminary Official
Statements shall be revised, from time to time, pending such distribution as shall be required to
cause the preliminary Official Statements to contain any further information necessary to
accurately describe the Agency and the Bonds. With respect to the distribution of the
preliminary Official Statements, the Executive Director, Finance Director of the Agency or
Finance Director of the City are each authorized and directed, on behalf of the Agency, to deem
the preliminary Official Statement "final" pursuant to Rule 15c2-12 under the Securities
Exchange Act of 1934 (the "Rule").
Section 6. Approval of Final Official Statements. The final Official Statements,
which shall include such changes and additions thereto deemed advisable by the Executive
Director, Finance Director of the Agency or Finance Director of the City and such information
permitted to be excluded from the Preliminary Official Statements pursuant to the Rule, is
hereby approved for delivery to the purchasers of the 2011 Bonds and the 2011 Housing
Bonds, and the Executive Director, Finance Director of the Agency or Finance Director of the
City are each authorized and directed to. execute the final Official Statements for and on behalf
of the Agency and the Executive Director, Finance Director of the Agency or Finance Director of
the City are each authorized and directed to deliver to the purchaser of the Bonds (i) a
certificate as to the accuracy and completeness of the information set forth therein and (ii) a
Continuing Disclosure Certificate substantially in the form appended to the final Official
Statements.
Section 7. Taxable Bonds. Pursuant to the provisions of Chapter 11 of Division 6 of
Title 1 (commencing with Section 5900) of the Government Code of the State of California, the
Commission hereby determines that the interest payable on the 2011 Housing Bonds will be
subject to federal income taxation under law in existence on the date of issuance of the 2011
Housing Bonds.
Section 8. Official Action. All actions heretofore taken by the officers and agents of
the Agency with respect to the issuance of the Bonds are hereby approved, confirmed and
3
ratified. The Chairman, Executive Director, Secretary, Finance Director, Treasurer, General
Counsel and other appropriate officers of the Agency are hereby authorized and directed, for
and in the name and on behalf of the Agency, to do any and all things and take any and all
actions, including payment from the proceeds of the Bonds of costs of issuance of the Bonds,
and execution and delivery of any and all assignments, certificates, requisitions, agreements
(including the Escrow Agreement substantially in the form on file with the Secretary), notices,
consents, instruments of conveyance, warrants and other documents, which such officers deem
necessary or advisable in order to consummate the sale, issuance and delivery of the Bonds
and the Indenture. Whenever in this Resolution any officer of the Agency is authorized to
execute or countersign any document or take any action, such execution, countersigning or
action may be taken on behalf of such officer by any other officer of the Agency designated by
such officer to act on his or her behalf in the case such officer shall be absent or unavailable.
Section 9. Effective Date. This resolution shall take effect from and after its adoption.
PASSED AND ADOPTED this 23`d day of February, 2011, by the following roll call vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
Mari Rodin, Chairperson
ATTEST:
Linda Brown, Redevelopment Secretary
4
Attachment 2
RESOLUTION NO. 2011-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF UKIAH
APPROVING ISSUANCE BY THE UKIAH REDEVELOPMENT AGENCY
OF TWO SEPARATE SERIES OF BONDS WITH RESPECT TO
THE UKIAH REDEVELOPMENT PROJECT OF THE AGENCY
WHEREAS, the Ukiah Redevelopment Agency (the "Agency") is a redevelopment
agency, and public body, corporate and politic, duly established and authorized to transact
business and exercise powers under and pursuant to the provisions of the Community
Redevelopment Law of the State of California, constituting Part 1 of Division 24 of the Health
and Safety Code of the State (the "Law"), including the power to issue bonds for any of its
corporate purposes;
WHEREAS, a Redevelopment Plan for the redevelopment project, designated the
"Ukiah Redevelopment Project", in the City of Ukiah, California (the "Redevelopment Project"),
has been adopted in compliance with all requirements of the Law;
WHEREAS, the Agency has previously issued its $5,595,000 initial principal amount of
Ukiah Redevelopment Agency Ukiah Redevelopment Project 2007 Tax Allocation Bonds for the
purpose of financing of redevelopment projects of benefit to the Redevelopment Project; and;
WHEREAS, for the purpose of financing additional redevelopment projects of benefit to
the Redevelopment Project, the Agency proposes to issue its not to exceed $8,250,000
aggregate principal amount of Ukiah Redevelopment Agency Ukiah Redevelopment Project
2011 Tax Allocation Bonds (the "2011 Bonds");
WHEREAS, in addition, for the purpose of financing low and moderate income housing
with respect to the Redevelopment Project the Agency proposes to issue on a federally taxable
basis its not to exceed $3,250,000 aggregate principal amount of Ukiah Redevelopment
Agency Ukiah Redevelopment Project 2011 Taxable Housing Tax Allocation Bonds (the "2011
Housing Bonds" and, together with the 2011 Bonds, the "Bonds");
WHEREAS, Section 33640 of the Law requires the Agency to obtain the approval of the
City Council of the City of Ukiah prior to issuance of the Bonds; and
WHEREAS, the City Council approves the issuance of the Bonds as being in the public
interests of the City of Ukiah and of the Agency;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Ukiah, as
follows:
Section 1. Approval of Issuance of Two Series of Bonds. The City Council of the
City of Ukiah approves the issuance of the 2011 Bonds by the Agency in the aggregate
principal amount of not to exceed $8,250,000 and its 2011 Housing Bonds in the aggregate
principal amount of not to exceed $3,250,000, as hereinabove described.
Section 2. Subordination. Any obligation of the Agency to repay any loans, advances
or indebtedness to the City or to make payments to the City pursuant to California Health &
Safety Code Section 33607.5 or Section 33607.7 from tax increment revenues allocated to the
Redevelopment Project shall be subordinate to the obligation of the Agency to use such tax
increment revenues to pay debt service on the 2011 Bonds and any obligations issued. on a
parity with the 2011 Bonds.
Section 3. Effective Date. This Resolution shall take effect from and after its adoption.
PASSED AND ADOPTED this 23`d day of February, 2011, by the following roll call vote:
AYES:
NOES:
ABSTAIN:
ABSENT:
By:
SEAL
ATTEST:
By:
Mari Rodin, Mayor
City Clerk
Jones Hall Draft 02/20/11
INDENTURE OF TRUST
Dated as of March 1, 2011
by and between the
UKIAH REDEVELOPMENT AGENCY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.
as Trustee
Relating to
Ukiah Redevelopment Agency
Ukiah Redevelopment Project
2011 Taxable Housing Tax Allocation Bonds
TABLE OF CONTENTS
Page
ARTICLE I
Definitions; Rules Of Construction
Section 1.01. Definitions 3
Section 1.02. Rules of Construction 11
ARTICLE II
Authorization and Terms of 2011 Bonds
Section 2.01.
Authorization and Purpose of 2011 Bonds
12
Section 2.02.
Terms of the 2011 Bonds
12
Section 2.03.
Redemption of 2011 Bonds
13
Section 2.04.
Form of 2011 Bonds
15
Section 2.05.
Authentication and Delivery of 2011 Bonds
15
Section 2.06.
Transfer of 2011 Bonds
15
Section 2.07.
Exchange of 2011 Bonds
16
Section 2.08.
Registration Books
16
Section 2.09.
Temporary Bonds
16
Section 2.10.
2011 Bonds Mutilated, Lost, Destroyed or Stolen
16
Section 2.11.
Book Entry Form
17
ARTICLE III
Deposit and Application of Proceeds of 2011 Bonds;
Issuance of Parity Debt
Section 3.01.
Issuance of 2011 Bonds
19
Section 3.02.
Deposit and Application of Proceeds
19
Section 3.03.
Costs of Issuance Fund
19
Section 3.04.
Low and Moderate Income Housing Account
20
Section 3.05.
Issuance of Parity Debt
20
Section 3.06.
Issuance of Subordinate Debt
21
Section 3.07.
Validity of Bonds
21
ARTICLE IV
Security Of Bonds; Flow Of Funds;
Investments
Section 4.01. Pledge of Housing Tax Revenues ............................................................................22
Section 4.02. Special Fund; Deposit of Tax Revenues 22
Section 4.03. Debt Service Fund; Transfer of Amounts to Trustee 22
Section 4.04. Investment of Moneys in Funds ................................................................................24
ARTICLE V
Other Covenants of the Agency
Section 5.01.
Punctual Payment
26
Section 5.02.
Continuing Disclosure
26
Section 5.03.
Limitation on Additional Indebtedness
26
Section 5.04.
Extension of Payment of Bonds
26
Section 5.05.
Payment of Claims
26
Section 5.06.
Books and Accounts; Financial Statements
27
Section 5.07.
Protection of Security and Rights of Owners
27
Section 5.08.
Payments of Taxes and Other Charges
27
Section 5.09.
Disposition of Property
27
Section 5.10.
Maintenance of Tax Revenues
27
Section 5.11.
2011 Bonds Federally Taxable
28
Section 5.12.
Plan Limitations
28
Section 5.13.
Redevelopment of Project Area
28
Section 5.14. Further Assurances 28
Section 6.01.
Section 6.02.
Section 6.03.
Section 6.04.
Section 6.05.
Section 6.06.
Section 6.07.
Section 6.08.
Section 6.09.
Section 7.01
Section 7.02
Section 7.03
Section 7.04
Section 7.05
Section 8.01
Section 8.02
Section 8.03
Section 8.04
Section 8.05
Section 8.06
Section 8.07
Section 9.01.
Section 9.02.
Section 9.03.
Section 9.04.
Section 9.05.
Section 9.06.
Section 9.07.
Section 9.08.
Section 9.09.
Section 9.10.
Section 9.11.
Section 9.12.
Section 9.13.
ARTICLE VI
The Trustee
Duties, Immunities and Liabilities of Trustee 29
Merger or Consolidation 30
Liability of Trustee 30
Right to Rely on Documents 32
Preservation and Inspection of Documents 33
Compensation and Indemnification ...........................................................................33
Accounting Records and Financial Statements 33
Appointment of Co-Trustee or Agent 33
No Liability for Agency Performance 34
ARTICLE VII
Modification or Amendment of this Indenture
Authorized Amendments
Effect of Supplemental Indenture
Endorsement or Replacement of Bonds After Amendment
Amendment by Mutual Consent
Trustee's Reliance
ARTICLE VIII
Events of Default and Remedies
Events of Default and Acceleration of Maturities
Application of Funds Upon Acceleration
Power of Trustee to Control Proceedings
Limitation on Owners' Right to Sue
Non-waiver
Actions by Trustee as Attorney-in-Fact
Remedies Not Exclusive
35
35
36
36
36
37
38
39
39
39
40
40
ARTICLE IX
Miscellaneous
Benefits Limited to Parties
41
Successor is Deemed Included in All References to Predecessor
41
Defeasance of Bonds
41
Execution of Documents and Proof of Ownership by Owners
42
Disqualified Bonds
42
Waiver of Personal Liability
42
Destruction of Canceled Bonds
42
Notices
43
Partial Invalidity
43
Unclaimed Moneys
43
Payment on Non-Business Days
43
Execution in Counterparts
43
Governing Law
43
EXHIBIT A - FORM OF 2011 BONDS
INDENTURE OF TRUST
This INDENTURE OF TRUST (this "Indenture") is made and entered into and dated as of
March 1, 2011, by and between the UKIAH REDEVELOPMENT AGENCY, a public body
corporate and politic duly organized and existing under the laws of the State of California (the
"Agency"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national
banking association duly organized and existing under the laws of the United States of America,
as Trustee (the "Trustee");
WITNESSETH:
WHEREAS, the Agency was duly established and authorized to transact business and
exercise powers under and pursuant to the provisions of the Community Redevelopment Law,
being Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of
the State of California (the "Law"), including the power to issue bonds for any of its corporate
purposes;
WHEREAS, pursuant to Section 33640 et seq of the Law, the Agency is authorized to
issue bonds for any redevelopment purpose;
WHEREAS, a redevelopment plan for the Agency's Ukiah Redevelopment Project in the
City of Ukiah have been adopted in compliance with all requirements of the Law (the
"Redevelopment Project)";
WHEREAS, for the purpose of providing funds to assist in the financing of
redevelopment activities of the Redevelopment Project consisting of the increasing, improving
and preserving of the supply of low and moderate income housing within the City of Ukiah, the
Agency has determined to issue hereunder on a federally taxable basis its Ukiah
Redevelopment Agency Ukiah Redevelopment Project 2011 Taxable Housing Tax Allocation
Bonds, in the principal amount of $ (the "2011 Bonds"), all as provided herein;
and
WHEREAS, in order to provide for the authentication and delivery of the 2011 Bonds, to
establish and declare the terms and conditions upon which the 2011 Bonds are to be issued
and secured and to secure the payment of the principal thereof and interest and redemption
premium (if any) thereon, the Agency and the Trustee have duly authorized the execution and
delivery of this Indenture; and
WHEREAS, the Agency has determined that all acts and proceedings required by law
necessary to make the 2011 Bonds, when executed by the Agency, authenticated and delivered
by the Trustee and duly issued, the valid, binding and legal special obligations of the Agency,
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 or taken;
NOW, THEREFORE, in order to secure the payment of the principal of and the interest
and redemption premium (if any) on all the Outstanding Bonds under this Indenture according to
their tenor, and to secure the performance and observance of all the covenants and conditions
therein and herein set forth, and to declare the terms and conditions upon and subject to which
the Bonds are to be issued and received, and in consideration of the premises and of the mutual
covenants herein contained and of the purchase and acceptance of the Bonds by the Owners
thereof, and for other valuable considerations, the receipt of which is hereby acknowledged, the
Agency and the Trustee do hereby covenant and agree with one another, for the benefit of the
respective Owners from time to time of the Bonds, as follows:
2
ARTICLE I
Definitions; Rules Of Construction
SECTION 1.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 1.01 shall, for all purposes of this Indenture, of any Supplemental Indenture, and of
any certificate, opinion or other document herein mentioned, have the meanings herein
specified.
"Additional Revenues" means, as of the date of calculation, the amount of Housing Tax
Revenues which, as shown in the Report of an Independent Redevelopment Consultant, are
estimated to be receivable by the Agency within the Fiscal Year following the Fiscal Year in
which such calculation is made, as a result of increases in the assessed valuation of taxable
property in the Project Area due to the completion of construction which is not then reflected on
the tax rolls, or due to transfer of ownership or any other interest in real property which has
been recorded but which is not then reflected on the tax rolls.
"Agency" means the Ukiah Redevelopment Agency, a public body corporate and politic
duly organized and existing under the Redevelopment Law.
"Bond Counsel' means (a) Jones Hall, A Professional Law Corporation, or (b) any other
attorney or firm of attorneys appointed by or acceptable to the Agency of nationally-recognized
experience in the issuance of obligations the interest on which is excludable from gross income
for federal income tax purposes.
"Bond Year" means any twelve-month period beginning on December 2 in any year and
extending to the next succeeding December 1, both dates inclusive; except that the first Bond
Year shall begin on the Closing Date and end on December 1, 2011.
"Bonds" means, collectively, the 2011 Bonds and any Parity Debt.
"Business Day" means a day of the year (other than a Saturday or Sunday) on which
banks in the State and the state of New York are not required or permitted to be closed, and on
which the New York Stock Exchange is open.
"Certificate of the Agency" means a certificate in writing signed by the Chairman,
Executive Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly
authorized by the Agency for that purpose.
"City" means the City of Ukiah, a municipal corporation organized and existing under the
laws of the State.
"Closing Date" means the date on which the 2011 Bonds are delivered by the Agency to
the Original Purchaser.
"Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate
executed by the Agency dated as of the Closing Date, as originally executed and as it may be
amended from time to time in accordance with the terms thereof.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the 2011
3
Bonds, including but not limited to: printing expenses; rating agency fees; bond insurance and
surety bond premiums; filing and recording fees; initial fees, expenses and charges of the
Trustee and its counsel, including the Trustee's first annual administrative fee; fees, charges
and disbursements of attorneys, financial advisors, accounting firms, consultants and other
professionals; fees and charges for preparation, execution and safekeeping of the 2011 Bonds;
and any other cost, charge or fee in connection with the original issuance of the 2011 Bonds.
"Costs of Issuance Fund" means the fund by that name established and held by the
Trustee pursuant to Section 3.03.
"County" means the County of Mendocino, a county duly organized and existing under
the Constitution and laws of the State.
"Debt Service Fund" means the fund by that name established and held by the Trustee
pursuant to Section 4.03.
"Defeasance Obligations' means cash and Federal Securities.
"Depository" means (a) initially, DTC, and (b) any other Securities Depository acting as
Depository pursuant to Section 2.11.
"Depository System Participant" means any participant in the Depository's book-entry
system.
"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.
"Federal Securities" means,. with respect to the 2011 Bonds: (a) any direct general
obligations of the United States of America (including obligations issued or held in book entry
form on the books of the Department of the Treasury of the United States of America), for which
the full faith and credit of the United States of America are pledged; or (b) obligations of any
agency, department or instrumentality of the United States of America, the timely payment of
principal and interest on which are directly or indirectly secured or guaranteed by the full faith
and credit of the United States of America; specifically:
U.S. treasury Obligations,
all direct or fully guaranteed obligations,
Farmers Home Administration,
General Services Administration,
Guaranteed Title IX financing,
Government National Mortgage Association (GNMA), and
State and Local Government Series.
"Fiscal Year" means any twelve-month period beginning on July 1 in any year and
extending to the next succeeding June 30, both dates inclusive, or any other twelve-month
period selected and designated by the Agency as its official fiscal year period pursuant to a
Certificate of the Agency filed with the Trustee.
"Housing Tax Revenues" means that portion of the Tax Revenues otherwise required by
Section 33334.3 of the Redevelopment Law to be deposited in the Low and Moderate Income
4
Housing Fund, but only to the extent necessary to repay that portion of the proceeds of the 2011
Bonds and any Parity Debt (including applicable reserves and financing costs) used to increase
or improve the supply of low and moderate income housing within or of benefit to the Project
Area.
"Indenture" means this Indenture of Trust by and between the Agency and the Trustee,
as amended or supplemented from time to time pursuant to any Supplemental Indenture
entered into pursuant to the provisions hereof.
"Independent Accountant" means any accountant or firm of such accountants duly
licensed or registered or entitled to practice and practicing as such under the laws of the State,
appointed by or acceptable to the Agency, and who, or each of whom: (a) is in fact independent
and not under domination of the Agency; (b) does not have any substantial interest, direct or
indirect, with the Agency; and (c) is not connected with the Agency as an officer or employee of
the Agency, but who may be regularly retained to make reports to the Agency.
"Independent Fiscal Consultant" means any consultant or firm of such consultants
appointed by or acceptable to the Agency and who, or each of whom: (a) is judged by the
Agency to have experience in matters relating to the financing of redevelopment projects; (b) is
in fact independent and not under domination of the Agency; and (c) is not connected with the
Agency as an officer or employee of the Agency, but who may be regularly retained to make
reports to the Agency.
"Independent Redevelopment Consultant" means any consultant or firm of such
consultants appointed by the Agency, and who, or each of whom:
(a) is judged by the Agency to have experience in matters relating to the
collection of Tax Revenues or otherwise with respect to the financing of redevelopment
projects;
(b) is in fact independent and not under the domination of the Agency;
(c) does not have any substantial interest, direct or indirect, with the Agency,
other than as original purchaser of the Bonds or any Parity Debt; and
(d) is not connected with the Agency as an officer or employee of the Agency,
but who may be regularly retained to make reports to the Agency.
"Information Services" means Financial Information, Inc.'s "Daily Called Bond Service",
30 Montgomery Street, 10th Floor, Jersey City, New Jersey 07302, Attention: Editor;
Mergent/FIS, Inc., 5250 77 Center Drive, Suite 150, Charlotte, North Carolina 28217, Attn:
Called Bond Dept.; and Kenny S&P, 55 Water Street, 45th Floor, New York, New York 10041,
Attention: Notification Department; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other services
providing information with respect to called bonds as the Agency may designate in a Written
Request of the Agency delivered to the Trustee.
"Interest Account" means the account by that name established and held by the Trustee
pursuant to Section 4.03(a).
"Interest Payment Date" means 1, 2011, and each June 1 and
December 1 thereafter so long as any of the Bonds remain unpaid.
5
"Low and Moderate Income Housinq Fund" means the fund of the Agency by that name
established pursuant to Section 33334.3 of the Redevelopment Law.
"Low and Moderate Income Housinq Account" means the account by that name
established within the Low and Moderate Income Housing Fund pursuant to Section 3.04 and
held by the Agency.
"Maximum Annual Debt Service" means, as of the date of calculation, the largest
aggregate amount for the current or any future Bond Year payable on the 2011 Bonds and any
Parity Debt in such Bond Year. For purposes of such calculation, there shall be excluded
payments with respect to any Parity Debt to the extent that the proceeds of such Parity Debt are
deposited in an escrow fund from which amounts may not be released to the Agency unless the
Tax Revenues for the current Fiscal Year (as evidenced in the written records of the County) at
least equal to one hundred twenty-five percent (125%) of the amount of Maximum Annual Debt
Service.
Woody's" means Moody's Investors Service, Inc., its successors and assigns.
"Office" means, with respect to the Trustee, the corporate trust office of the Trustee at
700 South Flower Street, Suite 500, Los Angeles, California 90017, or at such other or
additional offices as may be specified by the Trustee in writing to the Agency, provided that for
the purposes of maintenance of the Registration Books and presentation of Bonds for transfer,
exchange or payment such term shall mean the office of the Trustee in St. Paul, Minnesota, or
such other office as may be designated by the Trustee.
"Original Purchaser" means Piper Jaffray & Co., as the initial underwriter of the 2011
Bonds.
"Outstanding", when used as of any particular time with reference to Bonds, means
(subject to the provisions of Section 9.05) all Bonds except: (a) Bonds theretofore canceled by
the Trustee or surrendered to the Trustee for cancellation; (b) Bonds paid or deemed to have
been paid within the meaning of Section 9.03; and (c) Bonds in lieu of or in substitution for
which other Bonds shall have been authorized, executed, issued and delivered by the Agency
pursuant hereto.
"Owner" means, with respect to any Bond, the person in whose name the ownership of
such Bond shall be registered on the Registration Books.
"Parity Debt" means any loans, bonds, notes, advances or indebtedness payable from
Housing Tax Revenues on a parity with the 2011 Bonds issued or incurred pursuant to and in
accordance with the provisions of Section 3.05.
"Parity Debt Instrument" means any resolution, indenture of trust, trust agreement or
other instrument authorizing the issuance of any Parity Debt and which otherwise complies with
all of the terms and conditions of this Indenture, including, without limitation, the provisions of
Section 3.05.
"Permitted Investments" means any of the following which at -the time of investment are
legal investments under the laws of the State for the moneys proposed to be invested therein:
(a) Federal Securities;
6
(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 Development (PHA's); (ix) Federal
Housing Administration and (x) Federal Financing Bank;
(c) senior debt obligations rated "Aaa" by Moody's and "AAA" by S&P issued by
the Federal National Mortgage Association or the Federal Home Loan Mortgage
Corporation, obligations of the Resolution Funding Corporation (RFFCORP) 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 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 fund rated "AAAm" or "AAAm-G" or better by
S&P, including any such money market fund from which the Trustee or its affiliates
receive fees for services to such fund;
(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;
(h) general obligations of States with a rating of at least "A2/A" or higher by both
Moody's and S&P
the Local Agency Investment Fund maintained by the State of California.
"Plan Limitations" means the limitations contained or incorporated in the Redevelopment
Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues which
may be outstanding at any time and (b) the aggregate amount of taxes which may be divided
and allocated to the Agency pursuant to the Redevelopment Plan.
"Principal Account" means the account by that name established and held by the
Trustee pursuant to Section 4.03(b).
"Protect" means the low and moderate income housing redevelopment activities to be
financed with the proceeds of the 2011 Bonds deposited in the Low and Moderate Income
Housing Account.
"Proiect Area" means the Ukiah Redevelopment Project.
"Record Date" means, with respect to any Interest Payment Date, the close of business
on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date,
whether or not such fifteenth (15th) calendar day is a Business Day.
"Redemption Account" means the account by that name established and held by the
Trustee pursuant to Section 4.03(e).
"Redevelopment Law" means the Community Redevelopment Law of the State,
constituting Part 1 of Division 24 of the Health and Safety Code of the State, and the acts
amendatory thereof and supplemental thereto.
"Redevelopment Plan" means the Redevelopment Plan for the Ukiah Redevelopment
Project Area, entitled Redevelopment Plan for the Ukiah Redevelopment Project, adopted and
approved as the Official Redevelopment Plan for the Project Area by Ordinance No. 895,
adopted by the City Council of the City on November 15, 1989, as amended by Ordinance No.
1088, adopted on November 27, 2006, together with any amendments thereof at any time duly
authorized pursuant to the Redevelopment Law.
"Redevelopment Project" means the undertaking of the Agency to redevelop a Project
Area in accordance with the Redevelopment Plan.
"Registration Books" means the records maintained by the Trustee pursuant to Section
2.08 for the registration and transfer of ownership of the 2011 Bonds.
"Request of the Agency" means a request in writing signed by the Chairman, Executive
Director, Treasurer or Secretary of the Agency, or any other officer of the Agency duly
authorized by the Agency for that purpose.
"Reserve Account" means the account by that name established and held by the Trustee
pursuant to Section 4.03(d).
"Reserve Requirement" means, as of the date of any calculation, Maximum Annual Debt
Service, as certified to the Trustee by the Agency.
"S&P" means Standard & Poor's Ratings Services, A Division of the McGraw-Hill
Companies, Inc., its successors and assigns.
8
"Securities Depositories" means The Depository Trust Company, 55 Water Street, 50th
Floor, New York, New York 10041-0099, Attention: Call Notification Department, Fax (212) 855-
7232; and, in accordance with then current guidelines of the Securities and Exchange
Commission, such other addresses and/or such other securities depositories as the Agency
may designate in a Request of the Agency delivered by the Agency to the Trustee.
"Sinking Account" means the account by that name established and held by the Trustee
pursuant to Section 4.03(c).
"Special Fund" means the fund by that name established pursuant to Section 4.02.
"State" means the State of California.
"Subordinate Debt" means any bonds, notes, loans, advances or other indebtedness
issued or incurred by the Agency in accordance with the requirements of Section 3.06, which
are either: (a) payable from, but not secured by a pledge of or lien upon, the Tax Revenues; or
(b) secured by a pledge of or lien upon the Tax Revenues which is subordinate to the pledge of
and lien upon the Tax Revenues hereunder for the security of the Bonds.
"Supplemental Indenture" means any indenture, agreement or other instrument which
amends, supplements or modifies this Indenture and which has been duly entered into by and
between the Agency and the Trustee; but only if and to the extent that such Supplemental
Indenture is specifically authorized hereunder.
"2011 Bonds" means the Ukiah Redevelopment Agency Ukiah Redevelopment Project
2011 Taxable Housing Tax Allocation Bonds issued by the Agency in the aggregate principal
amount of $ pursuant to Section 2.01.
"Tax Revenues" means all taxes annually allocated and paid to the Agency with respect
to the Redevelopment Project following the Closing Date, pursuant to Article 6 of Chapter 6
(commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of
the Constitution of the State, or pursuant to other applicable State law, and as provided in the
Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the
Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax
rate limitations; but excluding (a) amounts payable under the Tax Sharing Agreements and to
entities other than the Agency under and pursuant to the Redevelopment Law (unless such
obligation is subordinated to payment of the Bonds), and (b) amounts of such taxes required
under the Redevelopment Law to be deposited into the Low and Moderate Income Housing
Fund established pursuant to Section 33334.3 of the Redevelopment Law. The amount of such
taxes shall be calculated with regard to all limitations contained in the Redevelopment Plan,
pursuant to Section 33333.2(1) of the Redevelopment Law, on the amount of taxes which may
be allocated to the Agency in any year.
"Tax Sharinq Agreements" means the Agreements listed below:
-Mendocino County. Under this agreement dated December 29, 1989, the
Agency generally passes through to the County between forty and one hundred percent
of what the County General Fund would have received as property tax revenues from
the Project Area had no provision been made for the Project Area, depending upon
which fiscal year it is after establishment of the Project Area, and sixty percent of tax
increment derived from development of the Mervyn's department store. The County also
9
receives a payment which is treated as a Section 33676 inflationary allocation, receiving
one hundred percent of its share of revenue derived from inflationary growth,
-Ukiah Valley Sanitation District. Under this agreement dated December 18,
1989, the Agency agrees to pass through to the UVSD one hundred percent of the
amount of the UVSD's share of tax increment that the UVSD would have received as
property taxes from the Project Area if no provision had been made for the Project Area.
-Ukiah Unified School District. Under this agreement dated January 17, 1990,
the Agency agrees to pass through to the UUSD increases in the rate of tax imposed for
the benefit of the UUSD into a Capital Outlay Fund to be expended on capital projects
within the project area selected by UUSD and approved by the Agency in accordance
with the Community Redevelopment Law The Agency is also required to set aside for
low and moderate income housing projects selected by the UUSD 20% of the funds the
Agency is required to set aside for to preserve and increase the supply of low and
moderate income housing within the Agency's redevelopment project area.
-Mendocino-Lake Community College District. Under this agreement dated
January 17, 1990, the Agency agrees to pass through to the MLCCD increases in the
rate of tax imposed for the benefit of the MLCCD into a Capital Outlay Fund to be
expended on capital projects within the project area selected by MLCCD and approved
by the Agency in accordance with the Community Redevelopment Law The Agency is
also required to set aside for low and moderate income housing projects selected by the
MLCCD 10% of the funds the Agency is required to set aside to preserve and increase
the supply of low and moderate income housing within the Agency's redevelopment
project area.
-Mendocino County Office of Education. Under this agreement dated January 17,
1990, the Agency agrees to pass through to the MCOE increases in the rate of tax
imposed for the benefit of the MCOE into a Capital Outlay Fund to be expended on
capital projects within the project area selected by MCOE and approved by the Agency
in accordance with the Redevelopment Law.
-Mendocino County Water Agency. Under this agreement dated January 2, 1990,
the Agency agrees to pass through to the MCWA one hundred percent of the amount of
the MCWA's share of tax increment that the MCWA would have received as property
taxes from the Project Area if no provision had been made for the Project Area.
-Russian River Cemetery District. Under this agreement dated December 28,
1989, the Agency agrees to pass through to the RRCD one hundred percent of the
amount of the RRCD`s share of tax increment that the RRCD would have received as
property taxes from the Project Area if no provision had been made for the Project Area.
-Russian River Flood Control and Water Conservation District. Under this
agreement dated December 28, 1989, the Agency agrees to pass through to the
RRFCWCD one hundred percent of the amount of the RRFCWCD's share of tax
increment that the RRFCWCD would have received as property taxes from the Project
Area if no provision had been made for the Project Area.
"Term Bonds" means, collectively, (a) the 2011 Bonds maturing on December 1,
- and December 1, , and (b) any maturity of Parity Debt which is subject to
10
mandatory Sinking Account redemption pursuant to the Supplemental Indenture authorizing the
issuance thereof.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., as Trustee
hereunder, or any successor thereto appointed as Trustee hereunder in accordance with the
provisions of Article VI.
"Written Request of the Agency" or "Written Certificate of the Agency" means a request
or certificate, in writing signed by the Chair, Vice-Chair, Executive Director, Secretary, Assistant
Secretary, Treasurer or General Counsel of the Agency or by any other officer of the Agency
duly authorized by the Agency for that purpose and so identified in a Written Certificate of the
Agency.
SECTION 1.02. Rules of Construction. All references herein 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.
11
ARTICLE II
Authorization and Terms of 2011 Bonds
SECTION 2.01. Authorization and Purpose of 2011 Bonds. The Agency has reviewed
all proceedings heretofore taken and has found, as a result of such review, and hereby finds
and determines that all things, conditions and acts required by law to exist, happen or be
performed precedent to and in connection with the issuance of the 2011 Bonds do exist, have
happened and have been performed in due time, form and manner as required by law, and the
Agency is now duly empowered, pursuant to each and every requirement of law, to issue the
2011 Bonds in the manner and form provided in this Indenture.
2011 Bonds in the aggregate principal amount of Million
Thousand Dollars ) are hereby authorized to be issued by the Agency under
the Redevelopment Law for the purpose of providing funds to finance low and moderate income
housing redevelopment activities with respect to the Redevelopment Project. The 2011 Bonds
shall be authorized and issued under, and shall be subject to the terms of, this Indenture and
the Redevelopment Law. The 2011 Bonds shall be designated the "Ukiah Redevelopment
Agency Ukiah Redevelopment Project 2011 Taxable Housing Tax Allocation Bonds".
SECTION 2.02. Terms of the 2011 Bonds. The 2011 Bonds shall be dated as of the
Closing Date. The 2011 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 2011 Bonds shall mature on December 1 in each of the years and
in the respective principal amounts, and shall bear interest (calculated on the basis of a 360-day
year comprised of twelve 30-day months) at the respective rates per annum, as set forth in the
following table:
Maturity Date Principal Interest
(December 1) Amount Rate
Interest on the 2011 Bonds shall be payable from the Interest Payment Date next
preceding the date of authentication thereof unless (i) a 2011 Bond is authenticated on or before
an Interest Payment Date and after the close of business on the preceding Record Date, in
which event it shall bear interest from such Interest Payment Date, (ii) a 2011 Bond is
authenticated on or before the first Record Date, in which event interest thereon shall be
payable from the Closing Date, or (iii) interest on any 2011 Bond is in default as of the date of
authentication thereof, in which event interest thereon shall be payable from the date to which
interest has been paid in full, payable on each Interest Payment Date. Interest shall be paid on
each Interest Payment Date to the persons in whose names the ownership of the 2011 Bonds is
registered on the Registration Books at the close of business on the immediately preceding
Record Date. Interest on any 2011 Bond which is not punctually paid or duly provided for on any
12
Interest Payment Date shall be payable to the person in whose name the ownership of such
2011 Bond is registered on the Registration Books at the close of business on a special record
date for the payment of such defaulted interest to be fixed by the Trustee, notice of which shall
be given to such Owner not less than ten (10) days prior to such special record date.
Interest on the 2011 Bonds shall be paid by check of the Trustee mailed by first class
mail, postage prepaid, on each Interest Payment Date to the Owners of the 2011 Bonds at their
respective addresses shown on the Registration Books as of the close of business on the
preceding Record Date; provided, however, that at the written request of the Owner of 2011
Bonds in an aggregate principal amount of at least $1,000,000, which written request is on file
with the Trustee prior to any Record Date, interest on such 2011 Bonds shall be paid on each
succeeding Interest Payment Date by wire transfer in immediately available funds to such
account of a financial institution within the United States of America as shall be specified in such
written request. Any such written request shall remain in effect until rescinded in writing by such
Owner. The principal of and premium (if any) on the 2011 Bonds shall be payable in lawful
money of the United States of America by check of the Trustee upon presentation and
surrender thereof at the Office of the Trustee.
SECTION 2.03. Redemption of 2011 Bonds.
(a) Optional Redemption. The 2011 Bonds maturing on or before December 1, ,
shall not be subject to redemption prior to their respective stated maturities. The 2011 Bonds
maturing on or after December 1, , shall be subject to redemption in whole, or in part
among maturities as shall be determined by the Agency and by lot within a maturity, on any date
commencing December 1, , at the option of the Agency from any available source of
funds, at a redemption price (expressed as a percentage of the principal amount of 2011 Bonds
to be redeemed) as set forth in the following table, together with accrued interest thereon to the
date fixed for redemption:
Redemption Dates Redemption Price
December 1, through
December 1, through
December 1, and thereafter
The Agency shall be required to give the Trustee written notice of its intention to redeem
2011 Bonds under this subsection (a), and the manner of selecting such 2011 Bonds for
redemption from among the maturities thereof, at least forty-five (45) days prior to the date fixed
for such redemption, or such later date as may be acceptable to the Trustee, and shall transfer
to the Trustee for deposit in the Debt Service Fund all amounts required for such redemption at
least one (1) Business Day prior to the date fixed for such redemption.
(b) Mandatory Sinking Account Redemption of 2011 Bonds. (i) The 2011 Bonds
maturing on December 1, are Term Bonds and, shall also be subject to redemption, in
part by lot, on December 1 in each year as set forth in the following table, from Sinking Account
payments made by the Agency pursuant to Section 4.03(c) at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium, or in lieu thereof shall be purchased pursuant to the
succeeding paragraph (iv) of this subsection (b), in the aggregate principal amounts and on the
dates as set forth in the following table; provided, however, that if some but not all of such 2011
Bonds have been redeemed pursuant to subsection (a) above, the total amount of all future
13
Sinking Account payments established pursuant to this subsection (b) (i) shall be reduced by
the aggregate principal amount of such 2011 Bonds so redeemed, to be allocated among such
Sinking Account payments on a pro rata basis in integral multiples of $5,000 as determined by
the Agency (written notice of which determination shall be given by the Agency to the Trustee).
Term Bonds Maturing December 1,
Sinking Account
Redemption Date Principal Amount
(December 1) To Be Redeemed
(iv) In lieu of redemption of the 2011 Bonds pursuant to this subsection (b), amounts on
deposit in the Special Fund (to the extent not required to be transferred by the Trustee pursuant
to Section 5.03 during the current Bond Year) may also be used and withdrawn by the Agency
at any time for the purchase of such 2011 Bonds at public or private sale as and when and at
such prices (including 'brokerage and other charges and including accrued interest) as the
Agency may in its discretion determine. The par amount of any of such 2011 Bonds so
purchased by the Agency in any twelve-month period ending on December 1 in any year shall
be credited towards and shall reduce the par amount of such 2011 Bonds required to be
redeemed pursuant to this subsection (b) on the next succeeding December 1.
(c) Notice of Redemption, Rescission. The Trustee on behalf and at the expense of the
Agency shall mail (by first class mail, postage prepaid) notice of any redemption, at least thirty
(30) but not more than sixty (60) days prior to the redemption date, to (i) the Owners of any
2011 Bonds designated for redemption at their respective addresses appearing on the
Registration Books, and (ii) the Securities Depositories and to one or more Information Services
designated in a Request of the Agency delivered to the Trustee; provided, however, that such
mailing shall not be a condition precedent to such redemption and neither failure to receive any
such notice nor any defect therein shall affect the validity of the proceedings for the redemption
of such 2011 Bonds or the cessation of the accrual of interest thereon. Such notice shall state
the redemption date and the redemption price, shall designate the CUSIP number of the 2011
Bonds to be redeemed, shall state the individual number of each 2011 Bond to be redeemed or
state that all 2011 Bonds between two stated numbers (both inclusive) or shall state that all of
the 2011 Bonds Outstanding of one or more maturities are to be redeemed, and shall require
that such 2011 Bonds be then surrendered at the Office of the Trustee for redemption at the
said redemption price, giving notice. also that further interest on the 2011 Bonds to be redeemed
will not accrue from and after the date fixed for redemption.
The Agency shall have the right to rescind any optional redemption by written notice to
the Trustee on or prior to the date fixed for redemption. Any such notice of optional redemption
shall be canceled and annulled if for any reason funds will not be or are not available on the
date fixed for redemption for the payment in full of the Bonds then called for redemption, and
such cancellation shall not constitute an Event of Default under this Indenture. The Agency and
the Trustee shall have no liability to the Owners or any other party related to or arising from
such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in
the same manner as the original notice of redemption was sent.
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(d) Partial Redemption of 2011 Bonds. In the event only a portion of any 2011 Bond is
called for redemption, then upon surrender thereof the Agency shall execute and the Trustee
shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a new 2011
Bond or Bonds of the same interest rate and maturity, of authorized denominations in aggregate
principal amount equal to the unredeemed portion of the 2011 Bond to be redeemed.
(e) Effect of Redemption. From and after the date fixed for redemption, if funds
available for the payment of the redemption price of and interest on the 2011 Bonds so called
for redemption shall have been duly deposited with the Trustee, such 2011 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 accrued interest to the redemption date, and no interest
shall accrue thereon from and after the redemption date specified in such notice.
(f) Manner of Redemption. Whenever provision is made in this Indenture for the
redemption of less than all of the 2011 Bonds of a maturity, the Trustee shall select the 2011
Bonds of such maturity to be redeemed by lot in any manner which the Trustee in its sole
discretion shall deem appropriate and fair. For purposes of such selection, all 2011 Bonds shall
be deemed to be comprised of separate $5,000 denominations and such separate
denominations shall be treated as separate 2011 Bonds which may be separately redeemed.
SECTION 2.04. Form of 2011 Bonds. The 2011 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. Authentication and Delivery of 2011 Bonds. The 2011 Bonds shall be
executed on behalf of the Agency by the signature of its Chairman and the signature of its
Secretary who are in office on the date of execution and delivery of,this Indenture or at any time
thereafter. Either or both of such signatures may be made manually or may be affixed by
facsimile thereof. If any officer whose signature appears on any 2011 Bond ceases to be such
officer before the Closing Date, such signature shall nevertheless be as effective as if the officer
had remained in office until the Closing Date. Any 2011 Bond may be signed and attested on
behalf of the Agency by such persons as at the actual date of the execution of such 2011 Bond
shall be the proper officers of the Agency, duly authorized to execute debt instruments on behalf
of the Agency, although on the date of such 2011 Bond any such person shall not have been
such officer of the Agency.
Only such of the 2011 Bonds as shall bear thereon a certificate of authentication in the
form set forth in Exhibit A, manually executed and dated 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 such 2011 Bonds have been duly authenticated and
delivered hereunder and are entitled to the benefits of this Indenture.
SECTION 2.06. Transfer of 2011 Bonds. Any 2011 Bond may, in accordance with its
terms, be transferred on the Registration Books by the person in whose name it is registered, in
person or by his duly authorized attorney, upon surrender of such 2011 Bond for cancellation,
accompanied by delivery of a written instrument of transfer, duly executed in a form approved
by the Trustee. Transfer of any 2011 Bond shall not be permitted by the Trustee during the
fifteen (15) day period preceding the selection of 2011 Bonds for redemption or if such 2011
Bond has been selected for redemption pursuant to Article IV. Whenever any 2011 Bonds shall
be surrendered for transfer, the Agency shall execute and the Trustee shall authenticate and
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shall deliver a new 2011 Bond for a like aggregate principal amount and of like maturity. The
Trustee may require the 2011 Bond Owner requesting such transfer to pay any tax or other
governmental charge required to be paid with respect to such transfer. The cost of printing
2011 Bonds and any services rendered or expenses incurred by the Trustee in connection with
any transfer shall be paid by the Agency.
SECTION 2.07. Exchange of 2011 Bonds. Any 2011 Bond may be exchanged at the
Office of the Trustee for a like aggregate principal amount of 2011 Bonds of other authorized
denominations and of like maturity. Exchange of any 2011 Bond shall not be permitted during
the fifteen (15) day period preceding the selection of 2011 Bonds for redemption or if such 2011
Bond has been selected for redemption pursuant to Article IV. The Trustee may require the
2011 Bond Owner requesting such exchange to pay any tax or other governmental charge
required to be paid with respect to such exchange. The cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any exchange shall be paid by
the Agency.
SECTION 2.08. Registration Books. The Trustee will keep or cause to be kept, at its
Office, sufficient records for the registration and registration of transfer of the 2011 Bonds, which
shall at all times during normal business hours, and upon reasonable notice, be open to
inspection by the Agency; 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, 2011 Bonds as hereinbefore provided.
SECTION 2.09. Temporary Bonds. The 2011 Bonds may be initially issued in temporary
form exchangeable for definitive 2011 Bonds when ready for delivery. The temporary 2011
Bonds may be printed, lithographed or typewritten, shall be of such denominations as may be
determined by the Agency, and may contain such reference to any of the provisions of this
Indenture as may be appropriate. Every temporary 2011 Bond shall be executed by the Agency
upon the same conditions and in substantially the same manner as the definitive 2011 Bonds. If
the Agency issues temporary 2011 Bonds it will execute and furnish definitive 2011 Bonds
without delay, and thereupon the temporary 2011 Bonds shall be surrendered, for cancellation,
in exchange therefor at the Office of the Trustee, and the Trustee shall deliver in exchange for
such temporary 2011 Bonds an equal aggregate principal amount of definitive 2011 Bonds of
authorized denominations. Until so exchanged, the temporary 2011 Bonds shall be entitled to
the same benefits pursuant to this Indenture as definitive 2011 Bonds authenticated and
delivered hereunder.
SECTION 2.10. 2011 Bonds. Mutilated, Lost, Destroyed or Stolen. If any 2011 Bond
shall become mutilated, the Agency, at the expense of the Owner of such 2011 Bond, shall
execute, and the Trustee shall thereupon authenticate and deliver, a new 2011 Bond of like
tenor in exchange and substitution for the 2011 Bond so mutilated, but only upon surrender to
the Trustee of the 2011 Bond so mutilated. Every mutilated 2011 Bond so surrendered to the
Trustee shall be canceled by it and delivered to, or upon the order of, the Agency. If any 2011
Bond 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 and indemnity satisfactory to the
Trustee shall be given, the Agency, at the expense of the Owner, shall execute, and the Trustee
shall thereupon authenticate and deliver, a new 2011 Bond of like tenor in lieu of and in
substitution for the 2011 Bond so lost, destroyed or stolen. The Trustee may require payment of
a sum not exceeding the actual cost of preparing each new 2011 Bond issued under this
Section and of the expenses which may be incurred by the Trustee in connection therewith.
Any 2011 Bond issued under the provisions of this Section in lieu of any 2011 Bond alleged to
be lost, destroyed or stolen shall constitute an original additional contractual obligation on the
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part of the Agency whether or not the 2011 Bond so 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 2011 Bonds issued pursuant to this Indenture.
Notwithstanding any other provision of this Section 2.10, in lieu of delivering a new Bond
for which principal has become due for a Bond which has been mutilated, lost, destroyed or
stolen, the Trustee may make payment of such Bond in accordance with its terms upon receipt
of indemnity satisfactory to the Trustee.
SECTION 2.11. Book Entry Form.
(a) Original Delivery to DTC. The 2011 Bonds shall be initially delivered to DTC in
the form of a separate single fully registered bond (which may be typewritten) for each maturity
of the 2011 Bonds. Upon initial delivery, the ownership of each such 2011 Bond shall be
registered on the Registration Books in the name of the Nominee. Except as provided in
subsection (c), the ownership of all of the Outstanding 2011 Bonds shall be registered in the
name of the Nominee on the Registration Books.
With respect to 2011 Bonds the ownership of which shall be registered in the name of
the Nominee, the Agency and the Trustee shall have no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the Agency holds an interest
in the 2011 Bonds. Without limiting the generality of the immediately preceding sentence, the
Agency and the Trustee shall have no responsibility or obligation with respect to (i) the accuracy
of the records of the Depository, the Nominee or any Depository System Participant with respect
to any ownership interest in the 2011 Bonds, (ii) the delivery to any Depository System
Participant or any other person, other than a 2011 Bond Owner as shown in the Registration
Books, of any notice with respect to the 2011 Bonds, including any notice of redemption, (iii) the
selection by the Depository of the beneficial interests in the 2011 Bonds to be redeemed in the
event the Agency elects to redeem the 2011 Bonds in part, (iv) the payment to any Depository
System Participant or any other person, other than a 2011 Bond Owner as shown in the
Registration Books, of any amount with respect to principal, premium, if any, or interest on the
2011 Bonds or (v) any consent given or other action taken by the Depository as Owner of the
2011 Bonds. The Agency and the Trustee may treat and consider the person in whose name
each 2011 Bond is registered as the absolute owner of such 2011 Bond for the purpose of
payment of principal of and premium, if any, and interest on such 2011 Bond, for the purpose of
giving notices of redemption and other matters with respect to such 2011 Bond, for the purpose
of registering transfers of ownership of such 2011 Bond, and for all other purposes whatsoever.
The Trustee shall pay the principal of and the interest and premium, if any, on the 2011 Bonds
only to the respective Owners or their respective attorneys duly authorized in writing, and all
such payments shall be valid and effective to fully satisfy and discharge all obligations with
respect to payment of principal of and interest and premium, if any, on the 2011 Bonds to the
extent of the sum or sums so paid. No person other than a 2011 Bond Owner shall receive a
2011 Bond evidencing the obligation of the Agency to make payments of principal, interest and
premium, if any, pursuant to this Indenture. Upon delivery by the Depository to the Nominee of
written notice to the effect that the Depository has determined to substitute a new Nominee in its
place, and subject to the provisions herein with respect to Record Dates, such new nominee
shall become the Nominee hereunder for all purposes; and upon receipt of such a notice the
Agency shall promptly deliver a copy of the same to the Trustee.
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(b) Representation Letter. In order to qualify the 2011 Bonds for the Depository's
book-entry system, the Agency shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the 2011 Bonds. The execution
and delivery of such letter shall not in any way limit the provisions of subsection (a) above or in
any other way impose upon the Agency or the Trustee any obligation whatsoever with respect
to persons having interests in the 2011 Bonds other than the 2011 Bond Owners. Upon the
written acceptance by the Trustee, the Trustee shall agree to take all action reasonably
necessary for all representations of the Trustee in such letter with respect to the Trustee to at all
times be complied with. In addition to the execution and delivery of such letter, the Agency may
take any other actions, not inconsistent with this Indenture, to qualify the 2011 Bonds for the
Depository's book-entry program.
(c) Transfers Outside Book-Entry System. In the event that either (i) the Depository
determines not to continue to act as Depository for the 2011 Bonds, or (ii) the Agency
determines to terminate the Depository as such, then the Agency shall thereupon discontinue
the book-entry system with such Depository. In such event, the Depository shall cooperate with
the Agency and the Trustee in the issuance of replacement 2011 Bonds by providing the
Trustee with a list showing the interests of the Depository System Participants in the 2011
Bonds, and by surrendering the 2011 Bonds, registered in the name of the Nominee, to the
Trustee on or before the date such replacement 2011 Bonds are to be issued. The Depository,
by accepting delivery of the 2011 Bonds, agrees to be bound by the provisions of this
subsection (c). If, prior to the termination of the Depository acting as such, the Agency fails to
identify another Securities Depository to replace the Depository, then the 2011 Bonds shall no
longer be required to be registered in the Registration Books in the name of the Nominee, but
shall be registered in whatever name or names the Owners transferring or exchanging 2011
Bonds shall designate, in accordance with the provisions hereof.
In the event the Agency determines that it is in the best interests of the beneficial owners
of the 2011 Bonds that they be able to obtain certificated 2011 Bonds, the Agency may notify
the Depository System Participants of the availability of such certificated 2011 Bonds through
the Depository. In such event, the Trustee will issue, transfer and exchange 2011 Bonds as
required by the Depository and others in appropriate amounts; and whenever the Depository
requests, the Trustee and the Agency shall cooperate with the Depository in taking appropriate
action (y) to make available one or more separate certificates evidencing the 2011 Bonds to any
Depository System Participant having 2011 Bonds credited to its account with the Depository, or
(z) to arrange for another Securities Depository to maintain custody of a single certificate
evidencing such 2011 Bonds, all at the Agency's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this Indenture
to the contrary, so long as any 2011 Bond is registered in the name of the Nominee, all
payments with respect to principal of and interest and premium, if any, on such 2011 Bond and
all notices with respect to such 2011 Bond shall be made and given, respectively, as provided in
the letter described in subsection (b) of this Section or as otherwise instructed by the
Depository.
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ARTICLE III
DEPOSIT AND APPLICATION OF PROCEEDS OF 2011 BONDS;
ISSUANCE OF PARITY DEBT
SECTION 3.01. Issuance of 2011 Bonds. Upon the execution and delivery of this
Indenture, the Agency shall execute and deliver 2011 Bonds in the aggregate principal amount
of $ to the Trustee and the Trustee shall authenticate and deliver the 2011
Bonds to the Original Purchaser upon receipt of a Request of the Agency therefor.
SECTION 3.02. Deposit and Application of Proceeds. On
proceeds of sale of the 2011 Bonds in the amount of $
$ principal amount of the 2011 Bonds less an
$ less the Original Purchaser's discount of $
the premiums described in subsection (a) below) shall be paid to the
the Trustee as follows:
the Closing Date; the net
(being the
original issue discount of
and less
Trustee and deposited by
(a) The Trustee shall deposit the amount of $ in the Reserve
Account on the Closing Date; and
(b) The Trustee shall deposit the amount of $ in the Costs of
Issuance Fund on the Closing Date; and
(c) The Trustee shall transfer the remaining amount of proceeds, namely the
amount of $ , to the Agency for deposit in the Low and Moderate
Income Housing Account.
The Trustee may establish an account or fund within its records to facilitate the above
transfers.
SECTION 3.03. Costs of Issuance Fund. There is hereby established a separate fund to
be known as the "Costs of Issuance Fund", which shall be held by the Trustee in trust. The
moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee from time to
time to pay the Costs of Issuance upon submission of a Request of the Agency stating (a) the
person to whom payment is to be made, (b) the amount to be paid, (c) the purpose for which the
obligation was incurred, (d) that such payment is a proper charge against the Costs of Issuance
Fund, and (e) that such amounts have not been the subject of a prior Request of the Agency; in
each case together with a statement or invoice for each amount requested thereunder. Each
such Request of the Agency 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 earlier
of (i) June 1, 2011, or (ii) the date of receipt by the Trustee of a Request of the Agency therefor,
all amounts (if any) remaining in the Costs of Issuance Fund shall be withdrawn therefrom by
the Trustee and transferred to the Agency for deposit in the Low and Moderate Income Housing
Account.
19
Section 3.04. Low and Moderate Income Housing Account. There is hereby established
a separate account within the Low and Moderate Income Housing Fund to be designated as the
" Low and Moderate Income Housing Account' (the "Low and Moderate Income Housing
Account'), which shall be held and administered by the Agency as provided herein. The moneys
in the Low and Moderate Income Housing Account shall be withdrawn by the Agency to be used
solely in the manner provided by Section 33334.2 of the Law solely for the purpose of aiding in
financing low and moderate income housing within or of benefit to the Project Area, including
the payment of unpaid Costs of Issuance, and the Agency warrants that no funds in the Low
and Moderate Income Housing Account shall be applied for any purpose not authorized by
Section 33334.2 of the Law and this Indenture.
SECTION 3.05. Issuance of Parity Debt. In addition to the 2011 Bonds, the Agency may
issue or incur additional Parity Debt, including the issuance or incurrence of Parity Debt
pursuant to the Prior Loan Agreements,.in such principal amount as shall be determined by the
Agency. The Agency may issue or incur such Parity Debt subject to the following specific
conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in this Indenture
and all Parity Debt Instruments.
(b) The Housing Tax Revenues estimated to be received for the then current Bond
Year, based on the assessed value of property within the Project Area as set forth in the written
records of the County, plus (at the option of the Agency) the Additional Revenues, and after
deducting Housing Tax Revenues allocable to any Project Area which, based on a projection of
an Independent Redevelopment Consultant, is expected to reach the aggregate amount of
taxes which may be divided and allocated to the Agency pursuant to the applicable
Redevelopment Plan prior to the final maturity of any Parity Debt (unless there is a
corresponding reduction in the applicable annual debt service with respect to such Parity Debt),
shall be at least equal to one hundred twenty-five percent (125%) of Maximum Annual Debt
Service on all Bonds which will be Outstanding immediately following the issuance of such
Parity Debt. For purposes of computing the amount of Housing Tax Revenues, the following
requirements shall be observed:
(i) Tax Revenues shall be calculated on the basis of a tax rate of $1.00 per
$100 of assessed value and shall not.include the amounts of any State tax subventions;
and
(ii) the amount of Tax Revenues shall be the amount received or estimated
to be in the most recent Fiscal Year (which may be the then current Fiscal Year) for
which records are available from the County establishing the assessed valuations of
property in the Project Area;
(c) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide that interest thereon shall not be payable on any dates other than June 1 and December
1, and principal thereof shall be payable on December 1 in any year in which principal is
payable, unless the Agency shall determine that other interest and principal payment dates will
not adversely affect the Owners of the Bonds.
(d) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide for the deposit into the Reserve Account of an amount required to cause the balance
therein to equal the full amount of the Reserve Requirement, which deposit shall be made
concurrent with the issuance of such Parity Debt.
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(e) The proceeds of such Parity Debt may be deposited into an escrow fund from
which amounts may not be released to the Agency unless and until the Housing Tax Revenues
(as evidenced in the written records of the County) at least equal one hundred twenty-five
percent (125%) of the amount of Maximum Annual Debt Service.
(f) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
(g) The Trustee shall be trustee for such Parity Debt.
(h) The Agency shall deliver to the Trustee a Certificate of the Agency certifying that
the conditions precedent to the issuance of such Parity Debt set forth in the foregoing provisions
of this Section 3.05 have been satisfied.
SECTION 3.06. Issuance of Subordinate Debt. The Agency may from time to time issue
or incur Subordinate Debt in such principal amount as shall be determined by the Agency,
provided that the issuance of such Subordinate Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
SECTION 3.07. Validity of Bonds. The validity of the authorization and issuance of the
Bonds shall not be dependent upon the completion of the Redevelopment Project or upon the
performance by any person of its obligation with respect to the Redevelopment Project.
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ARTICLE IV
SECURITY OF BONDS; FLOW OF FUNDS;
INVESTMENTS
SECTION 4.01. Pledge of Housing Tax Revenues. The 2011 Bonds and all Parity Debt
shall be equally secured by a first pledge of, security interest in and lien on all of the Housing
Tax Revenues, without preference or priority for series, issue, number, dated date, sale date,
date of execution or date of delivery. The Housing Tax Revenues are hereby allocated in their
entirety to the. payment of the principal of and interest on the 2011 Bonds and all Parity Debt.
The 2011 Bonds and all Parity Debt shall be additionally secured by a first and exclusive pledge
of and lien upon all of the moneys in the Debt Service Fund, including the Reserve Account.
Except for the Housing Tax Revenues and the Debt Service Fund, no funds or properties of the
Agency shall be pledged to, or otherwise liable for, the payment of principal of or interest or
premium (if any) on the 2011 Bonds and all Parity Debt.
In consideration of the acceptance of the Bonds by those who shall hold the same from
time to time, this Indenture shall be deemed to be and shall constitute a contract between the
Agency and the Owners from time to time of the Bonds, and the covenants and agreements
herein set forth to be performed on behalf of the Agency 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 and delivery thereof, or otherwise for
any cause whatsoever, except as expressly provided therein or herein.
SECTION 4.02. Special Fund; Deposit of Housing Tax Revenues. There is hereby
established a special fund known as the "Special Fund", which shall be held by the Agency.
The Agency shall transfer from the Low and Moderate Income Housing Fund and deposit in the
Special Fund all of the Housing Tax Revenues received in any Bond Year (and in any
applicable special fund created by any Parity Debt Instrument) promptly upon the receipt thereof
by the Agency, until such time (if any) during such Bond Year as the amounts on deposit in the
Special Fund equal the aggregate amounts of Housing Tax Revenues required to be transferred
to the Trustee (i) pursuant to Section 4.03, and (ii) pursuant to the applicable provisions of any
Parity Debt Instrument; and (except as may be otherwise provided in any Parity Debt
Instrument) any Housing Tax Revenues received during such Bond Year in excess of such
amounts shall be released from the pledge and lien hereunder and may be used for any lawful
purpose of the Agency. Prior to the payment in full of the principal of and interest and
prepayment premium (if any) on the 2011 Bonds and all Parity Debt and the payment in full of
all other amounts payable hereunder and under any Parity Debt Instrument, the Agency shall
not have any beneficial right or interest in the moneys on deposit in the Special Fund, except
only as provided in this Indenture and in any Parity Debt Instrument.
SECTION 4.03. Debt Service Fund; Transfer of Amounts to Trustee. There is hereby
established a special trust fund to be known as the "Debt Service Fund", which shall be held by
the Trustee hereunder in trust. Moneys in the Special Fund shall be transferred by the Agency
no later than the following times to the Trustee for deposit in the Debt Service Fund, for transfer
to the following respective special accounts within the Debt Service Fund, which accounts are
hereby established with the Trustee to pay debt service on the 2011 Bonds and any Parity Debt
not otherwise provided for in a Parity Debt Instrument, in the following order of priority:
22
(a) Interest Account. On or before the fourth (4th) Business Day
preceding each date on which interest on the Bonds becomes due and payable,
the Trustee shall withdraw from the Debt Service Fund for deposit in the Interest
Account an amount which, when added to the amount then on deposit in the
Interest Account, will be equal to the aggregate amount of the interest becoming
due and payable on the Outstanding Bonds on such date. No such transfer and
deposit need be made to the Interest Account if the amount contained therein is
at least equal to the interest to become due on the Interest Payment Date upon
all of the Outstanding Bonds. All moneys in the Interest Account shall be used
and withdrawn by the Trustee solely for the purpose of paying the interest on the
Bonds as it shall become due and payable (including accrued interest on any
Bonds purchased or redeemed prior to maturity pursuant to this Indenture).
(b) Principal Account. On or before the fourth (4th) Business Day
preceding each date on which principal of the Bonds becomes due and payable
at maturity, the Trustee shall withdraw from the Debt Service Fund for deposit in
the Principal Account an amount which, when added to the amount then on
deposit in the Principal Account, will be equal to the amount of principal coming
due and payable on such date on the Outstanding Bonds. All moneys in the
Principal Account shall be used and withdrawn by the Trustee solely for the
purpose of paying the principal of the Bonds upon the maturity thereof.
(c) Sinking Account. On or before the fourth (4th) Business Day
preceding each date on which any Outstanding Term Bonds become subject to
mandatory Sinking Account redemption, the Trustee shall withdraw from the Debt
Service Fund for deposit in the Sinking Account an amount which, when added to
the amount then contained in the Sinking Account, will be equal to the aggregate
principal amount of the Term Bonds required subject to mandatory Sinking
Account redemption on such date.. All moneys on deposit in the Sinking Account
shall be used and withdrawn by the Trustee for the sole purpose of paying the
principal of the Term Bonds as it shall become due and payable upon the
mandatory Sinking Account redemption thereof.
(d) Reserve Account. In the event that the Trustee has actual knowledge
that the amount on deposit in the Reserve Account at any time becomes less
than the Reserve Requirement, the Trustee shall promptly notify the Agency of
such fact. Promptly upon receipt of any such notice, the Agency shall transfer to
the Trustee an amount of available Housing Tax Revenues sufficient to maintain
the Reserve Requirement on deposit in the Reserve Account. Amounts in the
Reserve Account shall be used and withdrawn by the Trustee solely for the
purpose of making transfers pursuant to any applicable Parity Debt Instrument in
the applicable order of priority and to the Interest Account, the Principal Account
and the Sinking Account, in such order of priority, on any date which the principal
of or interest on the Bonds becomes due and payable hereunder, in the event of
any deficiency at any time in any of the applicable accounts. In the event there
shall be insufficient amounts in the Reserve Account to make all of the transfers
required by this Section 4.02(d) and any applicable Parity Debt Instrument, then
such transfers shall be made pro rata based on the then respective amounts
required to be so transferred. So long as no Event of Default shall have occurred
and be continuing, any amount in the Reserve Account in excess of the Reserve
Requirement on the fourth (4th) Business Day preceding each Interest Payment
Date shall be withdrawn from the Reserve Account by the Trustee and deposited
23
in the Interest Account and the Interest Account established by any Parity Debt
Instrument, pro rata based on the then respective outstanding principal amounts
of the 2011 Bonds and any Parity Debt.
The Reserve Account shall be maintained in the form of one or more
separate sub-accounts which are established at the direction of the Agency for
the purpose of holding the proceeds of separate issues of the Bonds. In this
regard, each such subaccount shall be allocated to the applicable separate issue
for purposes for meeting any deficiency in the amounts needed to pay debt
service from the Reserve Account.
(e) Redemption Account. On or before the Business Day preceding any
date on which Bonds are subject to redemption, other than mandatory Sinking
Account redemption of Term Bonds, the Trustee shall withdraw from the Special
Fund for deposit in the Redemption Account an amount required to pay the
principal of and premium, if any, on the Bonds to be so redeemed on such date.
The Trustee shall also deposit in the Redemption Account any other amounts
received by it from the Agency designated by the Agency in writing to be
deposited in the Redemption Account. All moneys in the Redemption Account
shall be used and withdrawn by the Trustee solely for the purpose of paying the
principal of and premium, if any, on the Bonds upon the redemption thereof, on
the date set for such redemption, other than mandatory Sinking Account
redemption of Term Bonds.
SECTION 4.04. Investment of Moneys in Funds. Moneys in the Debt Service Fund, the
Interest Account, the Principal Account, the Sinking Account, the Reserve Account, the
Redemption Account and the Costs of Issuance Fund shall be invested by the Trustee in
Permitted Investments specified in the Request of the Agency (which Request shall be deemed
to include a certification that the specified investment is a Permitted Investment) delivered to the
Trustee at least two (2) Business Days in advance of the making of such investments; provided,
however, that in the absence of any such direction from the Agency, the Trustee shall invest any
such moneys solely in Permitted Investments described in clause (e) of the definition thereof.
Moneys in the Redevelopment Fund and the Special Fund shall be invested by the Agency in
any obligations in which the Agency is legally authorized to invest funds within its control.
Obligations purchased as an investment of moneys in any fund or account shall be
deemed to be part of such fund or account. Whenever in this Indenture any moneys are
required to be transferred by the Agency to the Trustee, such transfer may be accomplished by
transferring a like amount of Permitted Investments. All interest or gain derived from the
investment of amounts in any of the funds or accounts held by the Trustee hereunder shall be
deposited in the Interest Account; provided, however, that all interest or gain from the
investment of amounts in the Reserve Account shall be deposited by the Trustee in the Interest
Account to the extent not required to cause the balance in the Reserve Account to equal the
Reserve Requirement. No Permitted Investment of moneys in the Reserve Account shall have
a maturity in excess of five (5) years following the date of its acquisition. For purposes of
acquiring any investments hereunder, the Trustee may commingle funds held by it hereunder
upon receipt by the Trustee of the Request of the Agency. The Trustee may act as principal or
agent in the acquisition or disposition of any investment, may utilize the investment departments
of its affiliates to complete each transaction and may impose its customary charges therefor.
The Trustee shall incur no liability for losses arising from any investments made pursuant to this
Section. The Agency acknowledges that to the extent that regulations of the Comptroller of the
Currency or other applicable regulatory agency grant the Agency the right to receive brokerage
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confirmations of security transactions as they occur, the Agency specifically waives receipt of
such confirmations to the extent permitted by law. The Trustee shall furnish to the Agency
periodic statements which include detail of all investment transactions made by the Trustee.
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ARTICLE V
OTHER COVENANTS OF THE AGENCY
SECTION 5.01. Punctual Payment. The Agency shall punctually pay or cause to be paid
the principal, premium (if any) and interest to become due in respect of all the Bonds in strict
conformity with the terms of the Bonds and of this Indenture. The Agency shall faithfully
observe and perform all of the conditions, covenants and requirements of this Indenture and all
Supplemental Indentures. Nothing herein contained shall prevent the Agency from making
advances of its own moneys howsoever derived to any of the uses or purposes referred to
herein.
. SECTION 5.02. Continuinq Disclosure. The Agency hereby covenants and agrees that it
will comply with and carry out all of the provisions of the Continuing Disclosure Certificate which
has been executed and delivered by the Agency on the Closing Date. Notwithstanding any other
provision hereof, failure of the Agency to comply with such Continuing Disclosure Certificate
shall not constitute an Event of Default hereunder; provided, however, that any Participating
Underwriter (as such term is defined in such Continuing Disclosure Certificate) or any Owner or
beneficial owner of the 2011 Bonds may take such actions as may be necessary and
appropriate, including seeking specific performance by court order, to cause the Agency to
comply with its obligations under this Section 5.02.
SECTION 5.03. Limitation on Additional Indebtedness. The Agency hereby covenants
that so long as any of the Bonds remain Outstanding, the Agency shall not issue any bonds,
notes or other obligations which are otherwise secured on a basis which is senior to the pledge
and lien which secures the Bonds. The Agency hereby covenants that it shall not issue any
bonds, notes or other obligations, enter into any agreement or otherwise incur any
indebtedness, which is in any case payable from all or any part of the Housing Tax Revenues,
excepting only the 2011 Bonds and Parity Debt, any Subordinate Debt and any obligations
entered into pursuant to Section 5.10.
SECTION 5.04. Extension of Payment of Bonds. The Agency 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 Outstanding Bonds and of all claims for interest thereon which shall not
have been so extended. Nothing in this Section shall be deemed to limit the right of the Agency
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 5.05. Payment of Claims. The Agency shall pay and discharge, or cause to
be paid and discharged, any, and all lawful claims for labor, materials or supplies which, if
unpaid, might become a lien or charge upon the properties owned by the Agency or upon the
Tax Revenues or any part thereof, or upon any funds held by the Trustee pursuant hereto, or
which might impair the security of the Bonds. Nothing herein contained shall require the Agency
to make any such payment so long as the Agency in good faith shall contest the validity of said
claims.
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SECTION 5.06. Books and Accounts; Financial Statements. The Agency shall keep, or
cause to be kept, proper books of record and accounts, separate from all other records and
accounts of the Agency and the City, in which complete and correct entries shall be made of all
transactions relating to the Redevelopment Project, the Tax Revenues, the Housing Tax
Revenues and the Special Fund. Such books of record and accounts shall at all times during
business hours be subject to the inspection of the Owners of not less than ten percent (10%) in
aggregate principal amount of the Bonds then Outstanding, or their representatives authorized
in writing.
The Agency will cause to be prepared and delivered to the Trustee annually, within one
hundred and eighty (180) days after the close of each Fiscal Year so long as any of the Bonds
are Outstanding, complete audited financial statements with respect to such Fiscal Year
showing the Tax Revenues, the Housing Tax Revenues, all disbursements from the Special
Fund and the financial condition of the Redevelopment Projects, including the balances in all
funds and accounts relating to the Redevelopment Projects, as of the end of such Fiscal Year.
In accordance with Section 6.03(e), the Trustee shall not be responsible for reviewing such
financial statements. The Agency shall furnish a copy of such statements to any Owner upon
reasonable request and at the expense of such Owner.
SECTION 5.07. Protection of Security and Rights of Owners. The Agency will preserve
and protect the security of the Bonds and the rights of the Owners. From and after the date of
issuance of any Bonds, such Bonds shall be incontestable by the Agency.
SECTION 5.08. Payments of Taxes and Other Charges. The Agency will pay and
discharge, or cause to be paid and discharged, all taxes, service charges, assessments and
other governmental charges which may hereafter be lawfully imposed upon the Agency or the
properties then owned by the Agency in the Project Area, when the same shall become due.
Nothing herein contained shall require the Agency to make any such payment so long as the
Agency in good faith shall contest the validity of said taxes, assessments or charges. The
Agency will duly observe and conform with all valid requirements of any governmental authority
relative to the Redevelopment Projects or any part thereof.
SECTION 5.09. Disposition of Property. The Agency will not participate in the
detachment of land from a Project Area or the disposition of any land or real property in a
Project Area to anyone which will result in such property becoming exempt from taxation
because of public ownership or use or otherwise (except property dedicated for public right-of-
way and except property planned for public ownership or use by the Redevelopment Plan in
effect on the date of this Indenture) so that such detachment or disposition shall, when taken
together with other such detachments or dispositions, (i) aggregate more than ten percent
(10%) of the land area in a Project Area or (ii) would cause the amount of Housing Tax
Revenues to be received by the Agency in the succeeding Fiscal Year to fall below 125% of
Maximum Annual Debt Service.
SECTION 5.10. Maintenance of Tax Revenues. The Agency shall comply with all
requirements of the Redevelopment Law to insure the allocation and payment to it of the Tax.
Revenues, including without limitation the timely filing of any necessary statements of
indebtedness with appropriate officials of the County and (in the case of supplemental revenues
and other amounts payable by the State) appropriate officials of the State of California. The
Agency shall not enter into any agreement with the County or any other governmental unit
which would have the effect of reducing the amount of Housing Tax Revenues available to the
Agency for payment of the Bonds. Nothing herein is intended or shall be construed in any way
to prohibit or impose any limitations on the entering into by the Agency of any such agreement,
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amendment or supplement which by its term is subordinate to the payment of the 2011 Bonds
and all Parity Debt.
SECTION 5.11. 2011 Bonds Federally Taxable. In Resolution No. RD 2006-_, adopted
July 27, 2006, the Agency has determined, pursuant to Section 5903 of the California
Government Code, that the interest payable on the 2011 Bonds will be subject to federal income
taxation under the law in existence on the Closing Date.
Section 5.12. Plan Limitations. The Agency agrees that the then remaining amount of
annual debt service remaining to be paid on all outstanding the Bonds and Subordinate Debt
shall at no time exceed ninety percent (90%) of the aggregate amount of the Housing Tax
Revenues which the Agency is permitted to receive under the Plan Limitations. In the event that
the aggregate amount of annual debt service remaining to be paid on the Bonds and
Subordinate Debt at any time equals or exceeds ninety percent (90%) of the then remaining
amount of the Housing Tax Revenues which the Agency is permitted to receive under its Plan
Limitations, all Housing Tax Revenues thereafter received by the Agency shall immediately be
deposited with the Trustee and applied by the Trustee for the sole purpose of paying the
principal of and interest on the Bonds and any Subordinate Debt as it comes due and payable.
Section 5.13. Redevelopment of Project Area. The Agency shall ensure that all
activities undertaken by the Agency with respect to the redevelopment of the Project Area,
including, without limitation, the application of moneys in the 'Low and Moderate Income
Housing Account solely for low and moderate income housing purposes, are undertaken and
accomplished in conformity with all applicable requirements of the Redevelopment Plans and
the Redevelopment Law. Without limiting the generality of the foregoing, the Agency covenants
that it shall deposit or cause to be deposited in the Low and Moderate Income Housing Fund all
amounts when, as and if required to be deposited therein pursuant to the Redevelopment Law.
SECTION 5.14. Further Assurances. The Agency 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 Owners the rights and benefits provided in
this Indenture.
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ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties. Immunities and Liabilities of Trustee.
(a) The Trustee shall, prior to the occurrence of an Event of Default, and after the
curing or waiver of all Events of Default which may have occurred, 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. The Trustee shall, during the existence of
any Event of Default (which has not been cured or waived), exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent person would exercise or use in the conduct of such person's own
affairs.
(b) The Agency may remove the Trustee at any time, unless an Event of Default shall
have occurred and then be continuing, and shall remove the Trustee (i) if at any time requested
to do so by an instrument or concurrent instruments in writing signed by the Owners of not less
than a majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing) or (ii) if at any time the Trustee shall cease to be eligible in
accordance with subsection (e) of this Section, or shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property shall be appointed,
or any public officer shall take control or charge of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation. In each case such removal shall be
accomplished by the giving of 30 days' written notice of such removal by the Agency to the
Trustee, whereupon the Agency shall appoint a successor Trustee by an instrument in writing.
(c) The Trustee may at any time resign by giving written notice of such resignation to
the Agency, and by giving the Owners notice of such resignation by first class mail, postage
prepaid, at their respective addresses shown on the Registration Books. Upon receiving such
notice of resignation, the Agency shall promptly appoint a successor Trustee by an instrument in
writing.
(d) Any removal or resignation of the Trustee and appointment of a successor Trustee
shall become effective upon acceptance of appointment by the successor Trustee. If no
successor Trustee shall have been appointed and have accepted appointment within forty-five
(45) days following giving notice of removal or notice of resignation as aforesaid, the resigning
Trustee or any Owner (on behalf of such Owner and all other Owners) may petition any court of
competent jurisdiction for the appointment of a successor Trustee, and such court may
thereupon, after such notice (if any) as it may deem proper, appoint such successor Trustee.
Any successor Trustee appointed under this Indenture shall signify its acceptance of such
appointment by executing and delivering to the Agency and to its predecessor Trustee a written
acceptance thereof, and to the predecessor Trustee an instrument indemnifying the
predecessor Trustee for any costs or claims arising during the time the successor Trustee
serves as Trustee hereunder, and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the moneys, estates, properties, rights, powers,
trusts, duties and obligations of such predecessor Trustee, with like effect as if originally named
Trustee herein; but, nevertheless, upon the receipt by the predecessor Trustee of the Request
of the Agency or the request of the successor Trustee, such predecessor Trustee shall execute
and deliver any and all instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly vesting in and confirming to
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such successor Trustee all the right, title and interest of such predecessor Trustee in and to any
property held by it under this Indenture and shall pay over, transfer, assign and deliver to the
successor Trustee any money or other property subject to the trusts and conditions herein set
forth. Upon request of the successor Trustee, the Agency shall execute and deliver any and all
instruments as may be reasonably required for more fully and certainly vesting in and confirming
to such successor Trustee all such moneys, estates, properties, rights, powers, trusts, duties
and obligations. Upon acceptance of appointment by a successor Trustee as provided in this
subsection, the Agency shall mail or cause the successor Trustee to mail, by first class mail
postage prepaid, a notice of the succession of such Trustee to the trusts hereunder to S&P and
Moody's, and to the Owners at the addresses shown on the Registration Books. If the Agency
fails to mail such notice within fifteen (15) days after acceptance of appointment by the
successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense
of the Agency.
(e) Any Trustee appointed under the provisions of this Section in succession to the
Trustee shall (i) be a company or bank having trust powers, (ii), shall have an office in the State
of California or such other state as shall be acceptable to the Agency, (iii) have (or be part of a
bank holding company system whose bank holding company has) a combined capital and
surplus of at least Seventy-Five Million Dollars ($75,000,000), and (iv) be subject to supervision
or examination by federal or state authority. If such bank or 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 subsection the combined
capital and surplus of such bank or company shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this subsection (e),.the
Trustee shall promptly resign in the manner and with the effect specified in subsection (c) of this
Section.
SECTION 6.02. Merger or Consolidation. Any bank or company into which the Trustee
may be merged or converted or with which either of them may be consolidated or any bank or
company resulting from any merger, conversion or consolidation to which it shall be a party or
any bank or company to which the Trustee may sell or transfer all or substantially all of its
corporate trust business, provided such bank or company shall be eligible under subsection (e)
of Section 6.01, shall be the successor to such Trustee without the execution or filing of any
paper or any further act, anything herein to the contrary notwithstanding.
SECTION 6.03. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as statements
of the Agency, and the Trustee shall not assume responsibility for the correctness of the same,
nor make any representations as to the validity or sufficiency of any offering memorandum, this
Indenture or of the Bonds nor shall incur any responsibility in respect thereof, other than as
expressly stated herein. The Trustee shall, however, be responsible for its representations
contained in its certificate of authentication on the Bonds. The Trustee shall not be liable in
connection with the performance of its duties hereunder, except for its own negligence or willful
misconduct. The Trustee shall not be liable for the acts of any agents of the Trustee selected
by it with due care. The Trustee may become the Owner of any Bonds with the same rights it
would have if they were not Trustee and, to the extent permitted by law, may act as 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 the Owners, whether or not such
committee shall represent the Owners of a majority in principal amount of the Bonds then
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Outstanding. The Trustee, either as principal or agent, may engage in or be entrusted in any
financial or other transaction with the Agency.
(b) The Trustee shall not be liable for any error of judgment made in good faith by a
responsible officer.
(c) The Trustee shall not be liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Agency, accompanied by an opinion of Bond
counsel, or in accordance with direction of the Owners of not less than a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee under this Indenture.
(d) The Trustee shall not be liable for any action taken by it in good faith and believed
by it to be authorized or within the discretion or rights or powers conferred upon it by this
Indenture, except for actions arising from the negligence or willful misconduct of the Trustee.
The permissive right of the Trustee to do things enumerated hereunder shall not be construed
as a mandatory duty.
(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder unless and until a responsible officer of the Trustee shall have actual knowledge
thereof, or the Trustee shall have received written notice thereof at its Office. Except as
otherwise expressly provided herein, the Trustee shall not be bound to ascertain or inquire as to
the performance or observance of any of the terms, conditions, covenants or agreements herein
or of any of the documents executed in connection with the Bonds, or as to the existence of an
Event of Default hereunder or thereunder. The Trustee shall not be responsible for the
Agency's payment of principal and interest on the Bonds, the observance or performance by the
Agency of any other covenants, conditions or terms contained herein, or the validity or
effectiveness of any collateral given to or held by it. Without limiting the generality of the
foregoing, the Trustee shall not be responsible for reviewing the contents of any financial
statements furnished to the Trustee pursuant to Section 5.06 and may rely conclusively on the
Certificate of the Agency accompanying such financial statements to establish the Agency's
compliance with its financial covenants hereunder, including, without limitation, its covenants
regarding the deposit of Tax Revenues into the Special Fund and the investment and
application of moneys on deposit in the Special Fund (other than its covenants to transfer such
moneys to the Trustee when due hereunder).
(f) No provision in this Indenture shall require the Trustee to risk, expend, or advance
its own funds or otherwise incur any financial liability hereunder. However, if the Trustee elects
to advance funds it, shall be entitled to receive interest on any moneys advanced by it
hereunder, at the maximum rate permitted by law.
(g) The Trustee may establish additional accounts or subaccounts of the funds
established hereunder as the Trustee deems necessary or prudent in furtherance of its duties
under this Indenture.
(h) The Trustee shall have no responsibility or liability with respect to any information,
statements or recital in any offering memorandum or other disclosure material prepared or
distributed with respect to the issuance of these Bonds.
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(i) Before taking any action under Article VIII or this Article at the request of the
Owners, the Trustee may require that a satisfactory indemnity bond be furnished by the Owners
for the reimbursement of all expenses to which it may put and to protect it against all liability,
except liability which is adjudicated to have resulted from its negligence or willful misconduct in
connection with any action so taken.
(j) The Trustee shall not be considered in breach of or in default in its obligations
hereunder or progress in respect thereto in the event of enforced delay ("unavoidable delay") in
the performance of such obligations due to unforeseeable causes beyond its control and without
its fault or negligence, including, but not limited to, Acts of God or of the public enemy or
terrorists, acts of a government, acts of the other party, fires, floods, epidemics, quarantine
restrictions, strikes, freight embargoes, earthquakes, explosion, mob violence, riot, inability to
procure or general sabotage or rationing of labor, equipment, facilities, sources of energy,
material or supplies in the open market, litigation or arbitration involving a party or others
relating to zoning or other governmental action or inaction pertaining to the project, malicious
mischief, condemnation, and unusually severe weather or delays of suppliers or subcontractors
due to such causes or any similar event and/or occurrences beyond the control of the Trustee.
(k) The Trustee agrees to accept and act upon facsimile transmission of written
instructions and/or directions pursuant to this Indenture provided, however, that: (a) subsequent
to such facsimile transmission of written instructions and/or directions the Trustee shall forthwith
receive the originally executed instructions and/or directions, (b) such originally executed
instructions and/or directions shall be signed by a person as may be designated and authorized
to sign for the party signing such instructions and/or directions, and (c) the Trustee shall have
received a current incumbency certificate containing the specimen signature of such designated
person.
SECTION 6.04. Right to Rely on Documents. The Trustee shall be protected in acting
upon any notice, resolution, requisition, request, consent, order, certificate, report, opinion or
other paper or document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with counsel, including, without limitation,
Bond Counsel or other counsel of or to the Agency, with regard to legal questions, and the
opinion of such counsel shall be full and complete authorization and protection in respect of any
action taken or suffered by the Trustee hereunder in accordance therewith.
The Trustee shall not be bound to recognize any person as the Owner of a Bond unless
and until such Bond is submitted for inspection, if required, and his title thereto is established to
the satisfaction of the Trustee.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee shall deem it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect thereof
be herein specifically prescribed) may be deemed to be conclusively proved and established by
a Certificate of the Agency, which shall be full warrant to the Trustee for any action taken or
suffered in good faith under the provisions of this Indenture in reliance upon such Certificate, but
in its discretion the Trustee may (but shall have no duty to), in lieu thereof, accept other
evidence of such matter or may require such additional evidence as to it may deem reasonable.
The Trustee may conclusively rely on any certificate or Report of any Independent Accountant
or Independent Fiscal Consultant appointed by the Agency.
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SECTION 6.05. Preservation and Inspection of Documents. All documents received by
the Trustee under the provisions of this Indenture shall be retained in its possession and shall
be subject during normal business hours, and upon reasonable prior written notice, to the
inspection of the Agency and any Owner, and their agents and representatives duly authorized
in writing.
SECTION 6.06. Compensation and Indemnification. The Agency shall pay to the
Trustee from time to time compensation for all services rendered under this Indenture and also
all expenses, charges, legal and consulting fees and other disbursements and those of its
attorneys (including any allocated costs of internal counsel), agents and employees, incurred in
and about the performance of its powers and duties under this Indenture. The Trustee shall
have a first lien on the Tax Revenues and all funds and accounts held by the Trustee hereunder
to secure the payment to the Trustee of all fees, costs and expenses, including compensation to
its experts, attorneys and counsel incurred in declaring such Event of Default and in exercising
the rights and remedies set forth in Article VIII.
The Agency further covenants and agrees to indemnify and save the Trustee and its
officers, directors, agents affiliates and employees, harmless against any loss, expense,
including legal fees and expenses, and liabilities which it may incur arising out of or in the
exercise and performance of its powers and duties hereunder, including the costs and expenses
of defending against any claim of liability and of enforcing any remedies hereunder and under
any related documents, but excluding any and all losses, expenses and liabilities which are due
to the negligence or willful misconduct of the Trustee, its officers, directors, agents affiliates or
employees. The obligations of the Agency under this Section 6.06 shall survive resignation or
removal of the Trustee under this Indenture and payment of the Bonds and discharge of this
Indenture.
SECTION 6.07. 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 the Bonds and all funds and accounts
established and held by the Trustee pursuant to this Indenture. Such books of record and
account shall be available for inspection by the Agency at reasonable hours, during regular
business hours, with reasonable prior notice and under reasonable circumstances. The Trustee
shall furnish to the Agency, at least monthly, an accounting (which may be in the form of its
customary statements) of all transactions relating to the proceeds of the Bonds and all funds
and accounts held by the Trustee pursuant to this Indenture.
SECTION 6.08. Appointment of Co-Trustee or Agent. It is the purpose of this Indenture
that there shall be no violation of any law of any jurisdiction (including particularly the law of the
State) denying or restricting the right of banking associations to transact business as Trustee in
such jurisdiction. It is recognized that in the case of litigation under this Indenture, and in
particular in case of the enforcement of the rights of the Trustee on default, or in the case the
Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise
any of the powers, rights or remedies herein granted to the Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Trustee appoint an additional
individual or institution as a separate co-Trustee. The following provisions of this Section 6.08
are adopted to these ends.
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In the event that the Trustee appoints an additional individual or institution as a separate
or co-Trustee, each and every remedy, power, right, claim, demand, cause of action, immunity,
estate, title, interest and lien expressed or intended by this Indenture to be exercised by or
vested in or conveyed to the Trustee with respect thereto shall be exercisable by and vest in
such separate or co-Trustee but only to the extent necessary to enable such separate or co-
Trustee to exercise such powers, rights and remedies, and every covenant and obligation
necessary to the exercise thereof by such separate or co-Trustee shall run to and be
enforceable by either of them, provided that in the event of any conflict, the Co-Trustee shall
defer to the Trustee.
Should any instrument in writing from the Agency be required by the separate Trustee or
co-Trustee so appointed by the Trustee for more fully and certainly vesting in and confirming to
it such properties, rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the Agency. In case any
separate Trustee or co-Trustee, or a successor to either, shall become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations of
such separate Trustee or co-Trustee, so far as permitted by law, shall vest in and be exercised
by the Trustee until the appointment of a new Trustee or successor to such separate Trustee or
co-Trustee.
The Trustee may perform any of its obligations or duties hereunder and under any
related documents through agents or attorneys and shall not be responsible for the acts of any
such agents or attorneys appointed by it with due care.
SECTION 6.09. No Liability for Agency Performance. The Trustee shall have no liability
or obligation to the Bond Owners with respect to the payment of debt service by the Agency or
with respect to the observance or performance by the Agency of the other conditions,
covenants, and terms contained in this Indenture, or with respect to the investment of any
moneys in any fund or account established, held, or maintained by the Agency pursuant to this
Indenture
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ARTICLE VII
MODIFICATION OR AMENDMENT OF THIS INDENTURE
SECTION 7.01. Authorized Amendments. This Indenture and the rights and obligations
of the Agency and of the Owners may be modified or amended at any time by a Supplemental
Indenture which shall become binding upon adoption, without the consent of any Owners, to the
extent permitted by law and only for any one or more of the following purposes-
(a) to add to the covenants and agreements of the Agency contained in
this Indenture, other covenants and agreements thereafter to be observed, or to
limit or surrender any rights or power herein reserved to or conferred upon the
Agency provided such addition, limit, or surrender shall not materially adversely
effect the interest of the Owners as determined by the Agency and certified to the
Trustee; or
(b) to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision contained in this
Indenture, or in any other respect whatsoever as the Agency may deem
necessary or desirable, provided under any circumstances that such
modifications or amendments shall not materially adversely affect the interests of
the Owners; or
(c) to provide for the issuance of Parity Debt pursuant to Section 3.04,
and to provide the terms and conditions under which such Parity Debt may be
issued, including but not limited to the establishment of special funds and
accounts relating thereto and any other provisions relating solely thereto, subject
to and in accordance with the provisions of Section 3.04; or
(d) to amend any provision hereof to assure the exclusion from gross
income of interest on the Bonds for federal income tax purposes, in the opinion of
Bond Counsel filed with the Agency and the Trustee.
Except as set forth in the preceding paragraph, this Indenture and the rights and
obligations of the Agency and of the Owners may be modified or amended at any time by a
Supplemental Indenture which shall become binding when the written consents of the Owners
of a majority in aggregate principal amount of the Bonds then Outstanding are delivered to the
Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the
interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the
principal, interest or redemption premium (if any) at the time and. place and at the rate and in the
currency provided therein of any Bond without the express written consent of the Owner of such
Bond, (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification, or (c) without its written consent thereto, modify any of the rights or
obligations of the Trustee.
SECTION 7.02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective pursuant to this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights, duties and
obligations of the parties hereto or thereto and all Owners, as the case may be, shall thereafter
be determined, exercised and enforced hereunder subject in all respects to such modification
35
and amendment, and all the terms and conditions of any Supplemental Indenture shall be
deemed to be part of the terms and conditions of this Indenture for any and all purposes.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After the
effective date of any amendment or modification hereof pursuant to this Article VII, the Agency
may determine that any or all of the Bonds shall bear a notation, by endorsement in form
approved by the Agency, as to such amendment or modification and in that case upon demand
of the Agency the Owners of such Bonds shall present such Bonds for that purpose at the Office
of the Trustee, and thereupon a suitable notation as to such action shall be made on such
Bonds. In lieu of such notation, the Agency may determine that new Bonds shall be prepared
and executed in exchange for any or all of the Bonds and in that case upon demand of the
Agency the Owners of the Bonds shall present such Bonds for exchange at the Office of the
Trustee without cost to such Owners.
SECTION 7.04. Amendment by Mutual Consent. The provisions of this Article VII shall
not prevent any Owner from accepting any amendment as to the particular Bond held by such
Owner, provided that due notation thereof is made on such Bond.
SECTION 7.05. Trustee's Reliance. The Trustee may conclusively rely, and shall be
protected in relying, upon an opinion of counsel stating that all requirements of this Indenture
relating to the amendment or modification hereof have been satisfied and that such
amendments or modifications do not materially adversely affect the interests of the Owners.
36
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.01. Events of Default and Acceleration of Maturities. Each of the following
events shall constitute an Event of Default hereunder:
(a) Failure to pay any installment of the principal of any Bonds when and
as the same shall become due and payable, whether at maturity as therein
expressed, by proceedings for redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on any Bonds when and as
the same shall become due and payable.
(c) Failure by the Agency to observe and perform any of the other
covenants, agreements or conditions on its part in this Indenture or in the Bonds
contained, if such failure shall have continued for a period of thirty (30) days after
written notice thereof, specifying such failure and requiring the same to be
remedied, shall have been given to the Agency by the Trustee; provided,
however, if in the reasonable opinion of the Agency the failure stated in the
notice can be corrected, but not within such thirty (30) day period, such failure
shall not constitute an Event of Default if corrective action is instituted by the
Agency within such thirty (30) day period and the Agency shall thereafter
diligently and in good faith cure such failure in a reasonable period of time.
(d) The Agency shall commence a voluntary case under Title 11 of the
United States Code or any substitute or successor statute.
Subject in all respects to the provisions of Section 8.08, if an Event of Default has
occurred and is continuing, the Trustee may, and if requested in writing by the Owners of a
majority in aggregate principal amount of the Bonds then Outstanding the Trustee shall (a)
declare the principal of the Bonds, together with the accrued interest thereon, to be due and
payable immediately, and upon any such declaration the same shall become immediately due
and payable, anything in this Indenture or in the Bonds to the contrary notwithstanding, and (b)
upon receipt of indemnity satisfactory to it from any liability or expense, including payment of the
fees and expenses of its counsel and agents, exercise any other remedies available to the
Trustee and the Owners in law or at equity. The Trustee shall be entitled as a matter of right to
the appointment of a receiver or receivers for the Tax Revenues, if appropriate, and for the
revenues, income, product, and profits thereon, if any, ex parte, and without notice, and the
Agency consents to the appointment of such receiver upon the occurrence of an Event of
Default. If any receivership, bankruptcy, insolvency, or reorganization or other judicial
proceedings affecting the Agency is filed, the Trustee shall be entitled to file such proofs of
claims and other documents as may be necessary or advisable in order to have claims of the
Trustee and Owners allowed in such proceedings for the entire amount due and payable under
this Indenture at the time of the institution of such proceedings, and also for any additional
amount which may become due and payable after such date, without prejudice to the right of
any Owner to file a claim on his own behalf. The Trustee shall not be obligated to take any such
action unless offered compensation, indemnity for its potential liability, and reimbursement for its
legal fees and expenses in accordance with this Section.
37
Promptly upon becoming aware of the occurrence of an Event of Default, the Trustee
shall give notice of such Event of Default to the Agency by telephone confirmed in writing. Such
notice shall also state whether the principal of the Bonds shall have been declared to be or have
immediately become due and payable. With respect to any Event of Default described in
clauses (a) or (b) above the Trustee shall, and with respect to any Event of Default described in
clause (c) above the Trustee in its sole discretion may, also give such notice to the Owners in
the same manner as provided herein for notices of redemption of the Bonds, which shall include
the statement that interest on the Bonds shall cease to accrue from and after the date, if any, on
which the Trustee shall have declared the Bonds to become due and payable pursuant to the
preceding paragraph (but only to the extent that principal and any accrued, but unpaid, interest
on the Bonds is actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal
of the Bonds 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 Agency shall
deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such
declaration and all matured installments of interest (if any) upon all the Bonds, with interest on
such overdue installments of principal and interest (to the extent permitted by law) at the
weighted average interest rate then borne by the Outstanding Bonds, and the fees and
expenses of the Trustee, including any fees and expenses of its attorneys, and any and all other
defaults known to the Trustee (other than in the payment of principal of and interest on the
Bonds due and payable solely by reason of such declaration) shall have been made good or
cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate shall
have been made therefor, then, and in every such case, the Owners of a majority in aggregate
principal amount of the Bonds then Outstanding, by written notice to the Agency and to the
Trustee, may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration
and its consequences. However, no such rescission and 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. All of the Tax Revenues and
all sums in the funds and accounts established and held by the Trustee hereunder upon the
date of the declaration of acceleration as provided in Section 8.01 (excluding moneys in the Low
and Moderate Income Housing Account), and all sums thereafter received by the Trustee
hereunder, shall be applied by the Trustee as follows and in the following order:
(a) To the payment of any fees, costs and expenses incurred by the
Trustee to protect the interests of the Owners of the Bonds; payment of the fees,
costs and expenses of the Trustee (including fees and expenses of its counsel,
including any allocated costs of internal counsel) incurred in and about the
performance of its powers and duties under this Indenture and the payment of all
fees, costs and expenses owing to the Trustee pursuant to Section 6.06, together
with interest on all such amounts advanced by the Trustee at the maximum rate
permitted by law;
(b) To the payment of the whole amount then owing and unpaid upon
the Bonds for interest and principal with interest on such overdue amounts at the
respective rates of interest borne by the Outstanding Bonds, and in case such
moneys shall be insufficient to pay in full the whole amount so owing and unpaid
upon the Bonds, then to the payment of such interest, principal and interest on
overdue amounts without preference or priority among such interest, principal
and interest on overdue amounts ratably to the aggregate of such interest,
principal and interest on overdue amounts.
38
SECTION 8.03. Power of Trustee to Control Proceedings. In the event that the Trustee,
upon the happening of an Event of Default, shall have taken any action, by judicial proceedings
or otherwise, pursuant to its duties hereunder, whether upon its own discretion or upon the
request of the Owners of a majority in principal amount of the Bonds then Outstanding, it shall
have full power, in the exercise of its discretion for the best interests of the Owners of the
Bonds, with respect to the continuance, discontinuance, withdrawal, compromise, settlement or
other disposal of such action; provided, however, that the Trustee shall not, unless there no
longer continues an Event of Default, discontinue, withdraw, compromise or settle, or otherwise
dispose of any litigation pending at law or in equity, if at the time there has been filed with it a
written request signed by the Owners of a majority in principal amount of the Outstanding Bonds
hereunder opposing such discontinuance, withdrawal, compromise, settlement or other disposal
of such litigation accompanied, if requested by the Trustee, by indemnity or confirmation of
indemnity as described in Section 8.01.
SECTION 8.04. Limitation on Owners' Right to Sue. No Owner of any Bond issued
hereunder shall have the right to institute any suit, action or proceeding at law or in equity, for
any remedy under or upon this Indenture, unless (a) such Owner shall have previously given to
the Trustee written notice of the occurrence of an Event of Default; (b) the Owners of a majority
in aggregate principal amount of all the Bonds then Outstanding shall have made written
request upon the Trustee to exercise the powers hereinbefore granted or to institute such
action, suit or proceeding in its own name; (c) said Owners shall have tendered to the Trustee
indemnity reasonably acceptable to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with such request; and (d) the Trustee shall have refused or omitted to
comply with such request for a period of sixty (60) days after such written request shall have
been received by, and said tender of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any remedy
hereunder; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by his or their action to enforce any right under this Indenture, except in
the manner herein provided, and that all proceedings at law or in equity to enforce any provision
of this Indenture shall be instituted, had and maintained in the manner herein provided and for
the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of and premium,
if any, and interest on such Bond as herein provided, shall not be impaired or affected without
the written consent of such Owner, notwithstanding the foregoing provisions of this Section or
any other provision of this Indenture.
SECTION 8.05. Non-waiver. Nothing in this Article VIII or in any other provision of this
Indenture or in the Bonds, shall affect or impair the obligation of the Agency, which is absolute
and unconditional, to pay from the Tax Revenues and other amounts pledged hereunder, the
principal of and interest and redemption premium (if any) on the Bonds to the respective
Owners when due and payable as herein provided, or affect or impair the right of action, which
is also absolute and unconditional, of the Owners to institute suit to enforce such payment by
virtue of the contract embodied in the Bonds.
A waiver of any default by any Owner shall not affect any subsequent default or impair
any rights or remedies on the subsequent default. No delay or omission of any Owner or the
Trustee to exercise any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver of any such default or an acquiescence therein, and
39
every power and remedy conferred upon the Trustee and Owners by the Redevelopment Law
or by this Article VIII may be enforced and exercised from time to time and as often as shall be
deemed expedient by the Owners and the Trustee.
If a suit, action or proceeding to enforce any right or exercise any remedy shall be
abandoned or determined adversely to the Trustee, Agency, or Owners, the Agency, Trustee,
and the Owners shall be restored to their former positions, rights and remedies as if such suit,
action or proceeding had not been brought or taken.
SECTION 8.06. Actions by Trustee as Attorney-in-Fact. Any suit, action or proceeding
which any Owner shall have the right to bring to enforce any right or remedy hereunder may be
brought by the Trustee for the equal benefit and protection of all Owners similarly situated and
the Trustee is hereby appointed (and the successive respective Owners by taking and holding
the Bonds shall be conclusively deemed so to have appointed it) the true and lawful attorney-in-
fact of the respective Owners for the purpose of bringing any such suit, action or proceeding
and to do and perform any and all acts and things for and on behalf of the respective Owners as
a class or classes, as may be necessary or advisable in the opinion of the Trustee as such
attorney-in-fact, subject to the provisions of Article VI.
SECTION 8.07. Remedies Not Exclusive. No remedy herein conferred upon or reserved
to the Trustee or Owners is intended to be exclusive of any other remedy. Every such remedy
shall be cumulative and shall be in addition to every other remedy given hereunder or now or
hereafter existing, at law or in equity or by statute or otherwise, and may be exercised without
exhausting and without regard to any other remedy conferred by the Redevelopment Law or any
other law.
40
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Benefits Limited to Parties. Nothing in this Indenture, expressed or
implied, is intended to give to any person other than the Agency, the Trustee and the Owners,
any right, remedy, claim under or by reason of this Indenture. Any covenants, stipulations,
promises or agreements in this Indenture contained by and on behalf of the Agency shall be for
the sole and exclusive benefit of the Trustee and the Owners.
SECTION 9.02. Successor is Deemed Included in All References to Predecessor.
Whenever in this Indenture or any Supplemental Indenture either the Agency or the Trustee is
named or referred to, such reference shall be deemed to include the successors or assigns
thereof, and all the covenants and agreements in this Indenture contained by or on behalf of the
Agency or the Trustee shall bind and inure to the benefit of the respective successors and
assigns thereof whether so expressed or not.
SECTION 9.03. Defeasance of Bonds. If the Agency shall pay and discharge the entire
indebtedness on any Bonds in any one or more of the following ways:
(i) by paying or causing to be paid the principal of and interest on such
Bonds, as and when the same become due and payable;
(ii) by irrevocably depositing with the Trustee or another fiduciary, in
trust, at or before maturity, an amount of cash which, together with the available
amounts then on deposit in the funds and accounts established pursuant to this
Indenture, in the opinion or report of an Independent Accountant is fully sufficient
to pay such Bonds, including all principal, interest and redemption premium, if
any;
(iii) by irrevocably depositing with the Trustee or another fiduciary, in
trust, non-callable Defeasance Obligations in such amount as an Independent
Accountant shall determine will, together with the interest to accrue thereon and
available moneys then on deposit in any of the funds and accounts established
pursuant to this Indenture, be fully sufficient to pay and discharge the
indebtedness on such Bonds (including all principal, interest and redemption
premium, if any) at or before maturity;.or
(iv) by purchasing such Bonds prior to maturity and tendering such
Bonds to the Trustee for cancellation;
and if such Bonds are to be redeemed prior to the maturity thereof notice of such redemption
shall have been duly given or provision satisfactory to the Trustee shall have been made for the
giving of such notice, then, at the election of the Agency, and notwithstanding that any such
Bonds shall not have been surrendered for payment, the pledge of the Tax Revenues and other
funds provided for in this Indenture and all other obligations of the Trustee and the Agency
under this Indenture with respect to such Bonds shall cease and terminate, except only (A) the
obligations of the Agency under Section 5.11, (B) the obligation of the Trustee to transfer and
exchange Bonds hereunder, (C) the obligation of the Agency to pay or cause to be paid to the
Owners of such Bonds, from the amounts so deposited with the Trustee, all sums due thereon,
and (D) the obligations of the Agency to compensate and indemnify the Trustee pursuant to
41
Section 6.06. Notice of such election shall be filed with the Trustee. In the event the Agency
shall, pursuant to the foregoing provisions, pay and discharge any portion or all of the Bonds
then Outstanding, the Trustee shall be authorized to take such actions and execute and deliver
to the Agency all such instruments as may be necessary or desirable to evidence such
discharge, including without limitation, selection by lot of Bonds of any maturity of the Bonds
that the Agency has determined to pay and discharge in part. Any funds thereafter held by the
Trustee, which are not required for said purpose, shall be paid over to the Agency.
SECTION 9.04. Execution of Documents and Proof of Ownership by Owners. Any
request, declaration or other instrument which this Indenture may require or permit to be
executed by any Owner may be in one or more instruments of similar tenor, and shall be
executed by such Owner in person or by their attorneys appointed in writing.
Except as otherwise herein expressly provided, the fact and date of the execution by any
Owner or his attorney of such request, declaration or other instrument, or of such writing
appointing such attorney, may be proved by the certificate of any notary public or other officer
authorized to take acknowledgments of deeds to be recorded in the state in which he purports
to act, that the person signing such request, declaration or other instrument or writing
acknowledged to him the execution thereof, or by an affidavit of a witness of such execution,
duly sworn to before such notary public or other officer.
The ownership of Bonds and the amount, maturity, number and date of ownership
thereof shall be proved by the Registration Books.
Any request, declaration or other instrument or writing of the Owner of any Bond shall
bind all future Owners of such Bond in respect of anything done or suffered to be done by the
Agency or the Trustee in good faith and in accordance therewith.
SECTION 9.05. Disqualified Bonds. In determining whether the Owners of the requisite
aggregate principal amount of Bonds, have concurred in any demand, request, direction,
consent or waiver under this Indenture, Bonds which are owned or held by or for the account of
the Agency or the City (but excluding Bonds held in any employees' retirement fund) shall be
disregarded and deemed not to be Outstanding for the purpose of any such determination,
provided however that the Trustee shall not be deemed to have knowledge that any Bond is
owned or held by or for the account of the Agency or the City unless the Agency or the City is
the registered Owner or the Trustee has received written notice that any other registered Owner
is the owner or is holding for the account of the Agency or City.
SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or employee of
the Agency shall be individually or personally liable for the payment of the principal of or interest
or any premium on the Bonds; but nothing herein contained shall relieve any such member,
officer, agent or employee from the performance of any official duty provided by law.
SECTION 9.07. Destruction of Canceled Bonds. Whenever in this Indenture provision is
made for the surrender to the Agency of any Bonds which have been paid or canceled pursuant
to the provisions of this Indenture, upon receipt by the Trustee of the Request of the Agency a
certificate of destruction duly executed by the Trustee shall be deemed to be the equivalent of
the surrender of such canceled Bonds and the Agency shall be entitled to rely upon any
statement of fact contained in any certificate with respect to the destruction of any such Bonds
therein referred to.
42
SECTION 9.08. Notices. All written notices to be given under this Indenture shall be
given by first class mail or personal delivery to the party entitled thereto at its address set forth
below, or at such address as the party may provide to the other party in writing from time to
time. Notice shall be effective either (a) upon transmission by facsimile transmission or other
form of telecommunication, with prompt written confirmation by mail, (b) 48 hours after deposit
in the United States mail, postage prepaid, or (c) in any other case, upon actual receipt. The
Agency or the Trustee may, by written notice to the other parties, from time to time modify the
address or number to which communications are to be given hereunder.
If to the Agency: Ukiah Redevelopment Agency
300 Seminary Avenue
Ukiah, California 95482
Attention: Executive Director
If to the Trustee: The Bank of New York Mellon Trust Company, N.A.
700 South Flower Street, Suite 500
Los Angeles, California 90017
SECTION 9.09. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase
of this Indenture shall for any reason be held illegal, invalid or unenforceable, such holding shall
not affect the validity of the remaining portions of this Indenture. The Agency and the Trustee
hereby declare that they would have entered into this Indenture and each and every other
Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the Bonds
pursuant thereto irrespective of the fact that any one or more Sections, paragraphs, sentences,
clauses, or phrases of this Indenture may be held illegal, invalid or unenforceable.
SECTION 9.10. Unclaimed Moneys. Anything contained herein to the contrary
notwithstanding, any money held by the Trustee in trust for the payment and discharge of the
interest or premium (if any) on or principal of the Bonds which remains unclaimed for two (2)
years after the date when the payments of such interest, premium and principal have become
payable, if such money was held by the Trustee at such date, or for two (2) years after the date
of deposit of such money if deposited with the Trustee after the date when the interest and
premium (if any) on and principal of such Bonds have become payable, shall be repaid by the
Trustee to the Agency as its absolute property free from trust, and the Trustee shall thereupon
be released and discharged with respect thereto and the Owners shall look only to the Agency
for the payment of the principal of and interest and redemption premium (if any) on such Bonds.
SECTION 9.11. Payment on Non-Business Days. In the event any payment is required
to be made hereunder on a day which is not a Business Day, such payment shall be made on
the next succeeding Business Day.
SECTION 9.12. Execution in Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 9.13. Governing Law. This Indenture shall be construed and governed in
accordance with the laws of the State.
43
IN WITNESS WHEREOF, the UKIAH REDEVELOPMENT AGENCY has caused this
Indenture to be signed in its name by its Executive Director and attested to by its Secretary, and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., in token of its acceptance of
the trusts created hereunder, has caused this Indenture to be signed in its corporate name by its
officer thereunto duly authorized, all as of the day and year first above written.
UKIAH REDEVELOPMENT AGENCY
By
Executive Director
ATTEST:
Secretary
By
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.,
as Trustee
Authorized Officer
44
EXHIBIT A
FORM OF BOND
No.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
UKIAH REDEVELOPMENT AGENCY
UKIAH REDEVELOPMENT PROJECT
2011 TAXABLE HOUSING TAX ALLOCATION BOND
RATE OF INTEREST: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
.2011
REGISTERED OWNER:
PRINCIPAL AMOUNT:
DOLLARS
The UKIAH REDEVELOPMENT AGENCY, a public body, corporate and politic, duly
organized and existing under the laws of the State of California (the "Agency"), for value
received, hereby promises to pay (but only out of the Housing Tax Revenues and other moneys
and securities hereinafter referred to) to the Registered Owner identified above or registered
assigns (the "Registered Owner"), on the Maturity Date identified above, the Principal Amount
identified above in lawful money of the United States of America; and to pay interest thereon at
the Rate of Interest identified above in like lawful money from the date hereof, which date shall
be the Interest Payment Date (as hereinafter defined) next preceding the date of authentication
of this Bond (unless this Bond is authenticated on or before an Interest Payment Date and after
the fifteenth calendar day of the month preceding such Interest Payment Date (a "Record
Date"), in which event it shall bear interest from such Interest Payment Date, or unless this
Bond is authenticated on or prior to , 2011, in which event it shall bear interest from
the Original Issue Date identified above; provided, however, that if, at the time of authentication
of this Bond, interest is in default on this Bond, this Bond shall bear interest from the Interest
Payment Date to which interest hereon has previously been paid or made available for
payment), payable semiannually on June 1 and December 1 in each year, commencing
1, 2011 (the "Interest Payment Dates"), until payment of such Principal Amount in
full. The Principal Amount hereof is payable upon presentation hereof at the principal corporate
trust office of The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"), in
St. Paul, Minnesota, or such other location as the trustee may designate. Interest hereon is
payable by check of the Trustee mailed by first class mail on each Interest Payment Date to the
Registered Owner hereof at the address of such Registered Owner as it appears on the
registration books of the Trustee as of the preceding Record Date; provided that at the written
request of the owner of at least $1,000,000 aggregate principal amount of Bonds, which written
request is on file with the Trustee prior to any Record Date, interest on such Bonds shall be paid
A-1
on the succeeding Interest Payment Date by wire transfer to an account of a financial institution
within the United States of America as shall be specified in such written request.
This Bond is one of a duly authorized issue of bonds of the Agency designated as the
"Ukiah Redevelopment Agency Ukiah Redevelopment Project 2011 Taxable Housing Tax
Allocation Bonds" (the "Bonds") of an aggregate principal amount of $ all of like tenor
and date (except for such variation, if any, as may be required to designate varying numbers,
maturities, interest rates or redemption provisions) and all issued pursuant to the provisions of
the Community Redevelopment Law, constituting Part 1 of Division 24 of the California Health
and Safety Code (the "Redevelopment Law") and pursuant to an Indenture of Trust, dated as of
March 1, 2011, by and between the Agency and the Trustee (the "Indenture"). The Agency may
issue or incur additional obligations secured on parity with the Bonds, but only subject to the
terms of the Indenture. Reference is hereby made to the Indenture (copies of which are on file
at the office of the Agency) and all supplements thereto and to the Redevelopment Law for a
description of the terms on which the Bonds are issued, the provisions with regard to the nature
and extent of the Housing Tax Revenues, as that term is defined in the Indenture, and the rights
thereunder of the owners of the Bonds and the rights, duties and immunities of the Trustee and
the rights and obligations of the Agency thereunder, to all of the provisions of which the
Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Agency for the purpose of providing funds to
finance low and moderate income housing redevelopment activities with respect to its Ukiah
Redevelopment Project in the City of Ukiah, California (the "Project Area").
In accordance with the Indenture, this Bond and the interest hereon, together with all
other Bonds and all other parity obligations and the interest thereon (to the extent set forth in the
Indenture), are payable from, and are secured by a pledge of and lien on the Housing Tax
Revenues derived by the Agency from the Project Area. As and to the extent set forth in the
Indenture, all of the Housing Tax Revenues are exclusively and irrevocably pledged in
accordance with the terms and provisions of the Indenture and the Law, to the payment of the
principal of and interest and premium, if any, on the Bonds and any Parity Debt (as defined in
the Indenture). Notwithstanding the foregoing, certain Housing Tax Revenues may be applied
for other purposes as provided in the Indenture.
This Bond is not a debt of the City of Ukiah, the State of California, or any of its political
subdivisions, other than the Agency, and neither said City, said State, nor any of its political
subdivisions, is liable hereon nor in any event shall this Bond be payable out of any funds or
properties other than the Tax Revenues.
The rights and obligations of the Agency and the owners of the Bonds may be modified
or amended at any time in the manner, to. the extent and upon the terms provided in the
Indenture, but no such modification or amendment shall permit a change in the terms of
redemption or maturity of the principal of any outstanding Bond or of any installment of interest
thereon or a reduction in the principal amount or the redemption price thereof or in the rate of
interest thereon without the consent of the owner of such Bond, or shall reduce the percentages
of the Bond owners required to effect any such modification or amendment.
The 2011 Bonds maturing on or before December 1, , shall not be subject to
redemption prior to their respective stated maturities. The 2011 Bonds maturing on or after
December 1, , shall be subject to redemption in whole, or in part among maturities as
shall be determined by the Agency and by lot within a maturity, on any date commencing
December 1, , at the option of the Agency from any available source of funds, at a
redemption price (expressed as a percentage of the principal amount of 2011 Bonds to be
redeemed) as set forth in the following table, together with accrued interest thereon to the date
A-2
fixed for'redemption:
December 1,
December 1,
December 1,
Redemption Dates
Redemption Price
through
through
and thereafter
The Agency shall be required to give the Trustee written notice of its intention to redeem
2011 Bonds under this subsection (a), and the manner of selecting such 2011 Bonds for
redemption from among the maturities thereof, at least forty-five (45) days prior to the date fixed
for such redemption, or such later date as may be acceptable to the Trustee, and shall transfer
to the Trustee for deposit in the Debt Service Fund all amounts required for such redemption at
least one (1) Business Day prior to the date fixed for such redemption.
(b) Mandatory Sinking Account Redemption of 2011 Bonds. (i) The 2011 Bonds
maturing on December 1, are Term Bonds and, shall also be subject to redemption, in
part by lot, on December 1 in each year as set forth in the following table, from Sinking Account
payments made by the Agency pursuant to Section 4.03(c) at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium, or in lieu thereof shall be. purchased pursuant to the
succeeding paragraph (iv) of this subsection (b), in the aggregate principal amounts and on the
dates as set forth in the following table; provided, however, that if some but not all of such 2011
Bonds have been redeemed pursuant to subsection (a) above, the total amount of all future
Sinking Account payments established pursuant to this subsection (b) (i) shall be reduced by
the aggregate principal amount of such 2011 Bonds so redeemed, to be allocated among such
Sinking Account payments on a pro rata basis in integral multiples of $5,000 as determined by
the Agency (written notice of which determination shall be given by the Agency to the Trustee).
Term Bonds Maturing December 1,
Sinking Account
Redemption Date Principal Amount
(December 1) To Be Redeemed
In lieu of redemption of the Bonds pursuant to the foregoing tables, amounts on deposit
in the Special Fund established by the Indenture to the extent not otherwise required to be
transferred by the Trustee pursuant to the Indenture may also be used and withdrawn at the
direction of the Agency at any time for the purchase of such Bonds at public or private sale as
and when and at such prices (including brokerage and other charges and including accrued
interest) as the Agency may in its discretion determine. The par amount of any of such Bonds
so purchased by the Agency in any twelve-month period ending on July 1 in any year shall be
credited towards and shall reduce the par amount of such Bonds required to be redeemed on
the next succeeding December 1.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first
class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption date to
the respective owners of any Bonds designated for redemption at their addresses appearing on
A-3
the Bond registration books of the Trustee, but neither failure to receive such notice nor any
defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption.
The Agency has the right to rescind any optional redemption by written notice to the
Trustee on or prior to the date fixed for redemption. Any such notice of optional redemption
shall be canceled and annulled if for any reason funds will not be or are not available on the
date fixed for redemption for the payment in full of the Bonds then called for redemption, and
such cancellation shall not constitute an Event of Default under the Indenture. The Agency and
the Trustee shall have no liability to the Owners or any other party related to or arising from
such rescission of redemption. The Trustee shall mail notice of such rescission of redemption in
the same manner as the original notice of redemption was sent.
If this Bond is called for redemption and payment is duly provided therefor as specified in
the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default, as defined in the Indenture, shall occur, the principal of all
outstanding Bonds may be declared due and payable upon the conditions, in the manner and
with the effect provided in the Indenture, but such declaration and its consequences may be
rescinded and annulled as further provided in the Indenture.
This Bond is transferable by the Registered Owner hereof, in person or by his attorney
duly authorized in writing, at said corporate trust office of the Trustee in Los Angeles, California
or such other place as designated by the .Trustee, but only in the manner, subject to the
limitations and upon payment of the charges provided in the Indenture, and upon surrender and
cancellation of this Bond. Upon registration of such transfer a new Bond or Bonds, of
authorized denomination or denominations, for the same aggregate principal amount and of the
same maturity will be issued to the transferee in exchange herefor.
The Agency and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Agency and the Trustee shall not be affected by any
notice to the contrary.
It is hereby certified that all of the things, conditions and acts required to exist, to have
happened or to have been performed precedent to and in the issuance of this Bond do exist,
have happened or have been performed in due and regular time, form and manner as required
by the Redevelopment Law and the laws of the State of California and that the amount of this
Bond, together with all other indebtedness of the Agency, does not exceed any limit prescribed
by the Redevelopment Law or any laws of the State of California, and is not in excess of the
amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the Trustee's Certificate of Authentication hereon endorsed shall
have been manually signed by the Trustee.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC"), to the Fiscal Agent 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 representative of DTC (and any payment is made
to Cede & Co. or to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
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IN WITNESS WHEREOF, the Ukiah Redevelopment Agency has caused this Bond to be
executed in its name and on its behalf with the facsimile signature of its Chairman and attested
to by the facsimile signature of its Secretary, all as of the Original Issue Date specified above.
UKIAH REDEVELOPMENT AGENCY
By:
ATTEST:
By:
Secretary
Chairman
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By:
Authorized Signatory
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ASSIGNMENT
For value received the undersigned do(es) hereby sell, assign and transfer unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within Bond and do(es) hereby irrevocably constitute and appoint
attorney,
to transfer the same on the books of the Trustee, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
NOTICE: Signature guarantee shall be made by a NOTICE: The signature(s) on this Assignment must
guarantor institution participating in the correspond with the name(s) as written on
Securities Transfer Agents Medallion the face of the within Bond in every
Program or in such other guarantee particular without alteration or enlargement
program acceptable to the Trustee. or any change whatsoever.
A-6
DUE TO THE VOLUME OF ATTACHMENT THIS
DOCUMENT MAY BE VIEWED IN FULL AT:
300 Seminary Avenue, Ukiah, CA
c/o City Clerk's Office
Jones Hall Draft 2/ 20 / 11
FIRST SUPPLEMENT TO INDENTURE OF TRUST
Dated as of March 1, 2011
by and between the
UKIAH REDEVELOPMENT AGENCY
and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
as Trustee
Relating to
Ukiah Redevelopment Agency
Ukiah Redevelopment Project
2011 Tax Allocation Bonds
TABLE OF CONTENTS
Page
Section 1.
Supplement to 2007 Bonds Indenture 2
Section 2.
Amendment of 2007 Bonds Indenture 8
Section 3.
Attachment of Appendix B
11
Section 4.
Partial Invalidity
11
Section 5.
Execution in Counterparts
11
Section 6.
Governing Law
12
EXHIBIT A -APPENDIX B TO INDENTURE
-i-
FIRST SUPPLEMENT TO INDENTURE OF TRUST
This First Supplement to Indenture of Trust (this "First Supplement"), dated as of
March 1, 2011, is by and between the UKIAH REDEVELOPMENT AGENCY, a public body
corporate and politic duly organized and existing under the laws of the State of California (the
"Agency"), and THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., a national
banking association organized and existing under the laws of the United States of America, as
trustee under the hereinafter defined 2007 Bonds Indenture (the "Trustee");
WITNESSETH:
WHEREAS, the Agency was duly established and authorized to transact business and
exercise powers under and pursuant to the provisions of the Community Redevelopment Law,
being Part 1 of Division 24 (commencing with Section 33000) of the Health and Safety Code of
the State of California (the "Law"), including the power to issue bonds for any of its corporate
purposes;
WHEREAS, pursuant to Section 33640 et seq of the Law, the Agency is authorized to
issue bonds for any redevelopment purpose;
WHEREAS, a redevelopment plan for the Agency's Ukiah Redevelopment Project in the
City of Ukiah have been adopted in compliance with all requirements of the Law (the
"Redevelopment Project)";
WHEREAS, the Agency issued its $5,595,000 aggregate principal amount of Ukiah
Redevelopment Project Tax Allocation Refunding Bonds, Series 2007 (the "2007 Bonds") for the
purpose of financing redevelopment activities with respect to the Redevelopment Project,
pursuant to an Indenture of Trust, dated as of April 1, 2007, by and between the Agency and the
Trustee (the "2007 Bonds Indenture");
WHEREAS, for the purpose of financing additional redevelopment activities with respect
to the Redevelopment Project, the Agency proposes to issue its $ aggregate
principal amount of Ukiah Redevelopment Agency Ukiah Redevelopment Project 2011 Tax
Allocation Bonds (the "2011 Bonds");
WHEREAS, the 2007 Bonds Indenture permits the issuance.of Parity Debt (within the
meaning of the 2007 Bonds Indenture) payable from Tax Revenues (as defined in the 2007
Bonds Indenture) on a parity with the 2007 Bonds, subject to certain terms and conditions;
WHEREAS, this First Supplement is entered into pursuant to and in accordance with the
provisions of Section 3.05 of the 2007 Bonds Indenture for the purpose of prescribing the terms
and conditions applicable to the issuance of the 2011 Bonds as Parity Debt under the 2007
Bonds Indenture, and for the purposes of amending and supplementing the 2007 Bonds
Indenture with respect thereto; and
WHEREAS, the Agency has certified that all acts and proceedings required by law
necessary to make the 2011 Bonds, when executed by the Agency, authenticated and delivered
by the Trustee, and duly issued, the valid, binding and legal special obligations of the Agency,
and to constitute this First Supplement a valid and binding agreement for the uses and purposes
herein set forth in accordance with its terms, have been done and taken, and the execution and
delivery of the First Supplement have been in all respects duly authorized.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto do hereby agree as follows:
SECTION 1. Supplement to 2007 Bonds Indenture. In accordance with the provisions of
Section 7.01(c) of the 2007 Bonds Indenture, the 2007 Bonds Indenture is hereby amended by
adding a supplement thereto consisting of a new article to be designated as Article X. Such
Article X shall read in its entirety as follows:
ARTICLE X
2011 BONDS
Section 10.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 10.01 shall, for all purposes of this Article but not for any other purposes of this
Indenture, have the respective meanings specified in this Section 10.01. All terms defined in
Section 1.01 and not otherwise defined in this Section 10.01 shall, when used in this Article X,
have the respective meanings given to such terms in Section 1.02.
"Article X" means this Article X which has been incorporated in and made a part of this
Indenture pursuant to the First Supplement, together with all amendments of and supplements
to this Article X entered into pursuant to the provisions of Section 8.01.
"Bond Year" means the one-year period beginning on December 2 in any year and
ending on the next succeeding December 1, both dates inclusive, except that, with respect to
the 2011 Bonds, the first Bond Year shall begin on the Closing Date and end on December 1,
2011.
"Closing Date" means the date on which the 2011 Bonds are delivered to the Original
Purchaser.
"Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate
relating to the 2011 Bonds executed by the Agency and dated the date of issuance and delivery
of the 2011 Bonds, as originally executed and as it may be amended from time to time in
accordance with the terms thereof.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the Agency relating to the authorization, issuance, sale and delivery of the 2011
Bonds, including but not limited to printing expenses, rating agency fees, municipal bond
insurance and surety bond premiums, filing and recording fees, initial fees, expenses and
charges of the Trustee, and its counsel, including the Trustee's first annual administrative fee,
fees, charges and disbursements of attorneys, financial advisors, accounting firms, consultants
and other professionals, fees and charges for preparation, execution and safekeeping of the
2011 Bonds and any other cost, charge or fee in connection with the original issuance of the
2011 Bonds.
"First Supplement" means the First Supplement to Indenture of Trust, dated as of March
1, 2011, by and between the Agency and the Trustee, as the same may be amended from time
to time in accordance with the terms of the 2007 Bonds Indenture.
"Interest Payment Date" means June 1, 2011, and each December 1 and June 1 in each
year thereafter so long as any of the 2011 Bonds remain Outstanding.
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It Original Purchaser" means Piper Jaffray & Co., as the first purchaser of the 2011
Bonds.
"Participating Underwriter" has the meaning ascribed thereto in the Continuing
Disclosure Certificate.
2011.
"Resolution" means Resolution No. adopted by the Agency on February 23,
"2011 Bonds" means the Bonds which are authorized and issued under Section 10.02.
"2011 Costs of Issuance Fund" means the fund by that name established and held by
the Trustee pursuant to Section 10.07.
"2007 Bonds" means the $5,595,000 aggregate principal amount of Ukiah
Redevelopment Agency Ukiah Redevelopment Project 2007 Tax Allocation Refunding Bonds.
"2007 Bonds Indenture" means the Indenture of Trust, dated as of April 1, 2007, by and
between the Agency and The Bank of New York Trust Company, National Association, as
trustee„ as the same may be amended from time to time in accordance with the terms thereof,
including as amended and supplemented by this First Supplement..
Section 10.02. Authorization of 2011 Bonds. The 2011 Bonds have been authorized to
be issued by the Agency pursuant to the Resolution. The 2011 Bonds are issued as Parity Debt
in the aggregate principal amount of Million Thousand
Dollars ) under and subject to the terms of this Indenture, the Resolution and
the Law, for the purpose of providing funds to refinance redevelopment activities with respect to
the Redevelopment Project. This Indenture constitutes a continuing agreement with the Owners
of all of the 2011 Bonds issued hereunder and at any time Outstanding to secure the full and
final payment of principal of and premium, if any, and interest on all 2011 Bonds which may
from time to time be executed and delivered hereunder, subject to the covenants, agreements,
provisions and conditions herein contained. The 2011 Bonds shall be designated the "Ukiah
Redevelopment Agency Ukiah Redevelopment Project 2011 Tax Allocation Bonds".
Section 10.03. Terms of 2011 Bonds. The 2011 Bonds shall be dated as of the Closing
Date, and shall be issued in fully registered form without coupons in denominations of $5,000 or
any integral multiple thereof and shall be subject to th'e book entry system provisions of Section
2.04. The 2011 Bonds shall mature on December 1 in each of the years and in the respective
principal amounts, and shall bear interest which is payable on each Interest Payment Date in
the respective amounts, as set forth in the following table.
Maturity Schedule
Maturity Principal Interest
(December 1) Amount Rate
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Interest on the Series 2007 Bonds shall be payable from the Interest Payment Date next
preceding the date of authentication thereof unless (i) a Series 2007 Bond is authenticated on or
before an Interest Payment Date and after the close of business on the preceding Record Date,
in which event it shall bear interest from such Interest Payment Date, (ii) a Series 2007 Bond is
authenticated on or before the first Record Date, in which event interest thereon shall be
payable from the Closing Date, or (iii) interest on any Series 2007 Bond is in default as of the
date of authentication thereof, in which event interest thereon shall be payable from the date to
which interest has been paid in full, payable on each Interest Payment Date. Interest shall be
paid on each Interest Payment Date to the persons in whose names the ownership of the Series
2011 Bonds is registered on the Registration Books at the close of business on the immediately
preceding Record Date, except as provided below. Interest on any Series 2011 Bond which is
not punctually paid or duly provided for on any Interest Payment Date shall be payable to the
person in whose name the ownership of such Series 2011 Bond is registered on the
Registration Books at the close of business on a special record date for the payment of such
defaulted interest to be fixed by the Trustee, notice of which shall be given to such Owner not
less than ten (10) days prior to such special record date.
Interest on the Series 2011 Bonds shall be paid by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Owners of the Series 2011
Bonds at their respective addresses shown on the Registration Books as of the close of
business on the preceding Record Date; provided, however, that at the written request of the
Owner of Series 2011 Bonds in an aggregate principal amount of at least $1,000,000, which
written request is on file with the Trustee as of any Record Date, interest on such Series 2011
Bonds shall be paid on each succeeding Interest Payment Date by wire transfer in immediately
available funds to such account within the United States of America as shall be specified in such
written request (any such written request shall remain in effect until rescinded in writing by the
Owner). The principal of and premium (if any) on the Series 2011 Bonds shall be payable in
lawful money of the United States of America by check or draft of the Trustee upon presentation
and surrender thereof at the Office of the Trustee.
Section 10.04. Redemption. The 2011 Bonds shall be redeemed as provided in this
Section 10.04.
(a) Optional Redemption. The 2011 Bonds maturing on or before December 1, ,
shall not be subject to redemption prior to their respective stated maturities. The 2011 Bonds
maturing on or after December 1, , shall be subject to redemption in whole, or in part
among maturities as shall be determined by the Agency and by lot within a maturity, on any date
commencing December 1, , at the option of the Agency from any available source of
funds, at a redemption price (expressed as a percentage of the principal amount of 2011 Bonds
to be redeemed) as set forth in the following table, together with accrued interest thereon to the
date fixed for redemption:
Redemption Dates Redemption Price
December 1, through August 31, 2012 %
December 1, through August 31, 2013 %
December 1, and thereafter %
The Agency shall be required to give the Trustee written notice of its
intention to redeem 2011 Bonds under this subsection (a), and the manner of selecting
such 2011 Bonds for redemption from among the maturities thereof, at least forty-five
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(45) days prior to the date fixed for such redemption, or such later date as may be
acceptable to the Trustee, and shall transfer to the Trustee for deposit in the Debt
Service Fund all amounts required for such redemption at least one (1) Business Day
prior to the date fixed for such redemption.
(b) Mandatory Sinking Account Redemption of 2011 Bonds. (i) The 2011
Bonds maturing on December 1, are Term Bonds and, shall also be subject to
redemption, in part by lot, on December 1 in each year as set forth in the following table,
from Sinking Account payments made by the Agency pursuant to Section 4.03(c) at a
redemption price equal to the principal amount thereof to be redeemed together with
accrued interest thereon to the redemption date, without premium, or in lieu thereof shall
be purchased pursuant to the succeeding paragraph (iv) of this subsection (b), in the
aggregate principal amounts and on the dates as set forth in the following table;
provided, however, that if some but not all of such 2011 Bonds have been redeemed
pursuant to subsection (a) above, the total amount of all future Sinking Account
payments established pursuant to this subsection (b) (i) shall be reduced by the
aggregate principal amount of such 2011 Bonds so redeemed, to be allocated among
such Sinking Account payments on a pro rata basis in integral multiples of $5,000 as
determined by the Agency (written notice of which determination shall be given by the
Agency to the Trustee).
Term Bonds Maturing December 1,
Sinking Account
Redemption Date Principal Amount
(December 1) To Be Redeemed
(iv) In lieu of redemption of the 2011 Bonds pursuant to this subsection (b),
amounts on deposit in the Special Fund (to the extent not required to be transferred by
the Trustee pursuant to Section 5.03 during the current Bond Year) may also be used
and withdrawn by the Agency at any time for the purchase of such 2011 Bonds at public
or private sale as and when and at such prices (including brokerage and other charges
and including accrued interest) as the Agency may in its discretion determine. The par
amount of any of such 2011 Bonds so purchased by the Agency in any twelve-month
period ending on December 1 in any year shall be credited towards and shall reduce the
par amount of such 2011 Bonds required to be redeemed pursuant to this subsection (b)
on the next succeeding December 1.
(c) Redemption Procedures. Except as provided in this Section 10.04 to the
contrary, the redemption procedures and other provisions of Section 2.03 shall apply to the
redemption of the 2011 Bonds.
Section 10.05. Form and Execution of 2011 Bonds. CUSIP Numbers. The 2011 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 B attached hereto and
by this reference incorporated herein, with necessary or appropriate variations, omissions and
insertions, as permitted or required by this Indenture.
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The 2011 Bonds shall be executed on behalf of the Agency by the signature of its
Chairman and the signature of its Secretary who are in office on the date of execution and
delivery of the First Supplement or at any time thereafter, and the seal of the Agency shall be
impressed, imprinted or reproduced by facsimile signature thereon. Either or both of such
signatures may be made manually or may be affixed by facsimile thereof. If any officer whose
signature appears on any 2011 Bond ceases to be such officer before delivery of the 2011
Bonds to the purchaser, such signature shall nevertheless be as effective as if the officer had
remained in office until the delivery of the 2011 Bonds to the purchaser. Any 2011 Bond may be
signed and attested on behalf of the Agency by such persons as at the actual date of the
execution of such 2011 Bond shall be the proper officers of the Agency although on the date of
such 2011 Bond any such person shall not have been such officer of the Agency.
Only such of the 2011 Bonds as shall bear thereon a Certificate of Authentication in the
form set forth in Exhibit B, executed and dated 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 such 2011 Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
The Trustee and the Agency shall not be liable for any omission, defect or inaccuracy in
the CUSIP number that appears on any 2011 Bond or in any redemption notice. The Trustee
may, in its discretion, include in any redemption notice a statement to the effect that the CUSIP
numbers on the 2011 Bonds have been assigned by an independent service and are included in
such notice solely for the convenience of the Owners and that neither the Trustee nor the
Agency shall be liable for any inaccuracies in such numbers.
Section 10.06. Application of Proceeds of Sale of 2011 Bonds. Upon the receipt of
payment for the 2011 Bonds on the Closing Date, the proceeds thereof shall be paid to the
Trustee and deposited in a temporary fund (if required by the Trustee to make the following
transfers and deposits, which temporary fund shall be closed after such transfers and deposits
have been made), all of the amounts on deposit in which shall be transferred on the Closing
Date as follows:
(a) The Trustee shall deposit to the 2011 Costs of Issuance Fund the amount of
$ proceeds of the 2011 Bonds.
(b) The Trustee shall transfer the remaining amount of Bond proceeds, namely,
$ to the Agency to be deposited by the Agency in the Redevelopment
Fund to be applied as provided in Section 10.08.
Section 10.07. 2011 Costs of Issuance Fund. There is hereby established a separate
fund to be known as the "2011 Costs of Issuance Fund", which shall be held by the Trustee in
trust. The moneys in the 2011 Costs of Issuance Fund shall be used and withdrawn by the
Trustee from time to time to pay the Costs of Issuance upon submission of a Request of the
Agency stating (a) the person to whom payment is to be made, (b) the amount to be paid, (c)
the purpose for which the obligation was incurred, (d) that such payment is a proper charge
against the 2011 Costs of Issuance Fund, and (e) that such amounts have not been the subject
of a prior Written Request of the Agency; in each case together with a statement or invoice for
each amount requested thereunder. On the earlier of June 1, 2011, or the date of receipt by the
Trustee of a Request of the Agency therefor, all amounts (if any) remaining in the 2011 Costs of
Issuance Fund shall be withdrawn therefrom by the Trustee and be transferred to the Agency
for deposit in the Redevelopment Fund described in Section 10.08.
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Section 10.08 Redevelopment Fund. There is hereby established a separate fund
known as the "Redevelopment Fund" which the Agency hereby covenants and agrees to cause
to be maintained and which shall be held in trust by the Agency. The Redevelopment Fund
shall continue be maintained pursuant to and in accordance with this Indenture and moneys in
the Redevelopment Fund shall be used in the manner provided by the Law solely for the
purpose of aiding in financing the Redevelopment Project, including payment of any remaining
unpaid 2011 Costs of Issuance. The Agency covenants that no funds on deposit in the
Redevelopment Fund shall be applied for any purpose not authorized by the Law and the
provisions of this Indenture.
Section 10.09 Security for 2011 Bonds. The 2011 Bonds shall be Parity Debt within the
meaning of such term in Section 1.01 and shall be secured in the manner and to the extent set
forth in Article IV. As provided in Section 4.01, the 2011 Bonds shall be secured on a parity with
all other Bonds issued under this Indenture, including the 2007 Bonds, by a first pledge of and
lien on all of the Tax Revenues in the Special Fund and all moneys in the Debt Service Fund
and the accounts therein, including the Reserve Account.
Section 10.10 Continuing Disclosure. The Agency hereby covenants and agrees that it
will comply with and carry out all of the provisions of the Continuing Disclosure Certificate.
Notwithstanding any other provision of this Indenture, failure of the Agency to comply with the
Continuing Disclosure Certificate shall not be considered an Event of Default; however, any
Participating Underwriter or any holder or beneficial owner of the 2011 Bonds may take such
actions as may be necessary and appropriate, including seeking specific performance by court
order, to cause the Agency to comply with its obligations under this Section 10.10.
Section 10.11 Benefits Limited to Parties. Nothing in this Article X, expressed or implied,
is intended to give to any person other than the Agency, the Trustee, the Insurer and the
Owners of the 2011 Bonds, any right, remedy, claim under or by reason of this Article X. Any
covenants, stipulations, promises or agreements in this Article X contained by and on behalf of
the Agency shall be for the sole and exclusive benefit of the Trustee, the Insurer and the
Owners of the 2011 Bonds.
Section 10.12. Effect of this Article X. Except as in this Article X expressly provided or
except to the extent inconsistent with any provision of this Article X, the 2011 Bonds shall be
deemed to be Bonds under and within the meaning of Section 1.01, and every term and
condition contained in the other provisions of this Indenture shall apply to the 2011 Bonds with
full force and effect, with such omissions, variations and modifications thereof as may be
appropriate to make the same conform to this Article X.
Section 10.13. Further Assurances. The Agency 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 Owners of the 2011 Bonds and the rights
and benefits provided in this Indenture.
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SECTION 2. Amendment of 2007 Bonds Indenture. The 2007 Bonds Indenture is
hereby further amended as set forth in this Section 2:
(a) Section 1.02 of the Indenture is hereby amended by adding thereto the
following new defined terms and, in the case of the following defined terms which are
currently contained in Section 1.01, by amending such to read in their entirety as follows:
"2011 Bonds" means the Ukiah Redevelopment Agency Ukiah Redevelopment
Project 2011 Tax Allocation Bonds, authorized pursuant to Section 10.02 and at any
time Outstanding under this Indenture.
(b) Section 4.03(c) of the 2007 Bonds Indenture is hereby amended to read
in its entirety as follows:
"(c) Sinking Account. On or before the fifth (5th) Business Day preceding each
December 1 on which any Outstanding Term Bonds are subject to mandatory
redemption pursuant to Section 2.03(b) or Section 10.04(b), the Agency shall withdraw
from the Special Fund and transfer to the Trustee for deposit in the Sinking Account an
amount which, when added to the amount then contained in the Sinking Account, will be
equal to the aggregate principal amount of the Term Bonds required to be redeemed on
such March 1 pursuant to Section 2.03(b) or Section 10.04(b). All moneys on deposit in
the Sinking Account shall be used and withdrawn by the Trustee for the sole purpose of
paying the principal of the Term Bonds as it shall become due and payable upon
redemption pursuant to Section 2.03(b) or Section 10.04(b).
(c) Section 4.03(e) of the 2007 Bonds Indenture is hereby amended to read
in its entirety as follows:
"(e) Redemption Account. On or before the fifth (5th) Business Day preceding
any redemption date on which Bonds are to be redeemed pursuant to Section 2.03(a) or
Section 10.04(a), the Agency shall withdraw from the Special Fund and transfer to the
Trustee for deposit in the Redemption Account an amount required to pay the principal
of and premium, if any, on the Bonds to be redeemed on such redemption date pursuant
to Section 2.03(a) or 10.04(a). All moneys in the Redemption Account shall be used and
withdrawn by the Trustee solely for the purpose of paying the principal of and premium,
if any, on the Bonds to be redeemed pursuant to Section 2.03(a) or Section 10.04(a) on
the date set for such redemption.
SECTION 3. Attachment of Exhibit B. The Indenture is also hereby further amended by
attaching thereto and incorporating therein an Exhibit B setting forth the form of the 2011 Bonds,
which shall read substantially as set forth in Appendix A which is attached hereto and by this
reference incorporated herein.
SECTION 4. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of
this First Supplement shall for any reason be held illegal, invalid or unenforceable, such holding
shall not affect the validity of the remaining portions of this First Supplement. The Agency
hereby declares that it would have entered into this First Supplement and each and every other
Section, paragraph, sentence, clause or phrase hereof and authorized the issue of the 2011
Bonds pursuant thereto irrespective of the fact that any one or more Sections, paragraphs,
-8-
sentences, clauses, or phrases of this First Supplement may be held illegal, invalid or
unenforceable.
SECTION 5. Execution in Counterparts. This First Supplement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.
SECTION 6. Governinq Law. This First Supplement shall be construed and governed in
accordance with the laws of the State of California.
-9-
IN WITNESS WHEREOF, the UKIAH REDEVELOPMENT AGENCY has caused this First
Supplement to be signed in its name by its Executive Director and attested by its Secretary, and
THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A., in token of its acceptance of
the trusts created hereunder, has caused this First Supplement to be signed in its corporate
name by its officers thereunto duly authorized, all as of the day and year first above written.
By:
ATTEST:
By:
Secretary
UKIAH REDEVELOPMENT AGENCY
Executive Director
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A., as Trustee
By:
Authorized Officer
-10-
APPENDIX A
EXHIBIT B TO INDENTURE
(FORM OF 2011 BOND)
No.
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
UKIAH REDEVELOPMENT AGENCY
UKIAH REDEVELOPMENT PROJECT
2011 Tax Allocation Bond
INTEREST RATE: MATURITY DATE: DATED DATE: CUSIP:
% December 1, [Closing Date]
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT:
The Ukiah Redevelopment Agency, a public body, corporate and politic, duly organized
and existing under the laws of the State of California (the "Agency"), for value received, hereby
promises to pay to the Registered Owner specified above or registered assigns (the "Registered
Owner"), on the Maturity Date specified above (subject to any right of prior redemption
hereinafter provided for), the Principal Amount specified above in lawful money of the United
States of America, and to pay interest thereon at the Interest Rate specified above in like lawful
money from the Interest Payment Date (as hereinafter defined) next preceding the date of
authentication of this Bond (unless this Bond is authenticated on or before an Interest Payment
Date and after the fifteenth (15th) calendar day of the month preceding such Interest Payment
Date (a "Record Date"), in which event it shall bear interest from such Interest Payment Date, or
unless this Bond is authenticated on or prior to February 15, 2004, in which event it shall bear
interest from the Dated Date specified above; provided, however, that if, at the time of
authentication of this Bond, interest is in default on this Bond, this Bond shall bear interest from
the Interest Payment Date to which interest hereon has previously been paid or made available
for payment), payable semiannually on March 1 and March 1 in each year, commencing March
1, 2004 (the "Interest Payment Dates"), until payment of such Principal Amount in full. The
Principal Amount hereof is payable upon presentation hereof at the principal corporate trust
office of The Bank of New York Mellon Trust Company, N.A. in St. Paul, Minnesota (the
"Trustee"), or such other office of the Trustee as the Trustee may designate (the "Principal
Corporate Trust Office"). Interest hereon is payable by check of the Trustee mailed by first
class mail on each Interest Payment Date to the Registered Owner hereof at the address of
such Registered Owner as it appears on the registration books of the Trustee as of the
preceding Record Date; provided that at the written request of the owner of at least $1,000,000
aggregate principal amount of Bonds, which written request is on file with the Trustee prior to
the Record Date immediately preceding the applicable Interest Payment Date, interest on such
Appendix A-1
Bonds shall be paid on such Interest Payment Date by wire transfer to such account within the
United States of America as shall be specified in such written request.
This Bond is one of a duly authorized issue of bonds of the Agency designated as the
"Ukiah Redevelopment Agency Ukiah Redevelopment Project 2011 Tax Allocation Bonds" (the
"Bonds") of an aggregate principal amount of Million
Thousand Dollars all of like tenor and date (except for such variation, if any, as
may be required to designate varying numbers, maturities or interest rates) and all issued
pursuant to the provisions of the Community Redevelopment Law of the State of California,
constituting Part 1 of Division 24 of the Health and Safety Code of the State of California (the
"Redevelopment Law"), and pursuant to an Indenture of Trust, dated as of April 1, 2007, as
supplemented and amended by a First Supplement to Indenture of Trust, dated as of March 1,
2011 (as so amended and supplemented, the "Indenture"). The Bonds have been issued on
parity with the Ukiah Redevelopment Agency Ukiah Redevelopment Project 2007 Tax Allocation
Refunding Bonds issued in the original principal amount of $5,595,000 (the "2007 Bonds"). The
Agency may issue or incur additional obligations secured and payable on parity with the 2007
Bonds and the Bonds, but only subject to the terms of the Indenture. Reference is hereby made
to the Indenture (copies of which are on file at the office of the Agency) and all supplements
thereto and to the Redevelopment Law for a description of the terms on which the Bonds are
issued, the provisions with regard to the nature and extent of the Tax Revenues, as that term is
defined in the Indenture, and the rights thereunder of the owners of the Bonds and the rights,
duties and immunities of the Trustee and the rights and obligations of the Agency thereunder, to
all of the provisions of which the Registered Owner of this Bond, by acceptance hereof, assents
and agrees.
The Bonds have been issued by the Agency for the purpose of providing funds to
refinance certain outstanding tax allocation bonds of the Agency issued to finance
redevelopment activities with respect to its Ukiah Redevelopment Project (the "Project Area").
In accordance with the Indenture, this Bond and the interest hereon, together with all
other Bonds, all 2007 Bonds and all other parity obligations and the interest thereon (to the
extent set forth in the Indenture), are payable from, and are secured by a pledge of and lien on
the Tax Revenues derived by the Agency from the Project Area. As and to the extent set forth
in the Indenture, all of the Tax Revenues are exclusively and irrevocably pledged in accordance
with the terms and provisions of the Indenture and the Law, to the payment of the principal of
and interest and premium, if any, on the Bonds, the 2007 Bonds and any additional Parity Debt
(as defined in the Indenture). Notwithstanding the foregoing, certain Tax Revenues may be
applied for other purposes as provided in the Indenture.
This Bond is not a debt of the City of Ukiah, the State of California, or any of its political
subdivisions, and neither said City, said State, nor any of its political subdivisions is liable
hereon, nor in any event shall this Bond be payable out of any funds or properties other than the
Tax Revenues.
The rights and obligations of the Agency and the owners of the Bonds may be modified
or amended at any time in the manner, to the extent and upon the terms provided in the
Indenture, but no such modification or amendment shall permit a change in the terms of maturity
of the principal of any outstanding Bond or of any installment of interest thereon or a reduction
in the rate of interest thereon without the consent of the owner of such Bond, or shall reduce the
percentages of the owners required to effect any such modification or amendment.
The 2011 Bonds maturing on or before December 1, , shall not be subject to
Appendix A-2
redemption prior to their respective stated maturities. The 2011 Bonds maturing on or after
December 1, , shall be subject to redemption in whole, or in part among maturities as
shall be determined by the Agency and by lot within a maturity, on any date commencing
December 1, , at the option of the Agency from any available source of funds, at a
redemption price (expressed as a percentage of the principal amount of 2011 Bonds to be
redeemed) as set forth in the following table, together with accrued interest thereon to the date
fixed for redemption:
Redemption Dates Redemption Price
December 1, through %
December 1, through %
December 1, and thereafter %
The Agency shall be required to give the Trustee written notice of its intention to
redeem 2011 Bonds under this subsection (a), and the manner of selecting such 2011 Bonds
for redemption from among the maturities thereof, at least forty-five (45) days prior to the date
fixed for such redemption, or such later date as may be acceptable to the Trustee, and shall
transfer to the Trustee for deposit in the Debt Service Fund all amounts required for such
redemption at least one (1) Business Day prior to the date fixed for such redemption.
The 2011 Bonds maturing on December 1, are Term Bonds and, shall also be
subject to redemption, in part by lot, on December 1 in each year as set forth in the following
table, from Sinking Account payments made by the Agency at a redemption price equal to the
principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium; provided, however, that if some but not all of such 2011
Bonds have been redeemed pursuant to optional redemption above, the total amount of all
future Sinking Account payments established shall be reduced by the aggregate principal
amount of such 2011 Bonds so redeemed, to be allocated among such Sinking Account
payments on a pro rata basis in integral multiples of $5,000 as determined by the Agency.
Term Bonds Maturing December 1,
Sinking Account
Redemption Date Principal Amount
(December 1) To Be Redeemed
In lieu of redemption of the 2011 Bonds pursuant to this subsection (b), amounts on
deposit in the Special Fund (to the extent not required to be transferred by the Trustee pursuant
to Section 5.03 during the current Bond Year) may also be used and withdrawn by the Agency
at any time for the purchase of such 2011 Bonds at public or private sale as and when and at
such prices (including brokerage and other charges and including accrued interest) as the
Agency may in its discretion determine. The par amount of any of such 2011 Bonds so
purchased by the Agency in any twelve-month period ending on December 1 in any year shall
be credited towards and shall reduce the par amount of such 2011 Bonds required to be
redeemed pursuant to this subsection (b) on the next succeeding December 1.
As provided in the Indenture, notice of redemption shall be mailed by the Trustee by first
class mail not less than thirty (30) nor more than sixty (60) days prior to the redemption date to
the respective owners of any Bonds designated for redemption at their addresses appearing on.
Appendix A-3
the Bond registration books of the Trustee, but neither failure to receive such notice nor any
defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption.
The Agency shall have the right to rescind any optional redemption by written notice to
the Trustee on or prior to the date fixed for redemption. Any notice of optional redemption shall
be cancelled and annulled if for any reason funds will not be or are not available on the date
fixed for redemption for the payment in full of the Bonds then called for redemption, and such
cancellation shall not constitute an Event of Default under the Indenture. The Agency and the
Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the
same manner as the original notice of redemption was sent. .
If this Bond is called for redemption and payment is duly provided therefor as specified in
the Indenture, interest shall cease to accrue hereon from and after the date fixed for
redemption.
If an Event of Default, as defined in the Indenture, shall occur, the Trustee may, and if
requested by a majority in aggregate principal amount of the Bonds then outstanding shall,
exercise any remedies available to the Trustee in law or in equity.
This Bond is'transferable by the Registered Owner hereof, in person or by an attorney
duly authorized in writing by such person, at said Principal Corporate Trust Office of the
Trustee, but only in the manner, subject to the limitations and upon payment of the charges
provided in the Indenture, and upon surrender and cancellation of this Bond. Upon registration
of such transfer a new Bond or Bonds, of authorized denomination or denominations, for the
same aggregate principal amount and of the same maturity will be issued to the transferee in
exchange herefor.
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York Corporation ("DTC"), to the Trustee for registration of transfer, exchange
or payment, and any Bond issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized representative of DTC),
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR
TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.
The Agency and the Trustee may treat the Registered Owner hereof as the absolute
owner hereof for all purposes, and the Agency and the Trustee shall not be affected by any
notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED AND DECLARED that all of the things, conditions and
acts required to exist, to have happened or to have been performed precedent to and in the
issuance of this Bond do exist, have happened or have been performed in due and regular time,
form and manner as required by the Redevelopment Law and the laws of the State of California
and that the amount of this Bond, together with all other indebtedness of the Agency, does not
exceed any limit prescribed by the Redevelopment Law or any laws of the State of California,
and is not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid or
obligatory for any purpose until the Certificate of Authentication hereon endorsed shall have
been manually signed by the Trustee.
Appendix A-4
IN WITNESS WHEREOF, THE UKIAH REDEVELOPMENT AGENCY has caused this
Bond to be executed in its name and on its behalf with the facsimile signature of its Chairman
and its seal to be reproduced hereon and attested to by the facsimile signature of its Secretary,
all as of the Dated Date set forth above.
UKIAH REDEVELOPMENT AGENCY
By:
ATTEST:
By:
Secretary
Appendix A-5
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within-mentioned Indenture.
Dated:
THE BANK OF NEW YORK MELLON
TRUST COMPANY, N.A.
as Trustee
By:
Authorized Signatory
Appendix A-6
ASSIGNMENT
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax
identifying number is , the within-mentioned Bond and hereby
irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the registration books of the Trustee with full power of
substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor institution.
Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of
the within Bond in every particular without alteration or
enlargement or any change whatsoever.
Appendix A-7
Jones Hall Draft 2/22/11
PRELIMINARY OFFICIAL STATEMENT DATED FEBRUARY_, 2011
NEW ISSUE
FULL BOOK ENTRY
Rating: Standard & Poor's: " "
See "RATING" herein
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to
certain qualifications described herein, under existing law, the interest on the 2011 Bonds is excluded from gross income for federal
income tax purposes and is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals
and corporations, although for the purpose of computing the alternative minimum tax imposed on certain corporations, such interest is
taken into account in determining certain income and earnings. In the further opinion of Bond Counsel, such interest is exempt from
California personal income taxes. See "TAX MATTERS" herein.
UKIAH REDEVELOPMENT AGENCY
(Ukiah Redevelopment Project)
Tax Allocation Bonds, Series 2011
Dated: Date of Delivery
Due: December 1, as shown inside front cover
Proceeds from the sale of the Ukiah Redevelopment Agency (the "Agency") (Ukiah Redevelopment Project) Tax Allocation
Bonds, Series 2011 (the "2011 Bonds"), will be used to (i) fund certain redevelopment activities of benefit to the Agency's Ukiah
Redevelopment Project (the "Project Area"); (ii) fund a reserve fund for the Bonds; and (iii) pay the costs of issuance of the Bonds.
The 2011 Bonds will be issued under an Indenture of Trust, dated as of April 1, 2007 and a First Supplement to Indenture dated
as of March 1, 2011 (together, the "Indenture"), by and between the Agency and The Bank of New York Mellon Trust Company, N.A.,
as trustee (the "Trustee"). The 2011 Bonds will be special obligations of the Agency payable solely from and secured by (i) a pledge of
Tax Revenues (as defined herein), subject to the provisions of the Indenture permitting the application thereof for other purposes and
to provisions of the Indenture permitting the issuance or incurrence of obligations on a parity with the 2011 Bonds, and (ii) a pledge of
amounts in certain funds and accounts established under the Indenture, all as further discussed herein. The Agency has outstanding
its (Ukiah Redevelopment Project) Tax Allocation Refunding Bonds, Series 2007 which have a parity claim on Tax Revenues.
Interest on the 2011 Bonds will be payable semi-annually on each December 1 and June 1, commencing 1, 2011 (each,
an "Interest Payment Date"). The 2011 Bonds will be issued in fully registered form without coupons and will be registered in the
name of Cede & Co., as nominee for The Depository Trust Company, New York, New York ("DTC"). DTC will act as securities
depository for the 2011 Bonds. Purchases of beneficial interests in the 2011 Bonds will be made in book-entry form only in
denominations of $5,000 or any integral multiple thereof. Purchasers of such beneficial interests will not receive physical certificates
representing their interests in the 2011 Bonds. Payment of principal of, interest and premium, if any, on the 2011 Bonds will be made
directly to DTC or its nominee, Cede & Co., so long as DTC or Cede & Co. is the registered owner of the 2011 Bonds. Disbursement
of such payments to the DTC Participants (as defined herein) is the responsibility of DTC and disbursement of such payments to the
Beneficial Owners (as defined herein) is the responsibility of the DTC Participants, as more fully described herein. See "THE 2011
BONDS-Book-Entry System" herein.
The 2011 Bonds are subject to optional and mandatory redemption prior to maturity. See "THE 2011 BONDS-
Redemption" herein.
THE 2011 BONDS ARE SPECIAL OBLIGATIONS OF THE AGENCY PAYABLE SOLELY FROM THE TAX REVENUES, AS
DESCRIBED HEREIN, AND AMOUNTS IN CERTAIN FUNDS AND ACCOUNTS MAINTAINED UNDER THE INDENTURE AND,
ARE NOT A DEBT OF THE CITY OF UKIAH (THE "CITY") OR THE STATE OF CALIFORNIA (THE "STATE") OR ANY POLITICAL
SUBDIVISIONS THEREOF (OTHER THAN THE AGENCY, TO THE LIMITED EXTENT SET FORTH IN THE INDENTURE), AND
NEITHER THE CITY NOR THE STATE OR ANY POLITICAL SUBDIVISIONS THEREOF (OTHER THAN THE AGENCY), IS LIABLE
THEREFOR. THE 2011 BONDS ARE NOT PAYABLE FROM, AND ARE NOT SECURED BY, ANY FUNDS OF THE AGENCY,
OTHER THAN THE TAX REVENUES PLEDGED PURSUANT TO THE INDENTURE. NEITHER THE MEMBERS OF THE AGENCY
NOR ANY PERSONS RESPONSIBLE FOR THE EXECUTION OF THE 2011 BONDS IS LIABLE PERSONALLY FOR PAYMENT OF
THE 2011 BONDS BY REASON OF THEIR ISSUANCE.
MATURITY SCHEDULE
(see inside cover)
This cover page contains information for quick reference only. It is not intended to be a summary of all factors relating
to an investment in the 2011 Bonds. Investors should review the entire Official Statement before making any investment
decision with respect to the 2011 Bonds.
The 2011 Bonds are offered when, as and if issued, subject to the approval as to their legality by Jones Hall, A Professional Law
Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Jones Hall, A Professional Law
Corporation, is also acting as Disclosure Counsel. It is anticipated that the 2011 Bonds will be available for delivery through DTC in
New York, New York, on or about 2011.
Dated: 2011
PIPER JAFFRAY & CO.
Preliminary, subject to change.
MATURITY SCHEDULE
UKIAH REDEVELOPMENT AGENCY
(Ukiah Redevelopment Project)
Tax Allocation Bonds, Series 2011
(Base CUSIPt: 903677)
Maturity
(December 1 )
Principal Interest
Amount Rate Yield
CUSIP t
903677
% Term Bonds due December 1, ; Yield
CUSIPt:
t Copyright 2011, American Bankers Association. CUSP data herein are provided by Standard & Poor's CUSIP
Service Bureau, a division of The McGraw-Hill Companies, Inc., and are provided for convenience of reference only.
Neither the Agency nor the Underwriter assumes any responsibility for the accuracy of these CUSP data.
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other
person has been authorized by the Agency to give any information or to make any representations with respect to the
Bonds other than as contained in this Official Statement, and, if given or made, such other information or
representation must not be relied upon as having been given or authorized by the Agency or the Underwriter.
Use of Official Statement. This Official Statement is submitted in connection with the sale of the Bonds
described herein and may not be reproduced or used, in whole or in part, for any other purpose. This Official
Statement does not constitute a contract between any Bond owner and the Agency or the Underwriter.
Preparation of this Official Statement The information contained in this Official Statement has been
obtained from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or
completeness. The Underwriter has provided the following sentence for inclusion in this Official Statement: The
Underwriter has reviewed the information in this Official Statement in accordance with, and as part of, its
responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this
transaction, but the Underwriter does not guarantee the accuracy or completeness of such information.
Estimates and Forecasts. When used in this Official Statement and in any continuing disclosure made by
the Agency, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate,"
"project," "forecast," "expect," "intend" and similar expressions identify "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially from those contemplated in such forward-looking
statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to develop the
forecasts will not be realized and unanticipated events and circumstances may occur. Therefore, there are likely to
be differences between forecasts and actual results, and those differences may be material.
This Official Statement speaks only as of its date, and the information and expressions of opinion contained
in this Official Statement are subject to change without notice. Neither the delivery of this Official Statement nor any
sale of the Bonds will, under any circumstances, create any implication that there has been no change in the affairs of
the Agency or the other parties described in this Official Statement, since the date of this Official Statement.
Document Summaries. All summaries of the Trust Agreement, the Loan Agreement, or other documents
contained in this Official Statement are made subject to the provisions of such documents and do not purport to be
complete statements of any or all such provisions. All references in this Official Statement to the Trust Agreement,
the Loan Agreement, and such other documents are qualified in their entirety by reference to such documents, which
are on file with the Agency.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or a
solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or
solicitation.
No Registration with the SEC. The issuance and sale of the Bonds have not been registered under the
Securities Act of 1933 or the Securities Exchange Act of 1934, both as amended, in reliance upon exemptions
provided thereunder by Sections 3(a)(2) and 3(a)(12), respectively, for the issuance and sale of municipal securities.
Public Offering Prices. The Underwriter may offer and sell the Bonds to certain dealers and dealer banks
and banks acting as agent at prices lower than the public offering prices stated on the inside cover page of this
Official Statement, and the Underwriter may change those public offering prices from time to time.
TABLE OF CONTENTS
Pape
INTRODUCTION .....................................................1
General
...1
The Agency
...1
Purpose of Issuance
...1
The Project Area
...2
The 2011 Bonds
...2
Source of Payment for the 2011 Bonds
...2
Reserve Account
...3
Parity Debt
...3
Bondowners' Risks
...3
Continuing Disclosure
...3
Tax Matters
...4
Professionals Involved in the Offering
...4
Other Information
...4
DEBT SERVICE SCHEDULE
...5
THE 2011 BONDS ..................................................7
General Provisions ................................................7
Redemption
..7
Book-Entry System ................................................8
SECURITY FOR THE BONDS ...............................9
Tax Revenues
..9
Pledge of Tax Revenues
10
Limited Obligations
10
Special Fund; Deposit of Tax Revenues
10
Debt Service Fund; Transfer of
Amounts to Trustee
11
Issuance of Parity Debt
12
Issuance of Subordinate Debt
13
THE CITY
13
THE AGENCY
13
Agency Members
13
Agency Administration
14
Agency Powers
14
Outstanding Indebtedness of the Agency
14
Agency Financial Statements
15
THE PROJECT AREA
15
General
15
Redevelopment Plan Limitations
16
Description of the Project Area
16
Assessed Valuation
17
Teeter Plan
19
Annual Tax Receipts to Tax Levy
19
Appeals of Assessed Values
19
Paae
Tax Sharing Agreements ....................................20
Statutory Pass-Through Payments
.22
Tax Increment Revenue Projections and
Debt Service Coverage
.22
Adjustments to Tax Increment Revenues
. 24
Fiscal Consultant's Report
.25
BON DOWNERS' RISKS
.25
Estimates of Pledged Tax Revenues
.25
Reduction in Taxable Value
.25
Reduction in Inflationary Rate
.25
Levy and Collection
.26
Parity Debt
.26
Natural Disasters
.32
Hazardous Substances
.32
Bankruptcy Risks
.33
Secondary Market
.33
Loss of Tax Exemption
.33
LIMITATIONS ON TAX REVENUES
.34
Property Tax Limitations-Article XI IIA
.34
Challenges to Article XIIIA
.35
Implementing Legislation
.35
Unitary Property
.35
Property Tax Collection Procedures
.36
Appropriations Limitations-Article XIIIB
.38
State Board of Equalization and
Property Assessment Practices
.38
Exclusion of Tax Revenues for
General Obligation Bonds Debt Service ............38
Proposition 218 ....................................................39
AB 1290 ...............................................................39
SB211
39
Future Initiatives ..................................................39
Low and Moderate Income Housing
39
Statement of Indebtedness
40
CERTAIN LEGAL MATTERS
40
Legal Opinions
40
Enforceability of Remedies
41
RATING
41
CONTINUING DISCLOSURE
41
ABSENCE OF LITIGATION
41
TAX MATTERS
42
UNDERWRITING
42
MISCELLANEOUS
42
APPENDIX A: AUDITED FINANCIAL STATEMENTS UKIAH REDEVELOPMENT AGENCY FOR THE FISCAL
YEAR ENDING JUNE 30, 2010
APPENDIX B:
FISCAL CONSULTANT'S REPORT
APPENDIX C:
GENERAL INFORMATION ABOUT MENDOCINO COUNTY
APPENDIX D:
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
APPENDIX E:
FORM OF BOND COUNSEL OPINION
APPENDIX F:
FORM OF CONTINUING DISCLOSURE CERTIFICATE
APPENDIX G:
BOOK-ENTRY SYSTEM
UKIAH REDEVELOPMENT AGENCY
(Mendocino County, California)
AGENCY BOARD
Mari Rodin, Chair
Mary Anne Landis, Vice Chair
Doug Crane, Boardmember
Phil Baldwin, Boardmember
Benj Thomas, Boardmember
AGENCY OFFICIALS
Jane Chambers, Executive Director
Allen Carter, Treasurer
Gordon Elton, Finance Director
Linda Brown, Secretary
David Rapport, Agency General Counsel
PROFESSIONAL SERVICES
Public Financial Management, Inc.
San Francisco, California
Financial Advisor
Jones Hall, A Professional Law Corporation
San Francisco, California
Bond Counsel and Disclosure Counsel
Seifel Consulting Inc.
San Francisco, California
Fiscal Consultant
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Trustee
OFFICIAL STATEMENT
UKIAH REDEVELOPMENT AGENCY
(Ukiah Redevelopment Project)
Tax Allocation Bonds, Series 2011
INTRODUCTION
General
This Official Statement of the Ukiah Redevelopment Agency (the "Agency") provides
information regarding the sale by the Agency of $ * aggregate principal amount of its
Ukiah Redevelopment Agency (Ukiah Redevelopment Project) Tax Allocation Bonds, Series
2011 (the "2011 Bonds").
Definitions of certain capitalized terms used in this Official Statement are set forth in
APPENDIX D--"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." This Official
Statement contains brief descriptions of the 2011 Bonds, the Indenture, the Project Area and
the Agency. Such descriptions do not purport to be comprehensive or definitive. All references
in this Official Statement to specific documents are qualified in their entirety by reference to
such documents and references to the 2011 Bonds are qualified in their entirety by reference to
the form of the 2011 Bonds included in the Indenture. Copies of the Indenture and other
documents described in this Official Statement may be obtained from the Agency as described
under the subheading "Other Information" below.
The Agency
The Agency was activated on November 15, 1989 by Ordinance No. 895 of the City
Council of the City of Ukiah (the "City") and the City Council declared itself to be the Agency.
The five members of the City Council serve as the governing body of the Agency and exercise
all rights, powers, duties and privileges of the Agency. See "THE AGENCY" herein.
Purpose of Issuance
Proceeds from the sale of the 2011 Bonds will be used to finance redevelopment
activities of benefit to the Agency's Ukiah Redevelopment Project (the "Project Area"), (b) fund
a reserve account for the 2011 Bonds, and (c) provide for the costs of issuing the 2011 Bonds.
* Preliminary, subject to change
The Project Area
The City Council of the City adopted a redevelopment plan (the "Redevelopment Plan")
for the Project Area pursuant to Ordinance No. 895, enacted by the City Council of the City on
November 15, 1989. The Project Area is comprised of 1,369 acres and is composed of primarily
residential and commercial development. The Project Area is zoned for residential, commercial
and industrial uses pursuant to City land use designations. See Table 2 herein. The total net
assessed valuation of taxable property in the Project Area in Fiscal Year 2010-11 is
$796.670,543, which is approximately $540,463,546 greater than the adjusted assessed
valuation in the 1989-90 base year. See "THE PROJECT AREA" herein. Assessed valuations in
the Project Area are subject to numerous risks which could result in decreases from those
reported for Fiscal Year 2010-11. See "BONDOWNERS' RISKS" herein.
The 2011 Bonds
The 2011 Bonds are being issued pursuant to the laws of the State of California (the
"State"), including the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of
Title 5 of the California Government Code (commencing with section 53550 thereof) (the "Law"),
a resolution adopted by the Agency on February 23, 2011 (the "Resolution"), and an Indenture
of Trust, dated as of April 1, 2007 and a First Supplement to Indenture dated as of March 1,
2011 (together, the "Indenture"), by and between the Agency and The Bank of New York
Mellon Trust Company, N.A., as trustee (the "Trustee"). See "THE 2011 BONDS" herein and
APPENDIX D-"SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE."
The 2011 Bonds will be issued in denominations of $5,000 each or integral multiples
thereof. Interest on the 2011 Bonds will be payable semi-annually on each December 1 and
June 1, commencing 1, 2011. Principal of and interest on the 2011 Bonds are
payable by the Trustee to DTC which will be responsible for remitting such principal and interest
to the Participants which will in turn be responsible for remitting such principal and interest to
the beneficial owners of the 2011 Bonds. No physical distribution of the 2011 Bonds will be
made to the public initially. See "THE 2011 BONDS-Book-Entry System" herein.
Source of Payment for the 2011 Bonds
The 2011 Bonds are special obligations of the Agency and are payable from and
secured by a pledge of Tax Revenues and amounts in certain funds and accounts held under
the Indenture.
The term "Tax Revenues" is defined in the Indenture to mean means all taxes annually
allocated and paid to the Agency with respect to the Redevelopment Project following the
Closing Date, pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the
Redevelopment Law and Section 16 of Article XVI of the Constitution of the State, or pursuant
to other applicable State law, and as provided in the Redevelopment Plan, including all
payments, subventions and reimbursements (if any) to the Agency specifically attributable to ad
valorem taxes lost by reason of tax exemptions and tax rate limitations; but excluding (a)
amounts payable under the Tax Sharing Agreements (See "The Project Area - Tax Sharing
Agreements" herein) and to entities other than the Agency under and pursuant to the
Redevelopment Law (unless such obligation is subordinated to payment of the Bonds), and (b)
amounts of such taxes required under the Redevelopment Law to be deposited into the Low
and Moderate Income Housing Fund established pursuant to Section 33334.3 of the
Redevelopment Law. The amount of such taxes shall be calculated with regard to all limitations
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contained in the Redevelopment Plan, pursuant to Section 33333.2(1) of the Redevelopment
Law, on the amount of taxes which may be allocated to the Agency in any year.
On May 2, 2007 the Agency issued its $5,595,000 (Ukiah Redevelopment Project) Tax
Allocation Refunding Bonds Series 2007 (the "2007 Bonds") which are currently outstanding in
the aggregate principal amount of $4,4535,000. The 2007 Bonds are secured on parity with the
2011 Bonds.
The Tax Revenues are not currently subject to the pledge and lien of any indebtedness
of the Agency other than the 2011 Bonds and the 2007 Bonds. The Tax Revenues may be
pledged to secure future Parity Debt as well as obligations which will be subordinate to the
payment of the 2011 Bonds, the 2007 Bonds and any such Parity Debt. See "LIMITATION ON
TAX REVENUES" and "THE AGENCY-Outstanding Indebtedness of the Agency" herein. The
2011 Bonds are not payable from, and are not secured by, any funds of the Agency other than
the Tax Revenues and amounts in certain funds and accounts pledged therefore under the
Indenture. See "SECURITY FOR THE BONDS" herein.
Reserve Account
A parity Reserve Account was established in connection with the 2007 Bonds. The
Reserve Account is required to be funded in an amount equal to the Reserve Requirement
described herein. Upon issuance of the 2011 Bonds, a portion of the proceeds thereof will be
used to satisfy the Reserve Requirement. See "PLAN OF FINANCE - Estimated Sources and
Uses of Funds". For further information concerning the Reserve Account, see "SECURITY FOR
THE BONDS-Debt Service Fund; Transfer of Amounts to Trustee-Reserve Account" herein.
Parity Debt
The Indenture provides that in addition to the 2007 Bonds and 2011 Bonds, the Agency
may issue or incur Parity Debt in such principal amount as shall be determined by the Agency,
pursuant to a Parity Debt Instrument adopted or entered into by the Agency to finance or
refinance redevelopment activities in the Project Area in such principal amount as shall be
determined by the Agency. The Agency may deliver Parity Debt subject to certain specific
conditions set forth in the Indenture. The 2011 Bonds and any such Parity Debt are collectively
referred to herein as the "Bonds." See "SECURITY FOR THE BONDS-Issuance of Parity
Debt."
Bondowners' Risks
Prospective investors should review this Official Statement and the Appendices hereto in
their entirety and should consider certain risk factors associated with the purchase of the 2011
Bonds, some of which have been summarized in the section herein entitled "BONDOWNERS'
RISKS" herein.
Continuing Disclosure
The Agency will covenant, pursuant to a Continuing Disclosure Certificate to be
executed on the date of delivery of the 2011 Bonds, for the benefit of owners and beneficial
owners of the 2011 Bonds, to provide certain financial information and operating data related to
the Agency by not later than nine months following the end of the Agency's Fiscal Year (the
"Annual Report"), and to provide notices of the occurrence of certain enumerated events, if
material. The Annual Report will be filed by the Agency with the Municipal Securities
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Rulemaking Board. The specific nature of the information to be contained in the Annual Report
and any notices of material events is summarized below under the caption "CONTINUING
DISCLOSURE" herein. A copy of the Continuing Disclosure Certificate is set forth in APPENDIX
F-"FORM OF CONTINUING DISCLOSURE CERTIFICATE." The covenants of the Agency in
the Continuing Disclosure Certificate have been made in order to assist the Underwriter in
complying with S.E.C. Rule 15c2-12(b)(5).
Tax Matters
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California,
Bond Counsel, subject, however to certain qualifications described herein, under existing law,
the interest on the 2011 Bonds is excluded from gross income for federal income tax purposes
and is not an item of tax preference for purposes of the federal alternative minimum tax imposed
on individuals and corporations, although for the purpose of computing the alternative minimum
tax imposed on certain corporations, such interest is taken into account in determining certain
income and earnings. In the further opinion of Bond Counsel, such interest is exempt from
California personal income taxes. See "TAX MATTERS" herein.
Professionals Involved in the Offering
The proceedings of the Agency in connection with the issuance of the 2011 Bonds are
subject to the approval as to their legality of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel for the 2011 Bonds. Jones Hall, A Professional Law
Corporation is also serving as Disclosure Counsel to the Agency for the 2011 Bonds. The Bank
of New York Mellon Trust Company, N.A., Los Angeles, California, will act as the Trustee under
the Indenture. Seifel Consulting Inc., San Francisco, California, will serve as Fiscal Consultant
to the Agency (the "Fiscal Consultant") in connection with the issuance of the 2011 Bonds. The
fees of Bond Counsel, Disclosure Counsel and the Trustee are contingent upon the sale and
delivery of the 2011 Bonds.
Other Information
This Official Statement speaks only as of its date and the information contained herein is
subject to change without notice. Copies of documents referred to herein are available from the
Agency upon written request to the Ukiah Redevelopment Agency, 1950 Parkside Drive, Ukiah,
CA 94519, Attention: Finance Director. The Agency may impose a charge for copying, mailing
and handling expenses related to any request for documents.
ESTIMATED SOURCES AND USES OF FUNDS
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The following table sets forth a summary of the estimated sources and uses of funds
associated with the issuance and sale of the 2011 Bonds.
Sources of Funds
Par Amount of 2011 Bonds
Less: Net Discount
Total Sources
Uses of Funds
Deposit to Project Fund
Deposit to Reserve Account (1)
Deposit to Costs of Issuance Fund (2)
Underwriter's Discount
Total Uses
(1) See "SECURITY FOR THE BONDS-Reserve Account" herein.
(2) Includes fees and expenses of bond counsel, disclosure counsel, the financial advisor, the fiscal
consultant, printing costs, trustee fees and other costs of issuance.
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DEBT SERVICE SCHEDULE
The following table sets forth the scheduled annual debt service for the 2007 Bonds and
2011 Bonds.
Year
Ending
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
Total
2007 Bonds
Debt Service
472,660.00
468,085.00
472,960.00
470,570.00
472,607.50
463,847.50
464,710.00
469,750.00
468,730.00
466,855.00
464,110.00
470,480.00
470,700.00
$6,096,065
Total Total
2011 Bonds 2011 Bonds 2011 Bonds Parity
Interest Principal Debt Service Debt Service
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THE 2011 BONDS
General Provisions
The 2011 Bonds will be delivered in fully registered form, without coupons, in the
denomination of $5,000 each or any integral multiple thereof. Interest on the 2011 Bonds will be
payable semiannually on December 1 and June 1 of each year, commencing 1,
2011 (each, an "Interest Payment Date"), to the Owner thereof as of the close of business on
the fifteenth (15th) calendar day of the month preceding each Interest Payment Date, whether
or not such fifteenth (15th) calendar day is a business day (each, a "Record Date"). Principal of
the 2011 Bonds will be payable on July 1 in each of the years and in the amounts shown on the
inside cover page hereof.
The 2011 Bonds will be dated as of their date of delivery. Each 2011 Bond will bear
interest from the Interest Payment Date next preceding the date of authentication thereof,
unless (i) it is executed during the period from the day after the Record Date for an Interest
Payment Date to and including such Interest Payment Date, in which event it will bear interest
from such Interest Payment Date, or (ii) it is executed on or prior to the Record Date for the first
Interest Payment Date, in which event it will bear interest from the date of its initial delivery;
provided, however, that if, at the time of registration of any 2011 Bond interest with respect to
such 2011 Bond is in default, such 2011 Bond shall will interest from the Interest Payment Date
to which interest has been paid or made available for payment with respect to such 2011 Bond.
Interest with respect to any 2011 Bond will be payable in lawful money of the United
States of America on each Interest Payment Date to the Owner thereof as of the close of
business on the Record Date, such interest to be paid by check of the Trustee, mailed by first
class mail no later than the Interest Payment Date to the Owner at his address as it appears, on
such Record Date, on the bond registration books maintained by the Trustee; provided,
however, that at the written request of the Owner of at least $1,000,000 in aggregate principal
amount of Outstanding 2011 Bonds filed with the Trustee prior to any Record Date, interest on
such 2011 Bonds will be paid to such Owner on each succeeding Interest Payment Date
(unless such request has been revoked in writing) by wire transfer of immediately available
funds to an account in the continental United States designated in such written request.
Payments of defaulted interest with respect to the 2011 Bonds will be paid by check to the
registered Owners of the 2011 Bonds as of a special record date to be fixed by the Trustee,
notice of which special record date shall be given to the Owners of the 2011 Bonds not less
than ten days prior thereto. The principal of and premium, if any, on the 2011 Bonds are
payable when due upon surrender thereof at the principal corporate trust office of the Trustee in
Los Angeles, California, in lawful money of the United States of America.
Redemption
Optional Redemption of 2011 Bonds. The 2011 Bonds maturing on or after December 1,
, are subject to redemption prior to their respective maturity dates, as a whole or in
part, in inverse order of maturity and by lot within a maturity, at the option of the Agency, on any
date occurring on or after December 1, , at a redemption price equal to the principal
amount of the 2011 Bonds to be redeemed, plus accrued interest thereon to the date fixed for
redemption, without premium.
Selection of 2011 Bonds for Redemption. Whenever provision is made in the Indenture
for the redemption of less than all of the 2011 Bonds, the Trustee shall select the 2011 Bonds to
be redeemed from all 2011 Bonds not previously called for redemption, by lot in any manner
which the Trustee in its sole discretion shall deem appropriate and fair. For purposes of such
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selection, all 2011 Bonds shall be deemed to be comprised of separate $5,000 portions and
such portions shall be treated as separate 2011 Bonds which may be separately redeemed.
Notice of Redemption. The Trustee, on behalf and at the expense of the Agency will mail
(by first class mail) notice of any redemption to the respective Owners of any 2011 Bonds
designated for redemption at their respective addresses appearing on the Registration Books,
and to the Securities Depositories and to one or more Information Services, at least thirty (30)
but not more than sixty (60) days prior to the date fixed for 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 2011 Bonds or the cessation of the accrual of
interest thereon. Such notice will state the date of the notice, the redemption date, the
redemption place and the redemption price and will designate the CUSIP numbers, the 2011
Bond numbers and the maturity or maturities (in the event of redemption of all of the 2011
Bonds of such maturity or maturities in whole) of the 2011 Bonds to be redeemed, and shall
require that such 2011 Bonds be then surrendered at the Office of the Trustee for redemption at
the redemption price, giving notice also that further interest on such 2011 Bonds will not accrue
from and after the redemption date.
Partial Redemption of 2011 Bonds. In the event only a portion of any 2011 Bond is
called for redemption, then upon surrender of such 2011 Bond the Agency shall execute and the
Trustee shall authenticate and deliver to the Owner thereof, at the expense of the Agency, a
new 2011 Bond or 2011 Bonds of the same series and maturity date, of authorized
denominations in aggregate principal amount equal to the unredeemed portion of the 2011
Bond to be redeemed.
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 2011 Bonds so called
for redemption shall have been duly provided, such 2011 Bonds so called shall cease to be
entitled to any benefit under the 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 2011 Bonds redeemed shall be cancelled and destroyed. All
moneys held by or on behalf of the Trustee for the payment of principal of or interest or premium
on 2011 Bonds, whether at redemption or maturity, shall be held in trust for the account of the
Owners thereof and the Trustee shall not be required to pay Owners any interest on, or be liable
to Owners for any interest earned on, moneys so held.
Book-Entry System
The 2011 Bonds will be subject to a book-entry system of registration, transfer and
payment and each 2011 Bond will initially be registered in the name of Cede & Co, as nominee
of The Depository Trust Company, New York, New York ("DTC"). As part of such book-entry
system, DTC has been appointed securities depository for the 2011 Bonds, and registered
ownership may not thereafter be transferred except as provided in the Indenture. The 2011
Bonds are being delivered in book-entry form only. Purchasers will not receive securities
certificates representing their interests in the 2011 Bonds. Rather, in accordance with the book-
entry system, purchasers of the 2011 Bonds will have beneficial ownership interest in the
purchased 2011 Bonds through DTC Participants (as hereinafter defined). For more information
concerning the book-entry system, see APPENDIX G-'BOOK-ENTRY SYSTEM."
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SECURITY FOR THE BONDS
Tax Revenues
Tax Allocations. The Law provides a means for financing redevelopment projects based
upon an allocation of taxes collected within a project area. The taxable valuation of a project
area last equalized prior to adoption of the redevelopment. plan, or base roll, is established as of
the adoption of the redevelopment plan. Thereafter, except for any period during which the
taxable valuation drops below the base year level, the taxing bodies receive the taxes produced
by the levy of the then-current tax rate upon the base roll. Taxes collected upon any increase in
taxable valuation over the base roll (with the exception of taxes derived from increases in the
tax rate imposed by Taxing Agencies (hereinafter defined) to support new bonded
indebtedness) are allocated to the redevelopment agency and may be pledged to the
repayment of any indebtedness incurred in financing or refinancing redevelopment.
Redevelopment agencies themselves have no authority to levy property taxes and must look
exclusively to such allocation of taxes.
As provided in the redevelopment plan for a project area, and pursuant to Article 6 of
Chapter 6 of the Law and Section 16 of Article XVI of the State Constitution, taxes levied upon
taxable property in the project area each year by or for the benefit of the State, cities, counties,
districts or other public corporations (collectively, the "Taxing Agencies"), for fiscal years
beginning after the effective date of the redevelopment plan, will be divided as follows:
(1) To Taxing Agencies: The portion equal to the amount of those taxes which
would have been produced by the then current tax rate, applied to the taxable valuation
of such property in the redevelopment project area as last equalized prior to the
establishment of the redevelopment project, or base roll, is paid into the funds of those
respective Taxing Agencies as taxes by or for said Taxing Agencies; and
(2) To the Agency: The portion of said levied taxes each year in excess of the
amount referred to in (1) above (the "Tax Increment Revenues") is allocated to, and
when collected, is paid to the agency; provided that the portion of the Tax Increment
Revenues which are attributable to a tax rate levied by a taxing agency to pay
indebtedness approved by the voters of that taxing agency on or after January 1, 1989,
shall be allocated to, and when collected shall be paid into, the fund of such taxing
agency.
Housing Set Aside Amounts. The Law requires generally that, unless a specified finding
is made, redevelopment agencies set aside 20% of all Tax Increment Revenues derived from
redevelopment project areas into a low and moderate income housing fund (the "Low and
Moderate Income Housing Fund"), to be used for the purpose of increasing, improving and or
preserving the supply of low and moderate income housing. Section 33334.2 of the Law dictate
the low and moderate income housing set-aside requirement for each project area. See
"LIMITATIONS ON TAX REVENUES-Low and Moderate Income Housing" herein.
The Housing Set-Aside is not pledged to or available to pay debt service on the
2007 Bonds or the 2011 Bonds.
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Pledge of Tax Revenues
Pursuant to the Indenture, the Bonds shall be secured by a pledge of and lien on all of
the Tax Revenues and all of the moneys on deposit in the Special Fund. In addition, the Bonds
shall be secured by a first and exclusive pledge of and lien upon all of the moneys in the Debt
Service Fund, the Interest Account, the Principal Account and the Reserve Account. Such
pledges and liens shall be for the equal security of the Bonds without preference or priority for
series, issue, number, dated date, sale date, date of execution or date of delivery. Except for the
Tax Revenues and such moneys, no funds or properties of the Agency shall be pledged to, or
otherwise liable for, the payment of principal of or interest on the Bonds.
The pledge of Tax Revenues for payment of the 2011 Bonds is a parity pledge for
payment of the 2007 Bonds. The Agency may issue additional obligations secured by a parity
pledge of Tax Revenues, subject to certain conditions. See "Parity Debt" below.
In consideration of the acceptance of the Bonds by those who shall hold the same from
time to time, the Indenture shall be deemed to be and shall constitute a contract between the
Agency and the Owners from time to time of the Bonds, and the covenants and agreements set
forth therein to be performed on behalf of the Agency 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 and delivery thereof, or otherwise for
any cause whatsoever, except as expressly provided therein or herein.
The Agency has no power to levy and collect property taxes, and any property tax
limitation, legislative measure, voter initiative or provision of additional sources of income to
applicable Taxing Agencies having the effect of reducing the property tax rate or collections,
could reduce the amount of Tax Revenues that would otherwise be available to pay the principal
of, and interest on, the Bonds. Likewise, broadened property tax exemptions could have a
similar effect. See "BONDOWNERS' RISKS" herein.
Limited Obligations
THE PRINCIPAL OF AND INTEREST AND PREMIUM, IF ANY, ON THE 2011 BONDS
ARE PAYABLE SOLELY FROM TAX REVENUES AND FROM AMOUNTS IN CERTAIN
FUNDS AND ACCOUNTS PLEDGED THEREFORE UNDER AND PURSUANT TO THE
INDENTURE. THE 2011 BONDS ARE NOT A DEBT OF THE CITY, OR THE STATE OR ANY
POLITICAL SUBDIVISION THEREOF (OTHER THAN THE AGENCY TO THE LIMITED
EXTENT SET FORTH IN THE INDENTURE), AND NEITHER THE CITY NOR THE STATE OR
ANY POLITICAL SUBDIVISIONS THEREOF (OTHER THAN THE AGENCY), IS LIABLE
THEREFOR. NEITHER THE MEMBERS OF THE AGENCY NOR ANY PERSON
RESPONSIBLE FOR THE EXECUTION OF THE 2011 BONDS IS LIABLE PERSONALLY FOR
THE 2011 BONDS BY REASON OF THE ISSUANCE THEREOF.
Special Fund; Deposit of Tax Revenues
Amounts deposited to and held by the Agency in the Special Fund shall be at all times
separately accounted for by the Agency from all other funds or accounts in the Redevelopment
Fund, and shall be used and applied solely as set forth in the Indenture. The Agency shall not
pledge or encumber any amounts in the Special Fund except as set forth in the Indenture.
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The Agency shall deposit all of the Tax Revenues received in any Bond Year in the
Special Fund promptly upon receipt thereof by the Agency, until such time during such Bond
Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to
be transferred to the Trustee and any trustee for Parity Bonds, for deposit into the Interest
Account, the Principal Account and the Reserve Account in such Bond Year, and for deposit in
such Bond Year into the funds and accounts established with respect to Parity Debt, as
provided in any Parity Debt Instrument.
All Tax Revenues received by the Agency during any Bond Year in excess of the
amount required to be deposited in the Special Fund during such Bond Year pursuant to the
preceding paragraph and any Parity Debt Instrument shall be released from the pledge and lien
for the security of the Bonds, shall be deposited in the unrestricted accounts of the
Redevelopment Fund and may be applied by the Agency for any lawful purpose of the
Redevelopment Fund. Prior to the payment in full of the principal of and interest on the Bonds,
and the payment in full of all other amounts payable under the Indenture and under any Parity
Debt Instrument, the Agency shall not have any beneficial right or interest in the moneys on
deposit in the Special Fund, except as may be provided in the Indenture.
Debt Service Fund; Transfer of Amounts to Trustee
Moneys in the Special Fund shall be transferred by the Agency to the Trustee in the
following amounts at the following times, for deposit by the Trustee in the following respective
special accounts within the Debt Service Fund, which accounts are established with the
Trustee, in the following order of priority:
Interest Account. On or before the fifth (5th) Business Day preceding each date on which
interest on the 2011 Bonds becomes due and payable, the Agency shall withdraw from the
Special Fund and transfer to the Trustee for deposit in the Interest Account an amount which,
when added to the amount then on deposit in the Interest Account, will be equal to the
aggregate amount of the interest becoming due and payable on the Outstanding 2011 Bonds on
such date. All moneys in the Interest Account shall be used and withdrawn by the Trustee solely
for the purpose of paying the interest on the Bonds as it shall become due and payable
(including accrued interest on any 2011 Bonds purchased or redeemed prior to maturity).
Principal Account. On or before the fifth (5th) Business Day preceding each date on
which principal of the 2011 Bonds becomes due and payable at maturity, the Agency shall
withdraw from the Special Fund and transfer to the Trustee for deposit in the Principal Account
an amount which, when added to the amount then on deposit in the Principal Account, will be
equal to the amount of principal coming due and payable on such date on the Outstanding 2011
Bonds, whether to pay Bonds then maturing, or to pay scheduled sinking fund payments on
Series 2007 Term Bonds. All moneys in the Principal Account shall be used and withdrawn by
the Trustee solely for the purpose of paying the principal of the 2011 Bonds upon the maturity
thereof.
Reserve Account. The 2011 Bonds, the 2007 Bonds and any additional Parity Debt are
also secured by the Reserve Account established pursuant to the Indenture, and maintained in
an amount equal to the Reserve Requirement.
The "Reserve Requirement" is defined in the Indenture to be, as of the date of any
calculation, the lesser of (a) Maximum Annual Debt Service on such Bonds (including any Parity
Debt), or (b) 125% of average Annual Debt Service on such Bonds (including any Parity Debt),
or (c) 10% of the Outstanding principal amount of such Bonds (including any Parity Debt).
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Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of making transfers to the Interest Account and the Principal Account, in such order
of priority, on any date which the principal of or interest on the 2011 Bonds becomes due and
payable hereunder, in the event of any deficiency at any time in any of such accounts, or at any
time for the retirement of all the 2011 Bonds then Outstanding. So long as no Event of Default
shall have occurred and be continuing, any amount in the Reserve Account in excess of the
Reserve Requirement preceding each Interest Payment Date shall be withdrawn from the
Reserve Account by the Trustee and deposited in the Interest Account on or before the Interest
Payment Date.
. Funds on deposit in the Reserve Account will be invested in "Permitted Investments"
under the Indenture, and interest earnings on the Reserve Account from the Closing Date until
the Reserve Account is equal to the Reserve Requirement will be retained therein. Thereafter,
interest earnings on the Reserve Account, to the extent not needed to maintain the Reserve
Account at the Reserve Requirement, shall be transferred on each Interest Payment Date to the
Interest Account. In the event that the amount on deposit in the Reserve Account at the time of
the valuation becomes less than the Reserve Requirement, the Trustee shall promptly notify the
Agency of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the
Trustee an amount of available Tax Revenues sufficient to maintain the Reserve Requirement
on deposit in the Reserve Account.
Parity Debt
Outstanding Parity Debt. The Agency has previously issued its Ukiah Redevelopment
Project Tax Allocation Refunding Bonds, Series 2007; the 2007 Bonds are secured by and
payable from a parity pledge of Tax Revenues with the Bonds. See "THE BONDS - Debt
Service Schedule" herein for the remaining annual debt service due on the 2007 Bonds. The
2007 Bonds were issued to refinance a Loan Agreement, dated as of January 1, 1994, between
the Agency and the Redwood Empire Financing Authority.
Future Parity Debt. Pursuant to the Indenture, in addition to the 2011 Bonds and the
2011 Bonds, the Agency may issue or incur Parity Debt in such principal amount as shall be
determined by the Agency, pursuant to a Parity Debt Instrument adopted or entered into by the
Agency. The Agency may issue or incur such Parity Debt, subject to the following specific
conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in the Indenture and
all Parity Debt Instruments.
(b) The Tax Revenues estimated to be received for the then current Fiscal Year based
on the most recent assessed valuation of property in the Project Area (excluding taxes
attributable to a tax rate levied by a taxing agency after January 1, 1989, for the purpose of
producing revenues in an amount sufficient to make annual repayments of the principal of, and
the interest on, any bonded indebtedness of such taxing agency), as evidenced in writing from
the County Assessor or other appropriate official of the County, plus, at the option of the
Agency, the Additional Allowance, shall be at least equal to one hundred twenty-five percent
(125%) of Maximum Annual Debt Service, including annual debt service on the proposed Parity
Debt.
(c) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide that interest thereon shall not be payable on any dates other than December 1 and June
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1, and principal thereof shall be payable on December 1 in any year in which principal is
payable.
(d) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide for the deposit into a reserve account for such Parity Debt the full amount of the
Reserve Requirement for such Parity Debt.
(e) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
"Additional Allowance" means, as of the date of calculation the amount of Tax
Revenues which, as shown in the report of an Independent Redevelopment Consultant, are
estimated to be receivable by the Agency in the next Fiscal Year as a result of increases in the
assessed valuation of taxable property in the Project Area due to either (i) construction which
has been completed but has not yet been reflected on the tax roll, or (ii) transfer of ownership or
any other interest in real property, which is not then reflected on the tax rolls.
Issuance of Subordinate Debt
In addition to the 2011 Bonds and any Parity Debt, from time to time the Agency may
issue or incur additional Subordinate Debt in such principal amount as shall be determined by
the Agency, provided that the issuance of such Subordinate Debt shall not cause the Agency to
exceed any applicable Plan Limitations.
THE CITY
Incorporated in 1876, the City of Ukiah (the "City") is located in north central Mendocino
County (the "County") in the northern coastal region of California, approximately 100 miles
north of San Francisco on U.S. Highway 101 and about an hour's drive from the coastal
redwoods and the Mendocino Coast. Ukiah is the largest city in the County and is the County
seat, with a population of 15,682 as of January 1, 2010. See APPENDIX C-"GENERAL
INFORMATION ABOUT MENDOCINO COUNTY."
THE AGENCY
Agency Members
The Agency was activated on November 15, 1989 by Ordinance No. 895 of the City
Council of the City and the City Council declared itself to be the Agency. The five members of
the City Council serve as the governing body of the Agency and exercise all rights, powers,
duties and privileges of the Agency. The members of the governing body of the Agency are as
follows:
Member
Term Expires
Mari Rodin
December, 2012
Doug F. Crane
December, 2012
Phil Baldwin
December, 2014
Mary Anne Landis
December, 2014
Benj Thomas
December, 2014
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Agency Administration
The Agency is administered by certain staff of the City:
For more information regarding the City of Ukiah and Mendocino County see APPENDIX
C-"GENERAL INFORMATION ABOUT MENDOCINO COUNTY."
Agency Powers
All powers of the Agency are vested in its members. Pursuant to the Law, the Agency is
a separate public body and exercises governmental functions, including planning and
implementing redevelopment projects.
The Agency may exercise the right to issue bonds for authorized purposes and to
expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease
property. The Agency may demolish buildings, clear land and cause to be constructed certain
improvements, including streets, sidewalks, and utilities, and can further prepare for use as a
building site any real property which it owns or administers.
The Agency may, from any funds made available to it for such purposes, pay for all or
part of the value of land and the cost of buildings, facilities or other improvements to be publicly
owned and operated, provided that such improvements are of benefit to a redevelopment
project and cannot be financed by any other reasonable method. The Agency may not construct
or develop buildings, with the exception of public buildings and housing, and must sell or lease
cleared property which it acquires within a redevelopment project for redevelopment in
conformity with a particular redevelopment plan, and may further specify a period within which
such redevelopment must begin and be completed.
Outstanding Indebtedness of the Agency
Certification of Agency Indebtedness. Pursuant to section 33675 of the Law, on or
before October 1 of each year the Agency must file with the County Auditor a statement of
indebtedness certified by the chief fiscal officer of the Agency for each redevelopment project
that receives tax increment. The statement of indebtedness is required to contain the date on
which any bonds were delivered, the principal amount, term, purpose and interest rate of bonds
and the outstanding balance and amount due on bonds. Similar information must be given for
each loan, advance or indebtedness that the Agency has incurred or entered into to be payable
from tax increment.
The Agency has complied with the requirements of section 33675 each year since
adoption of the Redevelopment Plan.
Section 33675 also provides that the County Auditor is limited in payment of tax
increment to the Agency to the amounts shown on the Agency's statement of indebtedness. The
section further provides that the statement of indebtedness is prima facie evidence of the
indebtedness of the Agency but that the County Auditor may dispute the amount of
indebtedness shown on the statement in certain cases. Provision is made for time limits under
which the dispute can be made by the County Auditor as well as provisions for determination by
the Superior Court in a declaratory relief action of the proper disposition of the matter. The issue
in any such action must involve only the amount of the indebtedness and not the validity of any
contract or debt instrument, or any expenditures pursuant thereto. An exception is made for
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payments to a public agency in connection with payments by such public agency pursuant to a
bond issue which shall not be disputed in any action under section 33675.
Agency Financial Statements
The Law requires redevelopment agencies to have an independent financial audit
conducted each year. The financial audit is also required to include an opinion of the Agency's
compliance with laws, regulations and administrative requirements governing activities of the
Agency. Audited financial statements for the Agency for the Fiscal Year that ended June 30,
2010, included in Appendix A attached hereto, have been prepared by Davis Hammon & Co.,
Oroville, California. The firm's audit was made in accordance with generally accepted auditing
standards. See APPENDIX A--"AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR
THE FISCAL YEAR ENDED JUNE 30, 2010."
THE PROJECT AREA
The following is a summary description of the Project Area. Included within this
description are sections discussing the present and current conditions of the Project Area and
the future development within the Project Area. These descriptions have been supplied by the
Agency. There can be no assurance that the future developments discussed below will be
completed in the manner or in the time periods set forth.
General
Under the Law every redevelopment agency is required to adopt, by ordinance, a
redevelopment plan for each redevelopment project specifically authorized in the adopted
redevelopment plan. A redevelopment plan is a legal document, the content of which is largely
prescribed in the Law, rather than a "plan" in the customary sense of the word.
The overall objective of the redevelopment plan is to eliminate blighted conditions in the
project area by undertaking all appropriate projects pursuant to the Law.
The Ukiah Redevelopment Project was originally adopted by the Ukiah City Council on
November 15, 1989 by Ordinance No. 895 and consists of 1,369 acres (the "Project Area").
The Project Area consists of mostly residential and commercial development.
The Redevelopment Plan was amended on December 16, 1998 pursuant to Resolution
No. 99-1 in order to provide that the deadline for the agency to incur new debt would be twenty
years from the date of adoption of the Redevelopment Plan, being November 15, 2009. The
Redevelopment Plan was also amended by Ordinance No. 1088 adopted on November 27,
2006 to (i) eliminate the time limit on the establishment of loans, advances and indebtedness
(as previously established pursuant to Resolution No. 99-1) pursuant to SIB 211 and (ii)
pursuant to SIB 1045, to extend the time limit on the effectiveness of the Redevelopment Plan to
November 15, 2030 and to establish that the last date which the Agency can pay indebtedness
or receive property taxes is November 15, 2040, except with respect to certain indebtedness
incurred prior to December 31, 1993, in which case the Agency may receive tax increment and
pay such indebtedness.
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Redevelopment Plan Limitations
Chapter 942, Statutes of 1993 (See Section VI, Legislation), as codified in Section
33333.6 of the Law, limits the life of redevelopment plans adopted prior to January 1, 1994, to
40 years from the date of adoption or January 1, 2009, whichever is later. It also limits the
period within which a redevelopment project area may receive tax increment to the life of the
redevelopment plan plus ten years beyond the termination of redevelopment activities except to
accommodate certain specific low and moderate-income housing obligations or to pay debt
service on bonds, indebtedness or other financial obligations authorized prior to January 1,
1994. Such redevelopment plans are further required to include a limitation on the number of tax
increment dollars that may be allocated to the redevelopment agency; a time limit on the
establishing of indebtedness to be repaid with tax increment; and a limit on the amount of
bonded indebtedness to be repaid with tax increment that can be outstanding at one time.
These limits can be extended only by an amendment of the redevelopment plan.
For redevelopment plans adopted prior to 1994, Chapter 942 stipulates that the time limit
for establishing indebtedness shall not exceed 20 years from the adoption of the redevelopment
plan or January 1, 2004, whichever is later. Chapter 741, Statutes of 2001, was adopted under
SB 211 and amends several sections of the Law that control time limitations for redevelopment
project areas. Limitations, that under prior legislation could not be amended or had different
amendment procedures, in accordance with this section, may be modified through project area
amendments as set forth in accordance with the Law.
The plan limitations for the Project Area are summarized below.
Table 1
UKIAH REDEVELOPMENT PROJECT
Ukiah Redevelopment Plan Limitations
Plan Last Date to Last Date to Tax Increment Bonded Debt
iration(') Incur Debt Repay Debt(') Limit Limit
)er 15, 2031 Deadline Eliminated November 15, 2041 $260 Million $75 Million
(1) The Agency is seeking an additional one year extension for Plan Effectiveness and Tax Increment receipt,
authorized by AB 26 4x.
Source: The Agency.
According to the City Finance Department and County records, the Agency has received
approximately $51,214,709 in total cumulative tax increment from the Project Area through
fiscal year 2009-10. Based on the projected tax increment revenues to be received by the
Agency, the limit on tax increment funds that the Agency may receive for the Project Area will
not be exceeded within the term of the 2011 Bonds.
Description of the Project Area
The Project Area consists of approximately 1,369 acres, and consists of mostly
residential and commercial development. The Project Area is generally located on the west side
of State Highway 101. It is bounded on the south by Norgard Lane at the south end of the
Ukiah Municipal Airport and extends northward to the vicinity of Ford Road and State Street. It
extends westerly from State Highway 101 to its western boundary at Dora Street. The Project
Area does include small areas on the east side of State Highway 101 at the interchange for
State Route 222 and between the intersections with Gobbi Street and Perkins Street. Generally
the Project Area encompasses the main commercial area of the City.
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Assessed Valuation
The Base Year assessed valuation was established in fiscal year 1989-90 in the amount
of $256,206,997. The majority of the land in the Project Area is used for residential (45.8% of
total assessed value) and commercial (41.0% of assessed value) purposes. A breakdown of the
fiscal year 2010-11 assessed valuation in the Project Area by category of use is as follows:
Table 2
UKIAH REDEVELOPMENT PROJECT
2010-11 Project Area Land Use Summary
% of Total
% of Total
Secured Roll
Secured
Unsecured
Unsecured
Total
% of
Category
Value
Roll
Roll Value
Roll
Roll Value
Total Roll
Residential
$332,518,755
45.8%
$1,107,958
1.7%
$333,626,713
42.2%
Commercial
297,506,515
41.0
31,609,835
48.8
329,116,350
41.6
Vacant
40,664,682
5.6
1,431,720
2.2
42,096,402
5.3
Industrial
25,997,430
3.6
7,089,152
11.0
33,086,582
4.2
Recreational
18,432,722
2.5
396,256
0.6
18,828,978
2.4
Institutional
9,192,246
1.3
9,197
0.0
9,201,443
1.2
Unknown/Misc.
2,012,441
0.3
23,094,857
35.7
25,107,298
3.2
Agricultural
141,014
0.0
-
0.0
141,014
0.0
Total
$726,465,805
100.0%
$64,738,975
100.0%
$791,204,780
100.0%
Source: Mendocino County, Seifel Consulting Inc.
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The following table shows the actual assessed values for fiscal years 2001-02 through
2010-11 based upon the County Auditor/Controller's equalized rolls and incremental values of
property within the Project Area, and showing the change in assessed values each year
following the base year of 1989-90. According to the Auditor-Controller, the taxable assessed
value in the 'Project Area has increased from $256,206,997 in fiscal year 1989-90 to
$796,670,543 in fiscal year 2010-11, or an average annual rate of 5.6%.
Table 3
UKIAH REDEVELOPMENT PROJECT
Historical Taxable Values
Fiscal Years Ended June 30, 2002 through Junes 30, 2011
Fiscal
Year
Base Year
(1989-90)
Secured
$230,874,048
Unsecured
$25,332,949
Total Assessed Valuation
Assessed Value % Growth
$256,206,997
Incremental
Valuation
2001-02
$453,583,905
$48,612,205
$502,196,110
$245,989,113
2002-03
491,869,015
46,192,448
538,061,463
7.14%
281,854,466
2003-04
531,657,312
48,496,584
580,153,896
7.82
323,946,899
2004-05
557,086,481
47,750,871
604,837,352
4.25
348,630,355
2005-06
597,592,309
53,743,752
651,336,061
7.69
395,129,064
2006-07
640,969,120
57,530,816
698,499,936
7.24
442,292,939
2007-08
690,850,869
57,481,567
748,332,436
7.13
492,125,439
2008-09
729,471,243
62,497,388
791,968,631
5.83
535,761,634
2009-10
746,201,802
64,644,933
810,846,735
2.38
554,639,738
2010-11
731,931,568
64,738,975
796,670,543
(1.75)
540,463,546
(1) Secured values include state assessed non-unitary utility property
Source: Mendocino County Auditor-Controller, Ukiah Redevelopment Agency, Seifel Consulting Inc
The following table shows the ten largest property taxpayers in the Project Area.
Table 4
UKIAH REDEVELOPMENT PROJECT
Largest Fiscal Year 2010-11 Property Taxpayers
Total Assessed
% of Total Project
Property Owner
Land Use
Value (1)
Area AV(2)
1. Pear Orchard Associates
Commercial, Retail
$19,750,708
2.50%
2. Savings Bank Of Mendocino (2)
Commercial, Office
12,372,460
1.56
3. Redwood Empire Lodging LP
Commercial, Hotel/Motel
11,022,361
1.39
4. Mendocino Brewing Company
Industrial, Light Manufac.
10,415,506
1.32
5. Wal Mart Real Estate Business
Commercial, Retail
9,923,961
1.25
6. Redwood Business Park of Ukiah
Commercial, Retail
9,597,469
1.21
7. Skycrest Properties LP
Commercial, Retail
9,086,236
1.15
8. Safeway Inc (3)
Residential, Apartments
8,577,003
1.08
9. Willcon LLC
Vacant, Industrial
6,349,018
0.80
10. Kohls Department Stores Inc
Commercial, Retail
6,098,333
0.77
Total Assessed Value Of Top 10
$103,193,055
13.04%
Total Assessed Value In Project Area
$791,204,780
100.00%
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(1) Assessed valuation data differs slightly from data in Table 2 because MuniServices LLC deducted Home Owners
Property Tax Relief (HOPTR) exemptions from assessed value.
(2) Savings Bank of Mendocino has $153,527 of unsecured assessed value. The other nine ten taxpayers in the
Project Area do not appear on the unsecured roll.
(3) Safeway Inc. is currently appealing its assessed value. See "Appeals of Assessed Values" below.
Source: MuniServices LLC, Mendocino County Auditor-Controller and Seifel Consulting Inc.
Teeter Plan
The Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale
Proceeds (the "Teeter Plan") has been adopted by 53 of the 58 counties, including the County,
as provided for in section 4701 et seq. of the California Revenue and Taxation Code. Under the
Teeter Plan, each participating local agency, including cities, levying property taxes in a county
receives the amount of uncollected taxes credited to its fund, in the same manner as if the
amount credited had been collected. In return, the county receives and retains delinquent
payments, penalties and interest as collected, that would have been due the local agency.
However, although a local agency receives the total levy for its property taxes without regard to
actual collections, to the extent of a reserve established and held by its county for this purpose,
the basic legal liability for property tax deficiencies at all times remains with the local agency.
The Teeter Plan is to remain in effect unless the county board of supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the county, the board
of supervisors receives a petition for its discontinuance from two-thirds of the participating
revenue districts in the county. The board of supervisors may, after holding a public hearing on
the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying
agency in its county.
Annual Tax Receipts to Tax Levy
According to the Fiscal Consultant, the County allocates to the Agency 100 percent of
the secured, unsecured and unitary taxes levied on the extended tax roll without regard to
corrections, cancellations and refunds, therefore the tax revenues of the Agency are not subject
to revenue loss due to delinquencies or gains due to redemptions. This methodology, however,
is an administrative practice of the County and is subject to change. For fiscal year 2009-10,
the delinquency rate within the City of Ukiah was % and within the County as a whole was
Appeals of Assessed Values
Pursuant to California law, property owners may apply for a reduction of their property
tax assessment by filing a written application, in the form prescribed by the State Board of
Equalization, with the appropriate county board of equalization or assessment appeals board.
After the applicant and the assessor have presented their arguments, the Appeals Board makes
a final decision on the proper assessed value. The Appeals Board may rule in the assessor's
favor, in the applicant's favor or the Appeals Board may set its own opinion of the proper
assessed value, which may be more or less than either the assessor's opinion or the applicant's
opinion.
Any reduction in the assessment ultimately granted applies to the year for which
application is made and during which the written application was filed. After a reduction is
allowed, the property is reviewed on an annual basis to determine its full cash value and the
valuation may be adjusted accordingly. This may result in further reductions or increases in
value. Such increases are in accordance with the actual cash value of the property and may
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exceed the maximum annual inflationary growth rate allowed on other properties under Article
XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for
inflation, it is once again subject to the annual inflationary growth rate allowed under Article
XIIIA.
Appeals for reduction in the "base year' value of an assessment, if successful, reduce
the assessment for the year in which the appeal is taken and prospectively after that. The "base
year' is determined by the completion date of new construction or the date of change of
ownership. Any base year appeal must be made within four years of the change of ownership or
new construction date.
Refunds for taxpayer overpayment of property taxes may include refunds for
overpayment of taxes in years after that which was appealed. Any taxpayer payment of property
taxes that is based on a value that is subsequently adjusted downward will require a refund for
overpayment.
As stated in the Fiscal Consultant Report, there is one pending assessment appeal
among the top taxpayers in the Project Area. Safeway, Inc. is appealing its 2010-11 assessed
value of $7,742,629. Its opinion of value is $3,036,000, which, if successfully appealed, would
result in a 60.8% reduction in value. The hearing for the appeal is scheduled for March 15,
2011.
Tax Sharing Agreements
Section 33676 Tax Sharing Agreements. For redevelopment project areas established
prior to January 1, 1994, Section 33676 of the Redevelopment Law allows taxing entities to
receive additional property taxes in a redevelopment project area above the base year revenue
amount. Such payments are based on annual increases in the real property portion of the base
year value up to the inflation limit of 2%.
Pursuant to Resolution No. 90-20 adopted on October 18, 1989, he City of Ukiah has
elected to receive its respective proportionate share of the tax increment produced in the Project
Area by the yearly 2% inflation increase in the Base Year Roll pursuant to California Health and
Safety Code Section 33676.
Negotiated Tax Sharing Obligations. Pursuant to former Section 33401 of the
Redevelopment Law, the Agency has entered into eight pass-through agreements, described as
follows. Each of the eight pass-through agreements contains a provision to the effect that the
taxing entity will subordinate such taxing entity's right to receive a portion of the tax increment
under the related pass-through agreement to debt service payments on indebtedness of the
Agency, if the Agency provides such taxing entity reasonably satisfactory evidence that the
projected tax increment will be sufficient to allow the Agency to meet the Agency's obligations
under such pass-through agreement and to pay debt service on the Agency's indebtedness.
For the purposes of showing coverage throughout this Official Statement, the projected
Tax Revenues are shown as if there has been no subordination of the taxing entities' right to
receive payment under the respective negotiated pass-through agreements to the Bonds.
A description of each tax sharing agreement of the Agency (see also "APPENDIX B
FISCAL CONSULTANT'S REPORT - SECTION VII - Tax Sharing Agreements and Other
Obligations") is as follows:
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•Mendocino County. Under this agreement dated December 29, 1989, the Agency
generally passes through to the County between forty and one hundred percent of what the
County General Fund would have received as property tax revenues from the Project Area had
no provision been made for the Project Area, depending upon which fiscal year it is after
establishment of the Project Area, and sixty percent of tax increment derived from development
of the Mervyn's department store. The County also receives a payment which is treated as a
Section 33676 inflationary allocation, receiving one hundred percent of its share of revenue
derived from inflationary growth,
. •Ukiah Valley Sanitation District. Under this agreement dated December 18, 1989, the
Agency agrees to pass through to the UVSD one hundred percent of the amount of the UVSD`s
share of tax increment that the UVSD would have received as property taxes from the Project
Area if no provision had been made for the Project Area.
•Ukiah Unified School District. Under this agreement dated January 17, 1990, the
Agency agrees to pass through to the UUSD increases in the rate of tax imposed for the benefit
of the UUSD into a Capital Outlay Fund to be expended on capital projects within the Project
Area selected by the UUSD and approved by the Agency in accordance with the Community
Redevelopment Law. The Agency is also required to set aside, for low and moderate income
housing projects selected by the UUSD, 20 percent of the funds the Agency is required to set
aside to preserve and increase the supply of low and moderate income housing within the
Project Area.
•Mendocino-Lake Community College District. Under this agreement dated January 17,
1990, the Agency agrees to pass through to the MLCCD increases in the rate of tax imposed for
the benefit of. the MLCCD into a Capital Outlay Fund to be expended on capital projects within
the Project Area selected by the MLCCD and approved by the Agency in accordance with the
Community Redevelopment Law. The Agency is also required to set aside, for low and
moderate income housing projects selected by the MLCCD, 10 percent of the funds the Agency
is required to set aside to preserve and increase the supply of low and moderate income
housing within the Project Area
•Mendocino County Office of Education. Under this agreement dated January 17, 1990,
the Agency agrees to pass through to the MCOE increases in the rate of tax imposed for the
benefit of. the MCOE into a Capital Outlay Fund to be expended on capital projects within the
Project Area selected by the MCOE and approved by the Agency in accordance with the
Community Redevelopment Law..
-Mendocino County Water Agency. Under this agreement dated January 2, 1990, the
Agency agrees to pass through to the MCWA one hundred percent of the amount of the
MCWA's share of tax increment that the MCWA would have received as property taxes from the
Project Area if no provision had been made for the Project Area.
-Russian River Cemetery District. Under this agreement dated December 28, 1989, the
Agency agrees to pass through to the RRCD one hundred percent of the amount of the RRCD's
share of tax increment that the RRCD would have received as property taxes from the Project
Area if no provision had been made for the Project Area.
-Russian River Flood Control and Water Conservation District. Under this agreement
dated December 28, 1989, the Agency agrees to pass through to the RRFCWCD one hundred
percent of the amount of the RRFCWCD's share of tax increment that the RRFCWCD would
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have received as property taxes from the Project Area if no provision had been made for the
Project Area.
Loans from the City. As reported on the Agency's Statement of Indebtedness filed for the
2006-07 tax year, the Agency has borrowed funds from the City's General Fund and the City's
Electric Fund in the combined principal amount of approximately $1,542,494. These loans are
payable from unencumbered tax increment revenue on a subordinate basis to all other legal
obligations of the Agency, including the 2011 Bonds.
Statutory Pass-Through Payments
Commencing in Fiscal Year 2010-11, the Agency is to pay statutory tax sharing
payments with the City of Ukiah, the Ukiah Parking District No. 1, and the Ukiah Valley Fire
District as a result of an amendment to the Redevelopment Plan November 27, 2006 eliminating
the last date to incur indebtedness for the Project Area.
For the purposes of preparing the tax increment projects set forth below, the Fiscal
Consultant has assumed that the City, the Ukiah Parking District No. 1, and the Ukiah Valley
Fire District have elected to receive statutory pass-through payments, and that they have been
subordinated to the payment of debt service on the 2011 Bonds pursuant to Section 33067.5 of
the California Health and Safety Code.
Tax Increment Revenue Projections and Debt Service Coverage
The following table sets forth the projected growth in tax increment revenues in the
Project Area over the next five years. See APPENDIX B-"FISCAL CONSULTANT'S REPORT"
for projected tax increment revenues for the full term of the 2011 Bonds.
Table 5
UKIAH REDEVELOPMENT PROJECT
Projected Tax Revenues
Taxable Values(1) 2010-11 2011-12 2012-13 2014-15
2015-16
Total Projected Assessed Value(2) 796,670,543 802,181,988 816,930,848 831,974,685
847,319,685
Incremental Value (3) 5,404,635 5,459,750 5,607,239 5,757,677
5,911,124
Less: Unilateral 2% Election (4) (133,418) (136 636) (145 249) (154 034)
(162 994)
Gross Tax Revenue 5,271,217 5,323,113 5,461,990 5,603,643
5,748,130
Less: County Admin Fee (5) (60,000) (60,612) (62,249) (63,919)
(65,623)
Less: 20% Housing Set-Aside (6) (1,054,243) (1,064,623) (1,092,398) (1,120,729)
(1,149,626)
Less: Pass-Through Payments 0 0 (1,397) (4,850)
(8,373)
Net Tax Revenues 4,156,974 4,197,878 4,305,946 4,414,145
4,524,508
*Projections and coverage through fiscal year 2040-41 can be seen in Table 1 of the Fiscal Consultant Report, See
"APPENDIX B"
attached hereto.
(1) Taxable values as reported by Mendocino County.
(2) Projected assessed value is increased for inflation at 0.753 for fiscal year 2011-12 and 2% annually thereafter.
(3) Incremental revenue is the revenue derived from the Incremental Value factored by the 1 % general levy tax rate.
(4) Section 33676 of the Law allows affected taxing entities to elect to receive the tax increment attributable to the "two percent
CCPI inflation" growth in assessed valuation in a project area in addition to their share of the frozen base of the property taxes under
certain circumstances
(5) County SIB 2557 Administration fee is estimated at 1.05% of Gross Tax Revenue.
(6) Housing Set Aside Requirement is calculated at 20% of Gross Tax Revenue.
Source: The Agency and Fiscal Consultant
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The foregoing projections reflects the Agency's understanding of the assessment and
tax apportionment procedures employed by the County. The County procedures are subject to
change as a reflection of policy revisions or legislative mandate. While the Agency believes the
estimates to be reasonable, taxable values resulting from actual appraisals may vary from the
amounts assumed in the projections.
Based on a projected assessed value increase as shown in the above table (0.753% for
fiscal year 2011-12 and 2% annually thereafter) plus 4% annual growth from new development
over the remaining life of the Project Area, the tax increment cap under the Redevelopment
Plan would be reached in fiscal year 2038-39. Under the Indenture, the Agency has agreed
that, at any point in time, the then remaining amount of annual debt service remaining to be paid
on all outstanding the Bonds and Subordinate Debt shall at no time exceed ninety percent
(90%) of the aggregate amount of the Tax Revenues which the Agency is permitted to receive
under the Plan Limitations. In the event that the aggregate amount of annual debt service
remaining to be paid on the Bonds and Subordinate Debt at any time equals or exceeds ninety
percent (90%) of the then remaining amount of the Tax Revenues which the Agency is
permitted to receive under its Plan Limitations, all Tax Revenues thereafter received by the
Agency shall immediately be deposited with the Trustee and applied by the Trustee for the sole
purpose of paying the principal of and interest on the Bonds and any Subordinate Debt as it
comes due and payable.
No assurances are provided by the Agency as to the certainty of the projected tax
increment revenues shown on the foregoing table, or the debt service coverage set forth on the
following table. Actual revenues may be higher or lower than what has been projected and are
subject to valuation changes resulting from new developments or transfers of ownership not
specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or
the non-payment of taxes due. See APPENDIX B-"FISCAL CONSULTANT'S REPORT."
Table 6 below sets forth estimated debt service coverage for the Bonds assuming the
projected growth in Tax Revenues set forth in Table 5.
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Table 6
UKIAH REDEVELOPMENT PROJECT
Estimated Debt Service Coverage*
Aggregate 2007 Projected
Year Ending
2007 Bonds
2011 Bonds and 2011 Bonds Net Tax Debt Service
June 30
Debt Service
Debt Service* Debt Service* Revenues(l) Covera e*
2011
$472,660.00
$4,156,974
2012
468,085.00
4,197,879
2013
472,960.00
4,305,946
2014
470,570.00
4,414,145
2015
472,607.50
4,524,508
2016
463,847.50
4,637,078
2017
464,710.00
4,751,900
2018
469,750.00
4,869,018
2019
468,730.00
4,988,479
2020
466,855.00
5,110,328
2021
464,110.00
5,234,614
2022
470,480.00
5,361,385
2023
470,700.00
5,490,692
2024
5,622,585
2025
5,757,115
2026
5,894,337
2027
6,032,302
(1) Net Tax Revenues, asset forth in Table 5, are subject to the assumptions set forth in Table 5.
* Preliminary, subject to change.
Adjustments to Tax Increment Revenues
Property Tax Administrative Costs. The County currently reduces the amount of total tax
increment revenue allocated to the Agency from the Project Area to cover property tax
administrative costs. Legislation enacted in 1990 (SB 2557), and in 1992 (SIB 1559) authorizes
county auditors to determine property tax administrative costs proportionately attributable to
local jurisdictions and, for the 1990-91 and 1991-92 Fiscal Years, to invoice the jurisdictions for
such costs. Commencing in the 1992-93 Fiscal Year, the amounts due as local agencies'
contribution to covering county administrative costs are to be allocated to the county as part of
the overall system for the redistribution of property taxes (as opposed to being paid pursuant to
invoices).
SB 1559 expressly includes redevelopment agencies as jurisdictions that are to be
charged for property tax administrative costs. For FY 2010-11, the Agency's budget estimates a
County administrative fee of approximately $60,000 for the Project Area. The projections
assume that this County fee will continue in about the same proportion (at 1.05%) to
incremental tax revenues for the Project Area. and is deducted from the estimate of Agency
revenue.
Low and Moderate Income Housing. The Agency must set aside 20 percent of its
allocated tax increment for low and moderate income housing purposes, except under certain
specified conditions. It is the current policy of the Agency to make deposits into its Low and
Moderate Income Housing Fund either through direct deposits to the Low and Moderate Income
Housing Fund or by using Low and Moderate Income Housing Fund revenues for eligible debt
service payments.
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Fiscal Consultant's Report
The Agency requested that the Fiscal Consultant review current and historical taxable
values and property tax revenues, review currently pending and recently resolved assessment
appeals and estimate future tax increment revenues for the Project. Pursuant to that request,
the Fiscal Consultant has prepared a Fiscal Consultant's Report. See APPENDIX B-"FISCAL
CONSULTANT'S REPORT."
BONDOWNERS' RISKS
The following information should be considered by prospective investors in evaluating
whether to invest in the 2011 Bonds. However, the following does not purport to be an
exhaustive listing of risks and other considerations which may be relevant to investing in the
2011 Bonds and the order in which the following information is presented is not intended to
reflect the relative importance of any such risks.
Estimates of Pledged Tax Revenues
To estimate the revenues available to pay debt service on the Bonds, the Agency has
made certain assumptions with regard to the assessed valuation in the Project Area, future tax
rates and percentage of taxes collected. The Agency believes these assumptions to be
reasonable, but to the extent that the assessed valuation, the tax rates or the percentage of
taxes collected are less than the Agency's assumptions, the Tax Revenues available to pay
debt service on the Bonds will, in all likelihood, be less than those projected.
Reduction in Taxable Value
Tax Revenues allocated to the Agency are determined by the amount of incremental
taxable value in the Redevelopment Project allocable to the Redevelopment Project and the
current rate or rates at which property in the Redevelopment Project is taxed. The reduction of
taxable values of property caused by economic factors beyond the Agency's control, such as a
relocation out of the Redevelopment Project by one or more major property owners, or the
transfer, pursuant to California Revenue and Taxation Code Section 68, of a lower assessed
valuation to property within the Redevelopment Project by a person displaced by eminent
domain or similar proceedings, or the discovery of hazardous substances on a property within
the Redevelopment Project (see "Hazardous Substances," below) or the complete or partial
destruction of such property caused by, among other eventualities, an earthquake (see "Seismic
and Flood Considerations," below), flood or other natural disaster, could cause a reduction in
the Tax Revenues securing the Bonds. Property owners may also appeal to the County
Assessor for a reduction of their assessed valuations or the County Assessor could order a
blanket reduction in assessed valuations based on then current economic conditions. See "THE
PROJECT AREA - Appeals of Assessed Values."
Reduction in Inflationary Rate
As described in greater detail below (see "LIMITATIONS ON TAX REVENUES"), Article
XIIIA of the California Constitution provides that the full cash value base of real property used in
determining taxable value may be adjusted from year to year to reflect the inflationary rate, not
to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the
consumer price index or comparable local data. Such measure is computed on a calendar year
basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the
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actual inflationary rate or 2%, there have been years in which the assessed values were
adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was
approved, the annual adjustment for inflation has fallen below the 2% limitation five times: in
fiscal year 1983-84, 1%; in fiscal year 1995-96, 1.19%; in fiscal year 1996-97, 1.11%; in fiscal
year 1999-00, 1.85%; and in fiscal year 2004-05, 1.867%. In addition, the inflationary growth
rate is negative (0.237%) for 2010-11 and will be 0.753% for 2011-12. The Agency is unable to
predict if any further adjustments to the full cash value base of real property within the Project
Areas, whether an increase or a reduction, will be realized in the future.
Tax Revenues allocated to the Agency are determined by the amount of incremental
taxable value in the Project Area and the current rate or rates at which property in the Project
Area is taxed. The reduction of taxable values of property caused by economic factors beyond
the Agency's control, such as a relocation out of the Project Area by one or more major property
owners, or the transfer, pursuant to California Revenue and Taxation Code Section 68, of a
lower assessed valuation to property within the Project Area by a person displaced by eminent
domain or similar proceedings, or the discovery of hazardous substances on a property within
the Project Area (see "Hazardous Substances," below) or the complete or partial destruction of
such property caused by, among other eventualities, an earthquake (see "Natural Disasters"
below) or other natural disaster, could cause a reduction in the Tax Revenues securing the
Bonds. Property owners may also appeal to the County Assessor for a reduction of their
assessed valuations or the County Assessor could order a blanket reduction in assessed
valuations based on then current economic conditions. Such a reduction of assessed
valuations and the resulting decline in Tax Revenues or the resulting property tax refunds could
have an adverse effect on the Agency's ability to make timely payments of principal of and
interest on the Bonds. See "THE PROJECT AREA - Appeals of Assessed Values."
The County has adopted the Teeter Plan , as provided for in section 4701 et seq. of the
California Revenue and Taxation Code. (See "THE PROJECT AREA - Teeter Plan".) The
Teeter Plan is to remain in effect unless the County Board of Supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the County, the
Board of Supervisors receives a petition for its discontinuance from two-thirds of the
participating revenue districts in the county. The Board of Supervisors may, after holding a
public hearing on the matter, discontinue the procedures under the,Teeter Plan with respect to
any tax levying agency in its County. The Agency can give no assurances that the Teeter Plan
will continue, and will continue to include tax increment received by the Agency.
Levy and Collection
The Agency has no independent power to levy and collect property taxes. Any reduction
in the tax rate or the implementation of any constitutional or legislative property tax decrease
could reduce the Tax Revenues and, accordingly, could have an adverse impact on the ability of
the Agency to make debt service payments on the Bonds. Likewise, delinquencies in the
payment of property taxes could have an adverse effect on the Agency's ability to make timely
debt service payments on the Bonds. The County currently allocates Tax Revenues collected
with respect to unsecured property to the Agency based upon the tax increment actually
collected.
Parity Debt
As referenced under the caption "Parity Debt", the Agency may issue or incur obligations
payable from Tax Revenues on a parity with its pledge of Tax Revenues to payment of debt
service on the Bonds. The existence of and the potential for such obligations increases the
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risks associated with the Agency's payment of debt service on the Bonds in the event of a
decrease in the Agency's collection of Tax Revenues.
State Budget Deficit-ERAF
State Budgets. Information about the State budget and State spending is regularly
available from various State offices or on the applicable websites, including the Department of
Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such
information is incorporated by such reference.
Historical ERAFs. In connection with its approval of the State budget for fiscal years
1992-93, 1993-94, 1994-95, 2002-03, 2003-04, 2004-05, 2005-06 and 2008-09, the State
Legislature enacted legislation which, among other things, reallocated funds from
redevelopment agencies to school districts by shifting a portion of each agency's tax increment,
net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit
in the Education Revenue Augmentation Fund ("ERAF"). The amount required to be paid by a
redevelopment agency under such legislation was apportioned among all of its redevelopment
project areas on a collective basis, and was not allocated separately to individual project areas.
Fiscal Year 2008-09. In 2008, the State Legislature adopted, and the Governor of the
State signed, legislation, Chapter 751, Statutes 2008 (AB 1389) ("AB 1389"), that among other
things required redevelopment agencies to pay into ERAF in fiscal year 2008-09, prior to May
10, 2009, an aggregate amount of $350 million. On April 30, 2009, a California superior court in
California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-
00028334) held that the required payment by redevelopment agencies into ERAF in fiscal year
2008-09 pursuant to AB 1389 violated the California Constitution and invalidated and enjoined
the operation of the California Health and Safety Code section requiring such payment. On May
26, 2009, the State filed a notice that it would appeal the decision of the superior court. On
September 28, 2009, the State noticed its withdrawal of its appeal of California Redevelopment
Association v. Genest.
Fiscal Year 2009-10 and Fiscal Year 2010-11. In connection with various legislation
related to the budget for the State for its fiscal year 2009-10, in late July 2009, the State
legislature adopted, and the Governor of the State signed, Assembly Bill No. 26x4 (the "2009
SERAF Legislation").
The 2009 SERAF Legislation mandates that redevelopment agencies in the State make
deposits to the Supplemental Educational Revenue Augmentation Fund ("SERAF") that is
established in each county treasury throughout the State the aggregate amounts of $1.7 billion
for fiscal year 2009-10, which were due prior to May 10, 2010, and $350 million for fiscal year
2010-11, which are due prior to May 10, 2011.
As noted below, the Agency timely paid the SERAF payment for fiscal year 2009-10 in
the amount of $ and the Agency has preliminarily estimated that the SERAF
Payment will be the amount of $359,158 for fiscal year 2010-11. Pursuant to the 2009 SERAF
Legislation, redevelopment agencies may use any funds that are legally available and not
legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of
bonds or other indebtedness, lease revenues, interest and other earned income.
The 2009 SERAF Legislation contains provisions that subordinate the obligation of
redevelopment agencies to make the SERAF payments specified therein to certain
indebtedness. Health and Safety Code, § 33690 (a) (3) states: "The obligation of any agency to
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make the payments required pursuant to this subdivision shall be subordinate to the lien of any
pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on
any bonds of the agency including, without limitation, bonds secured by a pledge of taxes
allocated to the agency pursuant to Section 33670 of the California Health and Safety Code."
The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies
that fail to timely make the required SERAF payments, including (i) a prohibition on adding or
expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on
the encumbrance and expenditure of funds, including funds for operation and administration
expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual
payment that is not timely made, a requirement that the applicable redevelopment agency
allocate an additional five percent of all taxes that are allocated to the redevelopment agency
under the Redevelopment Law for low and moderate income housing for the remainder of the
time that the applicable redevelopment agency receives allocations of tax revenues under the
Redevelopment Law.
The five percent additional housing set-aside penalty provision referred to in the 2009
SERAF Legislation (the "Penalty Set-Aside Requirement") would be in addition to the
percentage of such tax revenues already required to be used for low and moderate income
housing purposes. A redevelopment agency that borrows from amounts required to be allocated
to its housing set-aside funds to make required SERAF payments but does not timely repay the
funds, will also be subject to the Penalty Set-Aside Requirement. If a redevelopment agency
borrows funds from its low and moderate income housing fund to make the SERAF payment in
either year, and does not repay the funds within the specified time frame, it would be subject to
the Penalty Set-Aside Requirement. Note that, if a redevelopment agency fails to comply with
the foregoing described requirements in both fiscal year 2009-10 and 2010-11, the
redevelopment agency will be subject to the Penalty Set-aside Requirement in both such Fiscal
Years for a total of 10% additional housing set-aside penalty. The Agency's SERAF payment for
fiscal year 2009-10 was not made from the Housing Set-Aside Fund and the Agency has no
plans to borrow housing set-aside funds for the fiscal year 2010-11 SERAF.
The California Redevelopment Association, the Union City Redevelopment Agency and
the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento Superior Court on
October 20, 2009 challenging the constitutionality of the 2009 SERAF Legislation and seeking
to prevent the State from taking redevelopment funds for non-redevelopment purposes. On May
4, 2010, the Superior Court ruled that the 2009 SERAF Legislation is constitutional. The Agency
timely paid its SERAF payment by May 10, 2010. The California Redevelopment Association
has appealed the judgment of the Superior Court. The appeal seeks repayment of the fiscal
year 2009-10 payment and a prohibition of the second payment. The Agency cannot predict
whether or not the Court of Appeal will approve or overturn the judgment of the Superior Court
or whether or not the Agency will be able to recover the amount of the SERAF payment for
fiscal year 2009-10 in the event the judgment of the Superior Court is overturned. Further, the
Agency cannot predict whether or not such judgment will be overturned regarding the SERAF
payment for fiscal year 2010-11.
The State's ability to impose future ERAF and SERAF payments on redevelopment
agencies may be affected by Proposition 22, which was approved by the California electorate
on November 2, 2010. Proposition 22, among other things, amends Sections 24 and 25.5 of
Article XIII of the California Constitution to prohibit the State from reallocating, transferring,
borrowing, appropriating or restricting the use of taxes imposed or levied by a local government
solely for the local government's purposes. As applied to redevelopment agencies, Proposition
22 adds Section 25.5(A)(7) to Article XIII of the State Constitution to prohibit the State from
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requiring a redevelopment agency (A) to pay, remit, loan, or otherwise transfer, directly or
indirectly, taxes on ad valorem real property and tangible personal property allocated to the
agency pursuant to Section 16 of Article XVI of the State Constitution to or for the benefit of the
State, any agency of the State, or any other jurisdiction; or (B) to use, restrict, or assign a
particular purpose for such taxes for the benefit of the State, any agency of the State, or any
other jurisdiction, other than (i) statutory pass through payments required by Health and Safety
Code Sections 33607.5 and 33607.7 and (ii) payments for the purpose of increasing, improving,
and preserving the supply of low and moderate income housing available at affordable housing
cost. Although the passage of Proposition 22 will have no impact upon the Agency's obligation
to pay the 2010 SERAF Amount, the State Legislative Analyst's Office ("LAO") has stated that
the measure prohibits the State from enacting new laws that require redevelopment agencies to
shift funds to schools or other agencies. No assurance can be provided that Proposition 22 will
be implemented as contemplated by the LAO. In addition, Proposition 22 is subject to
interpretation by the courts and there can be no assurance that the measure will not be
challenged by the State or other parties or repealed by the voters of the State in the future.
Proposed 2011-12 Budget and Redevelopment Agencies. On January 10, 2011
Governor Jerry Brown released his proposed budget for fiscal year 2011-12 ("Proposed
Budget"). The Proposed Budget is designed to address an estimated budget shortfall of $25.4
billion in the fiscal year 2011-12 California State Budget. The budget shortfall consists of an
$8.2 billion projected deficit for 2010-11 and a $17.2 billion gap between projected revenues
and spending in 2011-12. The Governor's proposal includes approximately $12.5 billion in
budget cuts, $12 billion in tax extensions and changes, and $1.9 billion in other solutions. The
Governor is calling for a statewide special election in June to extend for five more years tax
measures currently set to expire.
The Proposed Budget makes the following redevelopment-related proposals (the "RDA
Provisions"), among others:
(i) ' The RDA Provisions, if adopted, would eliminate the current funding mechanism
for redevelopment agencies, although only limited details are provided for such a far-reaching
proposal.
(ii) The RDA Provisions, if adopted, would prohibit existing agencies from creating
new contracts or obligations effective upon enactment of urgency legislation.
(iii) By July 1, the RDA Provisions, if adopted, would disestablish existing
redevelopment agencies and successor local agencies would be required to use the property
tax revenues that redevelopment agencies would otherwise have received to retire
redevelopment agency debts and contractual obligations "in accordance with existing
payment schedules" (emphasis added).
(iv) For fiscal year 2011-12, the RDA Provisions, if adopted, would divert an
estimated $1.7 billion remaining after payment of the redevelopment agency debts and
contractual obligations described in the preceding paragraph (iii) to offset State General Fund
costs for Medi-Cal and trial courts. An additional estimated $210 million would be distributed on
a one-time basis to cities, counties, and special districts proportionate to their current share of
the countywide property tax.
(v) For fiscal years after fiscal year 2011-12, the RDA Provisions, if adopted, would
distribute the money available after payment of the redevelopment agency debt and contractual
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obligations described in the preceding paragraph (iii) to schools, counties, cities, and non-
enterprise special districts for general uses.
(vi) The RDA Provisions, if adopted, would shift amounts in the redevelopment
agency's balances reserved for low-moderate income housing to local housing authorities for
low and moderate income housing.
(vii) If adopted, the RDA Provisions would introduce a new financing mechanism for
economic development. Specifically, the Proposed Budget proposes that the Constitution be
amended to provide for 55% voter approval for limited tax increases and bonding against local
revenues for development projects such as are currently done by redevelopment agencies.
Voters in each affected jurisdiction would be required to approve use of their tax revenues for
these purposes.
Implementation of the Proposed Budget, including the RDA Provisions, would require
implementing legislation by the Legislature and perhaps voter approval as to certain material
elements and would probably include terms which are not yet proposed but that would be
material to the Agency and the Bonds. The Agency cannot predict the ultimate form of any
implementing legislation, if any is adopted.
Elements of the RDA Provisions, including the economic development program
authorization, contemplate voter approval through the initiative process. It is possible that
Proposition 22, which amended the State Constitution to prohibit state diversion of
redevelopment agency revenues generally, will affect the State's ability to implement some of
the RDA Provisions. It is possible that the Governor and the Legislature may seek voter
approval of changes to the terms of Proposition 22 that are in conflict with the Proposed Budget,
including the RDA Provisions.
The Agency cannot predict the timing, terms or ultimate implementation of any such final
legislation or voter initiative measures, or the impact on the Agency or the Bonds of any
proposed, interim or final legislative and constitutional changes which may be adopted arising
out of the Proposed Budget.
Legislative Analyst Report. The LAO released its Overview of the Governor's Budget
("LAO Overview") on January 12, 2011. As it relates to the RDA Provisions the LAO Overview
suggests the proposal has merit "but faces considerable implementation issues." The LAO
Overview notes:
the administration's plan will require considerable work by the Legislature to sort through
many legal, financial and policy issues. Several voter-approved constitutional measures,
for example, constrain the State's authority to redirect redevelopment funds, use
property tax revenues to pay for state programs, or impose increased costs on local
agencies. In addition, the administration's plan does not address many related issues,
such as clarifying the future financial responsibility for low- and moderate- income
housing (currently, a redevelopment program).
Finally, the LAO Overview recommends that the Legislature pass urgency legislation as
soon as possible prohibiting redevelopment agencies, during the period of legislative review of
the Proposed Budget, from taking actions that increase their debt.
Potential Impact on the Agency and the Bonds. There are a variety of ways in which the
Proposed Budget and the RDA Provisions, if adopted, could impact the Agency and the Bonds,
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although the Agency is not able to predict the full variety or extent of these impacts, and the
impacts will vary greatly depending on the final terms of laws adopted to implement the
Proposed Budget and the RDA Provisions:
(i) The RDA Provisions, if adopted, could impact the Agency's activities and
programs generally and could reduce or eliminate its fund balances and staffing.
(ii) The RDA Provisions, if adopted, could affect the Agency's compliance with and
performance under existing contracts and obligations, including senior Pass-Through
Agreements and Housing Set-Aside obligations.
(iii) Subject to certain constitutional protections described below, the RDA
Provisions, if adopted, could affect the Agency's compliance with and performance under the
terms of the Indenture and the Bonds. These impacts could relate to the amount or availability
of property tax revenue, Tax Increment revenues or Tax Revenues for the Bonds and other
uses, the manner of application of Tax Revenues to debt service, flow of funds, use of Bond
proceeds to fund new projects, compliance with Indenture covenants, continuing disclosure and
other matters.
(iv) Pending final adoption of laws to implement the RDA Provisions, interim
proposals could affect the activities of the Agency and the value of the Bonds.
(v) Most significantly, the RDA Provisions if adopted and implemented in their
proposed form - would eliminate redevelopment agencies and redeploy tax increment revenues
affecting redevelopment agencies. These actions would almost certainly raise legal and
practical issues, some of which may be subject to litigation and ultimate resolution in the courts,
or subsequent legislative action. These issues could affect the Agency and its compliance with
the terms of the Indenture and the Bonds, and resolution of these issues could involve expense
and delay or modification of certain of the rights of the bondholders in ways the Agency cannot
predict.
Constitutional Protections. The Agency believes that constitutional protections against
the impairment of contracts will prevent the proposed actions in the RDA Provisions from
adversely affecting the validity of the Bonds or the Agency's pledge of Tax Revenues to secure
the payment of the Bonds. Indeed, the RDA Provisions purport to provide for the payments by
successor entities of existing redevelopment agencies' "debts and contractual obligations."
Article I, section 10 of the United States Constitution provides that "No state shall... pass
any...law impairing the obligation of contracts." Article I, section 9 of the California Constitution
provides that a "law impairing the obligation of contracts may not be passed." Each of these
provisions is generally referred to as a "contracts clause". Federal courts have applied a fact-
based three-part test to determine whether a state law violates the federal contracts clause. In
general, the test compares any impairment against the significant and legitimate public purpose
behind the state law; there is no absolute prohibition against impairment.
The United States Supreme Court has declared in the context of a New Jersey law that
would have retroactively repealed a 1962 statutory (but contractual) covenant that would have
adversely impacted bondowners: "A governmental entity can always find a use for extra money,
especially when taxes do not have to be raised. If a State could reduce its financial obligations
whenever it wanted to spend the money for what it regarded as an important public purpose, the
Contract Clause would provide no protection at all." (See United States Trust Co. of New York
v. New Jersey (1977) 431 U.S. 1, 25-26.)
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The Agency cannot predict the applicable scope of "contract clause" protections to the
Bonds and the RDA Provisions as they may ultimately be implemented. Efforts to protect the
rights of Bondholders and to enforce the terms of the Indenture, if necessary, could involve
expense and delay including with respect to the determination of the applicable scope of the
"contract clause" provisions.
Future State Action. The Agency cannot predict what actions will be taken in the future
by the voters of the State, the State Legislature and the Governor to deal with changing State
revenues and expenditures and the repercussions they may have on the current fiscal year
State Budget, the Proposed Budget and future State budgets, or their impact on the Agency.
These developments at the State level, whether related to the Proposed Budget or not, may, in
turn, affect local governments and agencies, including the Agency. Even if the proposals
affecting the Agency in the Proposed Budget are not adopted, the State Legislature may adopt
other legislation from time to time requiring redevelopment agencies to make other payments to
ERAF or SERAF or to make other payments. The impact that current and future State fiscal
shortfalls will have on the Agency is unknown at this time. In prior years, the State has
experienced budgetary difficulties and as in the Proposed Budget, balanced its budget by
requiring local political subdivisions, such as the County, the City and the Agency, to fund
certain costs previously borne by the State.
Natural Disasters
A reduction of taxable values of property in the Project Area caused by economic factors
beyond the Commission's control, such as the discovery of hazardous substances on one or
more properties within the Project Area or the complete or partial destruction of such property
caused by, among other eventualities, an earthquake, flood or other natural disaster, could
cause a reduction in the Tax Revenues securing the 2011 Bonds. Such reduction of Tax
Revenues could have an adverse effect on the Commission's ability to make timely payments of
principal of and interest on the 2011 Bonds.
Pursuant to California law, the County Assessor may determine that the then current
market values require a general reduction in taxable value or a property owner may apply for a
reduction of the property taxable values of such owner's property by filing with the County
Assessor, a written application in the form prescribed by the State Board of Equalization with
the appropriate county assessment appeals board. A reduction in property taxable values
within the Project Area and the refund of taxes which may arise out of successful appeals by
property owners would reduce the amount of Tax Revenues available for payment of the 2011
Bonds.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed
value of property would be the discovery of a hazardous substance that would limit the
beneficial use of taxable property within the Project Area. In general, the owners and operators
of a property may be required by law to remedy conditions of the property relating to releases or
threatened releases of hazardous substances. The owner or operator may be required to
remedy a hazardous substance condition of property whether or not the owner or operator has
anything to do with creating or handling the hazardous substance. The effect, therefore, should
any of the property within the Project Area be affected by a hazardous substance, could be to
reduce the marketability and value of the property by the costs of remedying the condition.
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Bankruptcy Risks
The enforceability of the rights and remedies of the owners of the Bonds and the
obligations of the Agency may become subject to the following: the federal bankruptcy code
and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or
affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual
equitable principles which may limit the specific enforcement under state law of certain
remedies: the exercise by the United States of America of the powers delegated to it by the
federal Constitution; and the reasonable and necessary exercise, in certain exceptional
situations of the police power inherent in the sovereignty of the State of California and its
governmental bodies in the interest of servicing a significant and legitimate public purpose.
Bankruptcy proceedings, or the exercise of powers by the federal or state government, if
initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their
rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or
modification of their rights.
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a
secondary market exists, that such Bonds can be sold for any particular price. Occasionally,
because of general market conditions or because of adverse history or economic prospects
connected with a particular issue, secondary marketing practices in connection with a particular
issue are suspended or terminated. Additionally, prices of issues for which a market is being
made will depend upon the then prevailing circumstances. Such prices could be substantially
different from the original purchase price.
Loss of Tax Exemption
As discussed under the caption "Tax Matters" herein, interest on the Bonds could
become includable in gross income for purposes of federal income taxation retroactive to the
date the Bonds were issued as a result of future acts or omissions of the Agency in violation of
its covenants contained in the Indenture. Should such an event of taxability occur, the Bonds
are not subject to special redemption or any increase in interest rate and may remain
outstanding until maturity.
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LIMITATIONS ON TAX REVENUES
Property Tax Limitations-Article XIIIA
California voters, on June 6, 1978, approved an amendment (commonly known as both
Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment,
which added Article XIII A to the California Constitution, among other things, affects the
valuation of real property for the purpose of taxation in that it defines the full cash value of
property to mean "the county assessor's valuation of real property as shown on the fiscal year
1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to
exceed two percent per year, or any reduction in the consumer price index or comparable local
data, or any reduction in the event of declining property value caused by damage, destruction or
other factors. The amendment further limits the amount of any ad valorem tax on real property
to one percent of the full cash value except that additional taxes may be levied to pay debt
service on indebtedness approved by the voters prior to July 1, 1978. In addition, an
amendment to Article XIII was adopted in October 1986 by initiative which exempts any bonded
indebtedness approved by two-thirds (55% in certain instances) of the votes cast by the voters
for the acquisition or improvement of real property from the one percent limitation.
On September 22, 1978, the California Supreme Court upheld the amendment over
challenges on several state and federal constitutional grounds (Amador Valley Joint Union
School District v. State Board of Equalization). The Court reserved certain constitutional issues
and the validity of legislation implementing the amendment for future determination in proper
cases.
In the general elections of 1986, 1988 and 1990, the voters of the State approved
various measures which further amended Article XIII A. One such amendment generally
provides that the purchase or transfer of (i) real property between spouses or (ii) the principal
residence and the first $1,000,000 of the full cash value of other real property between parents
and children, do not constitute a "purchase" or "change of ownership" triggering reassessment
under Article XIII A. This amendment has reduced local property tax revenues. Other
amendments permitted the Legislature to allow persons over 55 who sell their residence on or
after November 5, 1986, to buy or build another of equal or lesser value within two years in the
same county, to transfer the old residence's assessed value to the new residence, and
permitted the Legislature to authorize each county under certain circumstances to adopt an
ordinance making such transfers of assessed value applicable to situations in which the
replacement dwelling purchased or constructed after November 8, 1988, is located within the
county and the original property is located in another county within California.
In the October 1990 election, the voters approved additional amendments to Article XIII
A permitting the State Legislature to extend the replacement dwelling provisions applicable to
persons over 55 to severely disabled homeowners for replacement dwellings purchased or
newly constructed on or after June 5, 1990, and to exclude from the definition of "new
construction," triggering reassessment, improvements to certain dwellings for the purpose of
making the dwelling more accessible to severely disabled persons. In the November 1990
election, the voters approved the amendment of Article XIII A to permit the State Legislature to
exclude from the definition of "new construction" seismic retrofitting improvements or
improvements utilizing earthquake hazard mitigation technologies constructed or installed in
existing buildings after November 6, 1990.
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Challenges to Article XIIIA
The U.S. Supreme Court struck down as a violation of equal protection certain property
tax assessment practices in West Virginia, which had resulted in vastly different assessments of
similar properties. Since Proposition 13 provides that property may only be reassessed up to
two percent per year, except upon change of ownership or new construction, recent purchasers
may pay substantially higher property taxes than long-time owners of comparable property in a
community. The Supreme Court in the West Virginia case expressly declined to comment in any
way on the constitutionality of Proposition 13.
Based on the decision in the West Virginia case, property owners in California brought
three suits challenging the acquisition value assessment provisions of Article XIII A. Two cases
involved residential property, and one case involved commercial property. In all three cases,
State trial and appellate courts have upheld the constitutionality of Article XIII A's assessment
rules and concluded that the West Virginia case did not apply to California's laws. On June 3,
1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relating to commercial
property, but the plaintiff subsequently withdrew its case. On June 18, 1992, the U.S. Supreme
Court upheld the decision in Nordlinger v. Hahn, one of the challenges relating to residential
property.
Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of
1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies
may not levy any property tax, except to pay debt service on indebtedness approved by the
voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article
XIIIA.
The apportionment of property taxes in fiscal years after 1978-79 has been revised
pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys
beginning in fiscal year 1978-79 and is designed to provide a permanent system for sharing
State taxes and budget surplus funds with local agencies. Under Chapter 282, cities and
counties receive about one-third more of the remaining property tax revenues collected under
Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced
amount of property taxes, but receive compensation directly from the State and are given
additional relief.
Future assessed valuation growth allowed under Article XIIIA (new construction, change
of ownership, 2% annual value growth) will be allocated on the basis of "situs" among the
jurisdictions that serve the tax rate area within which the growth occurs except for certain utility
property assessed by the State Board of Equalization which is allocated by a different method
discussed herein.
Unitary Property
Assembly Bill 454 Statutes of 1987, Chapter 921 ("AB 454"), provided that revenues
derived from Unitary Property (consisting mostly of operations property owned by utility
companies), commencing with fiscal year 1988-89, will be allocated as follows: (1) for revenues
generated from the one percent tax rate, (a) each jurisdiction, including redevelopment project
areas, will receive a percentage up to 102 percent of its prior year State-assessed unitary
revenue; and (b) if county-wide revenues generated from Unitary Property are greater than 102
percent of the previous year's revenues, each jurisdiction will receive a percentage share of the
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excess unitary revenues by a specified formula, and (2) for revenue generated from the
application of the debt service tax rate to county-wide unitary taxable value, each jurisdiction's
annual debt service requirements and the percentage of property taxes received by each
jurisdiction from unitary property taxes. This provision applies to all Unitary Property except
railroads whose valuation will continue to be allocated to individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of assessment of any State-
assessed properties nor a revision of the method of assessing utilities by the State Board of
Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be
shared by all jurisdictions within a county.
On February 1, 1991, the Superior Court for the County of Sacramento issued a
Statement of Decision in AT&T Communications of California, et al. v. State Board of
Equalization which reduced the valuation of certain unitary property owned by AT&T for property
tax purposes. Under the decision, the valuation method used by the State Board of Equalization
to assess unitary public utility property was declared illegal and a new method of valuation,
resulting in significantly lower values and therefore significantly lower potential property tax
revenues, was imposed. The effect on AT&T's statewide assessed value was to reduce it from
approximately $1,750,000,000 to approximately $1,100,000,000. As a result of this case, on
May 1, 1992, 57 of California's 58 counties, the State Board of Equalization and a number of
other utility companies whose unitary property valuations could be affected by the principles
announced in the Superior Court decision entered into a settlement agreement. On July 14,
1993, the Superior Court for the County of Sacramento entered a judgment validating the
settlement agreement.
Although the settlement agreement is complex and extensive, its substance is
represented by the signatory public utilities' agreement (except AT&T) to abandon their right to
refunds since 1983 in return for lowered assessed valuations for the next eight fiscal years
pursuant to an agreed formula.
To administer the allocation of unitary tax revenues to redevelopment agencies, the
County no longer includes the taxable value of utilities as part of the reported taxable values of
project areas, therefore, the base year values of project areas have been reduced by the
amount of utility value that existed originally in the base year. Within the Project Area, the
Auditor Controller has allocated $363.89 in unitary tax revenue to the Agency for fiscal year
2002-03. This amount is reasonably consistent with the unitary revenue allocations made to the
Agency in prior years. The Fiscal Consultant has assumed no increase in the amounts of unitary
tax revenues to the Agency for purposes of projecting Tax Revenues.
Property Tax Collection Procedures
Classifications. In California, property which is subject to ad valorem taxes is classified
as "secured" or "unsecured." Secured and unsecured property are entered on separate parts of
the assessment roll maintained by the county assessor. The secured classification includes
property on which any property tax levied by the County becomes a lien on that property
sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which
becomes a lien on secured property has priority over all other liens on the secured property,
regardless of the time of the creation of other liens. A tax levied on unsecured property does not
become a lien against unsecured property, but may become a lien on certain other property
owned by the taxpayer.
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Collections. The method of collecting delinquent taxes is substantially different for the
two classifications of property. The taxing authority has four ways of collecting unsecured
property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the
taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to
obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency
for record in the county recorder's office, in order to obtain a lien on certain property of the
taxpayer; and (4) seizure and sale of the personal property, improvements or possessory
interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes with respect to
property on the secured roll is the sale of property securing the taxes to the State for the amount
of taxes which are delinquent.
Penalties. A 10% penalty is added to delinquent taxes which have been levied with
respect to property on the secured roll. In addition, property on the secured roll on which taxes
are delinquent is declared in default on or about June 30 of the fiscal year. Such property may
thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a
redemption penalty of 1.5% per month to the time of redemption and a $15 Redemption Fee. If
taxes are unpaid for a period of five years or more, the property is recorded in a "Power to Sell"
status and is subject to sale by the county tax collector. A 10% penalty also applies to the
delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1.5%
per month accrues with respect to such taxes beginning the first day of the third month following
the delinquency date.
Delinquencies. The valuation of property is determined as of January 1 each year and
equal installments of taxes levied upon secured property become delinquent on the following
December 10 and April 10. Taxes on unsecured property are due January 1. Unsecured taxes
enrolled by July 31, if unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty;
unsecured taxes added to the roll after July 31, if unpaid, are delinquent on the last day of the
month succeeding the month of enrollment.
Supplemental Assessments. Legislation enacted in 1983 (Chapter 498, Statutes of
1983) provides for the supplemental assessment and taxation of property as of the occurrence
of a change of ownership or completion of new construction.
Chapter 498 provided increased revenue to redevelopment agencies to the extent that
supplemental assessments of new construction or changes of ownership occur within the
boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such
State supplemental assessments occur within the Project Area, the Tax Revenues for the
Project Area may increase.
Tax Collection Fees. In 1990, the State Legislature enacted Senate Bill 2557 (Chapter
466, Statutes of 1990) ("SB 2557") which allows counties to charge for the cost of assessing,
collecting and allocating property tax revenues to local government jurisdictions on a prorated
basis. Two recent decisions have interpreted the provisions of SB 2557 and have upheld the
inclusion of redevelopment agencies as a local government Agency which must share the cost
of property tax administration. The 1992 enactment of Senate Bill 1559 (Chapter 697) and the
decision of the California Court of Appeal in Arcadia Redevelopment Agency v. lkemoto have
clarified that redevelopment agencies, such as the Agency, are to share in the cost of property
tax administration charged by most California counties, including the County.
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Appropriations Limitations-Article XIIIB
On November 6, 1979, California voters approved Proposition 4, the so-called Gann
Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article
XIIIB is to limit the annual appropriations of the State and any city, county, school district,
authority or other political subdivision of the State to the level of appropriations for the prior
fiscal year, as adjusted for changes in the cost of living, population and services rendered by the
government entity.
Effective November 30, 1980, the California Legislature added Section 33678 to the
Redevelopment Law which provided that the allocation of taxes to a redevelopment Agency for
the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be
deemed the receipt by such Agency of proceeds of taxes levied by or on behalf of the Agency
within the meaning of Article XIIIB, nor will such portion of taxes be deemed receipt of taxes by,
or an appropriation subject to the limitation of, any other public body within the meaning or for
the purpose of the Constitution and laws of the State, including Section 33678 of the
Redevelopment Law.
State Board of Equalization and Property Assessment Practices
On December 10, 1998, the State Board of Equalization ("SBOE") approved revisions to
its guidelines regarding the valuation of intangible business and commercial property for
property tax purposes. The SBOE approved these revisions over the strong objections of the
California Assessors Association ("CAA"), an organization representing all 58 County Assessors
in California.
The Agency is not able to predict whether the revised SBOE guidelines will cause any
reductions in tax increment revenues and, hence, in Tax Revenues. However, the Agency does
not believe that the SBOE's adoption of the revised guidelines will affect its ability to pay debt
service on the 2011 Bonds.
Exclusion of Tax. Revenues for General Obligation Bonds Debt Service
An initiative to amend the California Constitution entitled "Property Tax Revenues
Redevelopment Agencies" was approved by California voters at the November 8, 1988 general
election. Under prior law, a redevelopment agency using tax increment revenue received
additional property tax revenue whenever a local government increased its property tax rate to
pay off its general obligation bonds. This initiative amended the California Constitution to allow
the California Legislature to prohibit redevelopment agencies from receiving any of the property
tax revenues raised by increased property tax rates imposed by local governments to make
payments on their bonded indebtedness.
The initiative only applies to tax rates levied to finance general obligation bonds
approved by the voters on or after January 1, 1989. Any revenue reduction to redevelopment
agencies would depend on the number and value of the general obligation bonds approved by
voters in prior years, which tax rate will reduce due to increased valuation subject to the tax or
the retirement of the indebtedness. The Agency receives no tax increment as a result of general
obligation bond tax levies.
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Proposition 218
On November 5, 1996, California voters approved Proposition 218-Voter Approval for
Local Government Taxes-Limitation on Fees, Assessments, and Charges-Initiative
Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California
Constitution, imposing certain vote requirements and other limitations on the imposition of new
or increased taxes, assessments and property-related fees and charges. Tax Revenues
securing the 2011 Bonds are derived from property taxes which are outside the scope of taxes,
assessments and property-related fees and charges which were limited by Proposition 218.
AB 1290
In 1993, the California Legislature enacted Assembly Bill 1290 ("AB 1290") which
contained several significant changes in the Redevelopment Law. Among the changes made by
AB 1290 was a provision that limits the period of time for incurring and repaying loans,
advances and indebtedness payable from tax increment revenues. In general, a redevelopment
plan may terminate not more than 40 years following the date of original adoption, and loans,
advances and indebtedness may be repaid during a period extending not more than 10 years
following the date of termination of the redevelopment plan. See "THE PROJECT AREA-
Redevelopment Plan Limitations."
The Redevelopment Plan is fully in compliance with AB 1290.
SB 211
Senate Bill 211 ("SB 211"), which was adopted in 2001 and took effect as of January 1,
2002, allows redevelopment agencies, by ordinance, to eliminate the time limit on establishing
indebtedness (meaning the redevelopment agency could incur debt up to the end of the
effectiveness of its redevelopment plan), but would in turn trigger statutory pass-throughs to all
taxing entities with whom the redevelopment agency does not have a pass-through agreement
at the time the ordinance is adopted. If the agency chooses to eliminate the agency's existing
tax increment indebtedness limit as permitted by SB211, the statutory pass-throughs would
apply starting in the year after what is now the final year to incur indebtedness. In 2006, the
Agency amended the Redevelopment Plan to eliminate such time limit.
Future Initiatives
Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies
were each adopted as measures which qualified for the ballot pursuant to California's initiative
process. From time to time other initiative measures could be adopted, further affecting Agency
revenues or the Agency's ability to expend revenues.
Low and Moderate Income Housing
Chapter 1337, Statutes of 1976, added Sections 33334.2 and 33334.3 to the law
requiring redevelopment agencies to set aside 20% of all tax increment revenues allocated to
redevelopment agencies from redevelopment project areas adopted after December 31, 1976,
in a low- and moderate-income housing fund to be expended for authorized low- and moderate-
income housing purposes. Amounts on deposit in the low- and moderate-income housing fund
may also be applied to pay debt service on bonds, loans or advances of redevelopment
agencies to provide financing for such low- and moderate-income housing purposes.
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Statement of Indebtedness
Under the Redevelopment Law, the Agency must file with the County Auditor a
statement of indebtedness for the Project Area by October 1 of each year. As described below,
the statement of indebtedness controls the amount of tax increment revenue that will be paid to
the Agency in each fiscal year.
Each statement of indebtedness is filed on a form prescribed by the State Controller and
specifies, among other things: (i) the total amount of principal and interest payable on all loans,
advances or indebtedness (including the 2011 Bonds) (the "Debt"), both over the life of the Debt
and for the current fiscal year, and (ii) the amount of "available revenue" as of the end of the
previous fiscal year.
"Available Revenue" is calculated by subtracting the total payments on Debt during the
previous fiscal year from the total revenues (both tax increment revenues and other revenues)
received during the previous fiscal year, plus any carry-forward from the prior fiscal year.
Available Revenue include amounts held by the Agency and irrevocably pledged to the payment
of Debt other than amounts set aside for low- and moderate-income housing.
The County Auditor may only pay tax increment revenue to the Agency in any fiscal year
to the extent that the total remaining principal and interest on all Debt exceeds the amount of
available revenues as shown on the statement of indebtedness.
The statement of indebtedness constitutes prima facie evidence of the indebtedness of
the Agency; however, the County Auditor may dispute the statement of indebtedness in certain
cases. Section 33675 of the Redevelopment Law provides for certain time'limits controlling any
dispute of the statement of indebtedness, and allows for Superior Court determination of such
dispute if it cannot be resolved by the Agency and the County. Any such action may only
challenge the amount of the Debt as shown on the statement, and not the validity of any Debt or
its related contract or expenditures. No challenge can be made to payments to a trustee in
connection with a bond issue or payments to a public agency in connection with payments by
that public agency with respect to a lease or bond issue.
CERTAIN LEGAL MATTERS
Legal Opinions
The legal opinion of Jones Hall, A Professional Law Corporation, San Francisco,
California, as Bond Counsel, approving the validity of the 2011 Bonds, will be made available to
purchasers at the time of original delivery of the 2011 Bonds and the proposed form thereof
appears in Appendix E hereto. Bond Counsel's employment as bond counsel is limited to a
review of the legal proceedings required for the authorization of the 2011 Bonds and to
rendering the opinion set forth in Appendix E hereto. Jones Hall is also serving as Disclosure
Counsel. Certain legal matters will be passed upon for the Agency by McDonough Holland &
Allen PC, Sacramento, California, as special counsel to the Agency.
Payment of the fees and expenses of Bond Counsel and Disclosure Counsel is
contingent upon the sale and delivery of the 2011 Bonds.
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Enforceability of Remedies
The remedies available to the Trustee and to the registered owners of the 2011 Bonds
upon an event of default under the Indenture and any other document described herein are in
many respects dependent upon regulatory and judicial actions which are often subject to
discretion and delay. Under existing law and judicial decisions, the remedies provided for under
such documents may not be readily available or may be limited. The various legal opinions to be
delivered concurrently with the delivery of the 2011 Bonds will be qualified to the extent that the
enforceability of the legal documents with respect to the 2011 Bonds are subject to limitations
imposed by bankruptcy, reorganization, insolvency or other similar laws affecting the rights of
creditors generally and by equitable remedies and proceedings generally.
RATING
The Bonds have received the rating of " " by Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies ("W"). Such rating reflects only the views of S&P,
and an explanation of the significance of such ratings may be obtained from S&P.
There is no assurance that such rating will be retained for any given period of time or
that it will not be revised downward or withdrawn entirely by such rating agency if, in the
judgment of such rating agency, circumstances so warrant. Any such downward revision or
withdrawal of any rating obtained may have an adverse effect on the market price of the Bonds.
CONTINUING DISCLOSURE
The Agency has covenanted for the benefit of holders and beneficial owners of the 2011
Bonds to provide certain financial information and operating data relating to the Agency by not
later than nine months following the end of the Agency's Fiscal Year (which reporting date
would be March 31), commencing with the report for the 2010-11 Fiscal Year (the "Annual
Report"), and to provide notices of the occurrence of certain enumerated events, if material.
The Annual Report notices of material events will be filed by the Agency with the Municipal
Securities Rulemaking Board. The specific nature of the information to be contained in the
Annual Report or the notices of material events is set forth in the Form of Continuing Disclosure
Certificate in Appendix F hereto. These covenants have been made in order to assist the
Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The Agency is current with respect to
previous undertakings with regard to said Rule to provide annual reports or notices of material
events. See "APPENDIX F-"FORM OF CONTINUING DISCLOSURE CERTIFICATE."
ABSENCE OF LITIGATION
At the time the 2011 Bonds are delivered, the Agency will certify that, to its best
knowledge, there is no litigation pending with respect to which the Agency has been served with
process or know to be threatened against the Agency in any court or other tribunal of competent
jurisdiction, State or federal, which seeks to enjoin or challenges the authority of the Agency to
participate in the transactions contemplated by this Official Statement, the 2011 Bonds or the
Indenture.
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TAX MATTERS
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California,
Bond Counsel, subject, however to the qualifications set forth below, under existing law, the
interest on the 2011 Bonds is excluded from gross income for federal income tax purposes and
such interest is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, provided, however, that, for the purpose of computing
the alternative minimum tax imposed on corporations (as defined for federal income tax
purposes), such interest is taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the
Agency comply with all requirements of the Internal Revenue Code of 1986 (the "Code") that
must be satisfied subsequent to the issuance of the 2011 Bonds in order that such interest be,
or continue to be, excluded from gross income for federal income tax purposes. The Agency
has covenanted to comply with each such requirement. Failure to comply with certain of such
requirements may cause the inclusion of such interest in gross income for federal income tax
purposes to be retroactive to the date of issuance of the 2011 Bonds.
In the further opinion of Bond Counsel, interest on the 2011 Bonds is exempt from
California personal income taxes.
Owners of the 2011 Bonds should also be aware that the ownership or disposition of, or
the accrual or receipt of interest on, the 2011 Bonds may have federal or state tax
consequences other than as described above. Bond Counsel expresses no opinion regarding
any federal or state tax consequences arising with respect to the 2011 Bonds other than as
expressly described above.
UNDERWRITING
The 2011 Bonds will be purchased by Piper Jaffray & Co. (the "Underwriter") at the
purchase price of $ (which is the aggregate principal amount of the 2011 Bonds,
less an underwriting discount of $ , less original issue discount of $
The initial public offering prices stated on the cover of this Official Statement may be
changed from time to time by the Underwriter. The Underwriter may offer and sell the 2011
Bonds to certain dealers, banks acting as agents and others at prices lower than said public
offering prices.
MISCELLANEOUS
The purpose of this Official Statement is to supply information to prospective buyers of
the 2011 Bonds. Quotations from, and summaries and explanations of, the Indenture and other
documents and statutes contained herein do not purport to be complete, and reference is made
to such documents, Indenture and statutes for full and complete statements of their provisions.
Unless otherwise noted, all information contained in this Official Statement pertaining to
the Agency and the Project Area has been furnished by the Agency. Any statement in this
Official Statement involving matters of opinion, whether or not expressly so stated, are intended
as such and not as representations of fact. This Official Statement is not to be construed as a
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contract or agreement between the Agency and the purchasers or registered owners of any of
the 2011 Bonds.
The execution and delivery of this Official Statement has been duly authorized by the
Agency.
UKIAH REDEVELOPMENT AGENCY
By
Executive Director
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APPENDIX A
AUDITED FINANCIAL STATEMENTS
UKIAH REDEVELOPMENT AGENCY
FOR THE FISCAL YEAR ENDING JUNE 30, 2010
A-1
APPENDIX B
FISCAL CONSULTANT'S REPORT
B-1
APPENDIX C
GENERAL INFORMATION ABOUT MENDOCINO COUNTY
The following information concerning the County of Mendocino is included only for the
purpose of supplying general information regarding the area of the District. The Refunding
Bonds are not a debt. of the the County, the State or any of its political subdivisions, and neither
the County, the State nor any of its political subdivisions is liable therefor.
General
Mendocino County was created in 1850 by the State Legislature and was one of the
State's original 27 counties. The County spans an area of over 2 million acres and its coastline
runs about 100 miles. The City of Ukiah is the largest city in the County and is the County seat.
Population
The County's population estimate at January 1, 2010 was 90,289. The following table
indicates population growth for the County and the State for the last ten years.
HISTORICAL COUNTY AND STATE POPULATION DATA
Mendocino
State of
Year
County
California
2001
87,115
34,430,970
2002
87,949
35,063,959
2003
88,654
35,652,700
2004
89,256
36,199,342
2005
89,597
36,676,931
2006
89,575
37,087,005
2007
89,513
37,463,609
2008
89,764
37,871,509
2009
89,938
38,255,508
2010
90,289
38,648,090
Source: State of California, Department of Finance, as of January 1.
C-1
Effective Buying income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor's income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
"disposable personal income."
Effective Buying Income
As of January 1, 2004 through 2009
Total Effective Median Household
Buying Income Effective Buying
Year Area (000's Omitted) Income
2004
Mendocino County
$ 1,530,370
$35,217
California
705,108,410
43,915
United States
5,692,909,567
39,324
2005
Mendocino County
$ 1,545,023
$35,299
California
720,798,106
44,681
United States
5,894,663,364
40,529
2006
Mendocino County
$ 1,618,368
$36,396
California
764,120,963
46,275
United States
6,107,092,244
41,255
2007
Mendocino County
$ 1,631,118
$36,477
California
814,894,438
48,203
United States
6,300,794,040
41,792
2008
Mendocino County
$ 1,652,445
$37,175
California
832,531,445
48,952
United States
6,443,994,426
42,303
2009
Mendocino County
$ 1,658,525
$37,414
California
844,823,319
49,736
United States
6,571,536,768
43,252
Source: Sales & Marketing Management Survey of Buying
Power..
C-2
Commercial Activity
Total taxable sales during the first two quarters of calendar year 2009 in the County
were reported to be $496,537,000 a 19.1% decrease over the total taxable sales $613,934,000
reported during the first two quarters of calendar year 2008. The number of establishments
selling merchandise subject to sales tax and the valuation of taxable transactions in the County
is presented in the following table. Annual figures for 2009 are not yet available.
COUNTY OF MENDOCINO
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores
Total All Outlets
Number
Taxable
Number
Taxable
of Permits
Transactions
of Permits
Transactions
2004
1,562
$836,934
3,732
$1,130,368
2005
1,590
877,344
3,754
1,186,691
2006
1,593
924,965
3,699
1,247,548
2007
1,566
955,204
3,749
1,286,361
2008
1,560
931,392
3,742
1,250,959
Source: State Board of Equalization. Taxable Sales in California (Sales & Use Tax).
Employment and Industry
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The civilian labor force, employment and unemployment for the County is set forth in the
following table.
COUNTY OF MENDOCINO
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
Civilian Labor Force t'I
Employment
Unemployment
Unemployment Rate
Wage and Salary Employment: t2I
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
Total, All Industries (3)
2005
2006
2007
2008
2009
43,930
43,490
43,370
43,470
43,450
41,390
41,230
41,000
40,500
38,900
2,540
2,260
2,370
2,970
4,550
5.8%
5.2%
5.5%
6.8%
10.5%
2,080
2,090
2,010
1,870
1,680
330
360
360
330
180
1,470
1,560
1,500
1,340
1,000
3,090
3,000
2,860
2,590
2,390
760
750
750
760
650
4,610
4,530
4,640
4,540
4,360
640
610
630
640
620
440
380
360
370
340
1,230
1,270
1,240
1,230
1,210
1,750
1,800
1,810
1,780
1,760
3,770
3,700
3,770
3,820
3,860
4,230
4,230
4,170
4,000
3,680
780
800
770
750
700
280
270
280
280
270
450
610
510
500
520
6,700
6,650
6,710
6,770
6,550
32,590
32,590
32,360
31,550
29,770
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
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Major Employers
The following table lists the top employers in the County, listed alphabetically.
MENDOCINO COUNTY
Major Employers
2010 - Listed Alphabetically
Employer Name
Location
Industry
City Of Ukiah
Ukiah
Government Offices-City, Village & Twp
Coyote Valley Shodakai Casino
Redwood Valley
Casino
Fetzer Tasting Room & Visitor
Hopland
Wineries (Mfrs)
Fetzer Vineyards
Hopland
Wineries (Mfrs)
Food Help Program
Ukiah
Organizations
Forestry & Fire Protection
Willits
Government - Forestry Services
Frank R. Howard Memorial Hosp.
Willits
Hospitals
Hillside Health Ctr
Ukiah
Clinics
Hopland Sho Ka Wah Casino
Hopland
Casinos
Mendocino Coast District Hosp
Fort Bragg
Hospitals
Mendocino County Coroner
Point Arena
Government Offices-County
Mendocino County Office-Education
Ukiah
Government Offices-County
Mendocino County Sheriff
Point Arena
Sheriff
Mendocino County Social Svc
Ukiah
County Government-Social/Human Resources
Mendocino Redwood Co. LLC
Calpella
Nonclassified establishment
Mental Health Services- Mendocino
Ukiah
County Public Health Programs
Metalfx
Willits
Sheet Metal Fabricators
Raley's
Ukiah
Grocers-Retail
Safeway
Fort Bragg
Grocers-Retail
Ukiah Campus
Ukiah
Schools - Universities & Colleges
Ukiah City Redevelopment
Ukiah
Government Offices - City, Village & TWP
Ukiah High School
Ukiah
Schools
Ukiah Valley Medical Ctr
Ukiah
Hospitals
Wal-Mart
Ukiah
Department Stores
Source: State of California Employment Development Department, extracted from The America's Labor Market
Information System (ALMIS) Employer Database.
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Construction
The following table shows a five-year summary of the valuation of building permits
issued in the County.
COUNTY OF MENDOCINO
Building Permit Valuation
(Valuation in Thousands of Dollars)
2005
2006
2007
2008
2009
Permit Valuation:
New Single-family
$31,371.0
$41,445.4
$33,806.6
$19,566.8
$16,911.3
New Multi-family
1,233.9
1,829.9
1,051.1
257.8
334.0
Res. Alterations/Additions
15.264.5
20.139.0
17.305.7
155.538.8
9.564.6
Total Residential
47,869.4
63,414.3
52,163.4
35,363.4
26,809.9
New Commercial
5,214.0
12,018.2
678.8
2,982.0
2,167.4
New Industrial
1,202.2
1,000.0
2,588.9
3,439.0
0.0
New Other
6,747.8
8,119.9
6,997.4
6,718.5
5,757.4
Com. Alterations/Additions
7,563.1
17,578.7
12,070.0
11632.7
16.449.0
Total Nonresidential
20,727.0
38,716.9
22,335.1
26,772.3
24,373.9
New Dwelling Units:
Single Family
281
273
220
143
112
Multiple Family
19
18
12
2
2
TOTAL
300
291
232
145
114
Source: Construction Industry Research Board, Building Permit Summary.
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APPENDIX D
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
Certain provisions of the Indenture are summarized below. This summary does not
purport to be complete or definitive and is qualified in its entirety by reference to the full terms of
the Indenture.
Definitions
"Additional Allowance" means, as of the date of calculation the amount of Tax Revenues
which, as shown in the report of an Independent Redevelopment Consultant, are estimated to
be receivable by the Agency in the next Fiscal Year as a result of increases in the assessed
valuation of taxable property in the Project Area due to either (i) construction which has been
completed but has not yet been reflected on the tax roll, or (ii) transfer of ownership or any other
interest in real property, which is not then reflected on the tax rolls.
For purposes of this definition, the term "increases in the assessed valuation" means the
amount by which the assessed valuation of taxable property in the Project Area in the next
Fiscal Year is estimated to exceed the assessed valuation of taxable property in the Project
Area in the then current Fiscal Year (as evidenced in a written document from an appropriate
official of the County) as of the date on which such calculation is made.
"Annual Debt Service" means, for each Bond Year, the sum of (a) the interest payable
on the 2011 Bonds in such Bond Year, and (b) the principal amount of the Outstanding 2011
Bonds scheduled to be paid in such Bond Year upon the maturity thereof.
"Bonds" means, collectively, the 2011 Bonds and any Parity Debt.
"Continuing Disclosure Certificate" means that certain Continuing Disclosure Certificate
for the 2011 Bonds executed by the Agency, dated as of the Closing Date, as originally
executed and as it may be amended from time to time in accordance with the terms thereof.
"Defeasance Securities" means any of the following, or any combination thereof: (a)
cash, (b) State and Local Government Series securities issued by the United States Treasury,
(c) United States Treasury bills, bonds and bonds, as traded on the open market, and (d) zero
coupon United States Treasury Bonds.
"Event of Default" means any of the events described as events of default in the
Indenture.
"Fiscal Year" means any twelve-month period beginning on July 1 in any year and
extending to the next succeeding June 30, both dates inclusive, or any other twelve month
period selected and designated by the Agency to the Trustee in writing as its official fiscal year
period.
"Indenture" means the Indenture of Trust and First Supplement To Indenture, by and
between the Agency and the Trustee, under which the 2011 Bonds are being issued, as
originally entered into or as it may be amended or supplemented by any Supplemental
Indenture entered into pursuant to the provisions thereof.
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"Independent Accountant' means any accountant or firm of such accountants duly
licensed or registered or entitled to practice and practicing as such under the laws of the State,
appointed by the Agency, and who, or each of whom: (a) is in fact independent and not under
domination of the Agency; (b) does not have any substantial interest, direct or indirect, with the
Agency; and (c) is not connected with the Agency as an officer or employee of the Agency, but
who may be regularly retained to make reports to the Agency.
"Independent Redevelopment Consultant" means any consultant or firm of such
consultants appointed by the Agency, and who, or each of whom: (a) is judged by the Agency to
have experience in matters relating to the collection of Tax Revenues or otherwise with respect
to the financing of redevelopment projects; (b) is in fact independent and not under domination
of the Agency; (c) does not have any substantial interest, direct or indirect, with the Agency; and
(d) is not connected with the Agency as an officer or employee of the Agency, but who may be
regularly retained to make reports to the Agency.
"Laud" means the Community Redevelopment Law of the State, constituting Part 1 of
Division 24 of the California Health and Safety Code, and the acts amendatory thereof and
supplemental thereto.
"Low and Moderate Income Housing Fund" means the fund of the Agency established by
the Agency pursuant to section 33334.3 of the Law.
"Maximum Annual Debt Service" means, as of the date of calculation, the largest amount
of Annual Debt Service on all Outstanding Bonds for the current or any future Bond Year. For
purposes of such calculation, there shall be excluded a pro rata portion of each installment of
principal of any Parity Debt, together with the interest to accrue thereon, in the event and to the
extent that the proceeds of such Parity Debt are deposited in an escrow fund from which
amounts may not be released to the Agency unless the Tax Revenues for the current Fiscal
Year (as evidenced in the written records of the County) at least equal one hundred twenty-five
percent (125%) of the amount of Maximum Annual Debt Service.
Bonds.
Woody's" means Moody's Investors Service, its successors and assigns.
"Original Purchaser" means Piper Jaffray & Co., as original purchaser of the 2011
"Outstanding" when used as of any particular time with reference to Bonds, means
(subject to the provisions of the Indenture relating to disqualified Bonds) all Bonds except:
(a) Bonds theretofore canceled by the Trustee or surrendered to the Trustee for
cancellation;
(b) Bonds paid or deemed to have been paid; and
(c) Bonds in lieu of or in substitution for which other Bonds shall have been authorized,
executed, issued and delivered by the Agency pursuant to the Indenture.
"Owner" or "Bondowner" means, with respect to any Bond, the person in whose name
the ownership of such Bond shall be registered on the Registration Books.
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"Parity Debt" means the any bonds, bonds, loans, advances or other indebtedness
issued or incurred by the Agency on a parity with the 2011 Bonds pursuant to the Indenture.
"Participating Underwrite" has the meaning ascribed thereto in the Continuing
Disclosure Certificate.
"Permitted Investments" means the following, but only to the extent that the same are
acquired at Fair Market Value:
(a) Federal Securities;
(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 Development (PHA's); (ix) Federal
Housing Administration and (x) Federal Financing Bank;
(c) senior debt obligations rated "Aaa" by Moody's and "AAA" 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 approved
by AMBAC Indemnity, obligations of the Resolution Funding Corporation (RFFCORP)
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 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 fund rated "AAAW or "AAAm-G" or better by
S&P, including any such money market fund from which the Trustee or its affiliates
receive fees for services to such fund;
(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
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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;
(h) general obligations of States with a rating of at least "A2/A" or higher by both
Moody's and S&P
(i) the Local Agency Investment Fund maintained by the State of California.
"Plan Limitations" means the limitations contained or incorporated in the Redevelopment
Plan on (a) the aggregate principal amount of indebtedness payable from Tax Revenues
derived under the Redevelopment Plan which may be outstanding at any time, (b) the
aggregate amount of taxes which may be divided and allocated to the Agency pursuant to the
Redevelopment Plan, and (c) the period of time for establishing, incurring or repaying
indebtedness payable from Tax Revenues derived under the Redevelopment Plan.
"Rating Categonl' means any generic rating category of S&P or Moody's, without regard
to any refinement of such category by plus or minus sign or by numerical or other qualifying
designation.
"Record Date" means, with respect to any Interest Payment Date, the close of business
on the fifteenth (15th) calendar day of the month preceding such Interest Payment Date,
whether or not such fifteenth (15th) calendar day is a Business Day.
"Redevelopment Plan" means the Redevelopment Plan for the Ukiah Redevelopment
Project Area, entitled Redevelopment Plan for the Ukiah Redevelopment Project, adopted and
approved as the Official Redevelopment Plan for the Project Area by Ordinance No. 895,
adopted by the City Council of the City on November 15, 1989, as amended by Ordinance No.
1088, adopted on November 27, 2006, together with any amendments thereof at any time duly
authorized pursuant to the Redevelopment Law.
"Redevelopment Project" means the undertaking of the Agency pursuant to the
Redevelopment Plan and the Redevelopment Law for the redevelopment of the area subject to
the Redevelopment Plan.
"Report" means a document in writing signed by an Independent Redevelopment
Consultant and including: (a) a statement that the person or firm making or giving such Report
has read the pertinent provisions of the Indenture to which such Report relates; (b) a brief
statement as to the nature and scope of the examination or investigation upon which the Report
is based; and (c) a statement that, in the opinion of such person or firm, sufficient examination
or investigation was made as is necessary to enable said consultant to express an informed
opinion with respect to the subject matter referred to in the Report.
"Responsible Office" means any Vice President, Assistant Vice President or Trust
Officer of the Trustee with responsibility for matters related to the Indenture.
"Reserve Requirement' means, with respect to a series of Bonds as of the date of any
calculation, the lesser of (a) Maximum Annual Debt Service on such series of Bonds, or (b) one
hundred twenty-five percent (125%) of average Annual Debt Service on such series of Bonds,
or (c) ten percent (10%) of the Outstanding principal amount of such series of Bonds.
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"S&P' means Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc., New York, New York, or its successors.
"Securities Depositories" means The Depository Trust Company, 711 Stewart Avenue,
Garden City, NY 11530, Fax (516) 227-4171 or 4190; Philadelphia Depository Trust Company,
Reorganization Division, 1900 Market Street, Philadelphia, PA 19103, Attention: Bond
Department, Fax (215) 496-5058; and, in accordance with then current guidelines of the
Securities and Exchange Commission, such other addresses and/or such other securities
depositories as the Agency may designate in a Written Certificate of the Agency delivered to the
Trustee.
"State" means the State of California.
"Subordinate Debt' means any loans, advances or indebtedness issued or incurred by
the Agency in accordance with the requirements of Section 3.06, which are either: (i) payable
from, but not secured by a pledge of or lien upon, the Tax Revenues; or (ii) secured by a pledge
of or lien upon the Tax Revenues which is subordinate to the pledge of and lien upon the Tax
Revenues hereunder for the security of the Bonds. The term "Subordinate Debt" shall not
include any reimbursement agreement between the Agency and the City in existence as of the
Closing Date.
"Supplemental Indenture" means any resolution, agreement or other instrument which
has been duly adopted or entered into by the Agency, but only if and to the extent that such
Supplemental Indenture is specifically authorized under the Indenture.
"Tax Revenues" means all taxes annually allocated and paid to the Agency with respect
to the Redevelopment Project following the Closing Date, pursuant to Article 6 of Chapter 6
(commencing with Section 33670) of the Redevelopment Law and Section 16 of Article XVI of
the Constitution of the State, or pursuant to other applicable State law, and as provided in the
Redevelopment Plan, including all payments, subventions and reimbursements (if any) to the
Agency specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax
rate limitations; but excluding (a) amounts payable under the Tax Sharing Agreements and to
entities other than the Agency under and pursuant to the Redevelopment Law (unless such
obligation is subordinated to payment of the Bonds), and (b) amounts of such taxes required
under the Redevelopment Law to be deposited into the Low and Moderate Income Housing
Fund established pursuant to Section 33334.3 of the Redevelopment Law. The amount of such
taxes shall be calculated with regard to all limitations contained in the Redevelopment Plan,
pursuant to Section 33333.2(1) of the Redevelopment Law, on the amount of taxes which may
be allocated to the Agency in any year.
"Tax Sharing Agreements" means the Agreements listed below:
-Mendocino County. Under this agreement dated December 29, 1989, the
Agency generally passes through to the County between forty and one hundred percent
of what the County General Fund would have received as property tax revenues from
the Project Area had no provision been made for the Project Area, depending upon
which fiscal year it is after establishment of the Project Area, and sixty percent of tax
increment derived from development of the Mervyn's department store. The County also
receives a payment which is treated as a Section 33676 inflationary allocation, receiving
one hundred percent of its share of revenue derived from inflationary growth,
C-5
-Ukiah Valley Sanitation District. Under this agreement dated December 18,
1989, the Agency agrees to pass through to the UVSD one hundred percent of the
amount of the UVSD's share of tax increment that the UVSD would have received as
property taxes from the Project Area if no provision had been made for the Project Area.
-Ukiah Unified School District. Under this agreement dated January 17, 1990,
the Agency agrees to pass through to the UUSD increases in the rate of tax imposed for
the benefit of the UUSD into a Capital Outlay Fund to be expended on capital projects
within the project area selected by UUSD and approved by the Agency in accordance
with the Community Redevelopment Law The Agency is also required to set aside for
low and moderate income housing projects selected by the UUSD 20% of the funds the
Agency is required to set aside for to preserve and increase the supply of low and
moderate income housing within the Agency's redevelopment project area.
-Mendocino-Lake Community College District. Under this agreement dated
January 17, 1990, the Agency agrees to pass through to the MLCCD increases in the
rate of tax imposed for the benefit of the MLCCD into a Capital Outlay Fund to be
expended on capital projects within the project area selected by MLCCD and approved
by the Agency in accordance with the Community Redevelopment Law The Agency is
also required to set aside for low and moderate income housing projects selected by the
MLCCD 10% of the funds the Agency is required to set aside to preserve and increase
the supply of low and moderate income housing within the Agency's redevelopment
project area.
-Mendocino County Office of Education. Under this agreement dated January 17,
1990, the Agency agrees to pass through to the MCOE increases in the rate of tax
imposed for the benefit of the MCOE into a Capital Outlay Fund to be expended on
capital projects within the project area selected by MCOE and approved by the Agency
in accordance with the Redevelopment Law.
-Mendocino County Water Agency. Under this agreement dated January 2, 1990,
the Agency agrees to pass through to the MCWA one hundred percent of the amount of
the MCWA's share of tax increment that the MCWA would have received as property
taxes from the Project Area if no provision had been made for the Project Area.
. -Russian River Cemetery District. Under this agreement dated December 28,
1989, the Agency agrees to pass through to the RRCD one hundred percent of the
amount of the RRCD`s share of tax increment that the RRCD would have received as
property taxes from the Project Area if no provision had been made for the Project Area.
-Russian River Flood Control and Water Conservation District. Under this
agreement dated December 28, 1989, the Agency agrees to pass through to the
RRFCWCD one hundred percent of the amount of the RRFCWCD's share of tax
increment that the RRFCWCD would have received as property taxes from the Project
Area if no provision had been made for the Project Area.
"Trustee" means The Bank of New York Mellon Trust Company, N.A., as trustee under
the Indenture, or any successor thereto appointed as trustee under the Indenture.
"Written Request of the Agency' or "Written Certificate of the Agency' means a request
or certificate, in writing signed by the Executive Director, Secretary or Treasurer of the Agency
or by any other officer of the Agency duly authorized by the Agency for that purpose.
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Costs of Issuance Fund
The moneys in the Costs of Issuance Fund shall be used and withdrawn by the Trustee
from time to time to pay the Costs of Issuance upon submission of a Written Request of the
Agency stating the person to whom payment is to be made, the amount to be paid, the purpose
for which the obligation was incurred and that such payment is a proper charge against said
fund. On the date six months following the Closing Date, or upon the earlier Written Request of
the Agency stating that all known Costs of Issuance have been paid, all amounts, if any,
remaining in the respective Costs of Issuance Fund shall be withdrawn therefrom by the Trustee
and transferred to the Agency for deposit into the Debt Service Fund.
Project Fund.
Special Fund; Deposit of Tax Revenues
The Agency shall deposit all of the Tax Revenues received in any Bond Year in the
Special Fund promptly upon receipt thereof by the Agency, until such time during such Bond
Year as the amounts on deposit in the Special Fund equal the aggregate amounts required to
be transferred to the Trustee for deposit into the Interest Account, the Principal Account and the
Reserve Account in such Bond Year and for deposit in such Bond Year into the funds and
accounts established with respect to Parity Debt, as provided in any Parity Debt Instrument.
All Tax Revenues received by the Agency during any Bond Year in excess of the
amount required to be deposited in the Special Fund during such Bond Year pursuant to the
preceding paragraph and any Parity Debt Instrument shall be released from the pledge and lien
hereunder for the security of the Bonds, shall be deposited in the unrestricted accounts of the
Redevelopment Fund and may be applied by the Agency for any lawful purpose of the
Redevelopment Fund. Prior to the payment in full of the principal of and interest on the Bonds,
and the payment in full of all other amounts payable hereunder and under any Parity Debt
Instruments, the Agency shall not have any beneficial right or interest in the moneys on deposit
in the Special Fund, except as may be provided in the Indenture.
Moneys in the Special Fund created under the Indenture shall be transferred by the
Agency to the Trustee in the following amounts, at the following times, and deposited by the
Trustee in the following respective special accounts, which are established in the Debt Service
Fund, and in the following order of priority:
(a) Interest Account. On or before the fifth Business Day preceding each Interest
Payment Date, the Agency shall withdraw from the Special Fund and transfer to the Trustee, for
deposit in the Interest Account an amount which when added to the amount contained in the
Interest Account on that date, will be equal to the aggregate amount of the interest becoming
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due and payable on the Outstanding Bonds on such Interest Payment Date. No such transfer
and deposit need be made to the Interest Account if the amount contained therein is at least
equal to the interest to become due on the next succeeding Interest Payment Date upon all of
the Outstanding Bonds. All moneys in the Interest Account shall be used and withdrawn by the
Trustee solely for the purpose of paying the interest on the Bonds as it shall become due and
payable (including accrued interest on any Bonds redeemed prior to maturity pursuant to the
Indenture).
(b) Principal Account. On or before the fifth Business Day preceding December 1 in each
year, beginning December 1, 2007, the Agency shall withdraw from the Special Fund and
transfer to the Trustee for deposit in the Principal Account an amount which, when added to the
amount then contained in the Principal Account, will be equal to the principal or sinking account
payment becoming due and payable on the Outstanding Serial Bonds and Term Bonds on the
next December 1. No such transfer and deposit need be made to the Principal Account if the
amount contained therein is at least equal to the principal or sinking account payment to
become due on the next December 1 on all of the Outstanding Serial Bonds and Term Bonds.
All moneys in the Principal Account shall be used and withdrawn by the Trustee solely for the
purpose of paying the principal of the Serial Bonds and sinking fund payments due on the Term
Bonds as the same shall become due and payable.
(c) Reserve Account. On the Closing Date the Trustee shall deposit to the Reserve
Account the amount of proceeds of the 2011 Bonds indicated in the portion of the Official
Statement under the heading "SOURCES AND USES". Such amount is less than the Reserve
Requirement; however, Interest earnings on the Reserve Account from the Closing Date until
the Reserve Account is equal to the Reserve Requirement shall be retained therein. Thereafter,
interest earnings on the Reserve Account, to the extent not needed to maintain the Reserve
Account at the Reserve Requirement, shall be transferred on each Interest Payment Date to the
Interest Account. Thereafter, once the Reserve Account has reached the Reserve Requirement,
if the Trustee has actual knowledge that the amount on deposit in the Reserve Account at any
time becomes less than the Reserve Requirement, the Trustee shall promptly notify the Agency
of such fact. Promptly upon receipt of any such notice, the Agency shall transfer to the Trustee
an amount of available Tax Revenues sufficient to maintain the Reserve Requirement on
deposit in the Reserve Account.
Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for
the purpose of making transfers to the Interest Account and the Principal Account, in such order
of priority, on any date which the principal of or interest on the Bonds becomes due and payable
under the Indenture, in the event of any deficiency at any time in any of such accounts, or at any
time for the retirement of all the Bonds then Outstanding. So long as no Event of Default shall
have occurred and be continuing, any amount in the Reserve Account in excess of the Reserve
Requirement on the Business Day preceding each Interest Payment Date shall be withdrawn
from the Reserve Account by the Trustee and deposited in the Interest Account.
Issuance of Parity Debt.
In addition to the 2011 Bonds, the Agency may issue or incur Parity Debt in such
principal amount as shall be determined by the Agency, pursuant to a Parity Debt Instrument
adopted or entered into by the Agency. The Agency may issue or incur such Parity Debt,
subject to the following specific conditions precedent:
(a) The Agency shall be in compliance with all covenants set forth in the Indenture and
all Parity Debt Instruments.
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(b) The Tax Revenues estimated to be received for the then current Fiscal Year, based
on the most recent assessed valuation of property in the Project Area (excluding taxes
attributable to a tax rate levied by a taxing agency after January 1, 1989 for the purpose of
producing revenues in an amount sufficient to make annual repayments of the principal of, and
the interest on, any bonded indebtedness of such taxing agency), as evidenced in writing from
the County Assessor or other appropriate official of the County, plus, at the option of the
Agency, the Additional Allowance, shall be at least equal to one hundred twenty-five percent
(125%) of Maximum Annual Debt Service, including annual debt service on the proposed Parity
Debt.
(c) ) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide that interest thereon shall not be payable on any dates other than June 1 and December
1, and principal thereof shall be payable on December 1 in any year in which principal is
payable.
(d) The Parity Debt Instrument providing for the issuance of such Parity Debt shall
provide for the deposit into a reserve account for such Parity Debt the full amount of the
Reserve Requirement for such Parity Debt .
(e) The issuance of such Parity Debt shall not cause the Agency to exceed any
applicable Plan Limitations.
(f) The Agency shall deliver to the Trustee a Certificate of the Agency certifying, and an
opinion of Bond Counsel stating that the conditions precedent to the issuance of such Parity
Debt set forth in the foregoing subsections (a), (b), (c), (d) and (e) above have been satisfied.
Covenants of the Agency
Punctual Payment. The Agency shall punctually pay or cause to be paid the principal
and interest to become due in respect of all the Bonds together with the premium thereon, if
any, in strict conformity with the terms of the Bonds and of the Indenture. The Agency shall
faithfully observe and perform all of the conditions, covenants and requirements of the Indenture
and all Supplemental Indenture and the Bonds. Nothing contained in the Indenture shall prevent
the Agency from making advances of its own moneys howsoever derived to any of the uses or
purposes referred to in the Indenture.
Limitation on Additional Indebtedness; Against Encumbrances. The Agency covenants
that, so long as the Bonds are Outstanding, the Agency shall not issue any bonds, notes or
other obligations, enter into any agreement or otherwise incur any indebtedness, for which all or
any part of the Tax Revenues or Housing Set-Aside Tax Revenues are pledged as security for
payment, excepting only the Bonds, any Parity Debt and any Subordinate Debt. The Agency will
not otherwise encumber, pledge or place any charge or lien upon any of the Tax Revenues or
other amounts pledged to the Bonds superior to the pledge and lien created in the Indenture for
the benefit of the Bonds.
Extension of Payment. The Agency will not, directly or indirectly, extend or consent to
the extension of the time for the payment of any Bond or claim for interest on any of the Bonds
and will not, directly or indirectly, be a party to or approve any such arrangement by purchasing
or funding the Bonds or claims for interest in any other manner. In case the maturity of any such
Bond or claim for interest shall be extended or funded, whether or not with the consent of the
Agency, such Bond or claim for interest so extended or funded shall not be entitled, in case of
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default under the Indenture, to the benefits of the 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 which
shall not have been so extended or funded.
Payment of Claims. The Agency shall promptly pay and discharge, or cause to be paid
and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, might
become a lien or charge upon the properties owned by the Agency or upon the Tax Revenues,
the Housing Set-Aside Tax Revenues or other amounts pledged to the payment of the Bonds,
or any part thereof, or upon any Fund in the hands of the Trustee, or which might impair the
security of the Bonds. Nothing contained in the Indenture shall require the Agency to make any
such payment so long as the Agency in good faith shall contest the validity of said claims.
Books and Accounts; Financial Statements. The Agency shall keep, or cause to be kept,
proper books of record and accounts, separate from all other records and accounts of the
Agency, in which complete and correct entries shall be made of all transactions relating to the
Redevelopment Project, the Tax Revenues, the Housing Set-Aside Tax Revenues and the
Special Fund. Such books of record and accounts shall at all times during business hours be
subject to the inspection of the Owners of not less than ten percent (10%) in aggregate principal
amount of the Bonds then Outstanding, or their representatives authorized in writing.
The Agency will cause to be prepared, within one hundred and eighty (180) days after
the close of each Fiscal Year so long as the Bonds are Outstanding, complete audited financial
statements with respect to such Fiscal Year showing the Tax Revenues, the Housing Set-Aside
Tax Revenues, all disbursements of Tax Revenues, the Housing Set-Aside Tax Revenues and
the financial condition of the Redevelopment Project, including the balances in all Fund and
accounts relating to the Redevelopment Project, as of the end of such Fiscal Year. The Agency
shall furnish a copy of such financial statements to any Owner upon reasonable request and at
the expense of such Owner. In addition, the Agency shall deliver to the Trustee, annually, a
written Certificate of the Agency and a written certificate or opinion of an Independent
Accountant stating that the Agency is in compliance with its obligations under the Indenture.
Protection of Security and Rights of Owners. The Agency will preserve and protect the
security of the Bonds and the rights of the Owners. From and after the Closing Date, the Bonds
shall be incontestable by the Agency.
Payments of Taxes and Other Charges. The Agency will pay and discharge, or cause to
be paid and discharged, all taxes, service charges, assessments and other governmental
charges which may hereafter be lawfully imposed upon the Agency or the properties then
owned by the Agency in the Project Area, or upon the revenues therefrom when the same shall
become due. Nothing contained in the Indenture shall require the Agency to make any such
payment so long as the Agency in good faith shall contest the validity of said taxes,
assessments or charges. The Agency will duly observe and conform with all valid requirements
of any governmental authority relative to the Redevelopment Project or any part thereof.
Taxation of Leased Property. All amounts derived by the Agency pursuant to section
33673 of the Law with respect to the lease of property for redevelopment shall be treated as Tax
Revenues for all purposes of the Indenture.
Disposition of Property. The Agency will not participate in the disposition of any land or
real property in the Project Area to anyone which will result in such property becoming exempt
from taxation because of public ownership or use or otherwise (except property dedicated for
public right-of-way and except property planned for public ownership or use by the
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Redevelopment Plan in effect on the date of the Indenture), if such disposition, when taken
together with other such dispositions, would either (a) aggregate more than ten percent (10%) of
the land area in the Project Area, (b) aggregate more than ten percent (10%) of the most recent
assessed valuation of the property in the Project Area, or (c) cause the amount of Tax
Revenues or Housing Set-Aside Tax Revenues to be received in the succeeding Fiscal Year to
fall below 1.25 times Maximum Annual Debt Service.
Maintenance of Tax Revenues and Housing Set-Aside Tax Revenues. The Agency shall
comply with all requirements of the Law to insure the allocation and payment to it of the Tax
Revenues and Housing Set-Aside Tax Revenues, including without limitation the timely filing of
any necessary statements of indebtedness with appropriate officials of the County and, in the
case of amounts payable by the State, appropriate officials of the State, and shall forward
information copies of each such filing to the Trustee.
Compliance with the Law, Low and Moderate Income Housing Fund. The Agency shall
ensure that all activities undertaken by the Agency with respect to the redevelopment of the
Project Area are undertaken and accomplished in conformity with all applicable requirements of
the Redevelopment Plan and the Law, including, without limitation, duly noticing and holding
any public hearing required by either section 33445 or section 33679 of the Law prior to
application of proceeds of the Bonds to any portion of the Redevelopment Project. Without
limiting the generality of the foregoing, the Agency covenants that it shall deposit or cause to be
deposited in the Low and Moderate Income Housing Fund established pursuant to section
33334.3 of the Law, all amounts when, as and if required to be deposited therein pursuant to the
Law.
Management and Operations of Properties. The Agency will manage and operate all
properties owned by the Agency and comprising any part of the Redevelopment Project, in a
sound and businesslike manner, and will keep such properties insured at all times in conformity
with sound business practice.
Plan Limits. The Agency agrees that the then remaining amount of annual debt service
remaining to be paid on all outstanding the Bonds and Subordinate Debt shall at no time exceed
ninety percent (90%) of the aggregate amount of the Tax Revenues which the Agency is
permitted to receive under the Plan Limitations. In the event that the aggregate amount of
annual debt service remaining to be paid on the Bonds and Subordinate Debt at any time
equals or exceeds ninety percent (90%) of the then remaining amount of the Tax Revenues
which the Agency is permitted to receive under its Plan Limitations, all Tax Revenues thereafter
received by the Agency shall immediately be deposited with the Trustee and applied by the
Trustee for the sole purpose of paying the principal of and interest on the Bonds and any
Subordinate Debt as it comes due and payable.
Continuing Disclosure. The Agency covenants and agrees that it will comply with and
carry out all of the provisions of the Continuing Disclosure Certificates. Notwithstanding any
other provision of the Indenture, failure of the Agency to comply with the Continuing Disclosure
Certificates shall not be an Event of Default under the Indenture. However, any Participating
Underwriter or any holder or beneficial owner of the Bonds may take such actions as may be
necessary and appropriate, including seeking specific performance by court order, to cause the
Agency to comply with its obligations under to the Indenture.
No Arbitrage. The Agency shall not take, or permit or suffer to be taken by the Trustee or
otherwise, any action with respect to the proceeds of the 2011 Bonds which, if such action had
been reasonably expected to have been taken, or had been deliberately and intentionally taken,
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on the date of issuance of the 2011 Bonds would have caused the 2011 Bonds to be "arbitrage
bonds" within the meaning of section 148 of the Code.
Private Activity Bond Limitation. The Agency shall assure that the proceeds of the 2011
Bonds are not so used as to cause the 2011 Bonds to satisfy the private business tests of
section 141(b) of the Code or the private loan financing test of section 141(c) of the Code.
Federal Guarantee Prohibition. The Agency 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 2011 Bonds to be
"federally guaranteed" within the meaning of section 149(b) of the Code.
Rebate Requirement. The Agency shall take any and all actions necessary to assure
compliance with section 148(f) of the Code, relating to the rebate of excess investment
earnings, if any, to the federal government, to the extent that such section is applicable to the
2011 Bonds.
Maintenance of Tax-Exemption. The Agency shall take all actions necessary to assure
the exclusion of interest on the 2011 Bonds from the gross income of the Owners of the 2011
Bonds to the same extent as such interest is permitted to be excluded from gross income under
the Code as in effect on the date of issuance of the 2011 Bonds.
Deposit and Investment of Moneys in Fund
Moneys in the Debt Service Fund, the Interest Account, the Principal Account, the
Sinking Account, the Reserve Account, the Redemption Account and the Costs of Issuance
Fund shall be invested by the Trustee in Permitted Investments as directed by the Agency in the
Written Request of the Agency filed with the Trustee at least two (2) Business Days in advance
of the making of such investments. In the absence of any such Written Request of the Agency,
the Trustee shall invest any such moneys in Permitted Investments described in clause (d) of
the definition thereof, which by their terms mature prior to the date on which such moneys are
required to be paid out under the Indenture. The Trustee shall be entitled to rely conclusively
upon the written instructions of the Agency directing investments in Permitted Investments as to
the fact that each such investment is permitted by the laws of the State, and shall not be
required to make further investigation with respect thereto. With respect to any restrictions set
forth in the above list which embody legal conclusions (e.g., the existence, validity and
perfection of security interests in collateral), the Trustee shall be entitled to rely conclusively on
an opinion of counsel or upon a representation of the provider of such Permitted Investment
obtained at the Agency's expense. Moneys in the Special Fund may be invested by the Agency
in any obligations in which the Agency is legally authorized to invest its Fund. 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 Fund or
accounts held by the Trustee under the Indenture shall be deposited in the Interest Account;
provided, however, that all interest or gain from the investment of amounts in the Reserve
Account shall be deposited by the Trustee in the Interest Account, to the extent not required to
cause the balance in the Reserve Account to equal the Reserve Requirement. The Trustee may
act as principal or agent in the acquisition or disposition of any investment and may impose its
customary charges therefor. The Trustee shall incur no liability for losses arising from any
investments made at the direction of the Agency or otherwise made pursuant to the Indenture.
The Trustee shall, at the direction of the Agency, invest the funds in the Escrow Fund in
Federal Securities maturing not later than the Refunded Bonds Redemption Date (June 1,
2007).
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All moneys held by the Trustee shall be held in trust, but need not be segregated from
other Fund unless specifically required by the Indenture. Except as specifically provided in the
Indenture, the Trustee shall not be liable to pay interest on any moneys received by it, but shall
be liable only to account to the Agency for earnings derived from Fund that have been invested.
The Agency covenants that all investments of amounts deposited in any fund or account
created by or pursuant to the Indenture, or otherwise containing gross proceeds of the Bonds
(within the meaning of section 148 of the Code) shall be acquired, disposed of, and valued (as
of the date that valuation is required by the Indenture or the Code) at Fair Market Value.
Investments in Fund or accounts (or portions thereof) that are subject to a yield
restriction under applicable provisions of the Code and (unless valuation is undertaken at least
annually) investments in the Reserve Account shall be valued by the Agency at their present
value (within the meaning of section 148 of the Code).
Amendment Without Consent of Owners
The Indenture and the rights and obligations of the Agency and of the Owners may be
modified or amended at any time by a Supplemental Indenture which shall become binding
upon adoption, without the consent of any Owners, to the extent permitted by law and only for
any one or more of the following purposes-
(a) to add to the covenants and agreements of the Agency in the Indenture contained,
other covenants and agreements thereafter to be observed, or to limit or surrender any rights or
powers in the Indenture reserved to or conferred upon the Agency; or
(b) to make such provisions for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained in the Indenture, or in any other
respect whatsoever as the Agency may deem necessary or desirable, provided under any
circumstances that such modifications or amendments shall not, in the reasonable
determination of the Agency, materially adversely affect the interests of the Owners; or
(c) to provide for the issuance of Bonds Parity Debt in accordance with the Indenture; or
(d) to amend any provision of the Indenture relating to the requirements of or compliance
with the Tax Code, to any extent whatsoever but only if and to the extent such amendment will
not adversely affect the exemption from federal income taxation of interest on any of the Bonds,
in the opinion of nationally recognized bond counsel; or
Amendment With Consent of Owners
Except as set forth in the preceding paragraph, the Indenture and the rights and
obligations of the Agency and of the Owners may be modified or amended at any time by a
Supplemental Indenture which shall become binding when the written consent of the Owners of
a majority in aggregate principal amount of the Bonds then Outstanding are filed with the
Trustee. No such modification or amendment shall (a) extend the maturity of or reduce the
interest rate on any Bond or otherwise alter or impair the obligation of the Agency to pay the
principal, interest or redemption premiums (if any) at the time and place and at the rate and in
the currency provided therein of any Bond without the express written consent of the Owner of
such Bond, or (b) reduce the percentage of Bonds required for the written consent to any such
amendment or modification. In no event shall any Supplemental Indenture modify any of the
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rights or obligations of the Trustee without its prior written consent. In addition, the Trustee shall
be entitled to an opinion of counsel concerning the Supplemental Indenture's lack of any
material adverse effect on the owners.
Effect of Supplemental Indenture
From and after the time any Supplemental Indenture becomes effective pursuant to the
Indenture, the Indenture shall be deemed to be modified and amended in accordance therewith,
the respective rights, duties and obligations of the parties to the Indenture or thereto and all
Owners, as the case may be, shall thereafter be determined, exercised and enforced under the
Indenture subject in all respects to such modification and amendment, and all the terms and
conditions of any Supplemental Indenture shall be deemed to be part of the terms and
conditions of the Indenture for any and all purposes.
Events of Default and Acceleration of Maturities
(a) if default shall be made by the Agency in the due and punctual payment of the
principal of or interest or redemption premium (if any) on any Bond when and as the same shall
become due and payable, whether at maturity as therein expressed, by declaration or
otherwise;
(b) if default shall be made by the Agency in the observance of any of the covenants,
agreements or conditions on its part in the Indenture or in the Bonds contained, other than a
default described in the preceding clause (a), and such default shall have continued for a period
of sixty (60) days following receipt by the Agency of written notice from the Trustee or any
Owner of the occurrence of such default provided that if in the reasonable opinion of the Agency
the failure stated in the notice can be corrected, but not within such 60 day period, such failure
will not constitute an event of default if corrective action is instituted by the Agency within such
60 day period and the Agency thereafter diligently and in good faith cures such failure in a
reasonable period of time; or
(c) If the Agency files a petition seeking reorganization or arrangement under the federal
bankruptcy laws or any other applicable law of the United States of America, or if a court of
competent jurisdiction will approve a petition seeking reorganization under the federal
bankruptcy laws or any other applicable law of the United States of America, or, if under the
provisions of any other law for the relief or aid of debtors, any court of competent jurisdiction will
approve a petition, seeking reorganization under the federal bankruptcy laws or any other
applicable law of the United States of America, or, if under the provisions of any other law for
the relief or aid of debtors, any court of competent jurisdiction will assume custody or control of
the Agency or of the whole or any substantial part of its property.
If an Event of Default has occurred under the Indenture and is continuing, the Trustee
may, and, if requested in writing by the Owners of a majority in aggregate principal amount of
the Bonds then Outstanding the Trustee shall, (a) declare the principal of the Bonds, together
with the accrued interest thereon, to be due and payable immediately, and upon any such
declaration the same shall become immediately due and payable, anything in the Indenture or in
the Bonds to the contrary notwithstanding, and (b) the Trustee shall, subject to the provisions of
the Indenture, exercise any other remedies available to the Trustee and the Bond Owners in law
or at equity.
Immediately upon receiving notice or actual knowledge of the occurrence of an Event of
Default, the Trustee shall give notice of such Event of Default to the Agency by telephone
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confirmed in writing. Such notice shall also state whether the principal of the Bonds shall have
been declared to be or have immediately become due and payable. With respect to any Event
of Default described in clauses (a) or (c) above the Trustee shall, and with respect to any Event
of Default described in clause (b) above the Trustee in its sole discretion may, also give such
notice to the Owners by mail, which shall include the statement that interest on the Bonds shall
cease to accrue from and after the date, if any, on which the Trustee shall have declared the
Bonds to become due and payable pursuant to the preceding paragraph (but only to the extent
that principal and any accrued, but unpaid, interest on the Bonds is actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the principal
of the Bonds 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 Agency shall
deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such
declaration and all matured installments of interest (if any) upon all the Bonds, with interest on
such overdue installments of principal and interest (to the extent permitted by law), and the
reasonable expenses of the Trustee, (including the allocated costs and disbursements of its in-
house counsel to the extent such services are not redundant with those provided by outside
counsel) and any and all other defaults known to the Trustee (other than in the payment of
principal of and interest on the Bonds due and payable solely by reason of such declaration)
shall have been made good or cured to the satisfaction of the Trustee or provision deemed by
the Trustee to be adequate shall have been made therefor, then, and in every such case, with
the prior written approval of the Owners of at least a majority in aggregate principal amount of
the Bonds then Outstanding, by written notice to the Agency and to the Trustee, may, on behalf
of the Owners of all of the Bonds, rescind and annul such declaration and its consequences.
However, no such rescission and annulment shall extend to or shall affect any subsequent
default or shall impair or exhaust any right or power consequent thereon.
Application of Fund Upon Acceleration
All of the Tax Revenues and all sums in the Fund and accounts established and held by
the Trustee under the Indenture upon the date of the declaration of acceleration as provided in
the Indenture, and all sums thereafter received by the Trustee under the Indenture, shall be
applied by the Trustee in the following order upon presentation of the several Bonds, and the
stamping thereon of the payment if only partially paid, or upon the surrender thereof if fully paid:
First, to the payment of the fees, costs and expenses of the Trustee in declaring
such Event of Default and in exercising the rights and remedies set forth in the
Indenture, including reasonable compensation to its agents, attorneys (including the
allocated costs and disbursements of its in-house counsel to the extent such services
are not redundant with those provided by outside counsel) and counsel and any
outstanding fees, expenses of the Trustee; and
Second, to the payment of the whole amount then owing and unpaid upon the
Bonds for principal and interest, with interest on the overdue principal and installments of
interest at the net effective rate then borne by the Outstanding Bonds (to the extent that
such interest on overdue installments of principal and interest shall have been collected),
and in case such moneys shall be insufficient to pay in full the whole amount so owing
and unpaid upon the Bonds, then to the payment of such principal and interest without
preference or priority of principal over interest, or interest over principal, or of any
installment of interest over any other installment of interest, ratably to the aggregate of
such principal and interest.
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Power of Trustee to Control Proceedings
In the event that the Trustee, upon the happening of an Event of Default, shall have
taken any action, by judicial proceedings or otherwise, pursuant to its duties under the
Indenture, whether upon its own discretion or upon the request of the Owners of a majority in
principal amount of the Bonds then Outstanding, it shall have full power, in the exercise of its
discretion for the best interests of the Owners of the Bonds, with respect to the continuance,
discontinuance, withdrawal, compromise, settlement or other disposal of such action; provided,
however, that the Trustee shall not, unless there no longer continues an Event of Default,
discontinue, withdraw, compromise or settle, or otherwise dispose of any litigation pending at
law or in equity, if at the time there has been filed with it a written request signed by the Owners
of a majority in principal amount of the Outstanding Bonds under the Indenture opposing such
discontinuance, withdrawal, compromise, settlement or other disposal of such litigation.
Limitation on Owner's Right to Sue
No Owner of any Bond issued under the Indenture shall have the right to institute any
suit, action or proceeding at law or in equity, for any remedy under or upon the Indenture,
unless (a) such Owner shall have previously given to the Trustee written notice of the
occurrence of an Event of Default; (b) the Owners of a majority in aggregate principal amount of
all the Bonds then Outstanding shall have made written request upon the Trustee to exercise
the powers hereinbefore granted or to institute such action, suit or proceeding in its own name;
(c) said Owners shall have tendered to the Trustee indemnity reasonably acceptable to the
Trustee against the costs, expenses and liabilities to be incurred in compliance with such
request; and (d) the Trustee shall have refused or omitted to comply with such request for a
period of sixty (60) days after such written request shall have been received by, and said tender
of indemnity shall have been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are declared, in
every case, to be conditions precedent to the exercise by any Owner of any remedy under the
Indenture; it being understood and intended that no one or more Owners shall have any right in
any manner whatever by his or their action to enforce any right under the Indenture, except in
the manner in the Indenture provided, and that all proceedings at law or in equity to enforce any
provision of the Indenture shall be instituted, had and maintained in the manner in the Indenture
provided and for the equal benefit of all Owners of the Outstanding Bonds.
The right of any Owner of any Bond to receive payment of the principal of (and premium,
if any) and interest on such Bond as in the Indenture provided, shall not be impaired or affected
without the written consent of such Owner, notwithstanding the foregoing provisions of the
Indenture or any other provision of the Indenture.
Remedies Not Exclusive
No remedy in the Indenture conferred upon or reserved to the Owners is intended to be
exclusive of any other remedy. Every such remedy shall be cumulative and shall be in addition
to every other remedy given under the Indenture or now or hereafter existing, at law or in equity
or by statute or otherwise, and may be exercised without exhausting and without regard to any
other remedy conferred by the Law or any other law.
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Discharge of Indenture
If the Agency shall pay and discharge the entire indebtedness on all Bonds or any
portion thereof in any one or more of the following ways:
(i) by well and truly paying or causing to be paid the principal of and interest and
premium (if any) on all or the applicable portion of Outstanding Bonds, as and when the
same become due and payable;
(ii) by irrevocably depositing with the Trustee or another fiduciary, in trust, at or before
maturity, money which, together with the available amounts then on deposit in the Fund and
accounts established pursuant to the Indenture, is fully sufficient to pay all or the applicable
portion of Outstanding Bonds, including all principal, interest and redemption premiums, or;
(iii) by irrevocably depositing with the Trustee or another fiduciary, in trust,
Federal Securities in such amount as an Independent Accountant shall determine will,
together with the interest to accrue thereon and available moneys then on deposit in the
Fund and accounts established pursuant to the Indenture, be fully sufficient to pay and
discharge the indebtedness on all Bonds or the applicable portion of (including all
principal, interest and redemption premiums) at or before maturity;
and, if such Bonds are to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given pursuant to the Indenture or provision satisfactory to the
Trustee shall have been made for the giving of such notice, then, at the election of the Agency,
and notwithstanding that any Bonds shall not have been surrendered for payment, the pledge of
the Tax Revenues and other Fund provided for in the Indenture and all other obligations of the
Trustee and the Agency under the Indenture shall cease and terminate with respect to all
Outstanding Bonds or, if applicable, with respect to that portion of the Bonds which has been
paid and discharged, except only (a) the covenants of the Agency under the Indenture with
respect to the Code, (b) the obligation of the Trustee to transfer and exchange Bonds under the
Indenture, (c) the obligations of the Agency under the Indenture, and (d) the obligation of the
Agency to pay or cause to be paid to the Owners, from the amounts so deposited with the
Trustee, all sums due thereon and to pay the Trustee all fees, expenses and costs of the
Trustee. In the event the Agency shall, pursuant to the foregoing provision, pay and discharge
any portion or all of the Bonds then Outstanding, the Trustee shall be authorized to take such
actions and execute and deliver to the Agency all such instruments as may be necessary or
desirable to evidence such discharge, including, without limitation, selection by lot of Bonds of
any maturity of the Bonds that the Agency has determined to pay and discharge in part.
In the case of a defeasance or payment of all of the Bonds Outstanding, any Fund
thereafter held by the Trustee which are not required for said purpose or for payment of
amounts due the Trustee pursuant to the Indenture shall be paid over to the Agency.
To accomplish defeasance the Agency shall cause to be delivered (i) a report of an
Independent Accountant's verifying the sufficiency of the escrow established to pay the Bonds
in full on the maturity or earlier redemption date ("Verification"), (ii) an escrow deposit
Agreement, and (iii) an opinion of nationally recognized bond counsel to the effect that the
Bonds are no longer "Outstanding" under the Indenture; each Verification and defeasance
opinion shall be acceptable in form and substance, and addressed, to the Agency and the
Trustee.
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APPENDIX E
FORM OF BOND COUNSEL OPINION
[Closing Date]
, 2011
Redevelopment Agency of the City of Ukiah
300 Seminary Avenue
Ukiah, California 95482
Re: $ Redevelopment Agency of the City of Ukiah Ukiah
Redevelopment Project 2011 Tax Allocation Bonds
Members of the Agency:
We have acted as bond counsel in connection with the issuance by the Redevelopment
Agency of the City of Ukiah (the "Agency") of $ Redevelopment Agency of the City of
Ukiah Ukiah Redevelopment Project 2011 Tax Allocation Bonds, dated as of the date hereof
(the "Bonds"), pursuant to the Community Redevelopment Law of the State of California,
constituting Part 1 of Division 24 of the California Health and Safety Code (the "Lave") and an
Indenture of Trust, dated as of April 1, 2007 and a First Supplement to Indenture of Trust, dated
as of March 1, 2011, between the Agency and The Bank of New York Mellon Trust Company,
N.A., as trustee (the "Indenture"). We have examined the law and such certified proceedings
and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of
the Agency contained in the Indenture and in the certified proceedings and certifications of
public officials and others furnished to us without undertaking to verify the same by independent
investigation.
Based upon the foregoing we are of the opinion, under existing law, as follows:
1. The Agency is duly created and validly existing as a public body, corporate and
politic, with the power to enter into the Indenture, perform the agreements on its part contained
therein and issue the Bonds.
2. The Indenture has been duly approved by the Agency and constitutes a valid and
binding obligation of the Agency enforceable in accordance with its terms.
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3. Pursuant to the Law, the Indenture creates a valid lien on the funds pledged by the
Indenture for the security of the Bonds on a parity with other bonds (if any) issued or to be
issued under the Indenture, subject to no other prior lien granted under the Law.
4. The Bonds have been duly authorized, executed and delivered by the Agency and
are valid and binding special obligations of the Agency, payable solely from the sources
provided therefor in the Indenture.
5. The interest on the Bonds is excluded from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations; it should be noted, however, that, for the purpose
of computing the alternative minimum tax imposed on corporations (as defined for federal
income tax purposes), such interest is taken into account in determining certain income and
earnings. The opinions set forth in the preceding sentences are subject to the condition that the
Agency comply with all requirements of the Code that must be satisfied subsequent to the
issuance of the Bonds in order that interest thereon be, or continue to be, excluded from gross
income for federal income tax purposes. The Agency has covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the inclusion of
interest on the Bonds in gross income for federal income tax purposes to be retroactive to the
date of issuance of the Bonds. We express no opinion regarding other federal tax
consequences arising with respect to the Bonds.
6. Interest on the Bonds is exempt from personal income taxation imposed by the State
of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Indenture may be subject to bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights heretofore or hereafter enacted and may also be subject
to the exercise of judicial discretion in appropriate cases.
Respectfully submitted,
A Professional Law Corporation
E-2
APPENDIX F
FORM OF CONTINUING DISCLOSURE CERTIFICATE
This CONTINUING DISCLOSURE CERTIFICATE (this "Disclosure Certificate") is
executed and delivered by the UKIAH REDEVELOPMENT AGENCY (the "Agency") in
connection with the issuance of $ Ukiah Redevelopment Agency (Ukiah
Redevelopment Project) Tax Allocation Bonds, Series 2011 (the "Bonds"). The Bonds are being
issued pursuant to an Indenture of Trust, dated as of April 1, 2007 and First Supplement to
Indenture dated as of March 1, 2011 (together, the "Indenture"), by and between the Agency
and The Bank of New York Mellon Trust Company, N.A., as trustee (the "Trustee"). The Agency
covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is being
executed and delivered by the Agency for the benefit of the holders and beneficial owners of the
Bonds and in order to assist the Participating Underwriters in complying with S.E.C. Rule 15c2-
12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Indenture, which apply
to any capitalized term used in this Disclosure Certificate, unless otherwise defined, the
following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the Agency pursuant to, and
as described in, Sections 3 and 4 of this Disclosure Certificate.
"Dissemination Agent' shall U.S. Bank National Association, or any successor
Dissemination Agent designated in writing by the Agency and which has filed with the Agency a
written acceptance of such designation.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Certificate.
WSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule.
"Participating Underwrite" shall mean any of the original underwriters of the Bonds
required to comply with the Rule in connection with offering of the Bonds.
"Repository" shall mean each National Repository and each State Repository.
"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 Repository' shall mean any public or private repository or entity designated by the
State of California as a state repository for the purpose of the Rule and recognized as such by
the Securities and Exchange Commission. As of the date of this Disclosure Certificate, there is
no State Repository.
F-1
Section 3. Provision of Annual Reports.
(a) The Agency shall, or shall cause the Dissemination Agent to, not later than nine (9)
months after the end of the Agency's fiscal year (which date currently would be March 31,
based upon the June 30 end of the Agency's fiscal year), commencing with the report for the
2010-11 fiscal year, provide to the MSRB an Annual Report which is consistent with the
requirements of Section 4 of this Disclosure Certificate. Not later than fifteen (15) Business
Days prior to said date, the Agency shall provide the Annual Report to the Dissemination Agent
(if other than the Agency). 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 Agency may be submitted separately from the balance of the Annual Report,
and later than the date required above for the filing of the Annual Report if not available by that
date. If the Agency's fiscal year changes, it shall give notice of such change in the same manner
as for a Listed Event under Section 5(c).
(b) If the Agency is unable to provide to the Repositories an Annual Report by the
date required in subsection (a), the Agency shall provided to the MSRB, in electronic format as
prescribed by the MSRB, a notice in substantially the form attached as Exhibit A.
(c) The Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then-applicable
rules and electronic format prescribed by the MSRB for the filing of annual
continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the Agency, file a report with the
Agency certifying that the Annual Report has been provided pursuant to this
Disclosure Certificate, stating the date it was provided and listing all the
Repositories to which it was provided.
Section 4. Content of Annual Reports. The Agency's Annual Report shall contain or
incorporate by reference the following:
(a) 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 Agency's audited financial statements are not
available by the time the Annual Report is required to be filed pursuant to Section 3(a), the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the final Official Statement, and the audited financial statements shall
be filed in the same manner as the Annual Report when they become available.
(b) The following financial information and operating data set forth in the final Official
Statement:
(i) Assessed Valuation;
(ii) Table 3-Historical Taxable Values and Tax Increment Revenues;
(iii) Table 4-Largest Fiscal Year Property Taxpayers;
(iv) Tax Levy and Collections for the current fiscal year; and
(v) Information regarding pending assessment appeals, including the number of
appeals, assessed values being appealed, and the status of the appeal.
F-2
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 Agency or related public entities,
which have been submitted to each of the Repositories or the Securities and Exchange
Commission. If the document included by reference is a final official statement, it must be
available from the Municipal Securities Rulemaking Board. The Agency shall clearly identify
each such other document so included by reference.
Section 5. Reporting of Significant Events.
(a) The Agency shall give, or cause to be given, notice of the occurrence of any of the
following Listed Events with respect to the Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax status of the security.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the Agency or
other obligated person.
(13) The consummation of a merger, consolidation, or acquisition involving the
Agency or an obligated person, or the sale of all or substantially all of the
assets of the Agency 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.
F-3
(14) Appointment of a successor or additional trustee or the change of name
of a trustee, if material.
(b) Whenever the Agency obtains knowledge of the occurrence of a Listed Event, the
Agency shall, or shall cause the Dissemination Agent (if not the Agency) to, file a notice of such
occurrence with the MSRB, in an electronic format as prescribed by the MSRB, in a timely
manner not in excess of 10 business days after the occurrence of the Listed Event.
Notwithstanding the foregoing, notice of Listed Events described in subsections (a)(8) and (9)
above need not be given under this subsection any earlier than the notice (if any) of the
underlying event is given to holders of affected Bonds under the Indenture.
(c) The Agency acknowledges that the events described in subparagraphs (a)(2), (a)(7),
(a)(8) (if the event is a bond call), (a)(10), (a)(13), and (a)(14) of this Section 5 contain the
qualifier "if material." The Agency 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 the Agency determines the event's
occurrence is material for purposes of U.S. federal securities law.
Section 6. Termination of Reportinq Obligation. The Agency's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the Bonds or upon the delivery to the Dissemination Agent of an opinion of nationally
recognized bond counsel retained by the Agency to the effect that continuing disclosure is no
longer required. If such termination occurs prior to the final maturity of the Bonds, the Agency
shall give notice of such termination in the same manner as for a Listed Event under Section
5(c).
Section 7. Dissemination Agent.
(a) The Agency may, from time to time, appoint or engage a Dissemination Agent to
assist it in carrying out its obligations under this Disclosure Certificate, and may discharge any
such Dissemination Agent, with or without appointing a successor Dissemination Agent. The
Dissemination Agent shall not be responsible in any manner for the content of any notice or
report prepared by the Agency pursuant to this Disclosure Certificate, unless the Agency is the
Dissemination Agent, as provided herein. The initial Dissemination Agent shall be The Bank of
New York Mellon Trust Company, N.A.. If at any time there is no designated Dissemination
Agent appointed by the Agency, or if the Dissemination Agent so appointed is unwilling or
unable to perform the duties of Dissemination Agent hereunder, the Agency shall be the
Dissemination Agent and undertake or assume its obligations hereunder.
Any company succeeding to all or substantially all of the Dissemination Agent's
corporate trust business shall be the successor to the Dissemination Agent hereunder without
the execution or filing of any paper or any further act. The Dissemination Agent may resign its
duties hereunder at any time upon written notice to the Agency.
(b) The Dissemination Agent shall be paid compensation by the Agency for its services
provided hereunder in accordance with its schedule of fees as agreed to between the
Dissemination Agent and the Agency from time to time and for all expenses, legal fees and
advances made or incurred by the Dissemination Agent in the performance of its duties
hereunder. The Dissemination Agent (unless the Agency is the Dissemination Agent) shall have
no duty or obligation to review any information provided to it by the Agency hereunder and shall
not be deemed to be acting in any fiduciary capacity for the Agency, holders or beneficial
owners or any other party. The Dissemination Agent may rely and shall be protected in acting or
F-4
refraining from acting upon any direction from the Agency or an opinion of nationally recognized
bond counsel retained by the Agency.
Section 8. Amendment: Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Agency may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied
(provided no amendment or waiver shall be made that affects the duties or rights of the
Dissemination Agent without its written consent):
(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 retained by the Agency, have complied with the
requirements of the Rule at the time of the primary offering of the Bonds, after taking into
account any amendments or interpretations of the Rule, as well as any change in
circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the Bonds in
the manner provided in the Indenture for amendments to the Indenture with the consent of
holders, or (ii) does not, in the opinion of nationally recognized bond counsel retained by the
Agency, materially impair the interests of the holders or beneficial owners of the Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information filed
pursuant hereto containing the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the Agency to meet its obligations. To the
extent reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be sent to the Repositories in the same manner as for a Listed Event
under Section. 5(c).
Section 9. Additional Information. Nothing in this Disclosure Certificate shall be deemed
to prevent the Agency from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the Agency 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 Agency 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..
F-5
Section 10. Default. In the event of a failure of the Agency to comply with any provision
of this Disclosure Certificate, any 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 Agency to comply with its
obligations under this Disclosure Certificate. A default under this Disclosure Certificate shall not
be deemed an Event of Default under the Indenture, and the sole remedy under this Disclosure
Certificate in the event of any failure of the Agency to comply with this Disclosure Certificate
shall be an action to compel performance.
Section 11. Duties, Immunities and Liabilities of Dissemination Agent. All of the
immunities, indemnities, and exceptions from liability in Article VI of the Indenture insofar as
they relate to the Trustee shall apply to the Trustee and the Dissemination Agent in this
Disclosure Certificate. The Dissemination Agent shall have only such duties as are specifically
set forth in this Disclosure Certificate, and the Agency agrees to indemnify and save the
Dissemination Agent, its officers, directors, employees and agents, harmless against any loss,
expense and liabilities which it may incur arising out of or in the exercise or performance of its
powers and duties hereunder, including the costs and expenses (including attorneys fees) of
defending against any claim of liability, but excluding liabilities due to the Dissemination Agent's
negligence or willful misconduct. The Dissemination Agent may rely and shall be protected in
acting or refraining from acting upon any direction from the Agency or an opinion of nationally
recognized bond counsel retained by the Agency. The obligations of the Agency under this
Section shall survive resignation or removal of the Dissemination Agent and payment of the
Bonds. No person, other than the Agency, shall have any right to commence any action against
the Trustee or Dissemination Agent seeking any remedy other than to compel specific
performance of this Disclosure Certificate.
Section 12. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of
the Agency, the Dissemination Agent, the Participating Underwriters and holders and beneficial
owners from time to time of the Bonds, and shall create no rights in any other person or entity.
Dated: [Closing Date]
UKIAH REDEVELOPMENT AGENCY
By _
Name
Title
F-6
EXHIBIT A
NOTICE TO MUNICIPAL SECURITIES RULEMAKING
BOARD OF FAILURE TO FILE ANNUAL REPORT
Name of Issuer: Ukiah Redevelopment Agency
Name of Bond Issue: Ukiah Redevelopment Agency (Ukiah Redevelopment Project)
Tax Allocation Bonds, Series 2011
Date of Issuance: [Closing Date]
NOTICE IS HEREBY GIVEN that the Ukiah Redevelopment Agency (the "Issuer") has
not provided an Annual Report with respect to the above-named Bonds as required by the
Indenture of Trust, dated as of April 1, 2007, as supplemented, by and between the Issuer, and
The Bank of New York Mellon Trust Company, N.A., as trustee. The Issuer anticipates that the
Annual Report will be filed by
Dated:
UKIAH REDEVELOPMENT AGENCY
By
Title
cc: Trustee
F-7
APPENDIX G
BOOK-ENTRY SYSTEM
The information in this Appendix H has been provided by The Depository Trust
Company ("DTC'), New York, NY, for use in securities offering documents, and City takes no
responsibility for the accuracy or completeness thereof. The Agency cannot and does not give
any assurances that DTC, DTC Participants or Indirect Participants will distribute the Beneficial
Owners either (a) payments of interest, principal or premium, if any, with respect to the 2011
Bonds or (b) certificates representing ownership interest in or other confirmation of ownership
interest in the 2011 Bonds, or that they will so do on a timely basis or that DTC, DTC Direct
Participants or DTC Indirect Participants mill act in the manner described in this Official
Statement.
1. DTC will act as securities depository for the 2011 Bonds (the "Securities"). The
Securities will be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully-registered Security certificate will be issued for each maturity
of the Securities, in the aggregate principal amount of such issue, and will be deposited with
DTC.
2. DTC, the world's largest 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 2 million issues of U.S. and non-U.S. equity issues,
corporate and municipal debt issues, and money market instruments from over 85 countries that
DTC's participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade
settlement among Direct Participants of sales and other securities transactions in deposited
securities, through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned
by a number of Direct Participants of DTC and Members of the National Securities Clearing
Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and
Emerging Markets Clearing Corporation, (NSCC, GSCC, MBSCC, and EMCC, also subsidiaries
of DTCC), as well as by the New York Stock Exchange, Inc., the American Stock Exchange
LLC, and the National Association of Securities Dealers, Inc. 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 Standard &
Poor's highest rating: AAA. 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.
3. Purchases of Securities under the DTC system must be made by or through Direct
Participants, which will receive a credit for the Securities on DTC's records. The ownership
interest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recorded
G-1
on the Direct and Indirect Participants' records. Beneficial Owners will not receive written
confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive
written confirmations providing details of the transaction, as well as periodic statements of their
holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into
the transaction. Transfers of ownership interests in the Securities are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial
Owners. Beneficial Owners will not receive certificates representing their ownership interests in
Securities, except in the event that use of the book-entry system for the Securities is
discontinued.
4. To facilitate subsequent transfers, all Securities deposited by Direct Participants with
DTC are registered in the name of DTC's partnership nominee, Cede & Co., or such other name
as may be requested by an authorized representative of DTC. The deposit of Securities with
DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect
any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC's records reflect only the identity of the Direct Participants to whose
accounts such Securities are credited, which may or may not be the Beneficial Owners. The
Direct and Indirect Participants will remain responsible for keeping account of their holdings on
behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time.
6. Redemption notices shall be sent to DTC. If less than all of the Securities within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to Securities unless authorized by a Direct Participant in accordance with DTC's
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer 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 Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and dividend payments on the Securities will be
made to Cede & Co., or such other nominee as may be requested by an authorized
representative of DTC. DTC's practice is to credit Direct Participants' accounts upon DTC's
receipt of funds and corresponding detail information from the issuer or the paying agent or
bond trustee, 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 nor its nominee, the paying agent or bond trustee, or the issuer,
subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of redemption proceeds, distributions, and dividend payments to Cede & Co. (or such
other nominee as may be requested by an authorized representative of DTC) is the
responsibility of the issuer or the paying agent or bond trustee, 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.
G-2
9. DTC may discontinue providing its services as depository with respect to the
Securities at any time by giving reasonable notice to the issuer or the paying agent or bond
trustee. Under such circumstances, in the event that a successor depository is not obtained,
Security certificates are required to be printed and delivered.
10. The issuer may decide to discontinue use of the system of book-entry transfers
through DTC (or a successor securities depository). In that event, Security certificates will be
printed and delivered.
G-3
Jones Hall Draft 2/22/11
PRELIMINARY OFFICIAL STATEMENT DATED , 2011
NEW ISSUE- NOT RATED
BOOK-ENTRY ONLYSee "RATING" herein
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, interest
on the Bonds is not excluded from gross income for federal income tax purposes. In the further opinion of Bond
Counsel, interest on the Bonds is exempt from California personal income taxation. See "TAX MATTERS" in this
Official Statement.
UKIAH REDEVELOPMENT AGENCY
Ukiah Redevelopment Project
2011 Taxable Housing Tax Allocation Bonds
Dated: Date of Delivery
Due: December 1, as shown inside front cover
The Ukiah Redevelopment Agency (the "Agency") is issuing the above-referenced bonds (the "Bonds") to (i)
provide funds to assist in the financing of redevelopment activities consisting of the increasing, improving and
preserving of the supply of low and moderate income housing within the City of Ukiah, (ii) fund a reserve fund for the
Bonds, and (iii) pay costs of issuing the Bonds.
The Bonds will be delivered as fully registered bonds, registered in the name of Cede & Co. as nominee of The
Depository Trust Company, New York, New York ("DTC"), and will be available to ultimate purchasers ("Beneficial
Owners") in the denomination of $5,000 or any integral multiple thereof, under the book-entry system maintained by
DTC.
The principal of premium, if any, and semiannual interest on the Bonds will be payable on December 1 and June
1 of each year, commencing 1, 2011, by The Bank of New York Mellon Trust Company, N.A., as
Trustee (the "Trustee"), San Francisco, California, to DTC for subsequent disbursement to DTC participants, so long
as DTC or its nominee remains the registered owner of the Bonds.
The Bonds are subject to optional redemption and mandatory redemption as further described in this Official
Statement. See "THE BONDS."
The Bonds are payable from Housing Tax Revenues (as defined in this Official Statement) to be derived from the
Agency's Ukiah Redevelopment Project (the "Project Area") and from amounts on deposit in certain funds and
accounts established for the Bonds as described in this Official Statement. Housing Tax Revenues consist of the 20%
of tax increment allocated to the Agency from the Project Area that the Agency is obligated to deposit into its Low and
Moderate. Income Housing Fund (the "Housing Set-Aside"). The Agency is authorized to incur additional
indebtedness payable from Housing Tax Revenues on a parity with the Bonds. See "SECURITY FOR THE BONDS".
The receipt of Housing Tax Revenues is subject to certain risks and limitations. See "BOND OWNERS' RISKS" and
"LIMITATIONS ON HOUSING TAX REVENUES" in this Official Statement.
THE BONDS ARE NOT A DEBT OF THE CITY OF UKIAH, THE STATE OF CALIFORNIA, OR ANY OF ITS
POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY, AND NEITHER THE CITY, THE STATE NOR ANY OF
ITS POLITICAL SUBDIVISIONS OTHER THAN THE AGENCY IS LIABLE THEREFOR. THE PRINCIPAL OF,
PREMIUM, IF ANY, AND INTEREST ON THE BONDS ARE PAYABLE SOLELY FROM HOUSING TAX
REVENUES ALLOCATED TO THE AGENCY FROM THE PROJECT AREA AND AMOUNTS IN CERTAIN FUNDS
AND ACCOUNTS HELD UNDER THE INDENTURE. THE BONDS DO NOT CONSTITUTE AN INDEBTEDNESS
WITHIN THE MEANING OF ANY CONSTITUTIONAL OR STATUTORY DEBT LIMITATION OR RESTRICTION.
NEITHER THE MEMBERS OF THE AGENCY OR THE CITY, NOR ANY PERSONS EXECUTING THE BONDS,
ARE LIABLE PERSONALLY ON THE BONDS BY REASON OF THEIR ISSUANCE.
This cover page contains certain information for quick reference only. It is not intended to be a summary of all
factors relating to an investment in the Bonds. Investors should review the entire Official Statement before making
any investment decision.
MATURITY SCHEDULE
(see inside cover)
The Bonds are offered when, as and if issued, subject to the approval of their legality by Jones Hall, A
Professional Law Corporation, San Francisco, California, Bond Counsel. Jones Hall is also acting as Disclosure
Counsel. Certain matters will be passed upon for the Agency by McDonough Holland & Allen PC, a professional
corporation, Sacramento, California. It is anticipated that the Bonds will be available for delivery in definitive form on
or about 2011
PIPER JAFFRAY & CO.
Dated: 2011
* Preliminary, subject to change.
MATURITY SCHEDULE
Base CUSIPt:
$ Serial Bonds
Maturity Date Principal Interest
(December 1) Amount Rate
Yield
CUSIPt
Term Bonds Due December 1, 20_; Yield
$ Term Bonds Due December 1, 20_; Yield
% CUSIP:
% CUSIP:
t Copyright 2011, American Bankers Association. CUSIP data in this Official Statement is
provided by Standard & Poor's CUSIP Service Bureau, a division of The McGraw-Hill
Companies, Inc.
UKIAH REDEVELOPMENT AGENCY
(Mendocino County, California)
AGENCY BOARD
Mari Rodin, Chair
Mary Anne Landis, Vice Chair
Doug Crane, Boardmember
Phil Baldwin, Boardmember
Benj Thomas, Boardmember
AGENCY OFFICIALS
Jane Chambers, Executive Director
Allen Carter, Treasurer
Gordon Elton, Finance Director
Linda Brown, Secretary
David Rapport, Agency General Counsel
PROFESSIONAL SERVICES
Public Financial Management, Inc.
San Francisco, California
Financial Advisor
Jones Hall, A Professional Law Corporation
San Francisco, California
Bond Counsel and Disclosure Counsel
Seifel Consulting Inc.
San Francisco, California
Fiscal Consultant
The Bank of New York Mellon Trust Company, N.A.
Los Angeles, California
Trustee
TABLE OF CONTENTS
INTRODUCTION 2
THE FINANCING PLAN
5
Redevelopment Activities
5
Estimated Sources and Uses of Funds
5
Debt Service Schedule
6
THE BONDS
7
Authority for Issuance
7
Description
7
Redemption Provisions
7
SECURITY FOR THE BONDS
9
Allocation of Taxes
9
Pledge of Housing Tax Revenues for the Bonds
9
Housing Set-Aside
10
No Power to Tax
10
Parity Debt
10
Reserve Account
11
THE CITY 11
THE AGENCY
12
Agency Members 12
Agency Administration 12
Agency Powers 12
Outstanding Indebtedness of the Agency 12
Agency Financial Statements 13
THE PROJECT AREA ..........................................................................................................................13
General 13
Redevelopment Plan Limitations
14
Description of the Project Area
15
Assessed Valuation
15
Teeter Plan
17
Annual Tax Receipts to Tax Levy
17
Appeals of Assessed Values
18
Tax Sharing Agreements and Statutory Tax Sharing
18
Tax Increment Revenue Projections and Debt Service Coverage
19
Fiscal Consultant's Report
20
BOND OWNERS' RISKS
21
Estimates of Pledged Tax Revenues
21
Reduction in Taxable Value
21
Reduction in Inflationary Rate
..21
Levy and Collection
22
Parity Debt
22
State Budget Deficit-ERAF
..22
Natural Disasters
28
Hazardous Substances
28
Bankruptcy Risks
29
Secondary Market
29
LIMITATIONS ON TAX REVENUES
29
Property Tax Limitations-Article XIIIA
29
Challenges to Article XI IIA
30
Implementing Legislation
30
Unitary Property
31
Property Tax Collection Procedures
32
Appropriations Limitations-Article XIIIB
33
State Board of Equalization and Property Assessment Practices
33
Exclusion of Tax Revenues for General Obligation Bonds Debt Service
34
Proposition 218
34
AB 1290
34
SB211
34
Future Initiatives
35
Statement of Indebtedness
35
OTHER INFORMATION
36
Continuing Disclosure
36
Litigation
36
Tax Matters
36
Legal Opinion
37
Rating
37
Underwriting
37
Miscellaneous
38
APPENDIX A - General Information About Mendocino County
APPENDIX B - Agency's Audited Financial Statements for Fiscal Year 2009-10
APPENDIX C - Form of Bond Counsel Opinion
APPENDIX D - Summary of Certain Provisions of the Indenture
APPENDIX E - Form of Continuing Disclosure Certificate
APPENDIX F - Fiscal Consultant Report
APPENDIX G - DTC and the Book-Entry Only System
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
Use of Official Statement. This Official Statement is submitted in connection with the offer and
sale of the Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in
part, for any other purpose. This Official Statement is not to be construed as a contract with the
purchasers of the Bonds.
Estimates and Forecasts. When used in this Official Statement and in any continuing
disclosure by the Agency in any press release and in any oral statement made with the approval of an
authorized officer of the Agency or any other entity described or referenced in this Official Statement, the
words or phrases "will likely result," "are expected to", "will continue", "is anticipated", "estimate", "project,"
'forecast', "expect", "intend" and similar expressions identify "forward looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and
uncertainties that could cause actual results to differ materially from those contemplated in such forward-
looking statements. Any forecast is subject to such uncertainties. Inevitably, some assumptions used to
develop the forecasts will not be realized and unanticipated events and circumstances may occur.
Therefore, there are likely to be differences between forecasts and actual results, and those differences
may be material. The information and expressions of opinion in this Official Statement are subject to
change without notice, and neither the delivery of this Official Statement nor any sale made hereunder
shall, under any circumstances, give rise to any implication that there has been no change in the affairs of
the Agency or any other entity described or referenced in this Official Statement since the date hereof.
Limit of Offering. No dealer, broker, salesperson or other person has been authorized by the
Agency to give any information or to make any representations in connection with the offer or sale of the
Bonds other than those contained in this Official Statement and if given or made, such other information
or representation must not be relied upon as having been authorized by the Agency or the Underwriter.
This Official Statement does not constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the Bonds by a person in any jurisdiction in which it is unlawful for such person to
make such an offer, solicitation or sale.
Involvement of Underwriter. The Underwriter has submitted the following statement for
inclusion in this Official Statement: The Underwriter has reviewed the information in this Official
Statement in accordance with, and as a part of, their responsibilities to investors under the Federal
Securities Laws as applied to the facts and circumstances of this transaction, but the Underwriter does
not guarantee the accuracy or completeness of such information. The information and expressions of
opinions in this Official Statement are subject to change without notice and neither delivery of this Official
Statement nor any sale made hereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Agency any other entity described or referenced in this Official
Statement since the date hereof. All summaries of the documents referred to in this Official Statement
are made subject to the provisions of such documents, respectively, and do not purport to be complete
statements of any or all of such provisions.
THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, IN RELIANCE UPON AN EXCEPTION FROM THE REGISTRATION REQUIREMENTS
CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER
THE SECURITIES LAWS OF ANY STATE.
OFFICIAL STATEMENT
UKIAH REDEVELOPMENT AGENCY
Ukiah Redevelopment Project
2011 Taxable Housing Tax Allocation Bonds
INTRODUCTION
General
The purpose of this Official Statement of the Ukiah Redevelopment Agency (the
"Agency") is to set forth information in connection with the sale of its Ukiah Redevelopment
Agency, Ukiah Redevelopment Project 2011 Taxable Housing Tax Allocation Bonds (the
"Bonds"). The Bonds are being issued under the following authority:
Redevelopment Law: The Community Redevelopment Law, constituting Part 1 of
Division 24 (commencing with Section 33000) of the Health and Safety Code of the
State of California (the "Redevelopment Law").
Indenture: An Indenture of Trust (the "Indenture"), dated as of March 1, 2011,
between the Agency and The Bank of New York Mellon Trust Company, N.A., as trustee
(the "Trustee").
The proceeds of the Bonds will be used to (i) provide funds to assist in the financing of
redevelopment activities consisting of the increasing, improving and preserving of the supply of
low and moderate income housing within the City of Ukiah (the "City"), (ii) fund a reserve fund
for the Bonds, and (iii) pay costs of issuing the Bonds.
The Bonds are special obligations of the Agency, secured by a pledge of and first lien on
Housing Tax Revenues (as defined in this Official Statement) derived from the Agency's Ukiah
Redevelopment Project (the "Project Area").
The Agency and the Project Area
The Agency was activated on November 15, 1989 by Ordinance No. 895 of the City
Council of the City of Ukiah (the "City") and the City Council declared itself to be the Agency.
The five members of the City Council serve as the governing body of the Agency and exercise
all rights, powers, duties and privileges of the Agency.
* Preliminary, subject to change.
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The City Council of the City adopted a redevelopment plan (the "Redevelopment Plan")
for the Project Area pursuant to Ordinance No. 895, enacted by the City Council of the City on
November 15, 1989. The Project Area is comprised of 1,369 acres and is composed of primarily
residential and commercial development. The Project Area is zoned for residential, commercial
and industrial uses pursuant to City land use designations. See Table 2 herein. The total net
assessed valuation of taxable property in the Project Area in Fiscal Year 2010-11 is
$796.670,543, which is approximately $540,463,546 greater than the adjusted assessed
valuation in the 1989-90 base year. See "THE PROJECT AREA" herein. See "THE AGENCY
AND THE PROJECT AREA" below.
Tax Allocation Financing
The Redevelopment Law provides a means for financing redevelopment projects based
upon an allocation of taxes collected within a project area. The taxable valuation of a project
area last equalized prior to adoption of the redevelopment plan, or base roll, is established and,
except for any period during which the taxable valuation drops below the base year level, the
taxing agencies thereafter receive the taxes produced by the levy of the then current tax rate
upon the base roll. Taxes collected upon any increase in taxable valuation over the base roll
are allocated to a redevelopment agency and may be pledged by a redevelopment agency to
the repayment of any loans, advances or indebtedness incurred in financing or refinancing a
redevelopment project. Redevelopment agencies themselves have no authority to levy property
taxes and must look specifically to the allocation of taxes produced as above indicated.
As more fully described under "SECURITY FOR THE BONDS," the Redevelopment Law
requires the Agency to apply 20% of the tax increment (referred to in this Official Statement as
the "Housing Set-Aside") for the purpose of increasing, improving and preserving the supply of
low and moderate income housing in the City. The Housing Tax Revenues pledged to pay
debt service on the Bonds under the Indenture consist of the Housing Set-Aside.
The Agency is subject to certain negotiated and statutory pass-through obligations to tax
entities within the County of Yolo. See "THE AGENCY AND THE PROJECT AREA - Pass-
Through Obligations" for more information about these obligations. However, the Housing Tax
Revenues securing the Bonds are unaffected by these pass-through obligations because,
pursuant to the Redevelopment Law, amounts deposited into the Agency's Low and Moderate
Income Housing Fund must equal 20% of gross tax increment allocated to the Agency.
Should there occur any future decrease in the taxable valuation in the Project Area or in
the applicable tax rates, the Housing Tax Revenues (as described under the caption
"SECURITY FOR THE BONDS - Pledge of Housing Tax Revenues to the Bonds" and "Housing
Set-Aside") allocated to the Agency from the Project Area would be reduced and,
correspondingly, there could be an adverse impact on the ability of the Agency to repay the
Bonds. See "BOND OWNERS' RISKS" in this Official Statement.
Parity Obligations
Outstanding Parity Debt. There is no outstanding debt secured by a pledge of the
Housing Tax Revenues.
Additional Agency Obligations. The Agency may issue or incur additional obligations
with respect to the Project Area on a parity with the pledge of the Housing Tax Revenues to the
Bonds if certain debt service coverage tests are met. See "SECURITY FOR THE BONDS -
Parity Debt."
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Professionals Involved in the Offering
The proceedings of the Agency in connection with the issuance of the 2011 Bonds are
subject to the approval as to their legality of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel for the 2011 Bonds. Jones Hall, A Professional Law
Corporation is also serving as Disclosure Counsel to the Agency for the 2011 Bonds. The Bank
of New York Mellon Trust Company, N.A., Los Angeles, California, will act as the Trustee under
the Indenture. Seifel Consulting Inc., San Francisco, California, will serve as Fiscal Consultant
to the Agency (the "Fiscal Consultant") in connection with the issuance of the 2011 Bonds. The
fees of Bond Counsel, Disclosure Counsel and the Trustee are contingent upon the sale and
delivery of the 2011 Bonds.
Summaries of Documents
This Official Statement includes brief descriptions of the Bonds, the security for the
Bonds, the Agency, the Project Area and certain other information relevant to the issuance of
the Bonds. All references in this Official Statement to the Indenture are qualified in their entirety
by reference to the definitive form thereof and all references to the Bonds are further qualified
by references to the information with respect thereto contained in the Indenture.
Selected information regarding the City is included in Appendix A. The Agency's audited
financial statements for the Fiscal Year ended June 30, 2010, are included in Appendix B. The
proposed form of Bond Counsel's legal opinion for the Bonds is set forth in Appendix C. A
summary of certain provisions of the Indenture is contained in Appendix D. The proposed form
of Continuing Disclosure Certificate is included in Appendix E. The Fiscal Consultant Report is
contained in Appendix F. All capitalized terms used in this Official Statement and not normally
capitalized have the meanings assigned to them in the Indenture, unless otherwise stated in this
Official Statement. Definitions of certain terms used in this Official Statement are set forth in
"APPENDIX D - Summary of Certain Provisions of the Indenture." Copies of the Indenture are
available for inspection during business hours at the corporate trust office of the Trustee in San
Francisco, California.
Other Information; Continuing Disclosure
This Official Statement speaks only of its date, as set forth on the cover hereof, and the
information and expressions of opinion in this Official Statement are subject to change without
notice, and neither the delivery of this Official Statement nor any sale made hereunder shall
under any circumstances create any implication that there has been no change in the affairs of
the Agency or the City since the date hereof.
The Agency has covenanted in the Indenture and in a Continuing Disclosure Certificate
to prepare and deliver an annual report to certain national and state repositories, and to provide
certain other information. See the caption "CONTINUING DISCLOSURE" and "APPENDIX E -
Form of Continuing Disclosure Certificate."
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THE FINANCING PLAN
The Bonds are being issued primarily to provide funds to assist in the financing of
redevelopment activities of the Project Area consisting of the increasing, improving and
preserving of the supply of low and moderate income housing within the City. Proceeds of the
Bonds will also be used to pay the premium for a debt service reserve fund surety bond for the
Bonds and pay the costs of issuing the Bonds.
Redevelopment Activities
Bond proceeds will be used to finance a variety of Agency projects intended to increase,
improve and preserve the supply of low and moderate income housing within the City. None of
the projects financed with proceeds of the Bonds represent security for the Bonds.
Estimated Sources and Uses of Funds
The anticipated sources and uses of funds from the sale of the Bonds are estimated to
be applied as follows:
TABLE 1
UKIAH REDEVELOPMENT AGENCY
UKIAH REDEVELOPMENT PROJECT
2011 Taxable Housing Tax Allocation Bonds
Sources and Uses of Funds
Sources:
Par Amount
Less Net Original Issue Discount
Total:
Uses:
Deposit to Low and Moderate Income Housing Account
Underwriter's Discount
Costs of Issuance
Total:
(1) Includes the legal fees, financial advisor fees, fiscal consultant fees, printing, Trustee
fees and certain other costs for the Bonds.
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Debt Service Schedule
The following table presents debt service for the Bonds.
TABLE 2
UKIAH REDEVELOPMENT AGENCY
Ukiah Redevelopment Project
2011 Taxable Housing Tax Allocation Bonds
Debt Service Schedule
Year
Ending
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
Total
Principal Interest
Total
Debt
Service
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THE BONDS
Authority for Issuance
The Bonds are being issued under the Indenture and the provisions of the
Redevelopment Law. On February , 2011, the Agency adopted a resolution authorizing
the execution and delivery of the Indenture and the issuance and sale of the Bonds.
Description
The Bonds will be dated as of the date of original delivery (the "Closing Date"), will bear
interest at the rates per annum and will mature on the dates and in the amounts set forth on the
inside cover page hereof. The Bonds will be issued in fully registered form, without coupons, in
the denomination of $5,000 each or any integral multiple thereof. Interest on the Bonds is
payable semiannually on December 1 and June 1 of each year, commencing 1, 2011
(each an "Interest Payment Date"). Principal of and premium, if any, on the Bonds is payable
upon the surrender thereof at the corporate trust office of the Trustee in San Francisco,
California, or such other trust office as may be designated by the Trustee (the "Trust Office").
Interest will be paid by check of the Trustee mailed by first class mail, postage prepaid, on each
Interest Payment Date to the registered owners as of the fifteenth day of the month preceding
the Interest Payment Date (the "Record Date"). At the written request of the Owner of Bonds in
an aggregate principal amount of at least $1,000,000, which written request is on file with the
Trustee as of any Record Date, interest on such Bonds shall be paid on each succeeding
Interest Payment Date by wire transfer in immediately available funds to such account within the
United States of America as shall be specified in such written request (any such written request
shall remain in effect until rescinded in writing by the Owner). The principal of and premium (if
any) on the Bonds shall be payable in lawful money of the United States of America by check or
draft of the Trustee upon presentation and surrender thereof at the Office of the Trustee.
Notwithstanding the foregoing, while the Bonds are held in the book-entry only system of
DTC, all such payments of principal, interest and premium, if any, will be made to Cede & Co.
as the registered owner of the Bonds, for subsequent disbursement to Participant and beneficial
owners. See "APPENDIX G - DTC AND THE BOOK-ENTRY ONLY SYSTEM".
Redemption Provisions
Optional Redemption of Bonds. The Bonds maturing on or before December 1, 20_,
shall not be subject to redemption prior to their respective stated maturities. The Bonds
maturing on or after December 1, 20_, shall be subject to redemption in whole, or in part
among maturities as shall be determined by the Agency and by lot within a maturity, on any date
commencing December 1, 20_, at the option of the Agency from any available source of funds,
at a redemption price (expressed as a percentage of the principal amount of Bonds to be
redeemed) as set forth in the following table, together with accrued interest thereon to the date
fixed for redemption:
Redemption Dates Redemption Price
Sinking Fund Redemption of Term Bonds. The Bonds maturing on December 1,
20_, and December 1, 20_ are subject to mandatory sinking account redemption in part by
lot, on December 1 in each year as set forth in the following tables, at a redemption price equal
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to the principal amount thereof to be redeemed together with accrued interest thereon to the
redemption date, without premium; provided, however, that if some but not all of such Bonds
have been optionally redeemed by the Agency, the total amount of all Bonds to be redeemed
thereafter from mandatory sinking account payments shall be reduced on a pro rata basis in
integral multiples of $5,000.
Mandatory Sinking Fund Redemption
of $ Term Bonds Maturing December 1, 20_
Sinking Fund
Redemption Date Principal Amount
(December 1) To Be Redeemed
Mandatory Sinking Fund Redemption
of $ Term Bonds Maturing December 1, 20_
Sinking Fund
Redemption Date Principal Amount
(December 1 ) To Be Redeemed
In lieu of redemption of the Bonds pursuant to the foregoing table, amounts on deposit in
the Special Fund established by the Indenture to the extent not otherwise required to be
transferred by the Trustee pursuant to the Indenture may also be used and withdrawn by the
Agency at any time for the purchase of such Bonds at public or private sale as and when and at
such prices (including brokerage and other charges and including accrued interest) as the
Agency may in its discretion determine. The par amount of any of such Bonds so purchased by
the Agency in any twelve-month period ending on July 1 in any year shall be credited towards
and shall reduce the par amount of such Bonds required to be redeemed on the next
succeeding December 1.
Notice of Redemption; Rescission. The Trustee on behalf and at the expense of the
Agency is required to mail notice of any redemption to the respective Owners of any Bonds
designated for redemption, at their respective addresses appearing on the Registration Books,
and to the Bond Insurer, the Securities Depositories and to one or more Information Services as
designated in the Indenture at least 30 but not more than 60 days prior to the date fixed for
redemption; provided, however, that neither failure to receive any such notice so mailed nor any
defect in this Official Statement shall affect the validity of the proceedings for the redemption of
such Bonds or the cessation of the accrual of interest thereon.
The Agency shall have the right to rescind any optional redemption by written notice to
the Trustee on or prior to the date fixed for redemption. Any notice of redemption shall be
cancelled and annulled if for any reason funds will not be or are not available on the date fixed
for redemption for the payment in full of the Bonds then called for redemption, and such
-8-
cancellation shall not constitute an Event of Default under the Indenture. The Agency and the
Trustee shall have no liability to the Owners or any other party related to or arising from such
rescission of redemption. The Trustee shall mail notice of such rescission of redemption in the
same manner as the original notice of redemption was sent.
SECURITY FOR THE BONDS
Allocation of Taxes
As provided in the Redevelopment Plan, and in Article 6 of Chapter 6 of the
Redevelopment Law and Section 16 of Article XVI of the Constitution of the State of California,
taxes levied upon taxable property in the Project Area each year by or for the benefit of the
State of California, any city, county, city and county, district, or other public corporation for fiscal
years beginning after the effective date of the ordinance approving the Redevelopment Plan
shall be divided as follows:
1. That portion of the taxes which would be produced by the rate upon which
the tax is levied each year by or for each of said taxing agencies upon the total sum of
the assessed value of the taxable property in the Project Area as shown upon the
assessment roll used in connection with the taxation of such property by such taxing
agency last equalized prior to the effective date of the ordinance approving the
Redevelopment Plan shall be allocated to, and when collected shall be paid into the
funds of the respective taxing agencies as taxes by or for said taxing agencies on all
other property are paid; and
2. Except for taxes which are attributable to a tax levy by a taxing agency for
the purpose of producing revenues to repay bonded indebtedness approved by the
voters of the taxing agency on or after January 1, 1989, which shall be allocated to and
when collected shall be paid to the applicable taxing agency, that portion of levied taxes
each year in excess of such amount will be allocated to, and when collected, will be paid
to the Agency to pay the principal of and interest on loans to, money advanced to, or
indebtedness incurred by the Agency to finance redevelopment projects.
Pledge of Housing Tax Revenues for the Bonds
The Bonds and any additional Parity Debt are secured by a first pledge of and lien on all
of the Housing Tax Revenues.
The Indenture defines "Housing Tax Revenues" to mean that portion of the Tax
Revenues otherwise required by Section 33334.3 of the Redevelopment Law to be deposited in
the Low and Moderate Income Housing Fund, but only to the extent necessary to repay that
portion of the proceeds of the Bonds and any Parity Debt (including applicable reserves and
financing costs) used to increase or improve the supply of low and moderate income housing
within or of benefit to the Project Area.
The Indenture defines "Tax Revenues" to mean means all taxes annually allocated and
paid to the Agency with respect to the Redevelopment Project following the Closing Date,
pursuant to Article 6 of Chapter 6 (commencing with Section 33670) of the Redevelopment Law
and Section 16 of Article XVI of the Constitution of the State, or pursuant to other applicable
State law, and as provided in the Redevelopment Plan, including all payments, subventions and
reimbursements (if any) to the Agency specifically attributable to ad valorem taxes lost by
-9-
reason of tax exemptions and tax rate limitations; but excluding (a) amounts payable under the
Tax Sharing Agreements and to entities other than the Agency under and pursuant to the
Redevelopment Law (unless such obligation is subordinated to payment of the Bonds), and (b)
amounts of such taxes required under the Redevelopment Law to be deposited into the Low
and Moderate Income Housing Fund established pursuant to Section 33334.3 of the
Redevelopment Law. The amount of such taxes shall be calculated with regard to all limitations
contained in the Redevelopment Plan, pursuant to Section 33333.2(1) of the Redevelopment
Law, on the amount of taxes which may be allocated to the Agency in any year.
Housing Set-Aside
The Redevelopment Law requires that for every redevelopment plan, not less than 20%
of the Tax Revenues be set aside in a separate low and moderate income housing fund (the
"Low and Moderate Income Housing Fund") and used by the Agency for the purposes of
increasing and improving the community's supply of low and moderate income housing (the
"Housing Set-Aside"). Amounts on deposit in the Low and Moderate Income Housing Fund
may also be applied to pay debt service on bonds, loans or advances of redevelopment
agencies issued or incurred to provide financing for such low and moderate income housing
purposes.
The Housing Set-Aside constitutes the Housing Tax Revenues pledged to pay
debt service on the Bonds.
No Power to Tax
The Agency has no power to levy and collect property taxes, and any property tax
limitation, legislative measure, voter initiative or provisions of additional sources of income to
taxing agencies having the effect of reducing the property tax rate, could reduce the amount of
Housing Tax Revenues that would otherwise be available to pay the principal of, and interest
on, the Bonds. Likewise, broadened property tax exemptions could have a similar effect. See
"BOND OWNERS' RISKS".
The Bonds are not a debt of the City, the State of California or any of its political
subdivisions other than the Agency, and neither the City, State, nor any of its political
subdivisions other than the Agency is liable. The Bonds do not constitute an indebtedness
within the meaning of any constitutional or statutory debt limit or restriction on the amount of
debt.
Parity Debt
Outstanding Parity Debt. The Agency has not previously incurred indebtedness that is
secured by and payable from Housing Tax Revenues on a senior or parity basis with the pledge
of Housing Tax Revenues to the Bonds.
Future Parity Debt. In addition to the Bonds, the Agency may issue or incur other
obligations on a parity with the Bonds. In such event, the Agency must comply with the
requirements of the Indenture relating to Parity Debt, including the requirement that the Housing
Tax Revenues estimated to be received for the then current Bond Year, based on the assessed
value of property within the Project Area as set forth in the written records of the County, plus
(at the option of the Agency) the Additional Revenues, and after deducting Housing Tax
Revenues allocable to any Project Area which, based on a projection of an Independent
Redevelopment Consultant, is expected to reach the aggregate amount of taxes which may be
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divided and allocated to the Agency pursuant to the applicable Redevelopment Plan prior to the
final maturity of any Parity Debt (unless there is a corresponding reduction in the applicable
annual debt service with respect to such Parity Debt), shall be at least equal to one hundred
twenty-five percent (125%) of Maximum Annual Debt Service on all Bonds which will be
Outstanding immediately following the issuance of such Parity Debt. For purposes of computing
the amount of Housing Tax Revenues, the following requirements shall be observed: the Tax
Revenues shall be calculated on the basis of a tax rate of $1.00 per $100 of assessed value
and shall not include the amounts of any State tax subventions; and the amount of Tax
Revenues shall be the amount received or estimated to be in the most recent Fiscal Year (which
may be the then current Fiscal Year) for which records are available from the County
establishing the assessed valuations of property in the Project Area. For all the requirements
that must be met for the issuance of Parity Debt, see "APPENDIX D - Summary of Certain
Provisions of the Indenture".
Reserve Account
The Bonds and any future additional Parity Debt are also secured by a Reserve Account
established pursuant to the Indenture, and maintained in an amount equal to the Reserve
Requirement.
The "Reserve Requirement" is defined in the Indenture to be, as of the date of any
calculation, the lesser of (a) Maximum Annual Debt Service on such Bonds (including any Parity
Debt), or (b) 125% of average Annual Debt Service on such Bonds (including any Parity Debt),
or (c) 10% of the Outstanding principal amount of such Bonds (including any Parity Debt).
In the event that the amount on deposit in the Reserve Account becomes less than the
Reserve Requirement, the Trustee shall promptly notify the Agency of such fact. Promptly upon
receipt of any such notice, the Agency shall transfer to the Trustee an amount of available Tax
Revenues sufficient to maintain the Reserve Requirement on deposit in the Reserve Account.
Amounts in the Reserve Account shall be used and withdrawn by the Trustee solely for the
purpose of making transfers to the Interest Account and the Principal Account, in such order of
priority, on any date which the principal of or interest on the Bonds or any Parity Debt becomes
due and payable, in the event of any deficiency at any time in any of such accounts, or at any
time for the retirement of all the Bonds or any additional Parity Debt then Outstanding. So long
as no Event of Default has occurred and be continuing, any amount in the Reserve Account in
excess of the Reserve Requirement preceding each Interest Payment Date shall be withdrawn
from the Reserve Account by the Trustee and deposited in the Interest Account on or before the
Interest Payment Date.
THE CITY
Incorporated in 1876, the City of Ukiah (the "City") is located in north central Mendocino
County (the "County") in the northern coastal region of California, approximately 100 miles
north of San Francisco on U.S. Highway 101 and about an hour's drive from the coastal
redwoods and the Mendocino Coast. Ukiah is the largest city in the County and is the County
seat, with a population of 15,682 as of January 1, 2010. See APPENDIX C-"GENERAL
INFORMATION ABOUT MENDOCINO COUNTY."
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THE AGENCY
Agency Members
The Agency was activated on November 15, 1989 by Ordinance No. 895 of the City
Council of the City and the City Council declared itself to be the Agency. The five members of
the City Council serve as the governing body of the Agency and exercise all rights, powers,
duties and privileges of the Agency. The members of the governing body of the Agency are as
follows:
MEMBER TERM EXPIRES
Mari Rodin
December, 2012
Doug F. Crane
December, 2012
Phil Baldwin
December, 2014
Mary Anne Landis
December, 2014
Benj Thomas
December, 2014
Agency Administration
The Agency is administered by certain staff of the City:
For more information regarding the City of Ukiah and Mendocino County see APPENDIX
C-"GENERAL INFORMATION ABOUT MENDOCINO COUNTY."
Agency Powers
All powers of the Agency are vested in its members. Pursuant to the Law, the Agency is
a separate public body and exercises governmental functions, including planning and
implementing redevelopment projects.
The Agency may exercise the right to issue bonds for authorized purposes and to
expend their proceeds, and the right to acquire, sell, rehabilitate, develop, administer or lease
property. The Agency may demolish buildings, clear land and cause to be constructed certain
improvements, including streets, sidewalks, and utilities, and can further prepare for use as a
building site any real property which it owns or administers.
The Agency may, from any funds made available to it for such purposes, pay for all or
part of the value of land and the cost of buildings, facilities or other improvements to be publicly
owned and operated, provided that such improvements are of benefit to a redevelopment
project and cannot be financed by any other reasonable method. The Agency may not construct
or develop buildings, with the exception of public buildings and housing, and must sell or lease
cleared property which it acquires within a redevelopment project for redevelopment in
conformity with a particular redevelopment plan, and may further specify a period within which
such redevelopment must begin and be completed.
Outstanding Indebtedness of the Agency
Certification of Agency Indebtedness. Pursuant to section 33675 of the Law, on or
before October 1 of each year the Agency must file with the County Auditor a statement of
indebtedness certified by the chief fiscal officer of the Agency for each redevelopment project
that receives tax increment. The statement of indebtedness is required to contain the date on
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which any bonds were delivered, the principal amount, term, purpose and interest rate of bonds
and the outstanding balance and amount due on bonds. Similar information must be given for
each loan, advance or indebtedness that the Agency has incurred or entered into to be payable
from tax increment.
The Agency has complied with the requirements of section 33675 each year since
adoption of the Redevelopment Plan.
Section 33675 also provides that the County Auditor is limited in payment of tax
increment to the Agency to the amounts shown on the Agency's statement of indebtedness. The
section further provides that the statement of indebtedness is prima facie evidence of the
indebtedness of the Agency but that the County Auditor may dispute the amount of
indebtedness shown on the statement in certain cases. Provision is made for time limits under
which the dispute can be made by the County Auditor as well as provisions for determination by
the Superior Court in a declaratory relief action of the proper disposition of the matter. The issue
in any such action must involve only the amount of the indebtedness and not the validity of any
contract or debt instrument, or any expenditures pursuant thereto. An exception is made for
payments to a public agency in connection with payments by such public agency pursuant to a
bond issue which shall not be disputed in any action under section 33675.
Agency Financial Statements
The Law requires redevelopment agencies to have an independent financial audit
conducted each year. The financial audit is also required to include an opinion of the Agency's
compliance with laws, regulations and administrative requirements governing activities of the
Agency. Audited financial statements for the Agency for the Fiscal Year that ended June 30,
2010, included in Appendix A attached hereto, have been prepared by Davis Hammon & Co.,
Oroville, California. The firm's audit was made in accordance with generally accepted auditing
standards. See APPENDIX A-"AUDITED FINANCIAL STATEMENTS OF THE AGENCY FOR
THE FISCAL YEAR ENDED JUNE 30, 2010."
THE PROJECT AREA
The following is a summary description of the Project Area. Included within this
description are sections discussing the present and current conditions of the Project Area and
the future development within the Project Area. These descriptions have been supplied by the
Agency. There can be no assurance that the future developments discussed below will be
completed in the manner or in the time periods set forth.
General
Under the Law every redevelopment agency is required to adopt, by ordinance, a
redevelopment plan for each redevelopment project specifically authorized in the adopted
redevelopment plan. A redevelopment plan is a legal document, the content of which is largely
prescribed in the Law, rather than a "plan" in the customary sense of the word.
The overall objective of the redevelopment plan is to eliminate blighted conditions in the
project area by undertaking all appropriate projects pursuant to the Law.
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The Ukiah Redevelopment Project was originally adopted by the Ukiah City Council on
November 15, 1989 by Ordinance No. 895 and consists of 1,369 acres (the "Project Area").
The Project Area consists of mostly residential and commercial development.
The Redevelopment Plan was amended on December 16, 1998 pursuant to Resolution
No. 99-1 in order to provide that the deadline for the agency to incur new debt would be twenty
years from the date of adoption of the Redevelopment Plan, being November 15, 2009. The
Redevelopment Plan was also amended by Ordinance No. 1088 adopted on November 27,
2006 to (i) eliminate the time limit on the establishment of loans, advances and indebtedness
(as previously established pursuant to Resolution No. 99-1) pursuant to SB 211 and (ii)
pursuant to SB 1045, to extend the time limit on the effectiveness of the Redevelopment Plan to
November 15, 2030 and to establish that the last date which the Agency can pay indebtedness
or receive property taxes is November 15, 2040, except with respect to certain indebtedness
incurred prior to December 31, 1993, in which case the Agency may receive tax increment and
pay such indebtedness.
Redevelopment Plan Limitations
Chapter 942, Statutes of 1993 (See Section VI, Legislation), as codified in Section
33333.6 of the Law, limits the life of redevelopment plans adopted prior to January. 1, 1994, to
40 years from the date of adoption or January 1, 2009, whichever is later. It also limits the
period within which a redevelopment project area may receive tax increment to the life of the
redevelopment plan plus ten years beyond the termination of redevelopment activities except to
accommodate certain specific low and moderate-income housing obligations or to pay debt
service on bonds, indebtedness or other financial obligations authorized prior to January 1,
1994. Such redevelopment plans are further required to include a limitation on the number of tax
increment dollars that may be allocated to the redevelopment agency; a time limit on the
establishing of indebtedness to be repaid with tax increment; and a limit on the amount of
bonded indebtedness to be repaid with tax increment that can be outstanding at one time.
These limits can be extended only by an amendment of the redevelopment plan.
For redevelopment plans adopted prior to 1994, Chapter 942 stipulates that the time limit
for establishing indebtedness shall not exceed 20 years from the adoption of the redevelopment
plan or January 1, 2004, whichever is later. Chapter 741, Statutes of 2001, was adopted under
SIB 211 and amends several sections of the Law that control time limitations for redevelopment
project areas. Limitations, that under prior legislation could not be amended or had different
amendment procedures, in accordance with this section, may be modified through project area
amendments as set forth in this section of the Law (see Section VI, Legislation).
The plan limitations for the Project Area are summarized below.
Table 1
UKIAH REDEVELOPMENT PROJECT
Ukiah Redevelopment Plan Limitations
Plan Last Date to Last Date to Tax Increment Bonded Debt
Expiration(') Incur Debt Repay Debt(') Limit Limit
November 15, 2031 Deadline Eliminated November 15, 2041 $260 Million $75 Million
(1) The Agency is seeking an additional one year extension for Plan Effectiveness and Tax Increment receipt,
authorized by AB 26 4x.
Source: The Agency.
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According to the City Finance Department and County records, the Agency has received
approximately $51,214,709 in total cumulative tax increment from the Project Area through
fiscal year 2009-10. Based on the projected tax increment revenues to be received by the
Agency, the limit on tax increment funds that the Agency may receive for the Project Area will
not be exceeded within the term of the 2011 Bonds.
Description of the Project Area
The Project Area consists of approximately 1,369 acres, and consists of mostly
residential and commercial development. The Project Area is generally located on the west side
of State Highway 101. It is bounded on the south by Norgard Lane at the south end of the
Ukiah Municipal Airport and extends northward to the vicinity of Ford Road and State Street. It
extends westerly from State Highway 101 to its western boundary at Dora Street. The Project
Area does include small areas on the east side of State Highway 101 at the interchange for
State Route 222 and between the intersections with Gobbi Street and Perkins Street. Generally
the Project Area encompasses the main commercial area of the City.
Assessed Valuation
The Base Year assessed valuation was established in fiscal year 1989-90 in the amount
of $256,206,997. The majority of the land in the Project Area is used for residential (45.8% of
total assessed value) and commercial (41.0% of assessed value) purposes. A breakdown of the
fiscal year 2010-11 assessed valuation in the Project Area by category of use is as follows:
Table 2
UKIAH REDEVELOPMENT PROJECT
2010-11 Project Area Land Use Summary
% of Total
% of Total
% of
Secured Roll
Secured
Unsecured
Unsecured
Total
Total
Category
Value
Roll
Roll Value
Roll
Roll Value
Roll
Residential
$332,518,755
45.8%
$1,107,958
1.7%
$333,626,713
42.2%
Commercial
297,506,515
41.0
31,609,835
48.8
329,116,350
41.6
Vacant
40,664,682
5.6
1,431,720
2.2
42,096,402
5.3
Industrial
25,997,430
3.6
7,089,152
11.0
33,086,582
4.2
Recreational
18,432,722
2.5
396,256
0.6
18,828,978
2.4
Institutional
9,192,246
1.3
9,197
0.0
9,201,443
1.2
Unknown/Misc.
2,012,441
0.3
23,094,857
35.7
25,107,298
3.2
Agricultural
141,014
0.0
-
0.0
141,014
0.0
Total
$726,465,805
100.0%
$64,738,975
100.0%
$791,204,780
100.0%
Source: Mendocino County.
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The following table shows the actual assessed values for fiscal years 2001-02 through
2010-11 based upon the County Auditor/Controller's equalized rolls and incremental values of
property within the Project Area, and showing the change in assessed values each year
following the base year of 1989-90. According to the Auditor-Controller, the taxable assessed
value in the Project Area has increased from $256,206,997 in fiscal year 1989-90 to
$796,670,543 in fiscal year 2010-11, or an average annual rate of 5.6%.
Table 3
UKIAH REDEVELOPMENT PROJECT
Historical Taxable Values
Fiscal Years Ended June 30, 2002 through Junes 30, 2011
Fiscal
Year
Base Year
(1989-90)
Secured
$230,874,048
Unsecured
$25,332,949
Total Assessed Valuation
Assessed Value % Growth
$256,206,997
Incremental
Valuation
2001-02
$453,583,905
$48,612,205
$502,196,110
$245,989,113
2002-03
491,869,015
46,192,448
538,061,463
7.14%
281,854,466
2003-04
531,657,312
48,496,584
580,153,896
7.82
323,946,899
2004-05
557,086,481
47,750,871
604,837,352
4.25
348,630,355
2005-06
597,592,309
53,743,752
651,336,061
7.69
395,129,064
2006-07
640,969,120
57,530,816
698,499,936
7.24
442,292,939
2007-08
690,850,869
57,481,567
748,332,436
7.13
492,125,439
2008-09
729,471,243
62,497,388
791,968,631
5.83
535,761,634
2009-10
746,201,802
64,644,933
810,846,735
2.38
554,639,738
2010-11
731,931,568
64,738,975
796,670,543
(1.75_
540,463,546
(1) Secured values include state assessed non-unitary utility property
Source: Mendocino County Auditor-Controller, Ukiah Redevelopment Agency, Seifel Consulting Inc.
The following table shows the ten largest property taxpayers in the Project Area.
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Table 4
UKIAH REDEVELOPMENT PROJECT
Largest Fiscal Year 2010-11 Property Taxpayers
Total Assessed
% of Total Project
Property Owner
Land Use
Value (1)
Area AV(2)
1. Pear Orchard Associates
Commercial, Retail
$19,750,708
2.50%
2. Savings Bank Of Mendocino (2)
Commercial, Office
12,372,460
1.56
3. Redwood Empire Lodging LP
Commercial, Hotel/Motel
11,022,361
1.39
4. Mendocino Brewing Company
Industrial, Light Manufac.
10,415,506
1.32
5. Wal Mart Real Estate Business
Commercial, Retail
9,923,961
1.25
6. Redwood Business Park of Ukiah
Commercial, Retail
9,597,469
1.21
7. Skycrest Properties LP
Commercial, Retail
9,086,236
1.15
8. Safeway Inc (3)
Residential, Apartments
8,577,003
1.08
9. Willcon LLC
Vacant, Industrial
6,349,018
0.80
10. Kohls Department Stores Inc
Commercial, Retail
6,098,333
0.77
Total Assessed Value Of Top 10
$103,193,055
13.04%
Total Assessed Value In Project Area
$791,204,780
100.00%
(1) Assessed valuation data differs slightly from data in Table 2 because MuniServices LLC deducted Home Owners
Property Tax Relief (HOPTR) exemptions from assessed value.
(2) Savings Bank of Mendocino has $153,527 of unsecured assessed value. The other nine ten taxpayers in the
Project Area do not appear on the unsecured roll.
(3) Safeway Inc. is currently appealing its assessed value. See "Appeals of Assessed Values" below.
Source: MuniServices LLC, Mendocino County Auditor-Controller and Seifel Consulting Inc.
Teeter Plan
The Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale
Proceeds (the "Teeter Plan") has been adopted by 53 of the 58 counties, including the County,
as provided for in section 4701 et seq. of the California Revenue and Taxation Code. Under the
Teeter Plan, each participating local agency, including cities, levying property taxes in a county
receives the amount of uncollected taxes credited to its fund, in the same manner as if the
amount credited had been collected. In return, the county receives and retains delinquent
payments, penalties and interest as collected, that would have been due the local agency.
However, although a local agency receives the total levy for its property taxes without regard to
actual collections, to the extent of a reserve established and held by its county for this purpose,
the basic legal liability for property tax deficiencies at all times remains with the local agency.
The Teeter Plan is to remain in effect unless the county board of supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the county, the board
of supervisors receives a petition for its discontinuance from two-thirds of the participating
revenue districts in the county. The board of supervisors may, after holding a public hearing on
the matter, discontinue the procedures under the Teeter Plan with respect to any tax levying
agency in its county.
Annual Tax Receipts to Tax Levy
According to the Fiscal Consultant, the County allocates to the Agency 100 percent of
the secured, unsecured and unitary taxes levied on the extended tax roll without regard to
corrections, cancellations and refunds, therefore the tax revenues of the Agency are not subject
to revenue loss due to delinquencies or gains due to redemptions. This methodology, however,
is an administrative practice of the County and is subject to change. For fiscal year 2009-10,
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the delinquency rate within the City of Ukiah was % and within the County as a whole was
Appeals of Assessed Values
Pursuant to California law, property owners may apply for a reduction of their property
tax assessment by filing a written application, in the form prescribed by the State Board of
Equalization, with the appropriate county board of equalization or assessment appeals board.
After the applicant and the assessor have presented their arguments, the Appeals Board makes
a final decision on the proper assessed value. The Appeals Board may rule in the assessor's
favor, in the applicant's favor or the Appeals Board may set its own opinion of the proper
assessed value, which may be more or less than either the assessor's opinion or the applicant's
opinion.
Any reduction in the assessment ultimately granted applies to the year for which
application is made and during which the written application was filed. After a reduction is
allowed, the property is reviewed on an annual basis to determine its full cash value and the
valuation may be adjusted accordingly. This may result in further reductions or increases in
value. Such increases are in accordance with the actual cash value of the property and may
exceed the maximum annual inflationary growth rate allowed on other properties under Article
XIIIA of the State Constitution. Once the property has regained its prior value, adjusted for
inflation, it is once again subject to the annual inflationary growth rate allowed under Article
XIIIA.
Appeals for reduction in the "base year" value of an assessment, if successful, reduce
the assessment for the year in which the appeal is taken and prospectively after that. The "base
year" is determined by the completion date of new construction or the date of change of
ownership. Any base year appeal must be made within four years of the change of ownership or
new construction date.
Refunds for taxpayer overpayment of property taxes may include refunds for
overpayment of taxes in years after that which was appealed. Any taxpayer payment of property
taxes that is based on a value that is subsequently adjusted downward will require a refund for
overpayment.
As stated in the Fiscal Consultant Report, there is one pending assessment appeal
among the top taxpayers in the Project Area. Safeway, Inc. is appealing its 2010-11 assessed
value of $7,742,629. Its opinion of value is $3,036,000, which, if successfully appealed, would
result in a 60.8% reduction in value. The hearing for the appeal is scheduled for March 15,
2011.
Tax Sharing Agreements and Statutory Tax Sharing
The Agency has entered into uniform tax-sharing agreements with taxing entities and
school districts with respect to the Project Area (the "Tax Sharing Agreements"). In addition,
the Project Area is subject to the tax sharing provisions of AB 1290. Under Section 33607.5 and
Section 33607.7 of the Law (added by AB 1290), any territory added to a project area after 1994
is required to share in tax increment revenue's generated by such territory pursuant to a
statutory formula ("Statutory Tax Sharing"). In addition, Statutory Tax Sharing is applicable
upon certain other amendments to the Redevelopment Plans. However, Housing Tax Revenues
are not impacted by the Tax Sharing Agreements or the Tax Sharing Statutes.
-18-
Tax Increment Revenue Projections and Debt Service Coverage
The following table sets forth the projected growth in tax increment revenues in the
Project Area over the next five years. See APPENDIX B-"FISCAL CONSULTANT'S REPORT"
for projected tax increment revenues for the full term of the 2011 Bonds.
Table 5
UKIAH REDEVELOPMENT PROJECT
Projected Housing Tax Revenues
Taxable Values(1) 2010-11 2011-12 2012-13 2014-15
2015-16
Total Projected Assessed Value(2) 796,670,543 802,181,988 816,930 848 831,974,685
847,319,685
Incremental Value (3) 5,404,635 5,459,750 5,607,239 5,757,677
5,911,124
Less: Unilateral 2% Election (4) (133,418) (136,636) (145 249) (154 034)
(162 994)
Gross Tax Revenue 5,271,217 5,323,113 5,461,990 5,603,643
5,748,130
Housing Tax Revenues (5) 1,054,243 1,064,623 1,092,398 1,120,729
1,149,626
*Projections and coverage through fiscal year 2040-41 can be seen in Table 1 of the Fiscal Consultant Report, See "APPENDIX B"
attached hereto.
(1) Taxable values as reported by Mendocino County.
(2) Projected assessed value is increased for inflation at 0.753 for fiscal year 2011-12 and 2% annually thereafter.
(3) Incremental revenue is the revenue derived from the Incremental Value factored by the 1 % general levy tax rate.
(4) Section 33676 of the Law allows affected taxing entities to elect to receive the tax increment attributable to the "two percent
(5) Housing Set Aside Requirement is calculated at 20% of Gross Tax Revenue.
Source: The Agency and Fiscal Consultant
The foregoing projections reflect the Agency's understanding of the assessment and tax
apportionment procedures employed by the County. The County procedures are subject to
change as a reflection of policy revisions or legislative mandate. While the Agency believes the
estimates to be reasonable, taxable values resulting from actual appraisals may vary from the
amounts assumed in the projections.
Based on a projected assessed value increase as shown in the above table (0.753% for
fiscal year 2011-12 and 2% annually thereafter) plus 4% annual growth from new development
over the remaining life of the Project Area, the tax increment cap under the Redevelopment
Plan would be reached in fiscal year 2038-39. Under the Indenture, the Agency has agreed
that, at any point in time, the then remaining amount of annual debt service remaining to be paid
on all outstanding the Bonds and Subordinate Debt shall at no time exceed ninety percent
(90%) of the aggregate amount of the Housing Tax Revenues which the Agency is permitted to
receive under the Plan Limitations. In the event that the aggregate amount of annual debt
service remaining to be paid on the Bonds and Subordinate Debt at any time equals or exceeds
ninety percent (90%) of the then remaining amount of the Housing Tax Revenues which the
Agency is permitted to receive under its Plan Limitations, all Housing Tax Revenues thereafter
received by the Agency shall immediately be deposited with the Trustee and applied by the
Trustee for the sole purpose of paying the principal of and interest on the Bonds and any
Subordinate Debt as it comes due and payable.
No assurances are provided by the Agency as to the certainty of the projected Housing
Tax Revenues shown on the foregoing table, or the debt service coverage set forth on the
following table. Actual revenues may be higher or lower than what has been projected and are
subject to valuation changes resulting from new developments or transfers of ownership not
specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or
the non-payment of taxes due. See APPENDIX B-"FISCAL CONSULTANT'S REPORT."
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Table 5
UKIAH REDEVELOPMENT PROJECT
Projected Tax Revenues
Taxable Values(1)
2010-11
2011-12
2012-13
2014-15
2015-16
Total Projected Assessed Value(2)
796,670,543
802,181,988
816,930,848
831,974,685
847,319,685
Incremental Value (3)
5,404,635
5,459,750
5,607,239
5,757,677
5,911,124
Less: Unilateral 2% Election (4)
(133,418)
(136 636)
(145 249)
(154 034)
(162 994)
Gross Tax Revenue
5,271,217
5,323,113
5,461,990
5,603,643
5,748,130
Less: County Admin Fee (5)
(60,000)
(60,612)
(62,249)
(63,919)
(65,623)
Less: 20% Housing Set-Aside (6)
(1,054,243)
(1,064,623)
(1,092,398)
(1,120,729)
(1,149,626)
Less: Pass-Through Payments
0
0
(1,397)
(4,850)
(8,373)
Net Tax Revenues
4,156,974
4,197,878
4,305,946
4,414,145
4,524,508
"Projections and coverage through fiscal year 2040-41 can be seen in Table 1 of the Fiscal Consultant Report, See "APPENDIX B"
attached hereto.
(1) Taxable values as reported by Mendocino County.
(2) Projected assessed value is increased for inflation at 0.753 for fiscal year 2011-12 and 2% annually thereafter.
3) Incremental revenue is the revenue de vMJftom~ncremental V ,lue factored by the 1 % general 1 _.Y_tax..rate=-=~
ien~676-3367-theeEW av~ a ows affected taxing entities to elect to rec a Vtl`Rff650hVbWeWWii utable to the 'two percent
CCPI inflation" growth in assessed valuation in a project area in addition to their share, of the frozen base of the property taxes under
certain circumstances ~..,n. _
`(5)°"County,SB 2557'Administration fee is estimated at 1.05% of Gross Tax Revenue.
(6) Housing Set Aside Requirement is calculated at 20% of Gross Tax Revenue.
Source: The Agency and Fiscal Consultant
The foregoing projections reflects the Agency's understanding of the assessment and
tax apportionment procedures employed by the County. The County procedures are subject to
change as a reflection of policy revisions or legislative mandate. While the Agency believes the
estimates to be reasonable, taxable values resulting from actual appraisals may vary from the
amounts assumed in the projections.
Based on a projected assessed value increase as shown in the above table (0.753% for
fiscal year 2011-12 and 2% annually thereafter) plus 4% annual growth from new development
over the remaining life of the Project Area, the tax increment cap under the Redevelopment
Plan would be reached in fiscal year 2038-39. Under the Indenture, the Agency has agreed
that, at any point in time, the then remaining amount of annual debt service remaining to be paid
on all outstanding the Bonds and Subordinate Debt shall at no time exceed ninety percent
(90%) of the aggregate amount of the Tax Revenues which the Agency is permitted to receive
under the Plan Limitations. In the event that the aggregate amount of annual debt service
remaining to be paid on the Bonds and Subordinate Debt at any time equals or exceeds ninety
percent (90%) of the then remaining amount of the Tax Revenues which the Agency is
permitted to receive under its Plan Limitations, all Tax Revenues thereafter received by the
Agency shall immediately be deposited with the Trustee and applied by the Trustee for the sole
purpose of paying the principal of and interest on the Bonds and any Subordinate Debt as it
comes due and payable.
No assurances are provided by the Agency as to the certainty of the projected tax
increment revenues shown on the foregoing table, or the debt service coverage set forth on the
following table. Actual revenues may be higher or lower than what has been projected and are
subject to valuation changes resulting from new developments or transfers of ownership not
specifically identified herein, actual resolution of outstanding appeals, future filing of appeals, or
the non-payment of taxes due. See APPENDIX B-"FISCAL CONSULTANT'S REPORT."
-23-
Table 6 below sets forth estimated debt service coverage for the Bonds assuming the
projected growth in Housing Tax Revenues set forth in Table 5.
Table 6
UKIAH REDEVELOPMENT PROJECT
Estimated Debt Service Coverage*
Year
Aggregate 2007 Projected
Ending 2011 Bonds
and 2011 Bonds Net Housing Tax Debt Service
June 30 Debt Service*
Debt Service* Revenues(') Covera e*
2011
$1,054,243
2012
1,064,623
2013
1,092,398
2014
1,120,729
2015
1,149,626
2016
1,179,101
2017
1,209,166
2018
1,239,832
2019
1,271,112
2020
1,303,017
2021
1,335,560
2022
1,368,754
2023
1,402,612
2024
1,437,147
2025
1,472,372
2026
1,508,302
2027
1,544,941
(1) Net Housing Tax Revenues, as set forth in Table 5, are subject to the assumptions set forth in Table 5.
* Preliminary, subject to change.
Fiscal Consultant's Report
The Agency requested that the Fiscal Consultant review current and historical taxable
values and property tax revenues, review currently pending and recently resolved assessment
appeals and estimate future tax increment revenues for the Project. Pursuant to that request,
the Fiscal Consultant has prepared a Fiscal Consultant's Report. See APPENDIX B-"FISCAL
CONSULTANT'S REPORT."
-20-
BOND OWNERS' RISKS
The following information should be considered by prospective investors in evaluating
whether to invest in the Bonds. However, the following does not purport to be an exhaustive
listing of risks and other considerations which may be relevant to investing in the Bonds and the
order in which the following information is presented is not intended to reflect the relative
importance of any such risks.
Estimates of Pledged Housing Tax Revenues
To estimate the revenues available to pay debt service on the Bonds, the Agency has
made certain assumptions with regard to the assessed valuation in the Project Area, future tax
rates and percentage of taxes collected. The Agency believes these assumptions to be
reasonable, but to the extent that the assessed valuation, the tax rates or the percentage of
taxes collected are less than the Agency's assumptions, the Housing Tax Revenues available to
pay debt service on the Bonds will, in all likelihood, be less than those projected.
Reduction in Taxable Value - - -
Housing Tax Revenues allocated to the Agency are determined by the amount of
incremental taxable value in the Redevelopment Project allocable to the Redevelopment Project
and the current rate or rates at which property in the Redevelopment Project is taxed. The
reduction of taxable values of property caused by economic factors beyond the Agency's
control, such as a relocation out of the Redevelopment Project by one or more major property
owners, or the transfer, pursuant to California Revenue and Taxation Code Section 68, of a
lower assessed valuation to property within the Redevelopment Project by a person displaced
by eminent domain or similar proceedings, or the discovery of hazardous substances on a
property within the Redevelopment Project (see "Hazardous Substances," below) or the
complete or partial destruction of such property caused by, among other eventualities, an
earthquake (see "Seismic and Flood Considerations," below), flood or other natural disaster,
could cause a reduction in the Housing Tax Revenues securing the Bonds. Property owners
may also appeal to the County Assessor for a reduction of their assessed valuations or the
County Assessor could order a blanket reduction in assessed valuations based on then current
economic conditions. See "THE PROJECT AREA - Appeals of Assessed Values."
Reduction in Inflationary Rate
As described in greater detail below (see "LIMITATIONS ON TAX REVENUES"), Article
XIIIA of the California Constitution provides that the full cash value base of real property used in
determining taxable value may be adjusted from year to year to reflect the inflationary rate, not
to exceed a 2% increase for any given year, or may be reduced to reflect a reduction in the
consumer price index or comparable local data. Such measure is computed on a calendar year
basis. Because Article XIIIA limits inflationary assessed value adjustments to the lesser of the
actual inflationary rate or 2%, there have been years in which the assessed values were
adjusted by actual inflationary rates, which were less than 2%. Since Article XIIIA was
approved, the annual adjustment for inflation has fallen below the 2% limitation five times: in
fiscal year 1983-84, 1%; in fiscal year 1995-96, 1.19%; in fiscal year 1996-97, 1.11%; in fiscal
year 1999-00, 1.85%; and in fiscal year 2004-05, 1.867%. In addition, the inflationary growth
rate is negative (0.237%) for 2010-11 and will be 0.753% for 2011-12. The Agency is unable to
predict if any further adjustments to the full cash value base of real property within the Project
Areas, whether an increase or a reduction, will be realized in the future.
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Housing Tax Revenues allocated to the Agency are determined by the amount of
incremental taxable value in the Project Area and the current rate or rates at which property in
the Project Area is taxed. The reduction of taxable values of property caused by economic
factors beyond the Agency's control, such as a relocation out of the Project Area by one or more
major property owners, or the transfer, pursuant to California Revenue and Taxation Code
Section 68, of a lower assessed valuation to property within the Project Area by a person
displaced by eminent domain or similar proceedings, or the discovery of hazardous substances
on a property within the Project Area (see "Hazardous Substances," below) or the complete or
partial destruction of such property caused by, among other eventualities, an earthquake (see
"Natural Disasters" below) or other natural disaster, could cause a reduction in the Housing Tax
Revenues securing the Bonds. Property owners may also appeal to the County Assessor for a
reduction of their assessed valuations or the County Assessor could order a blanket reduction in
assessed valuations based on then current economic conditions. Such a reduction of assessed
valuations and the resulting decline in Housing Tax Revenues or the resulting property tax
refunds could have an adverse effect on the Agency's ability to make timely payments of
principal of and interest on the Bonds. See "THE PROJECT AREA - Appeals of Assessed
Values r-
The County has adopted the Teeter Plan , as provided for in section 4701 et seq. of the
California Revenue and Taxation Code. (See "THE PROJECT AREA - Teeter Plan".) The
Teeter Plan is to remain in effect unless the County Board of Supervisors orders its
discontinuance or unless, prior to the commencement of any fiscal year of the County, the
Board of Supervisors receives a petition for its discontinuance from two-thirds of the
participating revenue districts in the county. The Board of Supervisors may, after holding a
public hearing on the matter, discontinue the procedures under the Teeter Plan with respect to
any tax levying agency in its County. The Agency can give no assurances that the Teeter Plan
will continue, and will continue to include tax increment received by the Agency.
Levy and Collection
The Agency has no independent power to levy and collect property taxes. Any reduction
in the tax rate or the implementation of any constitutional or legislative property tax decrease
could reduce the Housing Tax Revenues and, accordingly, could have an adverse impact on the
ability of the Agency to make debt service payments on the Bonds. Likewise, delinquencies in
the payment of property taxes could have an adverse effect on the Agency's ability to make
timely debt service payments on the Bonds. The County currently allocates Housing Tax
Revenues collected with respect to unsecured property to the Agency based upon the tax
increment actually collected.
Parity Debt
As referenced under the caption "Parity Debt", the Agency may issue or incur obligations
payable from Housing Tax Revenues on parity with its pledge of Housing Tax Revenues to
payment of debt service on the Bonds. The existence of and the potential for such obligations
increases the risks associated with the Agency's payment of debt service on the Bonds in the
event of a decrease in the Agency's collection of Housing Tax Revenues.
State Budget Deficit-ERAF
State Budgets. Information about the State budget and State spending is regularly
available from various State offices or on the applicable websites, including the Department of
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Finance, the Office of the Legislative Analyst and the State Treasurer. However, none of such
information is incorporated by such reference.
Historical ERAFs. In connection with its approval of the State budget for fiscal years
1992-93, 1993-94, 1994-95, 2002-03, 2003-04, 2004-05, 2005-06 and 2008-09, the State
Legislature enacted legislation which, among other things, reallocated funds from
redevelopment agencies to school districts by shifting a portion of each agency's tax increment,
net of amounts due to other taxing agencies, to school districts for such fiscal years for deposit
in the Education Revenue Augmentation Fund ("ERAF"). The amount required to be paid by a
redevelopment agency under such legislation was apportioned among all of its redevelopment
project areas on a collective basis, and was not allocated separately to individual project areas.
Fiscal Year 2008-09. In 2008, the State Legislature adopted, and the Governor of the
State signed, legislation, Chapter 751, Statutes 2008 (AB 1389) ("AB 1389"), that among other
things required redevelopment agencies to pay into ERAF in fiscal year 2008-09, prior to May
10, 2009, an aggregate amount of $350 million. On April 30, 2009, a California superior court in
California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-
---00028334)-held-that-the-required-payment-by-redevelopment-agencies into-ERAF-in-fiscal-year - - -
2008-09 pursuant to AB 1389 violated the California Constitution and invalidated and enjoined
the operation of the California Health and Safety Code section requiring such payment. On May
26, 2009, the State filed a notice that it would appeal the decision of the superior court. On
September 28, 2009, the State noticed its withdrawal of its appeal of California Redevelopment
Association v. Genest.
Fiscal Year 2009-10 and Fiscal Year 2010-11. In connection with various legislation
related to the budget for the State for its fiscal year 2009-10, in late July 2009, the State
legislature adopted, and the Governor of the State signed, Assembly Bill No. 26x4 (the "2009
SERAF Legislation").
The 2009 SERAF Legislation mandates that redevelopment agencies in the State make
deposits to the Supplemental Educational Revenue Augmentation Fund ("SERAF") that is
established in each county treasury throughout the State the aggregate amounts of $1.7 billion
for fiscal year 2009-10, which were due prior to May_10, 2010, and $350 million for fiscal year
2010-11, which are due prior to May 10, 2011.
As noted below, the Agency timely paid the SERAF payment for fiscal year 2009-10 in
the amount of $ and the Agency has preliminarily estimated that the SERAF
Payment will be the amount of $359,158 for fiscal year 2010-11. Pursuant to the 2009 SERAF
Legislation, redevelopment agencies may use any funds that are legally available and not
legally obligated for other uses, including reserve funds, proceeds of land sales, proceeds of
bonds or other indebtedness, lease revenues, interest and other earned income.
The 2009 SERAF Legislation contains provisions that subordinate the obligation of
redevelopment agencies to make the SERAF payments specified therein to certain
indebtedness. Health and Safety Code, § 33690 (a) (3) states: "The obligation of any agency to
make the payments required pursuant to this subdivision shall be subordinate to the lien of any
pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on
any bonds of the agency including, without limitation, bonds secured by a pledge of taxes
allocated to the agency pursuant to Section 33670 of the California Health and Safety Code."
The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies
that fail to timely make the required SERAF payments, including (i) a prohibition on adding or
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expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on
the encumbrance and expenditure of funds, including funds for operation and administration
expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual
payment that is not timely made, a requirement that the applicable redevelopment agency
allocate an additional five percent of all taxes that are allocated to the redevelopment agency
under the Redevelopment Law for low and moderate income housing for the remainder of the
time that the applicable redevelopment agency receives allocations of tax revenues under the
Redevelopment Law.
The five percent additional housing set-aside penalty provision referred to in the 2009
SERAF Legislation (the "Penalty Set-Aside Requirement") would be in addition to the
percentage of such tax revenues already required to be used for low and moderate income
housing purposes. A redevelopment agency that borrows from amounts required to be allocated
to its housing set-aside funds to make required SERAF payments but does not timely repay the
funds, will also be subject to the Penalty Set-Aside Requirement. If a redevelopment agency
borrows funds from its low and moderate income housing fund to make the SERAF payment in
either year, and does not repay the funds within the specified time frame, it would be subject to
-the-Penalty-Set-Aside-Requirement.. Note-that, if-a-redevelopment-agency -fails-to-comply-with-
the foregoing described requirements in both fiscal year 2009-10 and 2010-11, the
redevelopment agency will be subject to the Penalty Set-aside Requirement in both such Fiscal
Years for a total of 10% additional housing set-aside penalty. The Agency's SERAF payment for
fiscal year 2009-10 was not made from the Housing Set-Aside Fund and the Agency has no
plans to borrow housing set-aside funds for the fiscal year 2010-11 SERAF.
The California Redevelopment Association, the Union City Redevelopment Agency and
the Fountain Valley Redevelopment Agency filed a lawsuit in Sacramento Superior Court on
October 20, 2009 challenging the constitutionality of the 2009 SERAF Legislation and seeking
to prevent the State from taking redevelopment funds for non-redevelopment purposes. On May
4, 2010, the Superior Court ruled that the 2009 SERAF Legislation is constitutional. The Agency
timely paid its SERAF payment by May 10, 2010. The California Redevelopment Association
has appealed the judgment of the Superior Court. The appeal seeks repayment of the fiscal
year 2009-10 payment and a prohibition of the second payment. The Agency cannot predict
whether or not the Court of Appeal will approve or overturn the judgment of the Superior Court
or whether or not the Agency will be able to recover the amount of the SERAF payment for
fiscal year 2009-10 in the event the judgment of the Superior Court is overturned. Further, the
Agency cannot predict whether or not such judgment will be overturned regarding the SERAF
payment for fiscal year 2010-11.
The State's ability to impose future ERAF and SERAF payments on redevelopment
agencies may be affected by Proposition 22, which was approved by the California electorate
on November 2, 2010. Proposition 22, among other things, amends Sections 24 and 25.5 of
Article XIII of the California Constitution to prohibit the State from reallocating, transferring,
borrowing, appropriating or restricting the use of taxes imposed or levied by a local government
solely for the local government's purposes. As applied to redevelopment agencies, Proposition
22 adds Section 25.5(A)(7) to Article XIII of the State Constitution to prohibit the State from
requiring a redevelopment agency (A) to pay, remit, loan, or otherwise transfer, directly or
indirectly, taxes on ad valorem real property and tangible personal property allocated to the
agency pursuant to Section 16 of Article XVI of the State Constitution to or for the benefit of the
State, any agency of the State, or any other jurisdiction; or (B) to use, restrict, or assign a
particular purpose for such taxes for the benefit of the State, any agency of the State, or any
other jurisdiction, other than (i) statutory pass through payments required by Health and Safety
Code Sections 33607.5 and 33607.7 and (ii) payments for the purpose of increasing, improving,
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and preserving the supply of low and moderate income housing available at affordable housing
cost. Although the passage of Proposition 22 will have no impact upon the Agency's obligation
to pay the 2010 SERAF Amount, the State Legislative Analyst's Office ("LAO") has stated that
the measure prohibits the State from enacting new laws that require redevelopment agencies to
shift funds to schools or other agencies. No assurance can be provided that Proposition 22 will
be implemented as contemplated by the LAO. In addition, Proposition 22 is subject to
interpretation by the courts and there can be no assurance that the measure will not be
challenged by the State or other parties or repealed by the voters of the State in the future.
Proposed 2011-12 Budget and Redevelopment Agencies. On January 10, 2011
Governor Jerry Brown released his proposed budget for fiscal year 2011-12 ("Proposed
Budget"). The Proposed Budget is designed to address an estimated budget shortfall of $25.4
billion in the fiscal year 2011-12 California State Budget. The budget shortfall consists of an
$8.2 billion projected deficit for 2010-11 and a $17.2 billion gap between projected revenues
and spending in 2011-12. The Governor's proposal includes approximately $12.5 billion in
budget cuts, $12 billion in tax extensions and changes, and $1.9 billion in other solutions. The
Governor is calling for a statewide special election in June to extend for five more years tax
---measures-currently-set-to-expire. - - - The Proposed Budget makes the following redevelopment-related proposals (the "RDA
Provisions"), among others:
(i) The RDA Provisions, if adopted, would eliminate the current funding mechanism
for redevelopment agencies, although only limited details are provided for such a far-reaching
proposal.
(ii) The RDA Provisions, if adopted, would prohibit existing agencies from creating
new contracts or obligations effective upon enactment of urgency legislation.
(iii) By July 1, the RDA Provisions, if adopted, would disestablish existing
redevelopment agencies and successor local agencies would be required to use the property
tax revenues that redevelopment agencies would otherwise have received to retire
redevelopment agency debts and contractual obligations "in accordance with existing
payment schedules" (emphasis added).
(iv) For fiscal year 2011-12, the RDA Provisions, if adopted, would divert an
estimated $1.7 billion remaining after payment of the redevelopment agency debts and
contractual obligations described in the preceding paragraph (iii) to offset State General Fund
costs for Medi-Cal and trial courts. An additional estimated $210 million would be distributed on
a one-time basis to cities, counties, and special districts proportionate to their current share of
the countywide property tax.
(v) For fiscal years after fiscal year 2011-12, the RDA Provisions, if adopted, would
distribute the money available after payment of the redevelopment agency debt and contractual
obligations described in the preceding paragraph (iii) to schools, counties, cities, and non-
enterprise special districts for general uses.
(vi) The RDA Provisions, if adopted, would shift amounts in the redevelopment
agency's balances reserved for low-moderate income housing to local housing authorities for
low and moderate income housing.
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(vii) If adopted, the RDA Provisions would introduce a new financing mechanism for
economic development. Specifically, the Proposed Budget proposes that the Constitution be
amended to provide for 55% voter approval for limited tax increases and bonding against local
revenues for development projects such as are currently done by redevelopment agencies.
Voters in each affected jurisdiction would be required to approve use of their tax revenues for
these purposes.
Implementation of the Proposed Budget, including the RDA Provisions, would require
implementing legislation by the Legislature and perhaps voter approval as to certain material
elements and would probably include terms which are not yet proposed but that would be
material to the Agency and the Bonds. The Agency cannot predict the ultimate form of any
implementing legislation, if any is adopted.
Elements of the RDA Provisions, including the economic development program
authorization, contemplate voter approval through the initiative process. It is possible that
Proposition 22, which amended the State Constitution to prohibit state diversion of
redevelopment agency revenues generally, will affect the State's ability to implement some of
- -----the-RDA-Provisions-.-It--is possible-that- the--Governor-and -the-Legislature--may-seekvoter-
approval of changes to the terms of Proposition 22 that are in conflict with the Proposed Budget,
including the RDA Provisions.
The Agency cannot predict the timing, terms or ultimate implementation of any such final
legislation or voter initiative measures, or the impact on the Agency or the Bonds of any
proposed, interim or final legislative and constitutional changes which may be adopted arising
out of the Proposed Budget.
Legislative Analyst Report. The LAO released its Overview of the Governor's Budget
("LAO Overview") on January 12, 2011. As it relates to the RDA Provisions the LAO Overview
suggests the proposal has merit "but faces considerable implementation issues." The LAO
Overview notes:
the administration's plan will require considerable work by the Legislature to sort through
many legal, financial and policy issues. Several voter-approved constitutional measures,
for example, constrain the State's authority to redirect redevelopment funds, use
property tax revenues to pay for state programs, or impose increased costs on local
agencies. In addition, the administration's plan does not address many related issues,
such as clarifying the future financial responsibility for low- and moderate- income
housing (currently, a redevelopment program).
Finally, the LAO Overview recommends that the Legislature pass urgency legislation as
soon as possible prohibiting redevelopment agencies, during the period of legislative review of
the Proposed Budget, from taking actions that increase their debt.
Potential Impact on the Agency and the Bonds. There are a variety of ways in which the
Proposed Budget and the RDA Provisions, if adopted, could impact the Agency and the Bonds,
although the Agency is not able to predict the full variety or extent of these impacts, and the
impacts will vary greatly depending. on the final terms of laws adopted to implement the
Proposed Budget and the RDA Provisions:
(i) The RDA Provisions, if adopted, could impact the Agency's activities and
programs generally and could reduce or eliminate its fund balances and staffing.
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(ii) The RDA Provisions, if adopted, could affect the Agency's compliance with and
performance under existing contracts and obligations, including senior Pass-Through
Agreements and Housing Set-Aside obligations.
(iii) Subject to certain constitutional protections described below, the RDA
Provisions, if adopted, could affect the Agency's compliance with and performance under the
terms of the Indenture and the Bonds. These impacts could relate to the amount or availability
of property tax revenue, Tax Increment revenues or Housing Tax Revenues for the Bonds and
other uses, the manner of application of Housing Tax Revenues to debt service, flow of funds,
use of Bond proceeds to fund new projects, compliance with Indenture covenants, continuing
disclosure and other matters.
(iv) Pending final adoption of laws to implement the RDA Provisions, interim
proposals could affect the activities of the Agency and the value of the Bonds.
(v) Most significantly, the RDA Provisions if adopted and implemented in their
proposed form - would eliminate redevelopment agencies and redeploy tax increment revenues
- - - -affectingredevelopmentagencies. - Theseactionswouldalmost certainlyraise-legal and_
practical issues, some of which may be subject to litigation and ultimate resolution in the courts,
or subsequent legislative action. These issues could affect the Agency and its compliance with
the terms of the Indenture and the Bonds, and resolution of these issues could involve expense
and delay or modification of certain of the rights of the bondholders in ways the Agency cannot
predict.
Constitutional Protections. The Agency believes that constitutional protections against
the impairment of contracts will prevent the proposed actions in the RDA Provisions from
adversely affecting the validity of the Bonds or the Agency's pledge of Housing Tax Revenues
to secure the payment of the Bonds. Indeed, the RDA Provisions purport to provide for the
payments by successor entities of existing redevelopment agencies' "debts and contractual
obligations."
Article I, section 10 of the United States Constitution provides that "No state shall ...pass
any...law impairing the obligation of contracts." Article I, section 9 of the California Constitution
provides that a "law impairing the obligation of contracts may not be passed." Each of these
provisions is generally referred to as a "contracts clause". Federal courts have applied a fact-
based three-part test to determine whether a state law violates the federal contracts clause. In
general, the test compares any impairment against the significant and legitimate public purpose
behind the state law; there is no absolute prohibition against impairment.
The United States Supreme Court has declared in the context of a New Jersey law that
would have retroactively repealed a 1962 statutory (but contractual) covenant that would have
adversely impacted bondowners: "A governmental entity can always find a use for extra money,
especially when taxes do not have to be raised. If a State could reduce its financial obligations
whenever it wanted to spend the money for what it regarded as an important public purpose, the
Contract Clause would provide no protection at all." (See United States Trust Co. of New York
v. New Jersey (1977) 431 U.S. 1, 25-26.)
The Agency cannot predict the applicable scope of "contract clause" protections to the
Bonds and the RDA Provisions as they may ultimately be implemented. Efforts to protect the
rights of Bondholders and to enforce the terms of the Indenture, if necessary, could involve
expense and delay including with respect to the determination of the applicable scope of the
"contract clause" provisions.
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Future State Action. The Agency cannot predict what actions will be taken in the future
by the voters of the State, the State Legislature and the Governor to deal with changing State
revenues and expenditures and the repercussions they may have on the current fiscal year
State Budget, the Proposed Budget and future State budgets, or their impact on the Agency.
These developments at the State level, whether related to the Proposed Budget or not, may, in
turn, affect local governments and agencies, including the Agency. Even if the proposals
affecting the Agency in the Proposed Budget are not adopted, the State Legislature may adopt
other legislation from time to time requiring redevelopment agencies to make other payments to
ERAF or SERAF or to make other payments. The impact that current and future State fiscal
shortfalls will have on the Agency is unknown at this time. In prior years, the State has
experienced budgetary difficulties and as in the Proposed Budget, balanced its budget by
requiring local political subdivisions, such as the County, the City and the Agency, to fund
certain costs previously borne by the State.
Natural Disasters
-re ucfion-of-taxable values of-property-in-the ProjectArea caused-by economic factors
beyond the Commission's control, such as the discovery of hazardous substances on one or
more properties within the Project Area or the complete or partial destruction of such property
caused by, among other eventualities, an earthquake, flood or other natural disaster, could
cause a reduction in the Housing Tax Revenues securing the 2011 Bonds. Such reduction of
Housing Tax Revenues could have an adverse effect on the Commission's ability to make
timely payments of principal of and interest on the 2011 Bonds.
Pursuant to California law, the County Assessor may determine that the then current
market values require a general reduction in taxable value or a property owner may apply for a
reduction of the property taxable values of such owner's property by filing with the County
Assessor, a written application in the form prescribed by the State Board of Equalization with
the appropriate county assessment appeals board. A reduction in property taxable values
within the Project Area and the refund of taxes which may arise out of successful appeals by
property owners would reduce the amount of Housing Tax Revenues available for payment of
the 2011 Bonds.
Hazardous Substances
An additional environmental condition that may result in the reduction in the assessed
value of property would be the discovery of a hazardous substance that would limit the
beneficial use of taxable property within the Project Area. In general, the owners and operators
of a property may be required by law to remedy conditions of the property relating to releases or
threatened releases of hazardous substances. The owner or operator may be required to
remedy a hazardous substance condition of property whether or not the owner or operator has
anything to do with creating or handling the hazardous substance. The effect, therefore, should
any of the property within the Project Area be affected by a hazardous substance, could be to
reduce the marketability and value of the property by the costs of remedying the condition.
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Bankruptcy Risks
The enforceability of the rights and remedies of the owners of the Bonds and the
obligations of the Agency may become subject to the following: the federal bankruptcy code
and applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or
affecting the enforcement of creditors' rights generally, now or hereafter in effect; usual
equitable principles which may limit the specific enforcement under state law of certain
remedies: the exercise by the United States of America of the powers delegated to it by the
federal Constitution; and the reasonable and necessary exercise, in certain exceptional
situations of the police power inherent in the sovereignty of the State of California and its
governmental bodies in the interest of servicing a significant and legitimate public purpose.
Bankruptcy proceedings, or the exercise of powers by the federal or state government, if
initiated, could subject the owners of the Bonds to judicial discretion and interpretation of their
rights in bankruptcy or otherwise and consequently may entail risks of delay, limitation, or
modification of their rights.
Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds, or, if a
secondary market exists, that such Bonds can be sold for any particular price. Occasionally,
because of general market conditions or because of adverse history or economic prospects
connected with a particular issue, secondary marketing practices in connection with a particular
issue are suspended or terminated. Additionally, prices of issues for which a market is being
made will depend upon the then prevailing circumstances. Such prices could be substantially
different from the original purchase price.
LIMITATIONS ON TAX REVENUES
Property Tax Limitations-Article XIIIA
California voters, on June 6, 1978, approved an amendment (commonly known as both
Proposition 13 and the Jarvis-Gann Initiative) to the California Constitution. This amendment,
which added Article XIII A to the California Constitution, among other things, affects the
valuation of real property for the purpose of taxation in that it defines the full cash value of
property to mean "the county assessor's valuation of real property as shown on the fiscal year
1975-76 tax bill under full cash value, or thereafter, the appraised value of real property when
purchased, newly constructed, or a change in ownership has occurred after the 1975
assessment." The full cash value may be adjusted annually to reflect inflation at a rate not to
exceed two percent per year, or any reduction in the consumer price index or comparable local
data, or any reduction in the event of declining property value caused by damage, destruction or
other factors. The amendment further limits the amount of any ad valorem tax on real property
to one percent of the full cash value except that additional taxes may be levied to pay debt
service on indebtedness approved by the voters prior to July 1, 1978. In addition, an
amendment to Article X111 was adopted in October 1986 by initiative which exempts any bonded
indebtedness approved by two-thirds (55% in certain instances) of the votes cast by the voters
for the acquisition or improvement of real property from the one percent limitation.
On September 22, 1978, the California Supreme Court upheld the amendment over
challenges on several state and federal constitutional grounds (Amador Valley Joint Union
School District v. State Board of Equalization). The Court reserved certain constitutional issues
-29-
and the validity of legislation implementing the amendment for future determination in proper
cases.
In the general elections of 1986, 1988 and 1990, the voters of the State approved
various measures which further amended Article XIII A. One such amendment generally
provides that the purchase or transfer of (i) real property between spouses or (ii) the principal
residence and the first $1,000,000 of the full cash value of other real property between parents
and children, do not constitute a "purchase" or "change of ownership" triggering reassessment
under Article XIII A. This amendment has reduced local property tax revenues. Other
amendments permitted the Legislature to allow persons over 55 who sell their residence on or
after November 5, 1986, to buy or build another of equal or lesser value within two years in the
same county, to transfer the old residence's assessed value to the new residence, and
permitted the Legislature to authorize each county under certain circumstances to adopt an
ordinance making such transfers of assessed value applicable to situations in which the
replacement dwelling purchased or constructed after November 8, 1988, is located within the
county and the original property is located in another county within California.
- In--the- October 1990- elect! on-1-the voters-approved -additional-amendments-to Article XIII
A permitting the State Legislature to extend the replacement dwelling provisions applicable to
persons over 55 to severely disabled homeowners for replacement dwellings purchased or
newly constructed on or after June 5, 1990, and to exclude from the definition of "new
construction," triggering reassessment, improvements to certain dwellings for the purpose of
making the dwelling more accessible to severely disabled persons. In the November 1990
election, the voters approved the amendment of Article XIII A to permit the State Legislature to
exclude from the definition of "new construction" seismic retrofitting improvements or
improvements utilizing earthquake hazard mitigation technologies constructed or installed in
existing buildings after November 6, 1990.
Challenges to Article XIIIA
The U.S. Supreme Court struck down as a violation of equal protection certain property
tax assessment practices in West Virginia, which had resulted in vastly different assessments of
similar properties. Since Proposition 13 provides that property may only be reassessed up to
two percent per year, except upon change of ownership or new construction, recent purchasers
may pay substantially higher property taxes than long-time owners of comparable property in a
community. The Supreme Court in the West Virginia case expressly declined to comment in any
way on the constitutionality of Proposition 13.
Based on the decision in the West Virginia case, property owners in California brought
three suits challenging the acquisition value assessment provisions of Article XIII A. Two cases
involved residential property, and one case involved commercial property. In all three cases,
State trial and appellate courts have upheld the constitutionality of Article XIII A's assessment
rules and concluded that the West Virginia case did not apply to California's laws. On June 3,
1991, the U.S. Supreme Court agreed to hear the appeal in the challenge relating to commercial
property, but the plaintiff subsequently withdrew its case. On June 18, 1992, the U.S. Supreme
Court upheld the decision in Nordlinger v. Hahn, one of the challenges relating to residential
property.
Implementing Legislation
Legislation enacted by the California Legislature to implement Article XIIIA (Statutes of
1978, Chapter 292, as amended) provides that, notwithstanding any other law, local agencies
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may not levy any property tax, except to pay debt service on indebtedness approved by the
voters prior to July 1, 1978, and that each county will levy the maximum tax permitted by Article
XIIIA.
The apportionment of property taxes in fiscal years after 1978-79 has been revised
pursuant to Statutes of 1979, Chapter 282 which provides relief funds from State moneys
beginning in fiscal year 1978-79 and is designed to provide a permanent system for sharing
State taxes and budget surplus funds with local agencies. Under Chapter 282, cities and
counties receive about one-third more of the remaining property tax revenues collected under
Proposition 13 instead of direct State aid. School districts receive a correspondingly reduced
amount of property taxes, but receive compensation directly from the State and are given
additional relief.
Future assessed valuation growth allowed under Article XIIIA (new construction, change
of ownership, 2% annual value growth) will be allocated on the basis of "situs" among the
jurisdictions that serve the tax rate area within which the growth occurs except for certain utility
property assessed by the State Board of Equalization which is allocated by a different method
- - discussed-herein. - - - - - -
Unitary Property
Assembly Bill 454 Statutes of 1987, Chapter 921 ("AB 454"), provided that revenues
derived from Unitary Property (consisting mostly of operations property owned by utility
companies), commencing with fiscal year 1988-89, will be allocated as follows: (1) for revenues
generated from the one percent tax rate, (a) each jurisdiction, including redevelopment project
areas, will receive a percentage up to 102 percent of its prior year State-assessed unitary
revenue; and (b) if county-wide revenues generated from Unitary Property are greater than 102
percent of the previous year's revenues, each jurisdiction will receive a percentage share of the
excess unitary revenues by a specified formula, and (2) for revenue generated from the
application of the debt service tax rate to county-wide unitary taxable value, each jurisdiction's
annual debt service requirements and the percentage of property taxes received by each
jurisdiction from unitary property taxes. This provision applies to all Unitary Property except
railroads whose valuation will continue to be allocated to individual tax rate areas.
The provisions of AB 454 do not constitute an elimination of assessment of any State-
assessed properties nor a revision of the method of assessing utilities by the State Board of
Equalization. Generally, AB 454 allows valuation growth or decline of Unitary Property to be
shared by all jurisdictions within a county.
On February 1, 1991, the Superior Court for the County of Sacramento issued a
Statement of Decision in AT&T Communications of California, et al. v. State Board of
Equalization which reduced the valuation of certain unitary property owned by AT&T for property
tax purposes. Under the decision, the valuation method used by the State Board of Equalization
to assess unitary public utility property was declared illegal and a new method of valuation,
resulting in significantly lower values and therefore significantly lower potential property tax
revenues, was imposed. The effect on AT&T's statewide assessed value was to reduce it from
approximately $1,750,000,000 to approximately $1,100,000,000. As a result of this case, on
May 1, 1992, 57 of California's 58 counties, the State Board of Equalization and a number of
other utility companies whose unitary property valuations could be affected by the principles
announced in the Superior Court decision entered into a settlement agreement. On July 14,
1993, the Superior Court for the County of Sacramento entered a judgment validating the
settlement agreement.
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Although the settlement agreement is complex and extensive, its substance is
represented by the signatory public utilities' agreement (except AT&T) to abandon their right to
refunds since 1983 in return for lowered assessed valuations for the next eight fiscal years
pursuant to an agreed formula.
To administer the allocation of unitary tax revenues to redevelopment agencies, the
County no longer includes the taxable value of utilities as part of the reported taxable values of
project areas, therefore, the base year values of project areas have been reduced by the
amount of utility value that existed originally in the base year. Within the Project Area, the
Auditor Controller has allocated $363.89 in unitary tax revenue to the Agency for fiscal year
2002-03. This amount is reasonably consistent with the unitary revenue allocations made to the
Agency in prior years. The Fiscal Consultant has assumed no increase in the amounts of unitary
tax revenues to the Agency for purposes of projecting Tax Revenues.
Property Tax Collection Procedures
Classifications. In California, property which is subject to ad valorem taxes is classified
as "secured" or "unsecured." Secured and unsecured property are entered on separate parts of
the assessment roll maintained by the county assessor. The secured classification includes
property on which any property tax levied by the County becomes a lien on that property
sufficient, in the opinion of the county assessor, to secure payment of the taxes. Every tax which
becomes a lien on secured property has priority over all other liens on the secured property,
regardless of the time of the creation of other liens. A tax levied on unsecured property does not
become a lien against unsecured property, but may become a lien on certain other property
owned by the taxpayer.
Collections. The method of collecting delinquent taxes is substantially different for the
two classifications of property. The taxing authority has four ways of collecting unsecured
property taxes in the absence of timely payment by the taxpayer: (1) a civil action against the
taxpayer; (2) filing a certificate in the office of the county clerk specifying certain facts in order to
obtain a judgment lien on certain property of the taxpayer; (3) filing a certificate of delinquency
for record in the county recorder's office, in order to obtain a lien on certain property of the
taxpayer; and (4) seizure and sale of the personal property, improvements or possessory
interests belonging or assessed to the assessee.
The exclusive means of enforcing the payment of delinquent taxes with respect to
property on the secured roll is the sale of property securing the taxes to the State for the amount
of taxes which are delinquent.
Penalties. A 10% penalty is added to delinquent taxes which have been levied with
respect to property on the secured roll. In addition, property on the secured roll on which taxes
are delinquent is declared in default on or about June 30 of the fiscal year. Such property may
thereafter be redeemed by payment of the delinquent taxes and a delinquency penalty, plus a
redemption penalty of 1.5% per month to the time of redemption and a $15 Redemption Fee. If
taxes are unpaid for a period of five years or more, the property is recorded in a "Power to Sell"
status and is subject to sale by the county tax collector. A 10% penalty also applies to the
delinquent taxes on property on the unsecured roll, and further, an additional penalty of 1.5%
per month accrues with respect to such taxes beginning the first day of the third month following
the delinquency date.
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Delinquencies. The valuation of property is determined as of January 1 each year and
equal installments of taxes levied upon secured property become delinquent on the following
December 10 and April 10. Taxes on unsecured property are due January 1. Unsecured taxes
enrolled by July 31, if unpaid, are delinquent August 31 at 5:00 p.m. and are subject to penalty;
unsecured taxes added to the roll after July 31, if unpaid, are delinquent on the last day of the
month succeeding the month of enrollment.
Supplemental Assessments. Legislation enacted in 1983 (Chapter 498, Statutes of
1983) provides for the supplemental assessment and taxation of property as of the occurrence
of a change of ownership or completion of new construction.
Chapter 498 provided increased revenue to redevelopment agencies to the extent that
supplemental assessments of new construction or changes of ownership occur within the
boundaries of redevelopment projects subsequent to the January 1 lien date. To the extent such
State supplemental assessments occur within the Project Area, the Tax Revenues for the
Project Area may increase.
Tax Collection Fees. In 1990, the State Legislature enacted Senate Bill 2557 (Chapter
466, Statutes of 1990) ("SB 2557') which allows counties to charge for the cost of assessing,
collecting and allocating property tax revenues to local government jurisdictions on a prorated
basis. Two recent decisions have interpreted the provisions of SB 2557 and have upheld the
inclusion of redevelopment agencies as a local government Agency which must share the cost
of property tax administration. The 1992 enactment of Senate Bill 1559 (Chapter 697) and the
decision of the California Court of Appeal in Arcadia Redevelopment Agency v. lkemoto have
clarified that redevelopment agencies, such as the Agency, are to share in the cost of property
tax administration charged by most California counties, including the County.
Appropriations Limitations-Article XIIIB
On November 6, 1979, California voters approved Proposition 4, the so-called Gann
Initiative, which added Article XIIIB to the California Constitution. The principal effect of Article
XIIIB is to limit the annual appropriations of the State and any city, county, school district,
authority or other political subdivision of the State to the level of appropriations for the prior
fiscal year, as adjusted for changes in the cost of living, population and services rendered by the
government entity.
Effective November 30, 1980, the California Legislature added Section 33678 to the
Redevelopment Law which provided that the allocation of taxes to a redevelopment Agency for
the purpose of paying principal of, or interest on, loans, advances, or indebtedness will not be
deemed the receipt by such Agency of proceeds of taxes levied by or on behalf of the Agency
within the meaning of Article XIIIB, nor will such portion of taxes be deemed receipt of taxes by,
or an appropriation subject to the limitation of, any other public body within the meaning or for
the purpose of the Constitution and laws of the State, including Section 33678 of the
Redevelopment Law.
State Board of Equalization and Property Assessment Practices
On December 10, 1998, the State Board of Equalization ("SBOE") approved revisions to
its guidelines regarding the valuation of intangible business and commercial property for
property tax purposes. The SBOE approved these revisions over the strong objections of the
California Assessors Association ("CAA"), an organization representing all 58 County Assessors
in California.
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The Agency is not able to predict whether the revised SBOE guidelines will cause any
reductions in tax increment revenues and, hence, in Tax Revenues. However, the Agency does
not believe that the SBOE's adoption of the revised guidelines will affect its ability to pay debt
service on the 2011 Bonds.
Exclusion of Tax Revenues for General Obligation Bonds Debt Service
An initiative to amend the California Constitution entitled "Property Tax Revenues
Redevelopment Agencies" was approved by California voters at the November 8, 1988 general
election. Under prior law, a redevelopment agency using tax increment revenue received
additional property tax revenue whenever a local government increased its property tax rate to
pay off its general obligation bonds. This initiative amended the California Constitution to allow
the California Legislature to prohibit redevelopment agencies from receiving any of the property
tax revenues raised by increased property tax rates imposed by local governments to make
payments on their bonded indebtedness.
The initiative only applies to tax rates levied to finance general obligation bonds
approved by the voters on or after January 1, 1989. Any revenue reduction to redevelopment
agencies would depend on the number and value of the general obligation bonds approved by
voters in prior years, which tax rate will reduce due to increased valuation subject to the tax or
the retirement of the indebtedness. The Agency receives no tax increment as a result of general
obligation bond tax levies.
Proposition 218
On November 5, 1996, California voters approved Proposition 218-Voter Approval for
Local Government Taxes-Limitation on Fees, Assessments, and Charges-Initiative
Constitutional Amendment. Proposition 218 added Articles XIIIC and XIIID to the California
Constitution, imposing certain vote requirements and other limitations on the imposition of new
or increased taxes, assessments and property-related fees and charges. Tax Revenues
securing the 2011 Bonds are derived from property taxes which are outside the scope of taxes,
assessments and property-related fees and charges which were limited by Proposition 218.
AB 1290
In 1993, the California Legislature enacted Assembly Bill 1290 ("AB 1290") which
contained several significant changes in the Redevelopment Law. Among the changes made by
AB 1290 was a provision that limits the period of time for incurring and repaying loans,
advances and indebtedness payable from tax increment revenues. In general, a redevelopment
plan may terminate not more than 40 years following the date of original adoption, and loans,
advances and indebtedness may be repaid during a period extending not more than 10 years
following the date of termination of the redevelopment plan. See "THE PROJECT AREA-
Redevelopment Plan Limitations."
The Redevelopment Plan is fully in compliance with AB 1290.
SB 211
Senate Bill 211 ("SB 211"), which was adopted in 2001 and took effect as of January 1,
2002, allows redevelopment agencies, by ordinance, to eliminate the time limit on establishing
indebtedness (meaning the redevelopment agency could incur debt up to the end of the
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effectiveness of its redevelopment plan), but would in turn trigger statutory pass-throughs to all
taxing entities with whom the redevelopment agency does not have a pass-through agreement
at the time the ordinance is adopted. If the agency chooses to eliminate the agency's existing
tax increment indebtedness limit as permitted by SB211, the statutory pass-throughs would
apply starting in the year after what is now the final year to incur indebtedness. In 2006, the
Agency amended the Redevelopment Plan to eliminate such time limit.
Future Initiatives
Article XIIIA, Article XIIIB and certain other propositions affecting property tax levies
were each adopted as measures which qualified for the ballot pursuant to California's initiative
process. From time to time other initiative measures could be adopted, further affecting Agency
revenues or the Agency's ability to expend revenues.
Statement of Indebtedness
Under the Redevelopment Law, the Agency must file with the County Auditor a
statement of indebtedness for the Project Area by October 1 of each year. As described below,
the statement of indebtedness controls the amount of tax increment revenue that will be paid to
the Agency in each fiscal year.
Each statement of indebtedness is filed on a form prescribed by the State Controller and
specifies, among other things: (i) the total amount of principal and interest payable on all loans,
advances or indebtedness (including the 2011 Bonds) (the "Debt"), both over the life of the Debt
and for the current fiscal year, and (ii) the amount of "available revenue" as of the end of the
previous fiscal year.
"Available Revenue" is calculated by subtracting the total payments on Debt during the
previous fiscal year from the total revenues (both tax increment revenues and other revenues)
received during the previous fiscal year, plus any carry-forward from the prior fiscal year.
Available Revenue include amounts held by the Agency and irrevocably pledged to the payment
of Debt other than amounts set aside for low- and moderate-income housing.
The County Auditor may only pay tax increment revenue to the Agency in any fiscal year
to the extent that the total remaining principal and interest on all Debt exceeds the amount of
available revenues as shown on the statement of indebtedness.
The statement of indebtedness constitutes prima facie evidence of the indebtedness of
the Agency; however, the County Auditor may dispute the statement of indebtedness in certain
cases. Section 33675 of the Redevelopment Law provides for certain time limits controlling any
dispute of the statement of indebtedness, and allows for Superior Court determination of such
dispute if it cannot be resolved by the Agency and the County. Any such action may only
challenge the amount of the Debt as shown on the statement, and not the validity of any Debt or
its related contract or expenditures. No challenge can be made to payments to a trustee in
connection with a bond issue or payments to a public agency in connection with payments by
that public agency with respect to a lease or bond issue.
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OTHER INFORMATION
Continuing Disclosure
The Agency has covenanted for the benefit of holders and beneficial owners of the 2011
Bonds to provide certain financial information and operating data relating to the Agency by not
later than nine months following the end of the Agency's Fiscal Year (which reporting date
would be March 31), commencing with the report for the 2010-11 Fiscal Year (the "Annual
Report"), and to provide notices of the occurrence of certain enumerated events, if material.
The Annual Report notices of material events will be filed by the Agency with the Municipal
Securities Rulemaking Board. The specific nature of the information to be contained in the
Annual Report or the notices of material events is set forth in the Form of Continuing Disclosure
Certificate in Appendix F hereto. These covenants have been made in order to assist the
Underwriter in complying with S.E.C. Rule 15c2-12(b)(5). The Agency is current with respect to
previous undertakings with regard to said Rule to provide annual reports or notices of material
events. See "APPENDIX E-"FORM OF CONTINUING DISCLOSURE CERTIFICATE."
Litigation
At the time of delivery of and payment for the Bonds, the Agency will certify that, except
as disclosed in this Official Statement, to its best knowledge there is no litigation, action, suit,
proceeding or investigation, at law or in equity, before or by any court, governmental agency or
body, pending against or threatened against the Agency in any way affecting the existence of
the Agency or the titles of its officers to their respective offices or seeking to restrain or enjoin
the issuance, sale or delivery of the Bonds, the application of the proceeds thereof in
accordance with the Indenture, or the collection or application of Tax Revenues pledged or to be
pledged to pay the principal of and interest on the Bonds, or the pledge thereof, or in any way
contesting or affecting the validity or enforceability of the Bonds, the Indenture, or any action of
the Agency contemplated by any of said documents, or in any way contesting the completeness
or accuracy of this Official Statement or the powers of the Agency or its authority with respect to
the Indenture or any action of the Agency contemplated by said document, or which would
adversely affect the exclusion of interest paid on the Bonds from gross income for Federal
income tax purposes or the exemption of interest paid on the Bonds from California personal
income taxation, nor, to the knowledge of the Agency, is there any basis therefor.
Tax Matters
Interest on the Bonds is not excluded from gross income for federal income tax
purposes. However, in the opinion of Bond Counsel, interest on the Bonds is exempt from
California personal income taxes.
Owners of the Bonds should also be aware that the ownership or disposition of, or the
accrual or receipt of interest on, the Bonds may have federal or state tax consequences other
than as described above. Bond Counsel expresses no opinion regarding any federal or state
tax consequences arising with respect to the Bonds other than as expressly described above.
Circular 230 Disclaimer. To ensure compliance with requirements imposed by the IRS,
Bond Counsel informs Owners of the Bonds that any U.S. federal tax advice contained in this
Official Statement (including any attachments) is not intended or written to be used, and cannot
be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii)
promoting, marketing, or recommending to another party any transaction or matter addressed in
this Official Statement.
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Legal Opinion
Jones Hall, A Professional Law Corporation, San Francisco, California, will render an
opinion with respect to the validity of the Bonds in substantially the form set forth in Appendix C
hereto. Copies of such approving opinion will be available at the time of delivery of the Bonds.
In addition, Bond Counsel, in its capacity as Disclosure Counsel, will deliver to the
Agency and to the Underwriter a letter in customary form concerning the information set forth in
this Official Statement.
Rating
The Bonds have received the rating of " " by Standard & Poor's Ratings Services, a
Division of The McGraw-Hill Companies ("S&P"). Such rating reflects only the views of S&P,
and an explanation of the significance of such ratings may be obtained from S&P.
There is no assurance that such rating will be retained for any given period of time or
that it will not be revised downward or withdrawn entirely by such rating agency if, in the
judgment of such rating agency, circumstances so warrant. Any such downward revision or
withdrawal of any rating obtained may have an adverse effect on the market price of the Bonds.
Underwriting
The Bonds will be purchased by Piper Jaffray & Co. (the "Underwriter") at the purchase
price of $ (which is the aggregate principal amount of the Bonds, less an
underwriting discount of $ , less original issue discount of $
The initial public offering prices stated on the cover of this Official Statement may be
changed from time to time by the Underwriter. The Underwriter may offer and sell the Bonds to
certain dealers, banks acting as agents and others at prices lower than said public offering
prices.
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Miscellaneous
All quotations from and summaries and explanations of the Indenture and other statutes
and documents contained in this Official Statement do not purport to be complete, and
reference is made to such documents, Indenture and statutes for full and complete statements
of their provisions.
This Official Statement is submitted only in connection with the sale of the Bonds by the
Agency. All estimates, assumptions, statistical information and other statements contained in
this Official Statement, while taken from sources considered reliable, are not guaranteed by the
Agency. The information contained in this Official Statement should not be construed as
representing all conditions affecting the Agency or the Bonds.
UKIAH REDEVELOPMENT AGENCY
By:
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APPENDIX A
GENERAL INFORMATION ABOUT MENDOCINO COUNTY
The following information concerning the County of Mendocino is included only for the
purpose of supplying general information regarding the area of the District. The Refunding
Bonds are not a debt of the the County, the State or any of its political subdivisions, and neither
the County, the State nor any of its political subdivisions is liable therefor.
General
Mendocino County was created in 1850 by the State Legislature and was one of the
State's original 27 counties. The County spans an area of over 2 million acres and its coastline
runs about 100 miles. The City of Ukiah is the largest city in the County and is the County seat.
Population
The County's population estimate at January 1, 2010 was 90,289. The following table
indicates population growth for the County and the State for the last ten years.
HISTORICAL COUNTY AND STATE POPULATION DATA
Mendocino
State of
Year
County
California
2001
87,115
34,430,970
2002
87,949
35,063,959
2003
88,654
35,652,700
2004
89,256
36,199,342
2005
89,597
36,676,931
2006
89,575
37,087,005
2007
89,513
37,463,609
2008
89,764
37,871,509
2009
89,938
38,255,508
2010
90,289
38,648,090
Source: State of Califomia, Department of Finance, as of January 1.
A-1
Effective Buying income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is
the aggregate of wages and salaries, other labor-related income (such as employer
contributions to private pension funds), proprietor's income, rental income (which includes
imputed rental income of owner-occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
"disposable personal income."
Effective Buying Income
As of January 1, 2004 through 2009
Total Effective Median Household
Buying Income Effective Buying
Year Area (000's Omitted) Income
2004
Mendocino County
$ 1,530,370
$35,217
California
705,108,410
43,915
United States
5,692,909,567
39,324
2005
Mendocino County
$ 1,545,023
$35,299
California
720,798,106
44,681
United States
5,894,663,364
40,529
2006
Mendocino County
$ 1,618,368
$36,396
California
764,120,963
46,275
United States
6,107,092,244
41,255
2007
Mendocino County
$ 1,631,118
$36,477
California
814,894,438
48,203
United States
6,300,794,040
41,792
2008
Mendocino County
$ 1,652,445
$37,175
California
832,531,445
48,952
United States
6,443,994,426
42,303
2009
Mendocino County
$ 1,658,525
$37,414
California
844,823,319
49,736
United States
6,571,536,768
43,252
Source: Sales & Marketing Management Survey of Buying Power.
A-2
Commercial Activity
Total taxable sales during the first two quarters of calendar year 2009 in the County
were reported to be $496,537,000 a 19.1% decrease over the total taxable sales $613,934,000
reported during the first two quarters of calendar year 2008. The number of establishments
selling merchandise subject to sales tax and the valuation of taxable transactions in the County
is presented in the following table. Annual figures for 2009 are not yet available.
COUNTY OF MENDOCINO
TAXABLE RETAIL SALES
NUMBER OF PERMITS AND VALUATION OF TAXABLE TRANSACTIONS
(DOLLARS IN THOUSANDS)
Retail Stores
Total All Outlets
Number
Taxable
Number
Taxable
of Permits
Transactions
of Permits
Transactions
2004
1,562
$836,934
3,732
$1,130,368
2005
1,590
877,344
3,754
1,186,691
2006
1,593
924,965
3,699
1,247,548
2007
1,566
955,204
3,749
1,286,361
2008
1,560
931,392
3,742
1,250,959
Source: State Board of Equalization. Taxable Sales in California (Sales & Use Tax).
A-3
Employment and Industry
The civilian labor force, employment and unemployment for the County is set forth in the
following table.
COUNTY OF MENDOCINO
Civilian Labor Force, Employment and Unemployment
(Annual Averages)
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
Wage and Salary Employment: (2)
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
Total, All Industries (3)
2005
2006
2007
2008
2009
43,930
43,490
43,370
43,470
43,450
41,390
41,230
41,000
40,500
38,900
2,540
2,260
2,370
2,970
4,550
5.8%
5.2%
5.5%
6.8%
10.5%
2,080
2,090
2,010
1,870
1,680
330
360
360
330
180
1,470
1,560
1,500
1,340
1,000
3,090
3,000
2,860
2,590
2,390
760
750
750
760
650
4,610
4,530
4,640
4,540
4,360
640
610
630
640
620
440
380
360
370
340
1,230
1,270
1,240
1,230
1,210
1,750
1,800
1,810
1,780
1,760
3,770
3,700
3,770
3,820
3,860
4,230
4,230
4,170
4,000
3,680
780
800
770
750
700
280
270
280
280
270
450
610
510
500
520
6,700
6,650
6,710
6,770
6,550
32,590
32,590
32,360
31,550
29,770
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household domestic
workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
A-4
Major Employers
The following table lists the top employers in the County, listed alphabetically.
MENDOCINO COUNTY
Major Employers
2010 - Listed Alphabetically
Employer Name
Location
Industry
City Of Ukiah
Ukiah
Government Offices-City, Village & Twp
Coyote Valley Shodakai Casino
Redwood Valley
Casino
Fetzer Tasting Room & Visitor
Hopland
Wineries (Mfrs)
Fetzer Vineyards
Hopland
Wineries (Mfrs)
Food Help Program
Ukiah
Organizations
Forestry & Fire Protection
Willits
Government - Forestry Services
Frank R. Howard Memorial Hosp.
Willits
Hospitals
Hillside Health Ctr
Ukiah
Clinics
Hopland Sho Ka Wah Casino
Hopland
Casinos
Mendocino Coast District Hosp
Fort Bragg
Hospitals
Mendocino County Coroner
Point Arena
Government Offices-County
Mendocino County Office-Education
Ukiah
Government Offices-County
Mendocino County Sheriff
Point Arena
Sheriff
Mendocino County Social Svc
Ukiah
County Government-Social/Human Resources
Mendocino Redwood Co. LLC
Calpella
Nonclassified establishment
Mental Health Services- Mendocino
Ukiah
County Public Health Programs
Metalfx
Willits
Sheet Metal Fabricators
Raley's
Ukiah
Grocers-Retail
Safeway
Fort Bragg
Grocers-Retail
Ukiah Campus
Ukiah
Schools - Universities & Colleges
Ukiah City Redevelopment
Ukiah
Government Offices - City, Village & TWP
Ukiah High School
Ukiah
Schools
Ukiah Valley Medical Ctr
Ukiah
Hospitals
Wal-Mart
Ukiah
Department Stores
Source: State of California Employment Development Department extracted from The America's Labor Market
Information System (ALMIS) Employer Database.
A-5
Construction
The following table shows a five-year summary of the valuation of building permits
issued in the County.
COUNTY OF MENDOCINO
BUILDING PERMIT VALUATION
(VALUATION IN THOUSANDS OF DOLLARS)
2005
2006
2007
2008
2009
Permit Valuation:
New Single-family
$31,371.0
$41,445.4
$33,806.6
$19,566.8
$16,911.3
New Multi-family
1,233.9
1,829.9
1,051.1
257.8
334.0
Res. Alterations/Additions
15,264.5
20.139.0
17,305.7
155.538.8
9,564.6
Total Residential
47,869.4
63,414.3
52,163.4
35,363.4
26,809.9
New Commercial
5,214.0
12,018.2
678.8
2,982.0
2,167.4
New Industrial
1,202.2
1,000.0
2,588.9
3,439.0
0.0
New Other
6,747.8
8,119.9
6,997.4
6,718.5
5,757.4
Com. Alterations/Additions
7.563.1
17,578.7
12.070.0
13.632.7
16.449.0
Total Nonresidential
20,727.0
38,716.9
22,335.1
26,772.3
24,373.9
New Dwelling Units:
Single Family
281
273
220
143
112
Multiple Family
19
18
12
2
2
TOTAL
300
291
232
145
114
Source: Construction Industry Research Board, Building Permit Summary.
A-6
APPENDIX B
AGENCY'S AUDITED FINANCIAL STATEMENTS FOR
FISCAL YEAR 2009-10
B-1
APPENDIX C
FORM OF BOND COUNSEL OPINION
C-1
APPENDIX D
SUMMARY OF CERTAIN PROVISIONS
OF THE INDENTURE
D-1
APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
E-1
APPENDIX F
FISCAL CONSULTANT REPORT
F-1
APPENDIX G
DTC AND THE BOOK-ENTRY ONLY SYSTEM
The following description of the Depository Trust Company ("DTC'), the procedures and
record keeping with respect to beneficial ownership interests in the Bonds, payment of principal,
interest and other payments on the Bonds to DTC Participants or Beneficial Owners,
confirmation and transfer of beneficial ownership interest in the Bonds and other related
transactions by and between DTC, the DTC Participants and the Beneficial Owners is based
solely on information provided by DTC. Accordingly, no representations can be made
concerning these matters and neither the DTC Participants nor the Beneficial Owners should
rely on the foregoing information with respect to such matters, but should instead confirm the
same with DTC or the DTC Participants, as the case may be.
Neither the issuer of the Bonds (the "Issuer') nor the trustee, fiscal agent or paying agent
appointed with respect to the Bonds (the "Agent') take any responsibility for the information
contained in this Appendix.
No assurances can be given that DTC, DTC Participants or Indirect Participants will
distribute to the Beneficial Owners (a) payments of interest, principal or premium, if any, with
respect to the Bonds, (b) certificates representing ownership interest in or other confirmation or
ownership interest in the Bonds, or (c) redemption or other notices sent to DTC or Cede & Co.,
its nominee, as the registered owner of the Bonds, or that they will so do on a timely basis, or
that DTC, DTC Participants or DTC Indirect Participants will act in the manner described in this
Appendix. The current "Rules" applicable to DTC are on file with the Securities and Exchange
Commission and the current "Procedures" of DTC to be followed in dealing with DTC
Participants are on file with DTC.
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities
depository for the securities (the "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
certificate will be issued for the Bonds, in the aggregate principal amount of such issue, and will
be deposited with DTC. If, however, the aggregate principal amount of any issue exceeds $500
million, one certificate will be issued with respect to each $500 million of principal amount and
an additional certificate will be issued with respect to any remaining principal amount of such
issue.
2. DTC, the world's largest 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 2.2 million issues of U.S. and non-U.S. equity, corporate
and municipal debt issues, and money market instrument from over 100 countries that DTC's
participants ("Direct Participants") deposit with DTC. DTC also facilitates the post-trade
settlement among Direct Participants of sales and other securities transactions in deposited
securities through electronic computerized book-entry transfers and pledges between Direct
Participants' accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations. DTC is a wholly-owned
H-1
subsidiary of The Depository Trust & Clearing Corporation ("DTCC"). DTCC, in turn, is owned
by a number of Direct Participants of DTC and Members of the National Securities Clearing
Corporation, Fixed Income Clearing Corporation, and Emerging Markets Clearing Corporation
(NSCC, FICC, and EMCC, also subsidiaries of DTCC), as well as by the New York Stock
Exchange, Inc., the American Stock Exchange LLC, and the National Association of Securities
Dealers, Inc. 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 Standard & Poor's highest rating: AAA. 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 and www.dtc.org.
3. 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 receive certificates representing their ownership interests in Bonds,
except in the event that use of the book-entry system for the Bonds is discontinued.
4. 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 nominee do not effect 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.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may
wish to take certain steps to augment transmission to them of notices of significant events with
respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the
security 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 the notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the Bonds within an issue
are being redeemed, DTC's practice is to determine by lot the amount of the interest of each
Direct Participant in such issue to be redeemed.
7. Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent or vote with
respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to Issuer as soon as
H-2
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Redemption proceeds, distributions, and interest 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 Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners
will be governed by standing instructions and customary practices, as is the case with securities
held for the accounts of customers in bearer form or registered in "street name," and will be the
responsibility of such Participant and not of DTC nor its nominee, Agent, or Issuer, subject to
any statutory or regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividend payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the responsibility of
Issuer or Agent, disbursement of such payments to Direct Participants will be the responsibility
of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility
of Direct and Indirect Participants.
9. DTC may discontinue providing its services as securities depository with respect to
the Bonds at any time by giving reasonable notice to Issuer or Agent. Under such
circumstances, in the event that a successor securities depository is not obtained, Bond
certificates are required to be printed and delivered.
10. Issuer may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, Bond certificates will be
printed and delivered to DTC.
11. The information in this section concerning DTC and DTC's book-entry system has
been obtained from sources that Issuer believes to be reliable, but Issuer takes no responsibility
for the accuracy thereof.
H-3
Jones Hall Draft 2/20111
REDEVELOPMENT AGENCY OF THE REDEVELOPMENT AGENCY OF THE
CITY OF UKIAH CITY OF UKIAH
Ukiah Redevelopment Project (Ukiah Redevelopment Project)
2011 Tax Allocation Bonds 2011 Taxable Housing Tax Allocation Bonds
PURCHASE CONTRACT
2011
f Authority]
300 Seminary Avenue
Ukiah, CA 95482
Attn: Executive Director
Redevelopment Agency of the City of Ukiah
300 Seminary Avenue
Ukiah, CA 95482
Attn: Executive Director
Ladies and Gentlemen:
The undersigned, Piper Jaffray & Co. (the "Underwriter"), offers to enter into the
following agreement with the ( Authority] (the "Authority") which, upon the
Authority's execution of this agreement and the execution of this agreement by the Authority
and the Redevelopment Agency of the City of Ukiah (the "Agency"), will be binding upon the
Authority, the Agency and the Underwriter. This offer is made subject to the Authority's written
acceptance and the Agency's written approval hereof on or before 5:00 P.M., California time, on
the date hereof and, if not so accepted, will be subject to withdrawal by the Underwriter upon
written notice (by facsimile or otherwise) delivered to the Authority at any time prior to the
acceptance hereof by the Authority. All terms used herein and not otherwise defined shall have
the respective meanings given to such terms in the respective Indenture (as hereinafter
defined).
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements set forth herein, the Underwriter hereby agrees to
purchase from the Authority, and the Authority hereby agrees to sell and deliver to the
Underwriter the (i) $ aggregate principal amount of the Redevelopment
Agency of the City of Ukiah (Ukiah Redevelopment Project) 2011 Tax Allocation Bonds (the
"2011 Tax-Exempt Bonds") at the purchase price of $ (representing
$ aggregate principal amount of the 2011 Tax-Exempt Bonds, less
$ of Underwriter's discount and less $ of net original
issue discount) and (ii) $ aggregate principal amount of the Redevelopment
Agency of the City of Ukiah (Ukiah Redevelopment Project) 2011 Taxable Housing Tax
Allocation Bonds (the "2011 Taxable Housing Bonds" and together with the 2011 Tax-Exempt
Bonds, the "Bonds") at the purchase price of $ (representing
$ aggregate principal amount of the 2011 Taxable Housing Bonds, less
$ of Underwriter's discount and less $ of net original
issue discount). The Bonds are to be purchased by the Authority from the Agency pursuant
hereto for resale and delivery to the Underwriter concurrently with the purchase of the Bonds by
the Underwriter from the Authority; provided that the obligation of the Authority to purchase the
Bonds from the Agency shall be solely with moneys provided by the Underwriter.
The Bonds shall be dated the date of delivery of the Bonds and shall have the maturities
and bear interest at the rates per annum shown on Exhibit A hereto. Such payment and delivery
and the other actions contemplated hereby to take place at the time of such payment and
delivery are herein sometimes called the "Closing."
2. The Bonds and Related Documents. The 2011 Tax-Exempt Bonds are being
issued under the Redevelopment Law and pursuant to an Indenture of Trust dated as of March
1, 2011 and a First Supplement to Indenture of Trust dated as of March 1, 2011 (together, the
"Tax-Exempt Indenture") by and between the Agency and The Bank of New York Mellon Trust
Company, N.A., San Francisco, California, as trustee (the "Trustee"). The 2011 Taxable
Housing Bonds are being issued under the California Community Redevelopment Law,
constituting Part 1, Division 24 commencing with Section 33000) of the California Health and
Safety Code (the "Redevelopment Law") and pursuant to an Indenture of Trust dated as of
March 1, 2011 (the "Housing Indenture" and together with the Tax-Exempt Indenture, the
"Indentures") by and between the Agency and the Trustee. The Bonds are also issued
pursuant to the Redevelopment Law and a resolution of the Agency adopted ,
2011. The Bonds shall mature and shall be subject to redemption on the dates and in the
amounts and shall bear interest at the rates set forth in the Indenture and the Official Statement
dated the date hereof relating to the Bonds (which, together with all exhibits and appendices
included therein or attached thereto and such amendments or supplements thereto which shall
be approved by the Underwriter, is hereinafter called the "Official Statement").
A net proceeds of the Bonds will be used to finance redevelopment activities of the
Agency of benefit to the Ukiah Redevelopment Project (the "Project Area"). The 2011 Tax-
Exempt Bonds shall be secured by a parity pledge of and lien on all of the Tax Revenues (as
defined in the Tax-Exempt Indenture) allocated to the Agency with respect to the Project Area.
The 2011 Taxable Housing Bonds shall be secured by Housing Tax Revenues under the
Housing Indenture.
The Authority was created as a joint exercise of powers authority pursuant to Chapter 5
of Division 7 of Title 1 of the Government Code of the State of California (the "Act") and a Joint
Exercise of Powers Agreement (the "Joint Powers Agreement"), between the City and the
Agency.
The Agency will undertake pursuant to the provisions of a Continuing Disclosure
Certificate, to be dated the date of the Closing (the "Disclosure Certificate"), and executed by
the Agency, to provide certain annual information and notices of the occurrence of certain
events, if material. A description of the undertaking is set forth in the Preliminary Official
Statement (as defined below) and will also be set forth in the Official Statements.
-2-
The Indentures, the Disclosure Certificate and this Purchase Contract are sometimes
collectively referred to herein as the "Agency Legal Documents."
The resolution of the Agency adopted , 2011, approving the Agency Legal
Documents and related matters is referred to herein as the "Agency Resolution." The
resolution of the Authority adopted , 2011, approving the Authority Legal Documents,
the issuance of the Bonds and related matters is herein referred to as the "Authority
Resolution." The resolution of the City of Ukiah (the "City") adopted 2011,
approving the issuance of the Bonds is herein referred to as the "City Resolution."
3. Offering. The Underwriter agrees to make a bona fide public offering of all the
Bonds initially at the public offering prices (or yields) set forth on Appendix A attached hereto
and incorporated herein by reference. Subsequent to the initial public offering, the Underwriter
reserves the right to change the public offering prices (or yields) as it deems necessary in
connection with the marketing of the Bonds, provided that the Underwriter shall not change the
interest rates set forth on Appendix A. The Bonds may be offered and sold to certain dealers at
prices lower than such initial public offering prices. The Underwriter reserves the right to
change, subsequent to the initial public offering, such initial offering prices as it shall deem
necessary in connection with the marketing of the Bonds.
4. Use and Preparation of Documents. The Agency has caused to be prepared and
delivered to the Underwriter prior to the execution of this Purchase Agreement copies of a
Preliminary Official Statement for the 2011 Tax-Exempt Bonds, and a Preliminary Official
Statement for the 2011 Taxable Housing Bonds, each dated , 2011, relating to
the Bonds (collectively, the "Preliminary Official Statements"). The Agency ratifies, confirms
and approves the use by the Underwriter prior to the date hereof of the Preliminary Official
Statements. The Agency has previously deemed the Preliminary Official Statements to be final
as of its date for purposes of Rule 15c2-12 promulgated under the Securities Exchange Act of.
1934 ('Rule 15c2-12"), except for information permitted to be omitted therefrom by Rule 15c2-
12, in the form of Exhibit B.
The Agency hereby agrees to deliver or cause to be delivered to the Underwriter, within
seven (7) business days of the date hereof, a sufficient number of copies of the final Official
Statements relating to the Bonds, dated the date hereof, which includes all information
permitted to be omitted by Rule 15c2-12 and any amendments or supplements to such Official
Statements as have been approved by the Agency and the Underwriter (the "Official
Statements") to enable the Underwriter to distribute a single copy of each Official Statements to
any potential customer of the Underwriter requesting an Official Statements during the time
period beginning when the Official Statements becomes available and ending on the End of the
Underwriting Period (defined below). The Agency hereby approves of the use and distribution
(including the electronic distribution) by the Underwriter of the Preliminary Official Statements
and the Official Statements in connection with the offer and sale of the Bonds. The Underwriter
agrees that it will not confirm the sale of any Bonds unless the confirmation of sale is
accompanied or preceded by the delivery of a copy of the Official Statements.
The Authority represents, warrants and covenants to the Underwriter that:
(a) The Authority is a joint exercise of powers authority, duly organized and existing,
and authorized to transact business and exercise of powers under and pursuant to the
provisions of the laws of the State of California and the joint exercise of powers agreement
-3-
pursuant to which the Authority was created and has, and on Closing Date will have, full legal
right, power and authority to enter into this Purchase Contract, and to carry out and to
consummate the transactions contemplated by this Purchase Contract and the Official
Statements.
(b) By all necessary official action of the Authority, the Authority has duly authorized
and approved the execution and delivery of, and performance by the Authority of the obligations
contained in, this Purchase Contract and as of the date hereof, such authorizations and
approvals are in full force and effect and have not been amended, modified or rescinded. When
executed and delivered, this Purchase Contract will constitute the legally valid and binding
obligation of the Authority enforceable in accordance with its terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or affecting creditors' rights generally. The Authority has complied, and will
at the Closing be in compliance in all respects, with the terms of this Purchase Contract.
(c) The information relating to the Authority contained in the Preliminary Official
Statements and the final Official Statements as amended or supplemented, is correct in all
material respects and does not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make the statements
contained therein, in the light of the circumstances under which they were made, not
misleading.
(d) The Bonds will be purchased and sold by the Authority pursuant to the Mark-
Roos Local Bond Pooling Act of 1985, constituting Article 4 of Chapter 5, Division 7 of Title 1
(commencing with Section 6584) of the California Government Code.
(e) The Authority has complied, and will on the Closing.Date for be in compliance, in
all respects, with the JPA Act and all other applicable laws of the State of California and the joint
exercise of powers agreement pursuant to which the Authority was created.
(f) As of the time of acceptance hereof and as of the time of the Closing, except as
otherwise disclosed in the Official Statements, the Authority is not and will not be in breach of or
in default under any applicable constitutional provision, law or administrative rule or regulation of
the State of California or the United States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to
which the Authority is a party or is otherwise subject, and no event has occurred and is
continuing which, with the passage of time or the giving of notice, or both, would constitute a
default or event of default under any such instrument; and, as of such times, except as
disclosed in the Official Statements, the authorization, execution and delivery of this Purchase
Contract and compliance with the provisions hereof do not and will not conflict with or constitute
a breach of or default under any applicable constitutional provision, law or administrative rule or
regulation of the State of California or the United States, or any applicable judgment, decree,
license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement
or other instrument to which the Authority (or any of its officers in their respective capacities as
such) is subject, or by which it or any of its properties is bound, nor will any such authorization,
execution, delivery or compliance result in the creation or imposition of any lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of its assets or properties
or under the terms of any such law, regulation or instrument, except as may be provided by this
Purchase Contract.
-4-
(g) As of the time of acceptance hereof and the Closing, except as disclosed in the
Official Statements, there is no action, suit, proceeding, inquiry or investigation, at law or in
equity, before or by any court, government agency, public board or body, pending and served
or, to the best of its knowledge, threatened (i) in any way questioning the corporate existence of
the Authority or the titles of the officers of the Authority to their respective offices; (ii) seeking to
restrain or enjoin the sale of the Bonds or in any way contesting or affecting the validity of this
Purchase Contract, the power of the Authority to execute and deliver this Purchase Contract or
the consummation of the transactions contemplated hereby; or (iii) which may result in any
material adverse change relating to the Authority, and to the best of its knowledge, there is no
basis for any action, suit, proceeding, inquiry or investigation of the nature described in clauses
(i) through (iii) of this sentence.
(h) All approvals, consents and orders of any governmental authority, board, agency
or commission having jurisdiction which would constitute a condition precedent to the execution
and delivery by the Authority of this Purchase Contract have been obtained.
(i) Any certificate signed by an authorized officer of the Authority and delivered to
the Underwriter shall be deemed a representation and warranty of the Authority to the
Underwriter as to the statements made therein.
Representations, Warranties and Agreements of the Agency. The Agency hereby
represents, warrants and agrees as follows:
(a) The Agency is a public body, corporate and politic, organized and existing
under the Constitution and laws of the State of California, including the Community
Redevelopment Law of the State, constituting Part 1 of Division 24 of the Health and Safety
Code;
(b) The Agency has full legal right, power and authority to enter into the
Agency Legal Documents and carry out and consummate the transactions contemplated by the
Agency Legal Documents;
(c) By all necessary official action of the Agency prior to or concurrently with
the acceptance hereof, the Agency has duly authorized and approved the preparation and use
of the Preliminary Official Statements and the Official Statements, the execution and delivery of
the Official Statements and the Agency Legal Documents, and the performance by the Agency
of all transactions contemplated by the Agency Legal Documents; and, assuming due
authorization, execution and delivery by, and validity against, the other parties thereto, the
Agency Legal Documents will constitute legal, valid and binding obligations of the Agency,
enforceable in accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally;
(d) The Agency is not in any material respect in breach of or default under
any applicable constitutional provision, law or administrative regulation to which it is subject or
any applicable judgment or decree or any loan agreement, indenture, bond, note, resolution,
agreement or other instrument to which the Agency is a party or to which the Agency or any of
its property or assets is otherwise subject, and no event has occurred and is continuing which
with the passage of time or the giving of notice, or both, would constitute such a default or event
of default under any such instrument; and the execution and delivery of the Agency Legal
Documents, and compliance with the provisions on the Agency's part contained therein, will not
-5-
conflict with or constitute a material breach of or a material default under any constitutional
provision, law, administrative regulation, judgment, decree, loan agreement, indenture, bond,
note, resolution, agreement or other instrument to which the Agency is a party or to which the
Agency or any of its property or assets is otherwise subject, nor will any such execution,
delivery, adoption or compliance result in the creation or imposition of any lien, charge or other
security interest or encumbrance of any nature whatsoever upon any of the property or assets
of the Agency or under the terms of any such constitutional provision, law, regulation or
instrument, except as provided by the Indentures;
(e) Except as described in or contemplated by the Official Statements, all
authorizations, approvals, licenses, permits, consents and orders of any governmental authority,
board, agency or commission having jurisdiction of the matter which are required for the due
authorization by, or which would constitute a condition precedent to or the absence of which
would materially adversely affect the due performance by, the Agency of its obligations under
the Agency Legal Documents have been duly obtained;
(f) Between the date of this Purchase Contract and the date of the Closing,
the Agency will not, without the prior written consent of the Underwriter, offer or issue any
bonds, notes or other obligations for borrowed money, or incur any material liabilities, direct or
contingent, payable from Tax Revenues or Housing Tax Revenues, as applicable (as defined in
the Indentures), nor will there be any adverse change of a material nature in the financial
position, results of operations or condition, financial or otherwise, of the Agency;
(g) To the best knowledge of the officer of the Agency executing this
Purchase Contract, after due inquiry, as of the date hereof, there is no action, suit, proceeding,
inquiry or investigation, at law or in equity before or by any court, government agency, public
board or body, pending or threatened against the Agency, affecting the existence of the Agency
or the titles of its officers to their respective offices, or affecting or seeking to prohibit, restrain or
enjoin the execution and delivery of the Indentures or the collection of the Tax Revenues or
Housing Tax Revenues, as applicable, or contesting or affecting, as to the Agency, the validity
or enforceability of the Agency Legal Documents or contesting the exclusion from gross income
of interest on the 2011 Tax-Exempt Bonds for federal income tax purposes, or contesting the
completeness or accuracy of the Preliminary Official Statements or the Official Statements, or
contesting the powers of the Agency, or in any way contesting or challenging the consummation
of the transactions contemplated hereby, or which might result in a material adverse change in
the financial condition of the Agency or which might materially adversely affect the Tax
Revenues or Housing Tax Revenues of the Agency; nor, to the best knowledge of the Agency,
is there any known basis for any such action, suit, proceeding, inquiry or investigation, wherein
an unfavorable decision, ruling or finding would materially adversely affect the validity of the
authorization, execution, delivery or performance by the Agency of the Agency Legal
Documents;
(h) As of the time of acceptance hereof and as of the date of the Closing, the
Agency does not and will not have outstanding any indebtedness which indebtedness is
secured by a lien on the Tax Revenues or Housing Tax Revenues of the Agency superior to or
on a parity with the lien provided for in the Indentures on the Tax Revenues or Housing Tax
Revenues, other than as disclosed in the Official Statements. As of the time of acceptance
hereof and as of the date of the Closing, the Agency does not and will not have outstanding any
indebtedness which indebtedness is payable prior to the Bonds from Tax Revenues or Housing
Tax Revenues, as applicable;
-6-
(i) As of the time of acceptance hereof and as of the date of the Closing, the
Agency has complied with, and will at the Closing be in compliance, in all respects with, the
Redevelopment Law, including the filing requirements of Article 6 of Chapter 1 of the
Redevelopment Law;
Q) As of the date thereof, the Preliminary Official Statements did not, except
as revised by the Official Statements, contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein in light of the circumstances
under which they were made, not misleading in any material respect;
(k) As of the date thereof and at all times subsequent thereto to and including
the date which is 25 days following the End of the Underwriting Period (as such term is defined
above) for the Bonds, the Official Statements did not and will not contain any untrue statement
of a material fact or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were made not
misleading;
(1) If between the date hereof and the date which is 25 days after the End of
the Underwriting Period for the Bonds, an event occurs which would cause the information
contained in the Official Statements, as then supplemented or amended, to contain an untrue
statement of a material fact or to omit to state a material fact required to be stated therein or
necessary to make such information herein, in the light of the circumstances under which it was
presented, not misleading, the Agency will notify the Underwriter, and, if in the opinion of the
Underwriter or the Agency, or respective counsel, such event requires the preparation and
publication of a supplement or amendment to the Official Statements, the Agency will cooperate
in the preparation of an amendment or supplement to the Official Statements in a form and
manner approved by the Underwriter, and shall pay all expenses thereby incurred. For the
purposes of this subsection, between the date hereof and the date which is 25 days of the End
of the Underwriting Period for the Bonds, the Agency will furnish such information with respect
to itself as the Underwriter may from time to time reasonably request;
(m) If the information contained in the Official Statements is amended or
supplemented pursuant to paragraph (I) hereof, at the time of each supplement or amendment
thereto and (unless subsequently again supplemented or amended pursuant to such paragraph)
at all times subsequent thereto up to and including the date which is 25 days after the End of
the Underwriting Period for the Bonds, the portions of the Official Statements so supplemented
or amended (including any financial and statistical data contained therein) will not contain any
untrue statement of a material fact required to be stated therein or necessary to make such
information therein in the light of the circumstances under which it was presented, not
misleading;
(n) After the Closing, the Agency will not participate in the issuance of any
amendment of or supplement to the Official Statements to which, after being furnished with a
copy, the Underwriter shall reasonably object in writing or which shall be disapproved by
counsel for the Underwriter;
(o) Any certificate signed by any officer of the Agency and delivered to the
Underwriter shall be deemed a representation by the Agency to the Underwriter as to the
statements made therein;
-7-
(p) The Agency will apply the proceeds from the sale of the Bonds for the
purposes specified in the Official Statements;
(q) The Agency's Low and Moderate Income Housing Fund established
pursuant to Section 33334.3 of the Redevelopment Law does not on the date hereof, and will
not on the date of the Closing, contain an "excess surplus" (within the meaning of Section
33334.12 of the Redevelopment Law) that would cause the Agency to be or to become subject
to the sanctions contained in Section 33334.12(e)(1) of the Redevelopment Law;
(r) The Agency does not on the date hereof, and will not as of the Delivery
Date, have "major audit violations" (within the meaning of Section 33080.8(i) of the
Redevelopment Law) so as to be subject to a court order prohibiting the activities set forth in
Section 33080.8(e)(3) of the Redevelopment Law;
(s) The Agency has not been notified of any listing or proposed listing by the
Internal Revenue Service to the effect that either the Agency, the Authority or the City is a bond
issuer whose arbitrage certifications may not be relied upon.
(t) Except as disclosed in the Official Statements, the Agency has not
entered into any tax sharing agreements with regards to tax increment generated within the
Project Area. The Agency has repaid all obligations, if any, owed to the Low and Moderate
Income Housing Fund relating to amounts borrowed to make payments to the Educational
Revenue Augmentation Fund; and
(u) The Agency will undertake, pursuant to the Disclosure Certificate, to
provide or cause to be provided annual financial reports and notices of certain events; a
description of this undertaking is set forth in the Preliminary Official Statements and will also be
set forth as an appendix to the Official Statements. The Agency has not failed to comply in all
material respects with any undertaking by the Agency under Rule 15(c)2-12 except as
described in the Official Statements.
6. Closing. At 8:00 A.M., California time, on , 2011, or on such other
date as may be mutually agreed upon by the Authority and the Underwriter (the "Closing
Date"), the Agency will, subject to the terms and conditions hereof, sell and deliver the Bonds to
the Underwriter, duly executed and authenticated, together with the other documents hereinafter
mentioned, and, subject to the terms and conditions hereof, the Underwriter will accept such
delivery and pay the purchase price of the Bonds as set forth in Section 1 hereof in federal
funds. Sale, delivery and payment as aforesaid shall be made at the offices of Jones Hall, San
Francisco, California ("Bond Counsel"), or such other place as shall have been mutually
agreed upon by the Agency and the Underwriter, except that the Bonds (with one certificate for
each maturity and otherwise in a form suitable for the book-entry system) shall be delivered to
the Underwriter in New York, New York, through the book-entry system of The Depository Trust
Company ("DTC"). Unless the DTC Fast Automated Securities Transfer ("FAST") is utilized, the
Bonds will be made available for inspection by DTC at least one business day prior to the
Closing.
7. Closing Conditions. The Underwriter has entered into this Purchase Contract in
reliance upon the representations and warranties of the Authority and the Agency contained
herein, and in reliance upon the representations and warranties to be contained in the
documents and instruments to be delivered at the Closing and upon the performance by the
Authority and the Agency of their respective obligations hereunder, both as of the date hereof
-8-
and as of the date of the Closing. Accordingly, the Underwriter's obligations under this
Purchase Contract to purchase, to accept delivery of and to pay for the Bonds shall be
conditioned upon the performance by the Authority and the Agency of their respective
obligations to be performed hereunder and under such documents and instruments at or prior to
the Closing, and shall also be subject to the following additional conditions:
(a) The Underwriter shall receive, within seven (7) business days of the date
hereof, copies of the Official Statements (including all information previously permitted to have
been omitted from the Preliminary Official Statements by Rule 15c2-12 and any amendments or
supplements as have been approved by the Underwriter), in such reasonable quantity as the
Underwriter shall have requested;
(b) The representations and warranties of the Authority and the Agency
contained herein shall be true, complete and correct on the date hereof and on and as of the
date of the Closing, as if made on the date of the Closing and the statements of the officers and
other officials of the Authority, the Agency and the Trustee made in any certificate or other
document furnished pursuant to the provisions hereof are accurate;
(c) At the time of the Closing, the Agency Legal Documents shall have been
duly authorized, executed and delivered by the respective parties thereto, and the Official
Statements shall have been duly authorized, executed and delivered by the Agency and the
Authority, all in substantially the forms heretofore submitted to the Underwriter, with only such
changes as shall have been agreed to in writing by the Underwriter, and shall be in full force
and effect; and there shall be in full force and effect such resolution or resolutions of the
governing bodies of the Authority and the Agency as, in the opinion of Bond Counsel, shall be
necessary or appropriate in connection with the transactions contemplated hereby;
(d) At the time of the Closing, all necessary official action of the Authority and
the Agency relating to the Official Statements and the Legal Documents shall have been taken
and shall be in full force and effect and shall not have been amended, modified or
supplemented in any material respect;
(e) At or prior to the Closing, the Underwriter shall have received copies of
each of the following documents:
(1) Bond Counsel Opinion. The approving opinion of Bond Counsel
to the Agency, dated the date of the Closing and substantially in the form
included as an appendix to the Official Statements and a reliance letter
addressed to the Underwriter with respect to such opinion.
(2) Supplemental Opinion of Bond Counsel. A supplemental opinion
or opinions of Bond Counsel addressed to the Underwriter, in form and
substance acceptable to the Underwriter, and dated the date of the Closing,
stating that the Underwriter may rely on the opinion of Bond Counsel described in
paragraph (1) above as if such opinion were addressed to the Underwriter and to
the following effect:
(i) the Purchase Contract has been duly executed and
delivered by the Authority and the Agency and (assuming due
authorization, execution and delivery by and validity against the
Underwriter) constitutes the valid and binding agreement of the Authority
-9-
and the Agency, except as enforcement thereof may be limited by
bankruptcy, insolvency or other laws affecting enforcement of creditors'
rights and by the application of equitable principles;
(ii) the statements contained in the Official Statements on the
cover and under the captions "INTRODUCTION," "THE BONDS,"
"SECURITY FOR THE BONDS," "OTHER INFORMATION - Tax Matters"
and in Appendices C and D insofar as such statements expressly
summarize certain provisions of the. Indentures or the opinion of Bond
Counsel, are accurate in all material respects; and
(iii) the Bonds are not subject to the registration requirements
of the Securities Act of 1933, as amended, and the Indentures are
exempt from qualification pursuant to the Trust Indenture Act of 1939, as
amended.
(3) Agency Counsel Opinion. An opinion of Counsel to the Agency,
dated the date of the Closing and addressed to the Underwriter, in form and
substance acceptable to the Underwriter to the following effect:
(i) the Agency is a public body, corporate and politic, duly
organized and existing under the Constitution and laws of the State,
including the Redevelopment Law, with full right, power and authority to
execute, deliver and perform its obligations under the Agency Legal
Documents;
(ii) the Agency Resolution was duly adopted at a meeting of
the Agency, called and held pursuant to law, with all public notice
required by law and at which a quorum was present and acting
throughout; and the Agency Resolution is in full force and effect and has
not been modified amended or rescinded since their respective adoption
date;
(iii) the Agency Legal Documents have been duly authorized,
executed and delivered by the Agency and, assuming due authorization,
execution and delivery by the other parties thereto, constitute the valid,
legal and binding obligations of the Agency enforceable in accordance
with their respective terms, except as enforcement thereof may be limited
by bankruptcy, insolvency or other laws affecting enforcement of creditors
rights and by the application of equitable principles if equitable remedies
are sought;
(iv) the execution and delivery of the Agency Legal
Documents, the Bonds and the Official Statements and compliance with
the provisions of the Agency Legal Documents, under the circumstances
contemplated thereby, (A) do not and will not in any material respect
conflict with or constitute on the part of the Agency a breach of or default
under any agreement or other instrument to which the Agency is a party
or by which it is bound, and (B) do not and will not in any material respect
constitute on the part of the Agency a violation, breach of or default under
-10-
any existing law, regulation, court order or consent decree to which the
Agency is subject;
(v) except as otherwise disclosed in the Official Statements,
there is no litigation or proceeding, pending and served, or, to the best of
such counsel's knowledge based on due inquiry, threatened, challenging
the creation, organization or existence of the Agency, or the validity of the
Agency Legal Documents or seeking to restrain or enjoin any of the
transactions referred to therein or contemplated thereby, or under which a
determination adverse to the Agency would have a material adverse
effect upon the financial condition or the revenues of the Agency, or
which, in any manner, questions the right of the Agency to enter into the
Indentures or to use the Tax Revenues or Housing Tax Revenues for
payment of the Bonds or affects in any manner the right or ability of the
Agency to collect or pledge the Tax Revenues or Housing Tax Revenues;
and
(vi) the information in the Official Statements relating to the
Agency, the Tax Revenues or Housing Tax Revenues and the Project
Area (excluding any financial or statistical data with respect thereto, as to
which no opinion is expressed) is true and correct in all material respects,
and the Official Statements contains no misstatement of any material fact
and does not omit any statement necessary to make the statements
contained therein with respect to, in the light of the circumstances in
which such statements were made, not misleading.
(4) Authority Counsel Opinion. An opinion of counsel to the Authority,
dated the date of Closing and in form and substance satisfactory to the
Underwriter, to the effect that:
(i) the Authority is a joint exercise of powers authority, duly
organized and validly existing under the Act and the Joint Powers
Agreement;
(ii) the Authority Resolution was duly adopted at a meeting of
the Authority, called and held pursuant to law, with all public notice
required by law and at which a quorum was present and acting
throughout; and the Authority Resolution is in full force and effect and has
not been modified amended or rescinded since its adoption date;
(iii) the Purchase Contract has been duly authorized, executed
and delivered by the Authority, and assuming due authorization,
execution and delivery by, and validity against, the other parties thereto,
constitute the valid, legal and binding obligation of the Authority
enforceable in accordance with its terms, except as enforcement thereof
may be limited by bankruptcy, insolvency or other laws affecting
enforcement of creditors rights and by the application of equitable
principles if equitable remedies are sought;
(iv) except as otherwise disclosed in the Official Statements,
there is no litigation or proceeding, pending and served, or, to the best of
-11-
such counsel's knowledge, threatened, challenging the creation,
organization or existence of the Authority, or the validity of the Authority
Legal Documents or seeking to restrain or enjoin any of the transactions
referred to therein or contemplated thereby, or under which a
determination adverse to the Authority would have a material adverse
effect upon the right or ability of the Authority to collect or pledge the
Revenues.
(5) Trustee Counsel Opinion. The opinion of counsel to the Trustee,
dated the date of the Closing, addressed to the Underwriter, to the effect that:
(i) The Trustee is a national banking association, duly
organized and validly existing under the laws of the United States of
America, having full power to enter into, accept and administer the trusts
created under the Indentures.
(ii) The Indentures have been duly authorized, executed and
delivered by the Trustee and the Indentures constitute the legal, valid and
binding obligation of the Trustee, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency or other laws affecting the enforcement of creditors' rights
generally and by the application of equitable principles, if equitable
remedies are sought.
(iii) Except as may be required under Blue Sky or other
securities laws of any state, no consent, approval, authorization or other
action by any governmental or regulatory authority having jurisdiction over
the Trustee that has not been obtained is or will be required for the
execution and delivery of the Indentures, or the consummation of the
transactions contemplated by the Indentures.
(6) Agency Certificate. A certificate of the Agency, dated the date of
the Closing, signed on behalf of the Agency by a duly authorized officer of the
Agency, to the effect that:
(i) the representations and warranties of the Agency
contained herein are true and correct in all material respects on and as of
the date of the Closing as if made on the date of the Closing;
(ii) no event affecting the Agency has occurred since the date
of the Official Statements which has not been disclosed therein or in any
supplement or amendment thereto which event should be disclosed in the
Official Statements in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; and
(iii) no further consent is required to be obtained for the
inclusion of the Agency's audited financial statements, including the
accompanying accountant's letter, for Fiscal Year 2008-09 in the Official
Statements.
-12-
(7) Authority Certificate. A certificate of the Authority, dated the date
of the Closing, signed on behalf of the Authority by a duly authorized officer of
the Authority, to the effect that:
(i) the representations and warranties of the Authority
contained herein are true and correct in all material respects on and as of
the date of the Closing as if made on the date of the Closing; and
(ii) no event affecting the Authority has occurred since the
date of the Official Statements which has not been disclosed therein or in
any supplement or amendment thereto which event should be disclosed
in the Official Statements in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(8) Trustee's Certificate. A Certificate, dated the date of Closing, to
the effect that:
(i) the Trustee is a national, banking association duly
organized and validly existing under the laws of the United States of
America;
(ii) the Trustee has full power, authority and legal right to
comply with the terms of the Indentures and to perform its obligations
stated therein; and
(iii) the Indentures have been duly authorized, executed and
delivered by the Trustee and (assuming due authorization, execution and
delivery by the other parties thereto) constitutes a legal, valid and binding
obligations of the Trustee in accordance with their respective terms,
except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable
principles relating to or limiting creditors' rights generally.
(9) Disclosure Counsel Opinion. An opinion of Jones Hall, A
Professional Law Corporation, as disclosure counsel, addressed to the Authority
and the Underwriter stating that, without passing upon or assuming any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Official Statements and making no representation that they have
independently verified the accuracy, completeness or fairness of any such
statements, based upon the information made available to them in the course of
their participation in the preparation of the Official Statements, nothing has come
to such counsel's attention which would lead them to believe that the Official
Statements, including the cover page and all appendices thereto (but excluding
therefrom financial statements and statistical data, and information regarding The
Depository Trust Company and its book entry system, as to which no opinion
need be expressed) contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;
-13-
(10) Legal Documents. Executed copies of the Authority Legal
Documents and the Agency Legal Documents.
(11) Rating Letter. Letters from Standard & Poor's Ratings Services
("S&P") to the effect that the Bonds have been assigned a rating of
which rating shall be in effect as of the Closing Date;
(12) Fiscal Consultant Certificate. An executed certificate of the Fiscal
Consultant in the form attached hereto as Exhibit C.
(13) Financial Advisor Certificate. A certificate of Public Financial
Management, as Financial Advisor, dated the Closing Date and addressed to the
Agency and the Underwriter, to the effect that while the Financial Advisor has not
independently verified or undertaken an independent investigation of the
information in the Preliminary Official Statements and the Official Statements,
based on its participation in the preparation and review of the Preliminary Official
Statements and Official Statements, no information has come to its attention
which would lead it to believe that the information contained in the Preliminary
Official Statements and Official Statements is as of the date of delivery of the
Bonds, not true or correct in all material respects, or that the Preliminary Official
Statements and the Official Statements contains any untrue statement of a
material fact or omits to state a material fact where necessary to make a
statement not misleading in light of the circumstances under which it was made.
(14) Additional Documents. Such additional certificates, instruments
and other documents as Bond Counsel, the Agency or the Underwriter may
reasonably deem necessary.
All the opinions, letters, certificates, instruments and other documents mentioned above
or elsewhere in this Purchase Contract shall be deemed to be in compliance with the provisions
hereof if, but only if, they are in form and substance satisfactory to the Underwriter.
If.the Agency, the Authority or the Trustee shall be unable to satisfy the conditions to the
obligations of the Underwriter to purchase, to accept delivery of and to pay for the Bonds
contained in this Purchase Contract, or if the obligations of the Underwriter to purchase, to
accept delivery of and to pay for the Bonds shall be terminated for any reason permitted by this
Purchase Contract, this Purchase Contract shall terminate and neither the Underwriter nor the
Authority shall be under any further obligation hereunder.
8. Termination. The Underwriter shall have the right to terminate its obligations
under this Purchase Contract to purchase, to accept delivery of and to pay for the Bonds by
notifying the Authority of their election to do so if, after the execution hereof and prior to the
Closing: (i) the marketability of the Bonds or the market prices thereof, in the opinion of the
Underwriter, have been materially affected by an amendment to the Constitution of the United
States or by any legislation in or by the Congress of the United States or by the State of
California, or the recommendation to Congress or endorsement for passage (by press release,
other form of notice or otherwise) of legislation by the President of the United States, the
Treasury Department of the United States, the Internal Revenue Service or the Chairman or
ranking minority member of the Committee on Finance of the United States Senate or the
Committee on Ways and Means of the United States House of Representatives, or the proposal
for consideration of legislation by either such Committee or by any member thereof, or the
-14-
presentment of legislation for consideration as an option by either such Committee, by the staff
of either such Committee, or by the staff of the Joint Committee on Taxation of the Congress of
the United States, or the favorable reporting for passage of legislation to either House of the
Congress of the United States by a Committee of such House to which such legislation has
been referred for consideration, or any decision of any federal or applicable state court or any
ruling or regulation (final, temporary or proposed) or Official Statements on behalf of the United
States Treasury Department, the Internal Revenue Service or other federal authority or State of
California authority affecting the federal or State tax status of the Agency or the Authority, its
property or income, or the interest on its bonds or its notes (including the Bonds); (ii) the United
States has become engaged in hostilities (or an escalation of hostilities) which event has
materially affected the marketability of the Bonds or the market prices thereof; (iii) there shall
have occurred the declaration of a general banking moratorium by any authority of the United
States or the States of New York or California; (iv) there shall be in force a general suspension
of trading on the New York Stock Exchange; (v) an order, decree or injunction of any court of
competent jurisdiction, or order, ruling, regulation or Official Statements by the Securities and
Exchange Commission, or any other governmental agency having jurisdiction of the subject
matter, issued or made to the effect that the issuance, offering or sale of obligations of the
general character of the Bonds, or the execution, offering or sale of the Bonds, including any or
all underlying obligations, as contemplated hereby or by the Official Statements, is or would be
in violation of the federal securities laws as amended and then in effect; (vi) the withdrawal or
downgrading of any rating of the Bonds or other obligations of the Agency by a national rating
agency; (vii) the commencement of any action, suit, investigation or proceeding which, in the
judgment of the Underwriter, materially adversely affects the market price of the Bonds; or (viii)
any event occurring, or information becoming known which, in the reasonable judgment of the
Underwriter, makes untrue in any material respect any statement or information contained in the
Official Statements, or has the effect that the Official Statements contains any untrue statement
of material fact or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.
9. Expenses. (a) The Underwriter shall be under no obligation to pay, and the
Authority (or the Agency on behalf of the Authority) shall pay, any expenses incident to the
performance of the Authority's obligations hereunder including, but not limited to: (i) the cost of
preparation, printing and distribution of the Indentures and word processing, reproduction,
printing and distribution costs relating to the Preliminary Official Statements, the Official
Statements and any supplements or amendments thereto; (ii) the cost of preparation of the
Bonds; (iii) the fees and disbursements of Bond Counsel and the fees and expenses of counsel
to the Authority, the Agency and the City; (iv) the fees and disbursements of the Fiscal
Consultant and any other experts, consultants or advisors retained by the Authority, the Agency
or the City; (v) the fees of the rating agencies; (vi) and any out-of-pocket disbursements of the
Authority, the Agency and of the Underwriter incurred in connection with the public offering and
distribution of the Bonds, including any advertising expenses and expenses (included in the
expense component of the spread) incurred on behalf of the Authority's or the Agency's
employees which are incidental to implementing this Purchase Contract including, but not
limited to, meals, transportation, lodging and entertainment of those employees.
(b) The Underwriter shall pay: (i) the cost of preparation and printing of this
Purchase Contract; (ii) fees, if any, payable to the California Debt and Investment Advisory
Commission in connection with the issuance of the Bonds; (iii) the fees of Underwriter's Counsel
and (iv) all other expenses incurred by the Underwriter in connection with the public offering of
the Bonds.
-15-
10. Notices. Any notice or other communication to be given to the Authority under
this Purchase Contract may be given by delivering the same in writing at the Authority's address
set forth above, to the Agency under this Purchase Contract may be given by delivering the
same in writing to the same address Attention: Executive Director, and to the Underwriter under
this Purchase Contract may be given by delivering the same in writing to
11. Parties in Interest. This Purchase Contract is made solely for the benefit of the
Authority, the Agency and the Underwriter and no other person shall acquire or have any right
hereunder or by virtue hereof. All of the representations, warranties and agreements of the
Agency and the Authority contained in this Purchase Contract shall remain operative and in full
force and effect, regardless of: (i) any investigations made by or on behalf of the Underwriter;
(ii) delivery of and payment for the Bonds pursuant to this Purchase Contract; and (iii) any
termination of this Purchase Contract.
12. Effectiveness and Counterpart Signatures. This Purchase Contract shall become
effective upon the execution of the acceptance by an authorized officer of the Authority and
approval by an authorized officer of the Agency and shall be valid and enforceable at the time of
such acceptance and approval. This Purchase Contract may be executed by the parties hereto
by facsimile transmission and in separate counterparts, each of which when so executed and
delivered (including delivery by facsimile transmission) shall be an original, but all such
counterparts shall together constitute but one and the same instrument.
13. Headings. The headings of the sections of this Purchase Contract are inserted
for convenience only and shall not be deemed to be a part hereof.
-16-
14. Governing Law. This Purchase Contract shall be construed in accordance with
the laws of the State of California.
15. Severability. In case any one or more of the provisions contained herein shall for
any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision hereof.
Very truly yours,
PIPER JAFFRAY & CO., as Underwriter
By:
Authorized Officer
Accepted:
REDEVELOPMENT AGENCY OF THE
CITY OF UKIAH
By:
Executive Director
By:
Secretary
f AUTHORITY]
By:
Executive Director
By:
Secretary
-17-
EXHIBIT A
MATURITY SCHEDULE
2011 TAX-EXEMPT BONDS
Maturity
Date
(December 1)
Principal Interest
Amount Rate
Yield
Price
TAXABLE HOUSING BONDS
Maturity
Date
(December 1)
Principal Interest
Amount Rate
Yield
Price
A-1
EXHIBIT B
REDEVELOPMENT AGENCY OF THE CITY OF UKIAH
2011 Tax Allocation Bonds
(Ukiah Redevelopment Project)
RULE 15c2-12 CERTIFICATE
The undersigned hereby certifies and represents to (the "Underwriter")
that he is a duly appointed and acting officer of the Redevelopment Agency of the City of Ukiah
(the "Agency"), and as such is to execute and deliver this Certificate and further hereby certify
and reconfirm on behalf of the Agency to the Underwriter as follows:
(1) This Certificate is delivered to enable the Underwriter to comply with
Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange Act
of 1934 (the "Rule") in connection with the offering and sale of the above-referenced
bonds (the "Bonds").
(2) In connection with the offering and sale of the Bonds, there has been
prepared two Preliminary Official Statements, dated , 2011, setting
forth information concerning the Bonds and the Agency, as issuer of the Bonds (the
"Preliminary Official Statements").
(3) As used herein, "Permitted Omissions" shall mean the offering price(s),
interest rate(s), selling compensation, aggregate principal amount, principal amount per
maturity, delivery dates, ratings and other terms of the Bonds depending on such
matters and the identity of the underwriter(s), all with respect to the Bonds.
(4) The Preliminary Official Statements are, except for the Permitted
Omissions, deemed final within the meaning of the Rule and has been, and the
information therein is accurate and complete in all material respects except for the
Permitted Omissions.
(5) If, at any time prior to the execution of the final contract of purchase, any
event occurs as a result of which the Preliminary Official Statements might include an
untrue statement of a material fact or omit to state any material fact necessary to make
the statements therein, in light of the circumstances under which they were made, not
misleading, the Agency shall promptly notify the Underwriter thereof.
IN WITNESS WHEREOF, we have hereunto set our hands as of , 2011.
REDEVELOPMENT AGENCY OF THE
CITY OF UKIAH
By
Authorized Officer
B-1
EXHIBIT C
REDEVELOPMENT AGENCY OF THE CITY OF UKIAH
2011 Tax Allocation Bonds
(Ukiah Redevelopment Project)
CERTIFICATE OF FISCAL CONSULTANT
The undersigned hereby states and certifies:
(i) that the undersigned is the duly appointed, qualified and acting
representative of Seifel Consulting, Inc., San Francisco, California, the fiscal consultant
(the "Fiscal Consultant") to the Redevelopment Agency of the City of Ukiah (the
"Agency") in connection with the issuance by the Agency of the above-referenced bonds
(the "Bonds"), and as such, is familiar with the facts herein certified and is authorized
and qualified to certify the same on behalf of the Fiscal Consultant; and
(ii) that nothing has come to the attention of the Fiscal Consultant since the
date of the Fiscal Consultant's Report set forth as Appendix A to the Official Statements
relating to the Bonds (the "Report") which would cause the Fiscal Consultant to believe
that the Report was materially incorrect in any respect; and
(iii) that the Report sets forth the best estimates of the Fiscal Consultant with
respect to the projections contained therein; and
(iv) the statements contained in the Official Statements insofar as such
statements purport to summarize the Report, are true and correct in all material
respects, and did not and do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(v) the Fiscal Consultant hereby consents to the reproduction of the Report
as Appendix A to the Official Statements
Dated: .2011
SEIFEL CONSULTING, INC., as Fiscal
Consultant
By:
Its:
C-1