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HomeMy WebLinkAbout24 - Sale of Bonds for Assessment District 103CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No. 24 September 8, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director (949) 644 -3123 or DDanner(o-newportbeachca.gov Dan Matusiewicz, Finance Officer (949) 644 -3126 or DanM(a)newportbeachca.gov SUBJECT: Sale of Bonds for Assessment District 103 ISSUE: Should the City Council adopt a resolution reducing assessments to reflect the deletion of capitalized interest and finalize the amount of the unpaid assessments for Assessment District 103 and authorize a second resolution to authorize the attached documents necessary to sell bonds for the remaining unpaid assessments related to Assessment District 103? RECOMMENDATION: 1) Adopt a change proceedings resolution: a) Reducing the assessment to reflect the deletion of capitalized interest; and b) Determining remaining unpaid assessments. 2) Adopt the bond issuance resolution: a) Authorizing the sale of 1915 Act Assessment bonds not to exceed $3,429,200 for Assessment District 103; b) Authorizing the execution and delivery of an Indenture in substantially the form presented; c) Approving the form of a Preliminary Official Statement and authorizing the execution and delivery of a final Official Statement; d) Authorizing the execution and delivery of a Disclosure Dissemination Agent Agreement in substantially the form presented; e) Authorizing the execution and delivery of a Bond Purchase Contract in substantially the form presented; and f) Authorizing Staff to take the necessary steps to provide for the sale and issuance of the bonds. Sale of Bonds for Assessment District 103 September 8, 2009 Page 2 DISCUSSION: Background The purpose of Assessment District 103 is to finance the removal and undergrounding of overhead utilities (electricity, telephone and cable TV) in the area generally bounded by G Street, E. Balboa Boulevard, Channel Road and Ocean Boulevard. As is the case with other similar Assessment Districts within the City, residents petition the City to assist with the formation, design, construction and financing of the improvement project. Residents were able to certify sufficient resident interest in the project and City Council authorized the City to advance the funds necessary to perform the necessary design and engineering work in order to determine the estimated cost and feasibility of the project. City Council accepted the Preliminary Engineer's Report and adopted a Resolution of Intent in order to form the. assessment district on June 9, 2009. A public hearing date of July 28, 2009 was set and residents were notified of the public hearing on June 12, 2009 to provide the minimum 45 -day notice. A public information meeting was held on June 30, 2009 where residents were able to ask questions of staff, utility company representatives, the assessment engineer and bond counsel. On July 28, 2009 public testimony was heard during the public hearing and property owners cast their ballots, 53% in favor of proceeding with the improvement project. In deference to the property owner vote, City Council adopted Resolution No. 2009 -56 approving the Final Engineer's Report, levying assessments and authorizing the project to proceed. The total amount of assessments levied on parcels within Assessment District 103 recorded in the official records of the Orange County Recorder on July 30, 2009, totaled $6,220,752. Authorize Resolution to Reduce Assessments Removal of Capitalized Interest: Staff recommends that Council order, by resolution, a reduction of assessments levied on July 30, 2009 by $357,693 representing 5.75% of capitalized interest that will not be necessary since the City, collaborating with the County, will be able to place the unpaid assessments on the 2009 -10 tax roll on September 9, 2009 (substantially past the County's normal levy placement deadline). The levy addition will provide the funds necessary to pay all debt service on the bonds of the assessment district coming due on March 2 and September 2, 2010. With the removal of the capitalized interest, the revised amount of assessments total $5,863,059. Sale of Bonds for Assessment District 103 September 8, 2009 Page 3 Determine Paid Assessments: On July 29, 2009 a thirty-day cash collection period was opened to afford property owners the opportunity to self - finance any portion or all of their assessment at a 13% discount since certain prepaid financing costs could otherwise be avoided if bond financing was not required as follows: Bond Reserve 6.00% Capitalized Interest 5.75% Underwriter's Discount 1.25% Total 13.00% When the Cash Collection period closed on Monday, August 31, 2009, cash payments totaling $2,246,718 were received, representing 42% of the discounted value of the assessments. The sum of the cash payments, together with the assumed financing cost previously included in the total assessment, $187,094, result in a further reduction of assessments totaling $2,433,812. Authorize Resolution to Sell Bonds for Remaining Unpaid Assessments After the expiration of the cash collection period on August 31, 2009, staff has certified to City Council that the remaining unpaid assessments total $3,429,247. Under the provision of the Improvement Bond Act of 1915, the City is empowered to provide for the issuance, sale and delivery of limited obligation improvement bonds in the principal amount equal to the amount of the unpaid assessments of $3,429,200 (rounded to the nearest $100). In order to finance the unpaid assessments, staff recommends that Council adopt a resolution: a) Authorizing the sale of 1915 Act Assessment bonds not to exceed $3,429,200 for Assessment District 103 to complete the funding of the undergrounding project, to fund a reserve fund and to pay incidental costs of the Assessment District proceedings and the costs of issuance for the bonds; and b) Authorizing the execution and delivery of an Indenture in substantially the form presented which sets forth the terms and provisions of which the Bonds are to be issued and administered; and c) Approving the form of a Preliminary Official Statement and authorizing the execution and delivery of a final Official Statement describing the Bonds, the Assessment District, the undergrounding project and related matters; and Sale of Bonds for Assessment District 103 September 8, 2009 Page 4 d) Authorizing the execution and delivery of a Disclosure Dissemination Agent Agreement in substantially the form presented for the purpose of making undertakings to provide certain annual financial information and notice of certain prescribed events, if deemed material, as required for compliance with Rule 15c2 -12 of the United States Securities and Exchange Commission; and e) Authorizing the execution and delivery of a Bond Purchase Contract in substantially the form presented under the terms of which, among other things, the City agrees to sell and the bonds and the underwriter agrees to purchase the Bonds; and f) Authorizing staff to take the necessary steps to provide for the sale and issuance of the bonds. Selection of Underwriter, Manner of Sale, Rating & Financing Schedule Requests for proposals were sent out to three qualified underwriters. Proposals were reviewed in consultation with our financial advisors, Fieldman Rolapp and Associates. Southwest Securities was selected based on their knowledge and experience with land secured financing, past performances in delivering good pricing in similar deals and the lowest quoted underwriter's discount (approximately 89 basis points). Due to the credit quality of this assessment district and the Newport Beach name, there is a good chance that the district can achieve an "A" Rating from Standard & Poor's. If so, Southwest Securities believes this rating may reduce the interest cost by 25 basis points which will achieve a net present value savings to the property owners approaching $47,500. For this reason, the City may pursue a rating on behalf of the district but if for any reason an "A" rating cannot be achieved, the bonds will be sold as an unrated issue. Although the underwriter's fee has been determined, the pricing of the bonds will ultimately determine the true interest cost to the property owner. The bonds will be priced and negotiated just prior to the bond sale, again with the assistance of our financial advisors. The City has the final say whether or not the bonds can or will be sold on pricing day. The Preliminary Official Statement will be electronically distributed shortly after a rating is determined in approximately 10 days and bonds will be priced, sold and closed by mid October. Sale of Bonds for Assessment District 103 September 8, 2009 Page 5 Environmental Review: This project qualifies for a Class 2 California Environmental Quality Act (CEQA) exemption under Section 15302, item "d" of the Implementing Guidelines as follows: "Conversion of overhead electric utility distribution system facilities to underground including connection to existing overhead electric utility distribution lines where the surface is restored to the condition existing prior to the undergrounding." Public Notice: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Funding Availability: Funds will be available subject to the sale of bonds for this Assessment District. Alternatives: Revise the attached documents and /or defer the sale of bonds to a future date. Prepared by: an Matusiewicz Finance Officer Submitted by: Gt0 C�- Dennis C. Danner Administrative Services Director Attachments: District 103 Boundary Maps Change Proceeding Resolution to Reduce Assessments Resolution Authorizing Sale of Bonds and related documents Bond Indenture Preliminary Official Statement Cover Letter Preliminary Official Statement Bond Purchase Contract z m =�F g uo f ~ � �� XEWVUMT � q G z *k+ 4 v District 103 BALBOA BLVD FAST �e� A9 g RESOLUTION NO. 2009- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ORDERING CHANGE OF PROCEEDINGS TO REDUCE ASSESSMENTS TO REFLECT DELETION OF CAPITALIZED INTEREST FROM ESTIMATED COSTS AND DETERMINING REMAINING UNPAID ASSESSMENTS FOR ASSESSMENT DISTRICT NO. 103 (G STREET /EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) The City Council of the City of Newport Beach determines, orders and resolves as follows: SECTION 1. RECITALS. a. By proceedings duly had and taken, this City Council (this "Council ") of the City of Newport Beach (the "City ") has provided for (a) the formation of its Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District"), under and pursuant to the provisions of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code) (the "1913 Act "), and (b) the issuance of limited obligation improvement bonds (the "Bonds ") under and pursuant to the provisions of the Improvement Bond Act of 1915 (Division 10 of said Streets and Highways Code; hereafter the "1915 Act "). b. On July 28, 2009, this Council adopted its resolution approving the Final Engineer's Report, dated July 28, 2009, as identified in said resolution (the "Final Engineer's Report"), among other things approving and ordering implementation of the undergrounding of the existing overhead utility facilities (the " Undergrounding Project ") located within the public rights -of -way and easements and within or adjacent to the Assessment District, and levying the assessments on the parcels determined to be specially benefited by the Undergrounding Project, in the amounts set forth in the Final Engineer's Report. C. Thereafter, on July 30, 2009, the Notice of Assessment and the assessment diagram for the Assessment District were recorded in the official records of the Orange County Recorder, and the individual assessments thereby became a lien upon the respective individual parcels upon which they had been levied. d. On July 31, 2009, a notice of assessment was mailed to the owner or owners of each parcel assessed, advising that all or any portion of each such assessment could be paid in cash, without interest and at a discount of thirteen percent (13 %) (representing avoided financing costs respecting bond discount, capitalized interest and bond reserve fund), with a deadline of August 31, 2009, for receipt of such cash payments at the office of the Finance Officer of the City (the "Finance Officer "). e. Based upon the completion of these steps, this Council is advised by the Finance Officer that the City will be able to post an installment on account of unpaid assessments on the 2009 -2010 property tax roll of the County of Orange, providing for payment of the debt service on the Bonds on March 2 and September 2, 2010, thereby making unnecessary the inclusion of capitalized interest in the amount of the assessments. f. This Council is authorized and by this resolution wishes to order a change of proceedings pursuant to Section 10352 of the 1913 Act, without notice to the property owners in the Assessment District or public hearing, to provide for the reduction of assessments to reflect deletion of the allowance for capitalized interest and thereby pass on to the property owners this savings. g. Following the close of the cash payment period on August 31, the Administrative Services Director of the City (the "Director "), in consultation with the Finance Officer, prepared and submitted to the City Clerk of the City (the "City Clerk ") a Certificate Respecting Paid and Unpaid Assessments, a copy of which certificate is attached to this resolution as Exhibit A and by this reference incorporated herein, certifying that the amount of unpaid assessments, as revised to reflect both the deletion of capitalized interest ordered by this resolution and the cash payments received from property owners wishing to prepay their respective assessments, in whole or in part, without interest, is $3,429,247. h. By this resolution, this Council wishes to establish said amount of unpaid assessments, rounded down to the nearest $100, as the principal amount of limited obligation improvement bonds to be authorized and issued in these proceedings upon the security of said unpaid assessments. SECTION 2. RECITALS TRUE AND CORRECT. The foregoing recitals are true and correct, and this Council so finds and determines. SECTION 3. REDUCTION OF UNPAID ASSESSMENTS. Pursuant to the provisions of Section 10352 of the 1913 Act, this Council hereby orders a reduction in the principal amount of each unpaid assessment equal to five and seventy -five one- hundredths percent (5.75 %) to pass on to the property owners the savings achieved by eliminating the need to capitalize interest payable on the Bonds on March 2 and September 2, 2010. Those property owners who prepaid, whether in whole or in part, their assessments during the cash payment period have already received this discount as part of the thirteen percent (13.0 %) discount applied to such cash payments. SECTION 4. DETERMINATION OF AMOUNT OF UNPAID ASSESSMENTS. This Council hereby finds and determines that, as set forth in the attached certificate, and there being no information to the contrary, the amount of assessments remaining unpaid in the Assessment District is the amount set forth in said certificate, namely $3,429,247, and by N separate resolution, this Council will authorize the issuance of the Bonds in said principal amount, rounded down to the nearest $100. SECTION 5. RECORDATION OF ADDENDUM TO NOTICE OF ASSESSMENT. The City Clerk is authorized and directed to cause the preparation and recording of an appropriate addendum to the notice of assessment which was recorded on July 30, 2009, to reflect (a) the discharge of lien respecting those parcels for which the assessment has been fully prepaid and discharged, (b) the reduced amount of the assessment for those parcels for which the assessment has been partially prepaid, and (c) the reduced amount of the remaining unpaid assessments as ordered by this resolution. SECTION 6. TRANSMITTAL TO COUNTY AUDITOR. The Clerk is hereby directed to transmit a certified copy of this resolution to the Orange County Auditor, and the Orange County Auditor is requested to proceed in accordance with Section 8682 of the California Streets and Highways Code in the collection of installments of principal, interest and administrative costs respecting these unpaid assessments on the secured property tax assessment roll of the County of Orange, commencing with the 2009 -2010 tax roll. SECTION 7. EFFECTIVE DATE OF RESOLUTION. This resolution shall take effect immediately upon its adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Newport Beach held on 8a' day of September, 2009, Mayor ATTEST: City Clerk EXHIBIT A CERTIFICATE RE PAID AND UNPAID ASSESSMENTS CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) I HEREBY CERTIFY that the attached list of Paid and Unpaid Assessments correctly reflects the following: (1) The total amount of assessments levied on parcels within Assessment District No. 103 (G StreetlEast Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District") on July 28, 2009, and thereafter recorded in the official records of the Orange County Recorder on July 30, 2009, is $6,220,752. (2) The foregoing total amount of assessments is being reduced, by resolution to be adopted by the City Council on September 8, 2009, prior to consideration of this certificate, by the amount of $357,693, to a revised total amount of assessments of $5,863,059 on account of deletion of the allowance for capitalized interest which has been determined to be not needed in view of the fact that the City will be able to bill installments on account of unpaid assessments on the 2009 -2010 property tax roll to provide funds from which to pay all debt service on the Bonds of the Assessment District coming due on March 2 and September 2, 2010. (3) The total amount of cash payments received by the City from property owners on account of assessments levied in the Assessment District, prior to expiration of the cash payment period on August 31, 2009, as reported to me by the Finance Officer of the City, has resulted in a total reduction in the amount of unpaid assessments of $2,433,812 (when rounded to the nearest dollar). (4) After deducting the amount set forth in paragraph 3 above on account of cash payments received during the cash payment period, the amount of assessments remaining unpaid in the Assessment District is $3,429,247. Executed at Newport Beach, California, on September 1, 2009. Dennis Danner Administrative Services Director City of Newport Beach 1278133.1 Attach — List of Paid and Unpaid Assessments ld City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 1 048 - 201-47 MATHIES, WILLIAM A $22,384.20 2 048- 201-46 BRAWLEY, JOHN B JR $18,219.69 3 048 -201 -41 WALKER, DARLINE R $15,096.32 4 048 - 201-40 BLAHA, JOHN JOSEPH $15,096.32 5 048- 201 -39 DE ROUSSE, GARY EUGENE $15,096.32 6 048 - 201 -38 MC NEISH, STANLEE 8 $15,096.32 7 048- 201 -37 WELBOURN, JOHN RUSSELL $14,575.75 8 048- 201 -52 TOOHEY, THOMAS D $29,151.51 9 048- 201 -34 TOOHEY, THOMAS D $14,575.75 10 048- 201 -33 RODRIGUEZ, EDWARD J & MARTHA A $0.00 11 048- 201 -32 FLOTRON, MARK & KIMBERLEE GENOFILE $14,055.19 12 048 - 201 -31 ROSENBERGER, DAVID W $14,055.19 13 048- 201 -30 CORUM, SUSAN LARKEY $14,055.19 14 048 - 201 -29 GODBER, JAMES R $0.00 15 048 -201-04 DIMICK, BRIAN L $14,05519 16 048 -201 -05 ARMBRUSTER, THOMAS E $0.00 17 048- 201 -26 JAMIDAR, PRIYA & MELISSA S $13,534.62 18 048- 201 -25 MELLEN, LINDA D $13,534.62 19 048- 201 -24 WALKER, ROBERT R $13,534.62 20 048- 201 -23 BLAHA, JOHN JOSEPH $15,616.89 21 048- 201 -22 STAFFORD, RICHARD TIMBERLAKE $17,178.57 22 048 - 201-48 PERRING, JOSEPH L $15,096.32 23 048- 201 -51 EASTERBROOK, FRANK N $0.00 24 048 - 201 -50 OLSON, GEORGE A $0.00 25 048 -201 -02 MC WILLIAMS, JOHN G $0.00 26 048 -201 -03 WOOD, CHARLES W $13,014.07 27 048 -201 -04 PAROTTI, JOSEPH M $13,014.07 28 048- 201 -05 HOLMES, PAUL $13,014.07 29 048 - 201 -06 TOBIN. THOMAS B $0.00 30 048- 201 -07 OSWALD, THOMAS P $13,014.07 31 048 -201 -08 GARRETT, PHILIP L $0.00 32 33 048 - 201 -09 048 - 201 -10 KIRBY, SCOTT M & RHONDA A JABARA, GARY $13,014.07 $13,014.07 34 048- 201 -11 JABARA, GARY $13,014.07 35 048- 201 -12 ASPER, BRUCE E & SANDRA 0 $13,014.07 36 048- 201 -13 COGBILL, BRIAN C $0.00 37 048- 201 -14 KING, ROBERT W $13,014.07 38 048 - 201 -15 TAKEMOTO, ARTHUR M JR $13,014.07 39 048 - 201 -16 FRICKER, MARK A $0.00 40 048- 201 -17 SHEPHERD, STEPHEN R $0.00 41 048 - 201 -18 DAILY, STEVEN R $13,014.07 42 048 - 201 -19 NICHOLSON, GERALD T $0.00 43 048- 201 -20 CASTRONOVA, DANIEL C $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Amount of Asmt. Unpaid No. APN Owner Name Assessment 44 048- 201 -21 ALDER, HORACE B $16,137.44 45 048- 192 -01 OFT, FAMILY CORP THE $24,987.01 46 048 - 192 -02 ANDERSON, WILLIAM E TR & LIVING TRUST $18,219.69 47 048 - 192 -03 MORTENSON, KAY H $37,480.51 48 048 -192 -04 GATES, CHARLES EDWARD TR & FAMILY TR $20,822.50 49 048 -192 -05 ABRAMOWITZ, PHILIP $20,822.50 50 048- 192 -06 FUHRMANN, BRUCE $21,863.63 51 048 - 192 -07 MAYER, EMIL D $0.00 52 048 - 192 -08 MULLIN, MICHAEL $23,425.32 53 048 - 192 -09 COLLINS, JAMES B & LORIE R $52,576.64 54 048 - 191 -19 MATOS, JOANN GAULDEN $5,897.98 55 048 - 191 -02 CUMMINGS, SUZANNE GREGG $14,315.47 56 048 - 191 -03 FOWLER, KRISTEN $15,096.32 57 048 - 191 -04 LEE, ROBERT E $14,055.19 58 048 - 191 -05 SELDERS, JULIE G $14,055.19 59 048 - 191 -06 BALL, CHRISTOPHER $13,534.62 60 048 -191 -07 BARANYAY, MIKEL C $0.00 61 048 -191 -08 AVERY, WILLIAM BRADLEY $13,534.62 62 048 - 191 -09 _ REXMERE LAKE VILLAGE LLC $0.00 63 048 - 191 -10 POELSTRA, GARY $0.00 64 048 - 191 -11 GIESLER, HOWARD $16,658.00 65 930 - 504 -15 NELSON, RICHARD J & SHERYL J $6,849.56 66 930 - 504 -16 STOLZBENBERG, LARRY $0.00 67 930 - 504 -17 LOGAN, DOUGLAS N $8,849.56 68 930 - 504 -18 KASCHMITTER, DANIEL J $8,849.56 69 048- 191 -14 MUTH, JAMES T II $17,178.57 70 048 - 191 -15 LEFFLER, RICHARD ABBOTT $15,616.89 71 048 - 191 -16 GIORDANO, SANDRA L $0.00 72 048 -221 -01 SCALZO, NICHOLAS B $17,699.13 73 048- 221 -02 GOBEL, JANIS $13,534.62 74 048 -221 -03 KRAUS, FAMILY PARTNERSHIP LP $13,534.62 75 _ 76 048- 221 -28 048- 221 -06 _ PAPPAS, PAULETTE ROBERTS, ZOE B $0.00 $0.00 77 048- 221 -29 SCHMIDT, ROBERTA USHER $20,301.95 78 048 - 221 -24 COREY, SHARON 1 $20,301.95 79 048 - 221 -10 MILLER, TERESE A $0.00 80 048 - 221 -11 FREDERICK, JEFFREY D $0.00 81 048- 221 -12 HOGAN, THOMAS $13,534.62 82 048 - 221 -13 GOODING, JOHN P $0.00 83 048 - 221 -14 BAER, S RONALD L $15,616.89 84 048- 221 -34 ARCHIE, DAVID S & ANN K $0.00 85 048- 221 -35 BRIGANDI, CHRIS & CHRISTY $12,493.51 86 048 - 221 -22 BENDEL, SALLY 0 NEILL $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 87 048 - 221 -21 PAULSON, DONALD H $0.00 88 048- 221 -20 PETERSON, ROBERT G & JANET R $0.00 89 048- 221 -19 BURGESS, TIM J $0.00 90 048- 221 -18 STILES, ROBERT A $0.00 91 048- 221 -33 EVANS, ANDREW J II & JANE P $13,014.07 92 048- 221 -32 ESPENSCHIED, MARY FRANCES $0.00 93 94 048- 221 -31 048 - 221 -30 WASLEY, RICHARD JONATHON & WENDY LEE DETLING, LOIS BANTA $13,014.07 $13,014.07 95 048- 221 -26 JAVELERA, MARY ANN LUCILLE $13,014.07 96 048- 221 -27 JAVELERA, MARY ANN LUCILLE $0.00 98 048 -222 -01 JOHNSON, MARGARET R $0.00 99 048 - 222 -02 CAVANEY, BYRON M JR $13,014.07 100 048 -222 -03 MUENCHOW, JEROME C & SARA J $13,014.07 101 048 -222 -04 PUCCIO, KENNETH J $13,014.07 102 048- 222 -05 BOGGESS, WILLIAM W $13,014.07 103 048- 222 -06 WILTCHIK, YVONNE L $13,014.07 104 048- 222 -07 LESSARD, DARRALD G $0.00 105 048- 222 -08 HOMER, MILTON R $13,014.07 106 048- 222 -09 CAMPBELL, GARY A $0.00 107 048 - 222 -10 HARTLESS, FRANK J JR & KATHY A $0.00 108 048- 222 -11 PETTTI, ROBERT E $0.00 109 048- 222 -32 MARR, LOIS M $0.00 110 048- 222 -33 _ WRIGHT, STEWART REX� $0.00 111 048 -222 -34 KEYS, DONALD $0.00 112 048 - 222 -35 CUMMINS, ALAN & BONNIE $14,055.19 113 048- 222 -27 MC GUY. JAMES W $14,575.75 114 048- 222 -26 BROWN. JOHN D $13,534.62 115 048 - 222 -25 BROWN, JOHN & KATHLEEN $14,055.19 116 048- 222 -24 PERLMAN, NEIL $14,575.75 117 048- 222 -23 KRANYAK, BARBARA A & EDWARD $15,096.32 118 048- 222 -22 RHODES, JOHN E & JUDY A $0.00 119 120 048- 222 -21 048 - 222 -20 BRAME, ALICE PARIS GURR, JOHN W $0.00 $16,137.44 121 048- 222 -19 HANAWALT, WARD $0.00 122 048- 222 -31 WARNER, ROBERT E SR $17,178.57 123 048 - 222 -30 DAVIS, DONALD G $17,178.57 124 048 - 222 -28 KIRCHNER, NINA VERMOYNE $0.00 125 048- 222 -29 KUMAR, NIRMAL $17,699.13 126 048 - 222 -16 WAYDELICH, JAMES C $0.00 127 _ 048- 222 -37 BENNETT, JON L JR $16,137.44 128 048 - 222 -36 FRIEDMAN, ARTHUR S $17,178.57 129 048 - 211 -36 CONZONIRE, RONALD H & MARILYN L $0.00 130 048- 211 -35 JOHNS, JEAN C $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 131 048 -211 -34 DIETRICK, WILLIAM R $0.00 132 048- 211 -02 GUTHRIE, JOHN $0.00 133 048 -211 -03 SCHOTZ, ERIC ROBERT $13,014.07 134 048- 211 -37 THOMSEN, GARY CLARKE $0.00 135 048- 211 -38 BECKMAN. MICHAEL & JEAN $0.00 136 048 -211 -05 YEOMANS. JOHN RAY $13,014.07 137 048 -211 -06 CLARK, HOWARD ALAN $0.00 138 048 - 211 -27 MOSS. ROBERT J & SUSAN J $0.00 139 048- 211 -28 MOSES, LINDA L $0.00 140 048 - 211 -08 ROYSE, STEVEN B $0.00 141 048- 211 -09 SCANLON. MARK $0.00 142 048- 211 -10 RICHMAN, STEVEN N $0.00 143 048- 211 -11 ANDERSON, RONALD E $13,014.07 144 048 - 211 -12 LANTING, RONALD J & LORENE C $0.00 145 048- 211 -39 ABEL, JOHN K & DEBORAH K $15,616.89 146 048 - 21140 LORA, MICHAEL R $0.00 147 048 - 211 -23 REILLY, PATRICK C $13,534.62 148 048 - 211 -22 ODELL, ROBERT C $0.00 149 048- 211 -21 SCHNEIDER, MARK E & MARY $13,534.62 150 048- 211 -20 FRANK, BEAZ A $0.00 151 048 - 211 -19 PAYNE, EUGENE L JR $13,534.62 152 048- 211 -18 HAMILTON, MARY R $13,534.62 153 048 - 211 -17 PECK, DONALD W $13,534.62 154 048- 211 -30 CARPENTER, SANDRA & JOHN F $12,462.12 155 048 - 211 -32 _ CLARK, WARREN J $13,534.62 156 048- 211 -31 D'AQUILA, BERNARDINO & LIA $13,534.62 157 048- 211 -25 VAIRO, JOHN R $13,534.62 158 048 - 211 -15 BAKER, BYRON DOUGLAS $13,534.62 159 048- 211 -14 ELLIOTT, STEVEN $0.00 160 048- 211 -13 LINHOFF, RALPH STRATTON $0.00 161 048 - 261 -30 JOHNSON, ERIC P $0.00 162 048- 261 -29 NESLEN- RAMSAY, ELEANOR K $0.00 163 048 - 261 -28 ASSENHEIMER, LEE C $0.00 164_ 048 - 261 -33 SEIDLER, TERRY O MALLEY $0.00 165 048- 261 -34 THOMAS, GLORIA M $0.00 166 048- 261 -31 CAO, HON V _ $0.00 167 048 - 261 -32 MIDDLEBROOKS, CAROLYN J $13,534.62 168 048 - 261 -25 DAHL, BARBARA A $13,534.62 169 048- 261 -24 JOHNSON, MICHAEL A $13,534.62 170 048- 261 -23 MC EWENS, INC _ $0.00 171 048 - 261 -22 CARLTON, JOHN C. $13,534.62 172 048- 261 -21 COGAN, STUARTA $0.00 173 048- 261 -20 MATICH, ROBERT M $0.00 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. No. APN Owner Name Amount of Unpaid Assessment 174 048- 261 -19 ZILL, STANLEY R $13,534.62 175 048 - 261 -18 RHYMER, DONALD E $0.00 176 048- 261 -17 ALLEN, LAWRENCE W $16,658.00 177 048- 261 -01 FIGGE, SCOTT J $15,616.89 178 048- 261 -02 AVER, BONNIE J $0.00 179 048 -261 -03 HOWARD, JOHN E $0.00 180 048 -261 -04 PARGO LLP $10,931.81 181 048- 261 -05 MCEWEN, DAVID R $10,931.81 182 048- 261 -06 BURNISON, GARY D & LESLIE $10,931.81 183 048 -261 -07 FULLER, RICHARD H $10,931.81 184 048 -261 -08 D'ELISCU, JEFFREY B $0.00 185 048 - 261 -09 ERNST, JOHN W $0.00 186 048 - 261 -35 CHAPMAN, ROBERT J $0.00 187 048- 261 -36 KRAMER, EDWARD J $0.00 188 048 -261 -11 CAHILL, PATRICK A $10,931.81 189 048- 261 -12 ANDRUS, TERRY C $0m 190 048 - 261 -13 PIANI, RICHARO D & SHANNA E $10,931.81 191 048. 261 -14 CAHILL, PATRICK A $10,931.81 192 048- 261 -15 SWIFT, TOM & KELLY $10,931.81 193 048 - 261 -16 LAZICKI, WALTER H $0.00 194 048 - 252 -12 SIMS, WAYNE R $31,233.76 195 048- 252 -11 THOMSON, FRANKLIN GREG & JILL RENEE $12,493.51 196 048- 252 -10 BLEDSOE, ALAN A $11,972.94 197 048- 252 -15 SOMERS, LAWRENCE $20,351.88 198 048- 252 -14 GUENTHER, ALAN S & LINDA A $0.00 199 048- 252 -13 MALE, ALFRETTA B $0.00 200 048 - 252 -19 MAAS, RALPH W $0.00 201 048 - 252 -18 KEPHART, LESTER E $0.00 202 048- 252 -05 MC NAMEE, ANN $14,575.75 203 048 - 252 -21 WHITEHEAD, JAMES W $0.00 204 048- 252 -20 FRIEDMAN, JERALD & JUDITH $10,931.81 205 048- 252 -03 DE LAWTER, CHARLES PIERRE $1_6,658.00 206 048- 252 -02 JOHNSON, CATHERINE J $10,931.81 207 048- 252 -17 RIFE, ROBERT S $0.00 208 048- 252 -16 FITZGEORGE, KELLEEN ANN $0.00 209 048 - 251 -21 ST CLAIR, JOAN C $26,028.13 210 048 - 251 -22 LOCKE, ARCHIE Y $0.00 211 048- 251 -23 GERIAK, JAMES WILLIAM $0.00 212 048- 251 -24 MC MAHON, WILLIAM J $20,822.50 213 048- 251 -25 BIBB, JOHN M & KIMBERLY PEASE $20,822.50 214 048- 251 -26 WADSWORTH, JOHN S 111 $20,822.50 215 048- 251 -27 WADSWORTH, JOHN S III $20,822.50 216 048- 251 -28 KUSBY, EDWARD D $20,822.50 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 217 048 - 251 -29 TOLER, NANCY B $20,822.50 218 048 - 251 -30 ERICKSON, RALPH E $20,822.50 219 048- 251 -31 GESSFORD, SUSAN $0.00 220 048 - 251 -32 DEATON, KARRIE L $0.00 221 048 - 251 -33 LEWIS, ALICE N $18.577.93 222 048 - 251 -07 HILKER, MARY LOU $0.00 223 224 048 - 251 -06 048- 251 -37 JOHANSEN, JAMES ROBERT MORABITO, CARL $0.00 $30,192.63 225 048 - 251 -38 O'BECK, RICHARD & PATRICIA $27,069.26 226 048- 251 -34 MARSHALL, JOHN W $26,028.13 227 048 - 251 -35 RAWLINGS, GARY L $26,028.13 228 048 - 251 -14 HOFMANN, LEROY W $0.00 229 048 - 251 -15 BAILEY. ELIZABETH H $0.00 230 048 - 251 -16 DAVIS, MARC P $0.00 231 048 - 251 -17 FOHRMAN, RALEIGH S $20,822.50 232 048 - 251 -18 COLLINS, TIMOTHY C $20,822.50 233 048- 251 -19 BECKER, MARKS $20,822.50 234 048 - 251 -20 SNYDER, DOUGLAS G $20,822.50 235 048 - 251 -02 KINNEY, ROBERT I & CATHERINE S $0.00 236 048 - 251 -03 POWERS, ALICE M $0.00 237 048 - 251 -04 JALET, JAMES G III & LU ANN M $20,822.50 238 048- 251 -05 LAMBIE, JOAN B $0.00 239 048- 272 -28 MAZZARELLI, JOSE D $16,658.00 240 048- 272 -29 BRIGHTON, CARLETON C $0.00 241 048- 272 -20 SHIVELY, ROBERT N JR & CHRISTINE $14,575.75 242 048 - 272 -19 GATES, CHARLES EDWARD $14,575.75 243 048- 272 -31 BENNETT. BRUCE W JR $0.00 244 048- 272 -30 HANSEN, NEIL CALVIN JR $0.00 245 048- 272 -04 ROGERS, ROBERT E $0.00 246 048 - 272 -05 DORAN, THOMAS FREDERICK $14,575.75 247 048- 272 -24 STORCH, JOHN C $0.00 248 249 048- 272 -32 048- 272 -33 HALL, FRANK HERBERT HOLDER, THOMAS W $14,575.75 $14,575.75 250_ 048 - 272 -22 HARRIET J $14,575.75 251 048 - 272 -26 _LEPPEK, DAVIS, GEOFFREY O $14,575.75 252 048 - 272 -27 MATCHA, MORRIE $14,575.75 253 048 - 272 -21 ANDERSSON, NILS & NANCY $48,932.89 254 048 - 272 -09 THOMAS, LEONARD D & JEANNETTE L $13,014.07 255 048- 272 -10 BOROWSKY, DENNIS M $13,014.07 256 048 - 272 -11 SCAPPLE, JOHN M $13,014.07 257 048 - 272 -12 ROGERS, JOHN B $0.00 258 048 - 272 -18 QUEEN, STEPHEN $15,096.32 259 048- 272 -17 GORDON, DEBRA LYNN $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 260 048- 272 -16 NESS, MIKE & CHRISTINE $13,014.07 261 048 - 272 -15 SALCITO, DANIEL R WOO 262 048 - 272 -14 JOCHIM, RANDAL J $13,014.07 263 048 - 272 -13 SHELDON, SUSAN $0.00 264 048 - 271 -30 CUMMING, NANCY J $0.00 265 048 - 271 -29 ACKERMAN, ROBERT A $14,575.75 266 048- 271 -17 JACOBS, MICHAEL K & PAMELA D $0.00 267 048 - 271 -28 WHITE, JAMES DON $16,137.44 268 048- 271 -26 COOK, HERBERT 0 $16,137.44 269 048 - 271 -25 CORBO, LOUIS C $16,137.44 270 048- 271 -27 DERRICK, FOLK BARBARA $0.00 271 048 - 271 -14 AIELLO, SAM N & NANCY ANN $13,014.07 272 048- 271 -13 LOVELL, ROBERT E $13,014.07 273 048- 271 -21 BAKER, ASHLEY TR v $0.00 274 048 - 271 -23 FISHER, GEORGE H $0.00 275 048- 271 -31 DUNN, LAURA $13,883.40 276 048 - 271 -19 LAINER, MARK $14,575.75 277 048- 271 -01 GAUT, BARTON C $0.00 278 048- 271 -02 JONES, GRAHAM M $25,507.57 279 048 - 271 -03 JONES, GRAHAM M $13,014.07 280 048- 271 -32 DE CUBELLIS, ARTHUR $0.00 281 048- 271 -33 STONEHOUSE, RICHARD EARL $0.00 282 048 - 271 -05 MACKENZIE, JAMES M & PATRICIA A $13,014.07 283 048 - 271 -06 BIBB, JOHN M _ $25,507.57 284 048- 271 -07 SYNERGY GROUP FUND V LLC $24,466.44 285 048 -271 -08 FISHER, GEORGE H $0.00 286 048 - 271 -09 TAYLOR, SUSAN J $0.00 287 048 - 302 -01 BOYD, JEAN M $17,178.57 268 048 -302 -02 KING, JOSEPHINE D $15,616.89 289 048 - 302 -03 JACOBSON, DONALD A $0.00 290 048- 302-04 CAMPBELL -VOIT, MARY LAVONNE $15,616.89 291 292 048 -302 -05 048 - 302 -06 THOMPSON, CHARLES M THOMPSON, CHARLES M $0.00 $0.00 293 048 -302 -07 MEERMANS, GARY J $0.00 294 048- 302 -08 LEACH, WILLIS ROY $0.00 295 048- 302 -09 MARSHALL, ROBERT B Y $15,616.89 296 048 - 302 -10 COGAN, STUART A $0.00 297 048- 302 -11 L PIERRETTE BAKER M $17,178.57 298 048 - 302 -17 _ MEANS, EDWARD GLEN III $0.00 299 048- 302 -16 CLARK, HOWARD MARSTON $17,178.57 300 048- 302 -15 BEIDLE, LEONARD A JR $0.00 301 048 - 302 -14 OWEN, SCOTT CHRISTIAN $17,178.57 302 048- 302 -13 VAN WAGENEN, RICHARD A _Y $0.00 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Amount of Asmt. Unpaid No. APN Owner Name Assessment 303 048- 302 -12 FLOWERS, JACK S $0.00 305 048 -291 -01 KIM, MICHAEL J $0.00 306 048 -291 -02 VOIT, WILLARD S $0.00 307 048 -291 -22 CLEMENTS, CRAIG A $12,493.51 308 048 - 291 -23 SCHNIPPEL, MARK A $13,014.07 309 048 - 291 -20 CUNNISON, STEPHEN D $0.00 310 311 048 - 291 -26 048- 291 -19 COTTON, JOHN PEYTON ALEXANDER, ARCHIBALD B $13,064.91 $12,493.51 312 048 - 291 -18 MATHISEN, JUDITH T $0.00 313 048- 291 -17 LEACH, WILLIS R & LINDA A $0.00 314 048- 291 -24 ARMSTRONG, BILLIE JOE & ADRIENNE $0.00 315 048 - 291 -25 MC LAIN, MILLARD H $0.00 316 048 - 291 -15 HAWKES, JULIE E $13,014.07 317 048 - 291 -14 TRI PACIFIC LTD LIABILITY CO $0.00 318 048 - 291 -13 THOMSON, KIRK ALAN $0.00 319 048 - 291 -12 THOMPSON, RICHARD L $0.00 320 048 - 291 -06 GONZALES, MARIO J $15,616.89 321 048 - 291 -07 BOURKE, EDMOND F $0.00 322 048 -291 -08 OAKES, STUART B & GLORIA ANN_ $0.00 323 048 - 291 -09 TOMASECK, JANET S $14,575.75 324 048 - 291 -10 ANDERSON, CRAIG S & SUSAN L $14,575.75 325 048 -291 -11 SPRAGUE, CHARLES T & PATRICIA E $0.00 326 048 - 292 -28 TOLAN, JOHANNA $15,096.32 327 048 - 292 -29 KLEIN, JEFFREY ALAN $0.00 328 048 - 292 -02 CRAIG, ALLEN BRUCE $0.00 329 048 - 292 -03 KENOWSKY, ANN ELIZABETH $13,014.07 330 048 - 292 -04 BETZLER, ERIC S & CYNTHIA JOAN $13,014.07 331 048 - 292 -05 GASKILL, JOHN R $13,014.07 332 048 - 292 -06 BOPPELL, KARLYN L & CHARLES LE RO $13,014.07 333 048- 292 -07 COSTA, LISA MARIE $13,014.07 334 048 - 292 -27 MACK, RUTH L $14,055.19 335 336 048- 292 -26 048 - 292 -32 REID, FRANCES M MORSE, BURTON W $14,055.19 $14,055.19 337 048- 292 -33 E G UTAH LLC $14,055.19 338 048 - 292 -10 SEYMOUR, BEEK H $15,616.89 339 048 - 292 -25 BALLARD, JEFFREY PAUL $13,534.62 340 048- 292 -24 MACIAS, FREDRICK & DENISE B $13,014.07 341 048- 292 -23 GRUBER, GEOFFREY L $13,014.07 342 048 - 292 -22 MILLER, MARY E $0.00 343 048 - 292 -21 FORTANASCE, ARLENE M $0.00 344 048- 292 -20 JOHNSON, GLORIA $0.00 345 048- 292 -19 SUSAN, DOLE F $0.00 346 048 - 292 -18 LANDON, GEOFFREY EDWARD $10,931.81 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. Amount of Unpaid No. APN Owner Name Assessment 347 048 - 292 -17 GIBBS, LUVERNE D $10,931.81 348 048- 292 -35 GABRIEL, PHYLLIS $10,931.81 349 048 - 292 -34 ALLARD, RANDALL STEVENS & LEE K $13,014.07 350 048- 292 -15 MALCOMB, WILLIAM EARL $0.00 351 048- 292 -14 MCKELVEY, PAUL "RES $11,972.94 352 048- 292 -13 PISTOLE, JAMES A $0.00 353 354 048- 292 -12 048- 292 -11 BAUMAN, CHARLES M SATTLER, ROBERT L $11,972.94 $om 355 048 -281 -01 SCHNIEDERS, JOHN A JR $15,616.89 356 048 - 281 -02 ENRIQUEZ, LOUIS ANTHONY $0.00 357 048 - 281 -03 MELMET, STEVEN J $0.00 358 048 - 281 -04 CONNELLA, RICHARD D $0.00 359 048 -281-05 SCHARING, WILLIAM S $13,014.07 360 048- 281 -06 BANNIGAN, HARRY F $13,014.07 361 048- 281 -31 POMO, VIBIANA C $0.00 362 048- 281 -36 COBB, N F $0.00 363 048- 281 -35 MENZIES, DALE $13,534.62 364 048 - 281 -09 RICHARDS, BETTY E $0.00 365 048 - 281 -10 CHRISTENSEN, LELAND D $0.00 366 048 - 281 -11 MARK, PHILIP A $0.00 367 048- 281 -12 BRIDGES, TERRY $0.00 368 048- 281 -13 TODD, JOHN W $0.00 369 048 - 281 -37 MOYER, NORMAN EDWARD $0.00 370 048- 281 -38 MEXIA, MARIO A $0.00 371 048 - 281 -30 PEREZ, RAMONA GODOY TRUST $16,658.00 372 048 - 281 -29 DUDLEY. MARIE AILEEN $13.148.16 373 048 - 281 -28 JONES. KIMBERLY MOFFATT $13,534.62 374 048 - 281 -27 POWERS, PATRICK M $0.00 375 048 - 281 -26 NETHERCUTT, MARY ANN $13,534.62 376 048 - 281 -25 PECK, CURT A $13,534.62 377 048 - 281 -24 WALTERS & PONDER LLC $0.00 378 048- 281 -39 BREECH, WILLIAM E $0.00 379 048- 281 -21 _ BODINUS, ALICE M $17,178.57 380 048- 281 -20 EDSON, RICHARD J & CATHERINE C $0.00 381 048- 281 -19 Lt, MANDY $24,466.44 382 048- 281 -18 MOLLOY, JAMES R $0 -00 383 048 - 281 -33 COVENANT GROUP 2 LLC $15,616.89 384 048- 281 -34 CLARKE, THEODORE F $0.00 385 048 - 281 -16 ROBINS, THEODORE JR $0.00 386 048 - 281 -15 INTEGRITAS DESIGN AND DEVELOPMENT LLC $23,425.32 $3,429,247.26 RESOLUTION NO. 2009- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING THE ISSUANCE AND SALE OF LIMITED OBLIGATION IMPROVEMENT BONDS OF THE CITY WITH RESPECT TO ASSESSMENT DISTRICT NO. 103 (G STREETIEAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD); APPROVING THE FORM OF THE BOND INDENTURE PROVIDING FOR THE FORM, EXECUTION AND ISSUANCE OF SAID BONDS; APPROVING THE FORM OF THE BOND PURCHASE CONTRACT, THE PRELIMINARY OFFICIAL STATEMENT, AND THE DISCLOSURE DISSEMINATION AGENT AGREEMENT, ALL PERTAINING TO SAID BONDS; AND AUTHORIZING RELATED ACTIONS AND EXECUTION OF RELATED DOCUMENTS IN RESPECT OF THE ISSUANCE, SALE AND DELIVERY OF SAID BONDS The City Council of the City of Newport Beach determines, orders and resolves as follows: SECTION 1. RECITALS. a. This City Council (this "Council ") of the City of Newport Beach (the "City "), by proceedings duly had and taken, previously provided for the formation of its Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District "), under and pursuant to the provisions of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code), and indicated its intention to provide for the issuance of limited obligation improvement bonds under and pursuant to the provisions of the Improvement Bond Act of 1915 (Division 10 of said Streets and Highways Code; hereafter the "Act ") in a principal amount equal to the unpaid assessments of the Assessment District. b. On July 28, 2009, this Council adopted its resolution approving the Final Engineer's Report, as identified in said resolution (the "Final Engineer's Report"), and among other things approving and ordering implementation of the undergrounding of the existing overhead and ground -level utility facilities (the " Undergrounding Project") within the Assessment District, and levying the assessments on the parcels determined to be specially benefited by the Undergrounding Project, in the amounts set forth in the Final Engineer's Report. C. The assessment diagram and the Notice of Assessment respecting the Assessment District were thereafter recorded in the official records of the County Recorder of the County of Orange, thereby establishing liens upon the respective parcels upon which the individual assessments were levied to secure payment of said assessments as provided by the Act. d. The period of time within which property owners could, if they wished to do so, prepay all or any portion of the assessment levied upon the parcel or parcels owned by such property owners within the Assessment District expired on August 31, 2009, and the Administrative Services Director of the City has executed and submitted to this Council at its September 8 meeting a Certificate Respecting Paid and Unpaid Assessments, certifying to this Council that the amount of unpaid assessments is $3,429,247, and this Council, by separate resolution adopted this same date, has determined on the basis of said Certificate Respecting Paid and Unpaid Assessments, that the amount of unpaid assessments is $3,429,247. C. The City is empowered under the provisions of the Act to provide for the issuance, sale and delivery of limited obligation improvement bonds upon the security of the unpaid assessments and in a principal amount which as nearly as practicable is equal to the amount of the unpaid assessments. f. This Council wishes by this resolution to authorize the issuance of a series of bonds, under and pursuant to the Act, to be designated the "City of Newport Beach Assessment District No. 103 (G St/Bast Balboa Blvd/Channel Rd/Ocean Blvd) Limited Obligation Improvement Bonds (the "Bonds "), in a principal amount equal to the amount of the unpaid assessments, rounded down to the nearest $100, to complete the funding for the Undergrounding, to fund a reserve fund and to pay incidental costs of the Assessment District proceedings and the costs of issuance for the Bonds. g. The City has determined that all things necessary to make the Bonds, when authenticated and issued as provided in that certain Bond Indenture (the "Bond Indenture "), dated as of September 1, 2009, between the City and U.S. Bank National Association, as paying agent (the "Paying Agent "), the valid, binding and legal obligations of the City according to the import thereof and hereof have been done and performed. h. In furtherance of implementing the financing, there have been filed with the City Clerk and presented to this meeting for consideration and approval by this Council the following documents: (1) a Bond Indenture, under the terms and provisions of which the Bonds are to be issued and administered; (2) a Bond Purchase Contract, under the terms of which, among other things, the City agrees to sell and Southwest Securities, Inc. (the "Underwriter ") agrees to purchase the Bonds; (3) a Preliminary Official Statement, describing the Bonds, the Assessment District, the Undergrounding Project and related matters; and (4) a Disclosure Dissemination Agent Agreement for the purpose of making undertakings to provide certain annual financial information and notice of certain prescribed events, if deemed material, as required for compliance with Rule 15c2 -12 of the United States Securities and Exchange Commission. i. Being fully advised in the matter of the financing, this Council wishes to proceed with implementation of said financing. SECTION 2. ISSUANCE OF BONDS AUTHORIZED. Pursuant to the Act, the Bonds shall be issued in the aggregate principal amount equal to the unpaid assessments, rounded down to the nearest $100; provided, however, that (a) the bond discount, consisting of the net amount of Underwriter's discount, less original issue discount, if any, plus original issue premium, if any, shall not exceed the amount set forth in the Final Engineer's Report, as adjusted to reflect the discounted cash payments made on account of assessments during the cash payment period, (b) the maximum net interest rate on any maturity shall not exceed 7.00 %, and (d) the last maturity shall not extend beyond the year 2024. The Bonds may be issued as either (1) traditional tax - exempt Bonds or (2) direct payment Build America Bonds ( "Direct Payment BABs "), to be structured and issued as authorized by and pursuant to the American Reinvestment and Recovery Act of 2009 (the "Recovery Act "), or any combination of the two, as shall be determined by the Finance Director of the City (the "Finance Director ") in consultation with the Underwriter to be in the best interest of the City. As used in the foregoing paragraph, the term "net interest rate" shall mean, with respect to Direct Payment BABs, if issued as authorized by this resolution, the interest rate payable to holders of the Bonds less the rate at which the direct payment to the City, as issuer of the Bonds, is determined. SECTION 3. FORM OF BOND INDENTURE APPROVED. The form and substance of the Bond Indenture is hereby approved. The Administrative Services Director or designee thereof (all references hereafter to the "Administrative Services Director" shall be deemed to include any designee thereof, including but not limited to the Finance Officer of the City) is hereby authorized and directed to execute and deliver the Bond Indenture on behalf of the City in substantially said form, with such changes therein as the Administrative Services Director may require or approve in consultation with Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel to the City for the Assessment District and the Bonds ( "Bond Counsel "), such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. FORM OF BOND PURCHASE CONTRACT APPROVED. The form and substance of the Bond Purchase Contract is hereby approved. The Administrative Services Director is hereby authorized and directed to execute and deliver the Bond Purchase Contract on behalf of the City in substantially said form, with such changes therein as the Administrative Services Director may require or approve in consultation with McFarlin & Anderson LLP, Disclosure Counsel to the City for the Bonds ("Disclosure Counsel'), such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 5. FORM OF PRELIMINARY OFFICIAL STATEMENT APPROVED; OTHER ACTIONS RESPECTING THE PRELIMINARY OFFICIAL STATEMENT AND FINAL OFFICIAL STATEMENT AUTHORIZED. a. The form and substance of the Preliminary Official Statement is hereby approved. The Mayor or designee thereof (all references hereafter to the "Mayor" shall be deemed to include any designee thereof, including but not limited to the Mayor Pro Tem and the Administrative Services Director) is authorized to execute a certificate respecting the finality of the Preliminary Official Statement and to execute the final Official Statement to be derived therefrom. b. The Mayor is authorized to approve corrections and additions to the Preliminary Official Statement by supplement or amendment thereto, by appropriate insertions, or otherwise as appropriate, provided that such corrections or additions shall be regarded by the Mayor in consultation with Disclosure Counsel as necessary to cause the information contained therein to conform to facts material to an informed investment decision respecting the Bonds or to the proceedings of this Council or that such corrections or additions are in form rather than in substance. C. The Underwriter is authorized to distribute said Preliminary Official Statement and the final Official Statement to be derived therefrom in connection with sale and delivery of the Bonds. SECTION 6. FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT APPROVED. The form and substance of the Disclosure Dissemination Agent Agreement is hereby approved. The Administrative Services Director is hereby authorized and directed to execute and deliver the Disclosure Dissemination Agent Agreement on behalf of the City in substantially said form, with such changes as may be approved by the Administrative Services Director in consultation with Disclosure Counsel, such approval to be conclusively evidenced by such execution and delivery. SECTION 7. GENERAL AUTHORIZATION RESPECTING OTHER ACTIONS. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things, to take such actions, and to execute and deliver any and all documents, including but not limited to agreements, certificates and opinions which they may deem necessary or advisable in consultation with Bond Counsel and Disclosure Counsel in order to carry out, give effect to and comply with the terms and intent of this rd resolution in general and the Bond Purchase Contract in particular. Any such actions heretofore taken by such officers are hereby ratified, confirmed and approved. SECTION 8. EFFECTIVE DATE OF RESOLUTION. This resolution shall be effective immediately upon adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Newport Beach held on the 80' day of September, 2009. Mayor ATTEST: City Clerk 1278111.1 BOND INDENTURE by and between City of Newport Beach, California and U.S. Bank National Association, as Paying Agent Dated as of September 1, 2009 City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds TABLE OF CONTENTS Pace SECTION 1. Authorization, Designation and Amount ................................... ..............................1 SECTION 2. Issuance, Unpaid Assessments; No Parity Bonds ....................... ............................... 1 SECTION 3. Alternative Procedure for Advance Payment ............................. ............................... I SECTION 4. Registered Bonds; Denominations and Book -Entry Only ......... ............................... 1 SECTION5. Date of Bonds ................................................................................. ............................... I SECTION6. Maturit y ......................................................................................... ............................... 1 SECTION7. Interest ........................................................................................... ............................... 1 SECTION8. Place of Payment ........................................................................... ............................... 2 SECTION9. Redemption .................................................................................... ............................... 2 SECTION 10. Transfer of Registered Bonds ....................................................... ............................... 4 SECTION 11. Exchange of Bonds ........................................................................ ............................... 4 SECTION 12. Books of Registration .................................................................... ............................... 5 SECTION 13. Execution of Bonds ........................................................................ ............................... 5 SECTION14. Authentication ............................................................................... ............................... 5 SECTION 15. Ownership of Bonds ...................................................................... ............................... 5 SECTION 16. Mutilated, Destroyed, Stolen or Lost Bonds ............................... ............................... 5 SECTION 17. Cancellation of Bonds ................................................................... ............................... 6 SECTION 18. Application of Bond Proceeds ...................................................... ............................... 6 SECTION19. Creation of Funds .......................................................................... ............................... 6 SECTION20. Investments .................................................................................... ............................... 8 SECTION21. No City Liability ............................................................................ ............................... 8 SECTION 22. Covenant for Superior Court Foreclosure .................................. ............................... 8 SECTION 23. Covenant to Maintain Tax - Exempt Status .................................. ............................... 9 SECTION 24. Order to Print and Authenticate Bonds ...................................... ............................... 9 SECTION25. Paying Agent... .............................................................................................................. 9 SECTION 26. Liability of Paying Agent ............................................................ ............................... 10 SECTION 27. Provisions Constitute Contract .................................................. ............................... 11 SECTION28. Unclaimed Funds ............... ....................................................... ............................... 11 SECTION 29. Modification or Amendment to this Indenture ......................... ............................... 11 SECTION 30. Notices to and Demands on City and Paying Agent ................. ............................... 12 SECTION 31. Partial Invalidity ......................................................................... ............................... 12 SECTION32. Applicable Law ............................................................................ ............................... 12 SECTION33. Conflict with Act ......................................................................... ............................... 12 SECTION 34. Payment on Business Day ........................................................... ............................... 13 SECTION 35. Continuing Disclosure ................................................................. ............................... 13 SECTION36. Defeasance .................................................................................... ............................... 13 SECTION37. Counterparts ................................................................................ ............................... 15 Exhibit A MATURITY SCHEDULE A -1 Exhibit B BOOK -ENTRY BOND PROVISIONS B -1 Exhibit C FORM OF BOND C -1 Exhibit D AUTHORIZED INVESTMENTS D -1 i BOND INDENTURE This Bond Indenture (this "Indenture"), dated as of September 1, 2009, is entered into by and between the City of Newport Beach, a California municipal corporation (the "City"), and U.S. Bank National Association, as paying agent, registrar and transfer agent (the "Paying Agent"), to establish the terms and conditions pertaining to the issuance of bonds in a special assessment district known and designated as Assessment District No. 103 (the "Assessment District"). SECTION 1. Authorization, Designation and Amount. Pursuant to the provisions of the "Improvement Bond Act of 1915" (the "Act "), being Division 10 of the Streets and Highways Code ofthe State of California, the City does hereby authorize the issuance of a bond or bonds to represent the unpaid assessments within the Assessment District, rounded down to the nearest $100, in an aggregate principal amount of $ , to be designated as the "City of Newport Beach Assessment District No. 103 (G StreevEast Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds" (the "Bonds "). SECTION 2. Issuance; Unpaid Assessments; No Parity Bonds. The City shall determine the assessments that are unpaid and the aggregate amount thereof and issue, sell and deliver bonds therefor as authorized by the Act. The Bonds shall be secured by, and the City does hereby pledge, (1) the unpaid assessments within the Assessment District and (2) the amounts held in the Redemption Fund and the Reserve Fund maintained pursuant to this Indenture and any earnings thereon (except to the extent earnings are to be transferred to the Rebate Fund under this Indenture). Except for refunding bonds, if any, no additional bonds or other obligations will be issued or incurred that will be secured by or payable from the assessments of the Assessment District. SECTION 3. Alternative Procedure for Advance Payment. The provisions of Part 11.1 of the Act, providing an alternative procedure for the advance payment of assessments and the calling of all or a portion of the Bonds shall apply. SECTION 4. Registered Bonds; Denominations and Book -Entry Only. The Bonds shall be issued only as fully- registered Bonds in the denomination of $5,000, or any integral multiple thereof, except for one Bond (which Bond, if a series of Bonds is issued, shall be the Bond maturing in the first year of maturity) which shall include the amount by which the total aggregate principal amount of the Bonds exceeds the maximum integral multiple of $5,000. Notwithstanding any provisions herein to the contrary, the Bonds shall be initially issued in book -entry form in accordance with the terms of Exhibit B attached hereto and incorporated herein by this reference. SECTION 5. Date of Bonds. All of the Bonds shall be dated as of September _, 2009 (the "Closing Date "), and interest shall accrue from that date at the rates set forth in Exhibit A attached hereto and incorporated herein by this reference. SECTION 6. Maturity. The Bonds may be issued as serial bonds, term bonds, or both. The principal of the Bond or Bonds shall be payable on September 2 of every year, commencing September 2, 2010, until the whole is paid. The principal amount maturing or payable each year shall be the principal amounts maturing or payable in the respective years as shown on Exhibit A hereto. SECTION 7. Interest. Each serial Bond shall be of a single maturity and shall bear interest at the rate for its maturity as set forth in Exhibit A attached hereto. Interest on the Bonds shall be paid in lawful money of the United States of America on March 2 and September 2 of each year (each, an "Interest Payment Date "), commencing March 2, 2010, by check of the Paying Agent mailed by first -class mail, postage prepaid, on each Interest Payment Date to the registered owners thereof at the owner's addresses as they appear on the Paying Agent's books of registration on the 15th day of the month immediately preceding said Interest Payment Date regardless of whether such day is a business day (the "Record Date ") or by wire transfer to an account in the United States of America made on an Interest Payment Date upon written instructions received by the Paying Agent on or before the Record Date from an owner of $1,000,000 or more in aggregate principal amount of Bonds. Interest shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of authentication of that Bond, unless (i) the date of authentication is an Interest Payment Date, in which event interest shall be payable from such date of authentication, (ii) the date of authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event interest shall be payable from that Interest Payment Date, or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Closing Date, provided, however, that if at the time of authentication of any Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or from the Closing Date, if no interest has been paid or made available for payment. SECTION S. Place of Payment. The principal of, and any premium due on the redemption of the Bonds, shall be payable in lawful money of the United States of America upon surrender thereof at the corporate trust office of the Paying Agent in St. Paul, Minnesota (the "Principal Office"), or at such other office as the Paying Agent may designate, or at the corporate trust office of such other registrar, transfer agent, paying agent or fiscal agent as appointed by Section 25 hereof, SECTION 9. Redemption. (a) Optional Redemption. Any Bond or any portion of a Bond may be redeemed, in whole or in part in increments of $5,000, in advance of maturity on any Interest Payment Date, commencing March 2, 2010, from any source of funds legally available, including, without limitation, the prepayment of assessments and surplus funds from the Improvement Fund, if any, at the redemption prices (expressed as a percentage of the principal amount to be redeemed) set forth below, together with accrued interest to the date of redemption: Redemption Date Redemption Price March 2, 2010 through September 2, 2014 103% March 2, 2015 and September 2, 2015 102% March 2, 2016 and September 2, 2016 101% March 2, 2017 and thereafter 100% (b) Purchase of Bonds. hi lieu of payment at maturity or redemption under this Section 9, monies in the Redemption Fund (other than monies representing prepaid assessments) may be used and withdrawn by the Paying Agent for purchase of outstanding Bonds which mature on the next principal payment date, upon the filing with the Paying Agent prior to the selection of Bonds for redemption of a written request from the City requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such request may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, the premium, if any, plus interest accrued to the date of maturity or redemption that would otherwise be payable. (c) Selection of Bonds for Redemption. If less than all of the outstanding Bonds or portions thereof are to be redeemed, the Paying Agent shall select the Bonds to be redeemed in authorized denominations in such a way that the ratio of outstanding Bonds to issued Bonds shall be approximately the same for each annual maturity insofar as possible. (d) Notice of Redemption. When the Paying Agent shall receive notice from the City of its election to redeem Bonds at least sixty (60) days prior to the applicable redemption date, or when Bonds are otherwise to be redeemed pursuant to this Section 9, the Paying Agent shall give notice, in the name and at the expense of the City, of the redemption of such Bonds. Such notice of redemption shall (a) specify the numbers of the Bonds selected for redemption, except that where all the Bonds are subject to redemption or all the Bonds of a maturity date are subject to redemption, the numbers thereof need not be specified; (b) state the date fixed for redemption; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of the Bond which is to be redeemed; and (f) state the CUSIP numbers of the Bonds to be redeemed. Such notice shall further state that on the date fixed for redemption there shall become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Paying Agent shall mail by registered or certified mail, postage prepaid, or deliver by personal service, a copy of such notice, to the respective owners of the Bonds to be redeemed at their addresses appearing on the bond register. The actual receipt by the owner of any Bond of notice of such redemption shall not be a condition precedent thereto, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds, or the cessation of interest on the redemption date. A certificate by the Paying Agent that notice of such redemption has been given as herein provided shall be conclusive as against all parties, and it shall not be open to any Bond owner to show that he or she failed to receive notice of such redemption. In addition to the notice described in the foregoing paragraph, such redemption notice shall be given by the Paying Agent (i) by first class mail, postage prepaid, or (ii) by facsimile transmission on the same day as the date of the mailing required by the preceding paragraph, to Southwest Securities, Inc. (the "Underwriter") and to The Depository Trust Company. In addition to the foregoing notices, on the same day as the date of the mailing required by the second paragraph preceding this paragraph, such redemption notice shall be given by the Paying Agent by (i) first - class mail, postage prepaid, or (ii) facsimile transmission, to the Electronic Municipal Market Access website (www.emma.msrb.org). Neither failure to give the notice described in the two immediately preceding paragraphs nor any defect therein shall in any manner affect the redemption of the Bonds. (e) Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City shall execute and the Paying Agent shall authenticate and deliver to the Bond owner, at the expense of the City, a new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed portion of the Bond surrendered, with the same interest rate and the same maturity. (f) Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in this Section 9, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (1) The Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in this Indenture, anything in this Indenture or in the Bonds to the contrary notwithstanding; (2) Upon presentation and surrender thereof at the Principal Office of the Paying Agent, such Bonds shall be redeemed at the specified redemption price; (3) From and after the redemption date, the Bonds or portions thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds or portions thereof shall cease to bear further interest; and (4) From and after the date fixed for redemption, no owner of any of the Bonds or portion thereof so designated for redemption shall be entitled to any of the benefits of this Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. (g) Bonds Are Subject to Refunding. The Bonds shall be subject to refunding pursuant to Division 11.5 of the Streets and Highways Code of the State of California. (h) No Mandator. There shall be no mandatory redemption of the Bonds upon an event or determination of taxability or otherwise. SECTION 10. Transfer of Registered Bonds. Any Bond may, in accordance with its terms, be transferred upon the books of registration required to be kept by the Paying Agent pursuant to the provisions of Section 12 by the owner in whose name it is registered, or by his or her duly authorized attorney or legal representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent and duly executed by the owner of said Bonds. The Paying Agent may require the payment by the Bond owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer and such charges as provided for in the system of registration for registered debt obligations. The Paying Agent may refuse to transfer or exchange either (i) any Bond during the period established by the Paying Agent for the selection of Bonds for prepayment, or (ii) any Bond which the Paying Agent has selected for prepayment in whole or in part under the provisions of Section 9 of this Indenture. Upon any registration of transfer, a new Bond or Bonds shall be authenticated and delivered by the Paying Agent in exchange for such Bond, in the name of the transferee, in any denomination or denominations authorized by this Indenture and in an aggregate principal amount equal to the principal amount of such Bond or principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or transferred, the Paying Agent shall authenticate Bonds in accordance with the provisions of this Indenture. All Bonds surrendered in such exchange or registration transfer shall forthwith be canceled. SECTION 11. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Paying Agent for a like aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the payment of any tax or governmental charges, if any, upon surrender and cancellation of the Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same series and maturity for the same aggregate principal amount will be issued to the transferee in exchange therefor. The Paying Agent shall not be required to register the exchange of any Bonds during the fifteen (15) days preceding the selection of any Bonds for redemption prior to the maturity thereof, nor with respect to any Bond which has been selected for redemption prior to the maturity thereof. SECTION 12. Books of Registration. There shall be kept by the Paying Agent sufficient books for the registration and transfer of the Bonds and, upon presentation for such purpose, the Paying Agent shall, under such reasonable regulations as it may prescribe, register or transfer or cause to be registered or transferred, on said register, Bonds as hereinbefore provided. SECTION 13. Execution of Bonds. The Bonds shall be executed manually or in facsimile by the Treasurer and by the City Clerk of the City. The Bonds shall he delivered to the Paying Agent for authentication and registration. In case an officer who shall have signed or attested to any of the Bonds by facsimile or otherwise shall cease to be such officer before the authentication, delivery and issuance of the Bonds, such Bonds nevertheless may be authenticated, delivered and issued, and upon such authentication, delivery and issue, shall be as binding as though those who signed and attested the same had remained in office. SECTION 14. Authentication. Only such of the Bonds as shall bear thereon a certificate of authentication substantially in the form below, manually executed by the Paying Agent, shall be valid or obligatory for any purpose or entitled to the benefits of this Indenture, and such certificate of the Paying Agent shall be conclusive evidence that the Bonds so authenticated have been duly executed, authenticated and delivered hereunder, and are entitled to the benefits of this Indenture. FORM OF CERTIFICATE OF AUTHENTICATION This Bond has been authenticated on: [Closing Date] U.S. Bank National Association, as Paying Agent, Transfer Agent and Registrar Authorized signatory SECTION 15. Ownership of Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded by the Paying Agent and the City as the absolute owner thereof for all purposes and shall not be affected by any notice to the contrary, and payment of or on account of the principal and redemption premium, if any, of any such Bond, and the interest on any such Bond, shall be made only to or upon the order of the registered owner thereof or the owner's legal representative shown on the books of registration. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond, including the redemption premium, if any, and interest thereon, to the extent of the sum or sums so paid. SECTION 16. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond secured hereby shall become mutilated or be destroyed, stolen or lost, the City shall cause to be executed and authenticated a new Bond of like date and tenor and principal or maturity amount in exchange and substitution for and upon the cancellation of such mutilated Bond or in lieu of and in substitution for such Bond mutilated, destroyed, stolen or lost, upon the Bond owner's paying the reasonable expenses and charges in connection therewith, and, in the case of a Bond destroyed, stolen or lost, the filing by the Bond owner with the Paying Agent and City of evidence satisfactory to them that such Bond was destroyed, stolen or lost, and of ownership thereof, and furnishing the Paying Agent and City with indemnity satisfactory to them. SECTION 17. Cancellation of Bonds. Any Bond paid or redeemed either at or before maturity shall be canceled upon the payment or redemption of such Bond and shall be delivered to the Paying Agent when such payment or redemption is made. All Bonds canceled under any of the provisions of this Indenture shall be destroyed by the Paying Agent and the Paying Agent shall execute a certificate describing the Bonds so destroyed and retain said executed certificate in its permanent files for the issue. SECTION 18. Application of Bond Proceeds. The proceeds of the sale of the Bonds, in the aggregate amount of $ , (being the par amount of the Bonds less the underwriter's discount in the amount of $ and less /plus original issue discount/premium in the amount of $_ shall be received by the City and deposited as follows: (1) $ of the sale proceeds, which represents the initial Reserve Requirement (as defined below), shall be deposited in the Reserve Fund (as defined below) established pursuant to Section 19 (b) hereof, and (2) $ of the sale proceeds, together with the amount collected by the City as prepaid assessments, shall be deposited into the Improvement Fund (as defined below) established pursuant to Section 19 (c) (1) hereof. SECTION 19. Creation of Funds. The Paying Agent and the City, as applicable, are hereby authorized and directed to establish the following funds for purposes of collecting assessment installments, making payment for the hereinafter designated costs and expenses and payment of principal and interest on the Bonds. The funds to be created are designated and subject to the terms as follows: (a) Redemption Fund: The Paying Agent is hereby authorized and directed to establish and maintain a Redemption Fund (the "Redemption Fund ") designated by the name of the Assessment District and to deposit therein from time to time (i) the amount of the proceeds of the Bonds which represents accrued and capitalized interest, if any, on the Bonds, (ii) all sums received from the City representing the collection of the assessments (other than assessments for administrative costs) and the interest thereon, and (iii) any surplus in the Improvement Fund to the extent as provided below. There shall be established by the Paying Agent a Prepayment Account as a subaccount within the Redemption Fund (the "Prepayment Account "). The Paying Agent shall not be required to establish the Prepayment Account until the time when deposits are required to be made therein. The City shall transfer to the Paying Agent for deposit in the Prepayment Account all monies received by the City representing the prepayment of the principal of, and interest and redemption premium on, any Bonds. Such monies shall be applied solely to the payment of the principal of, and interest and premium on, Bonds to be redeemed prior to maturity pursuant to the optional redemption provisions of Section 9 of this indenture. Except for money received with respect to assessment surcharges for administrative costs, the City shall transfer or cause to be transferred to the Paying Agent at least five days prior to each Interest Payment Date all sums received and not previously transferred from the collection of the assessments and any interest thereon and all sums received for the partial or full prepayment of assessments as required by Streets and Highways Code Section 8767. Any transfer representing the prepayment of assessments shall be accompanied by written instructions as to the disposition of such sums to redeem Bonds prior to maturity or to pay accrued interest on any Bonds to be redeemed. Principal of and interest on the Bonds shall be paid by the Paying Agent to the registered owners out of the Redemption Fund to the extent funds on deposit in said Redemption Fund are available therefor. In all respects not recited herein, said Bonds shall be governed by this Indenture or such other direction of the City to the Paying Agent in writing given in accordance with the provisions of the Act. The Paying Agent may conclusively rely upon any statement or certification of the City that any such direction is given by the City in accordance with the Act. Under no circumstances shall the Bonds or interest thereon be paid out of any other fund except as provided herein. (b) Reserve Fund: The City shall create and maintain a special reserve fund for the Bonds (the "Reserve Fund ") to be designated by the name of the Assessment District. Pursuant to Section 18 of this Indenture, the Reserve Fund shall be initially funded from a portion of the Bond proceeds in an amount equal to 6% of the original principal amount of the Bonds, representing the original "Reserve Requirement" (as said term is defined below). The City shall also deposit in the Reserve Fund funds which represent the proceeds of (i) payments made to redeem delinquent assessment installments or (ii) the judicial foreclosure sale of parcels pursuant to Section 22 below, in each case if and to the extent necessary to restore the amount on deposit to the Reserve Requirement following any advance having been made from the Reserve Fund to the Redemption Fund as a result of such delinquencies. Monies in the Reserve Fund shall be applied as follows: (1) Amounts in the Reserve Fund shall be transferred to the Paying Agent for deposit in the Redemption Fund if there are insufficient monies in said Redemption Fund to pay principal of and interest on the Bonds when due. Amounts so transferred shall be repaid to the Reserve Fund from proceeds from the redemption or foreclosure of property with respect to which an assessment is unpaid and from payments of the delinquent assessments. (2) Interest earned on the permitted investment of monies on deposit in the Reserve Fund shall remain in the Reserve Fund to the extent required to maintain the Reserve Fund at the Reserve Requirement. Not later than August 30 of each fiscal year, the amount on deposit in the Reserve Fund in excess of the Reserve Requirement shall be transferred from the Reserve Fund to the Redemption Fund and credited to the unpaid assessment installments payable during such fiscal year. "Reserve Requirement" shall mean the least of (i) the maximum annual debt service on the outstanding Bonds, (ii) 125% of the average annual debt service on the outstanding Bonds, or (iii) 6% of the original principal amount of Bonds (the "Reserve Requirement "). The City's records utilized to calculate the annual assessment installments on account of unpaid assessments shall reflect the credits against each of the unpaid assessments in amounts equal to each parcel's proportionate share of such transfer. Notwithstanding the above, interest earnings on monies on deposit in the Reserve Fund in excess of the "yield" on the Bonds, as that term is defined in the Internal Revenue Code of 1986 (the "Code "), shall be subject to transfer and rebate to the United States Treasury. (3) Whenever monies in the Reserve Fund, together with available funds in the Redemption Fund, are sufficient to fully and timely pay and redeem all outstanding Bonds, plus accrued interest thereon, the money shall be transferred to the Redemption Fund and collection of a corresponding amount of the remaining unpaid assessments shall cease. (4) In the event an assessment is prepaid in cash, the City shall credit the prepaid assessment with a proportionate share of the Reserve Fund and transfer an amount equal to such credit to the Redemption Fund to be utilized for the advance retirement of Bonds. (c) Improvement Fund: (1) General. The City shall create and maintain an improvement fund for the Assessment District (the "Improvement Fund ") to be designated by the name of the Assessment District. (2) Project Costs. The monies in the Improvement Fund, including the prescribed portion of proceeds of sale of the Bonds and the proceeds of assessment prepayments received by the City prior to issuance and sale of the Bonds, shall be used only for the payment of Project Costs as that term is defined hereinafter. "Project Costs" shall mean the costs of the conversion of certain overhead electrical and communication facilities to underground locations, together with appurtenances and appurtenant work in connection therewith (the "Improvements ") as authorized in the assessment proceedings concluded on July 28, 2009, and any subsequent proceedings, if any, taken by the City Council of the City pursuant to Sections 10350 and following, California Streets and Highways Code, and all incidental costs related thereto, including but not limited to the costs of issuing the Bonds, all as more particularly described in the Final Engineer's Report for the Assessment District, dated July 28, 2009, on file in the Office of the City Clerk of the City, as the Final Engineer's Report may be amended from time to time pursuant to the Municipal Improvement Act of 1913. The Treasurer of the City shall be responsible for the safekeeping and investment of the monies credited to the Improvement Fund. Investment earnings are allocated to the Improvement Fund in accordance with its proportionate share of equity in the City's pooled cash and investment portfolio. A negative balance in the Improvement Fund during any period will proportionally reduce the amount of future investment earnings attributable to the Improvement Fund. Investment earnings apportioned to the Improvement Fund shall be deemed at all times to be part of the Improvement Fund. Upon completion of the acquisition and construction of the Improvements, the Superintendent of Streets of the City shall file a certificate of completion (the "Certificate of Completion ") with the Treasurer. Any funds remaining in the Improvement Fund following receipt by the Treasurer of the Certificate of Completion shall constitute surplus ( "Surplus "), and in accordance with the provisions of Section 5 of Resolution No. 2009-36, the "Resolution of Intention" for the Assessment District, adopted by the City Council of the City on June 9, 2009, the Surplus shall be utilized or distributed in such manner as shall be determined by the City Council for any one or more of the purposes set forth in Section 5 of said Resolution of Intention. (d) Rebate Fund: The City shall establish and maintain a "Rebate Fund." Deposits shall be made to the Rebate Fund only as may be required by and in accordance with the provisions of the Tax Certificate pertaining to the Bonds. Amounts, if any, on deposit in the Rebate Fund shall be paid to the United States of America. Notwithstanding any other provisions of this Indenture, all earnings on amounts on deposit in the Rebate Fund shall remain therein until all amounts payable to the United States of America have been paid. SECTION 20. Investments. Obligations purchased as investments of monies in any of the funds in which investments are authorized shall be deemed at all times to be part of such funds. Subject to the restrictions set forth herein, monies in said funds may from time to time be invested by the Paying Agent, as to money in the Redemption Fund, at the written direction of the Treasurer of the City, which written direction shall contain a certification to the Paying Agent that such investments are Authorized Investments as defined in Exhibit D hereto. In the absence of written direction from the City, the Paying Agent shall invest the monies deposited in the Redemption Fund and any account of such fund in investments described in paragraph (vi) of Exhibit D. Such monies shall be invested only in obligations which will by their terns mature on such dates so as to ensure the payment of principal of and interest on the Bonds as the same become due; provided, investments of money in the Reserve Fund shall mature not later than five years from the date of purchase except such money may be invested in a repurchase agreement or an investment agreement without such five -year limitation so long as the repurchase agreement or investment agreement provides for withdrawals at par on or before any Interest Payment Date. The City and, if applicable, the Paying Agent shall sell at the best price reasonably obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide monies to meet any payment or transfer for such funds or from such funds. For the purpose of determining at any given time the balance in any such funds, any such investments constituting a part of such funds shall be valued at their market value. Notwithstanding anything herein to the contrary, the Paying Agent shall not be responsible for any loss from any investments pursuant to this Indenture, except for its own negligence or willful misconduct. The Paying Agent may act as principal or agent in the acquisition or disposition of investments. The Paying Agent and the City may commingle the funds established hereunder for investment purposes, but shall nonetheless account for each separately. The Paying Agent is hereby authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Paying Agent or for any third person or dealing as principal for its own account. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waives receipt of such confirmations to the extent permitted by law. Notwithstanding the preceding sentence, the Paying Agent will deliver confirmations to the City upon the written request of the City with respect to any specific transaction identified in the request. The Paying Agent will furnish the City periodic cash transaction statements that include details for all investment transactions made by the Paying Agent hereunder. SECTION 21. No City Liability. It is hereby further determined and declared that the City will not obligate itself to advance any available funds from its treasury to cure any deficiency or delinquency which may occur in the Redemption Fund by failure of property owners to pay annual special assessments. This determination shall be clearly stated in the title of the Bonds to be issued as authorized and required by Section 8769 of the Streets and Highways Code of the State of California. SECTION 22. Covenant for Superior Court Foreclosure. The City will review the public records of the County of Orange, California, in connection with the collection of the assessment installments not later than August 1 of each year to determine the amount of assessment installments collected in the prior fiscal year. If the City determines that any parcel or parcels are delinquent in the payment of assessment installments, then the City will cause judicial foreclosure proceedings to be filed in the superior court not later than December 1 of each year, and will prosecute diligently such foreclosure proceedings to judgment and judicial foreclosure sale; provided, however, the commencement of any foreclosure action may be deferred in the sole discretion of the City if, and only so long as, the amount in the Reserve Fund is not less than seventy percent (70 %) of the Reserve Requirement. Upon the redemption or sale of the real property responsible for any such delinquent assessment installment, the City will apply the net proceeds thereof to: (a) deposit to the Reserve Fund the amount of any delinquency advanced therefrom to the Redemption Fund for payment of interest on or principal of the Bonds, and (b) the balance, if any, will be disbursed as set forth in the judgment of foreclosure or as required by law. SECTION 23. Covenant to Maintain Tax - Exempt Status. The City covenants that it will not make any use of the proceeds of the Bonds issued hereunder which would cause the Bonds to become "arbitrage bonds" subject to federal income taxation pursuant to the provisions of Section 148(k) of the Code, or to become "federally- guaranteed obligations" pursuant to the provisions of Section 149(b) of the Code, or to become "private activity bonds" pursuant to the provisions of Section 141(a) of the Code. To that end, the City will comply with all applicable requirements of the Code and all regulations of the United States Department of Treasury issued thereunder to the extent such requirements are, at the time, applicable and in effect. Additionally, the City agrees to implement and follow each and every recommendation provided by bond counsel and deemed to be necessary to be undertaken by the City to ensure compliance with all applicable provisions of the Code in order to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes. SECTION 24. Order to Print and Authenticate Bonds. The Treasurer is hereby instructed to cause Bonds, in form substantially similar to Exhibit C attached hereto, to be prepared, and to proceed to cause said Bonds to be authenticated and delivered to an authorized representative of the Underwriter, upon payment of the purchase price as set forth in the accepted proposal for the sale of Bonds. SECTION 25. Paying Agent. The City hereby appoints U.S. Bank National Association, and U.S. Bank National Association, hereby accepts appointment, as Paying Agent for the Bonds. The Paying Agent is hereby authorized to and shall mail or wire transfer interest payments to the Bond owners, select Bonds for redemption, give notice of redemption of Bonds, maintain the bond register and maintain and administer the Redemption Fund. The Paying Agent is hereby authorized to pay the principal of and premium, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds, all as provided in this Indenture, and to provide for the authentication of Bonds, and shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Paying Agent shall keep accurate records of all funds administered by it and all Bonds paid and discharged by it. The Paying Agent initially appointed, and any successor thereto, may be removed by the City and a successor or successors may be appointed. So long as any Bonds are outstanding and unpaid the Paying Agent and any successor or successors thereto designated by the City shall continue to be Paying Agent of the City for all of said purposes until the designation of a successor or successors as Paying Agent. The City shall compensate the Paying Agent at its normal fee and charges pursuant to the schedule of fees and charges to be provided to the City for the performance of its services hereunder. The Paying Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Paying Agent may consult with counsel, who may be counsel to the City, 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 it hereunder in good faith and in accordance therewith. Whenever in the administration of its duties under this Indenture the Paying Agent 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, in the absence of negligence or willful misconduct on the part of the Paying Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of this Indenture or any Supplemental Indenture upon the faith thereof, but in its discretion, the Paying Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence of such matter or may require such additional evidence as to it may deem reasonable. The City shall pay to the Paying Agent from time to time reasonable compensation for all services rendered as Paying Agent under this Indenture and also all reasonable expenses, charges, counsel fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under this Indenture, and the Paying Agent shall have a lien therefor on any funds at 10 any time held by it under this Indenture. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Paying Agent, its officers, employees, and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties hereunder which are not due to its negligence or willful misconduct. The obligation of the City under this Section shall survive resignation or removal of the Paying Agent under this Indenture and payment of the Bonds and discharge of this Indenture. A Paying Agent appointed hereunder may resign at any time upon written notice to the City and after appointment of a successor, provided the successor is either the Treasurer of the City or is a bank or trust company having (or, if such bank or trust company is a member of a bank holding company, its bank holding company has) combined capital (excluding borrowed capital) and surplus of at least $50,000,000 and is subject to State or federal supervision. Any company into which the Paying Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Paying Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible under this Section 25, shall succeed to the rights and obligations of such Paying Agent without the execution or filing of any paper or further act. If successor to the Paying Agent is not appointed by the City within sixty (60) calendar days after notice of resignation by the Paying Agent, the Paying Agent may petition a court of competent jurisdiction to appoint a successor. SECTION 26. Liability of Paying Agent. The recitals of fact and all promises, covenants and agreements contained herein and in the Bonds shall be taken as statements, promises, covenants and agreements of the City, and the Paying Agent assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of this Indenture or of the Bonds, and shall incur no responsibility in respect thereof other than in connection with its duties or obligations herein, or in the Bonds or in the certificate of authorization assigned to or imposed upon the Paying Agent. No implied duties or obligations shall be read into this Indenture against the Paying Agent. The Paying Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value. The Paying Agent shall not be liable in connection with the performance of its duties hereunder, except for its own negligence or willful misconduct. The Paying Agent shall be protected in acting on any notice, resolution, request, consent, certificate or other document believed by it to be genuine and to have been signed or presented by the proper ply. The Paying Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. The Paying Agent shall not be liable for any error ofjudgment made in good faith by a responsible officer of the Paying Agent unless it shall be proved that the Paying Agent was negligent in ascertaining the pertinent facts. No provision of this Indenture shall require the Paying Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers. All indemnification and releases from liability granted herein to the Paying Agent shall extend to the officers and employees of the Paying Agent. The Paying Agent shall not be chargeable with taking any actions hereunder in accordance with the Act but shall solely be charged with taking action in accordance with this Indenture and any other written direction furnished by the City. SECTION 27. Provisions Constitute Contract. The provisions of this Indenture and the Bonds shall constitute a contract between the City and the Bond owners and the provisions hereof and thereof shall be enforceable by any Bond owner for the equal benefit and protection of all Bond owners similarity situated by 11 mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. Said contract is made under and is to be construed in accordance with the laws of the State of California. After the issuance and delivery of the Bonds, this Indenture shall not be subject to rescission, but shall be subject to modification to the extent and in the manner provided in this Indenture, but to no greater extent and in no other manner. SECTION 28. Unclaimed Funds. Notwithstanding any provisions of this Indenture, subject to applicable state escheat laws, any monies held by the Paying Agent in trust for the payment of the principal of, or premium, if any, or interest on, any Bonds and remaining unclaimed for one year after the principal of all ofthe Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in this Indenture), if such monies were held at such date, or one year after the date of deposit of such monies if deposited after said date when all of the Bonds became due and payable, shall be repaid to the City free from the lien created by this Indenture, and all liability of the Paying Agent with respect to such monies shall thereupon cease and the Bond owners shall, upon such payment, look only to the City for payment; provided, however, that before the repayment of such monies to the City as aforesaid, the Paying Agent shall (at the written request and cost of the City) first publish at least once in a nationally recognized financial publication published in New York, New York, a notice, in such form as may be deemed appropriate by the Paying Agent, with respect to the provisions relating to the repayment to the City of the monies held for the payment thereof. SECTION 29. Modification or Amendment to this Indenture. (a) This Indenture and the rights and obligations of the City, of the owners of the Bonds, and of the Paying Agent may be modified or amended at any time by a supplemental indenture pursuant to the affirmative vote at a meeting of the owners, or with the written consent without a meeting, of the owners of at least a majority in aggregate principal amount of the Bonds then outstanding. No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the owner of such Bond, (ii) permit the creation of any pledge of or lien upon the assessments superior to or on a parity with the pledge and lien created for the benefit of the Bonds, (iii) reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Notwithstanding the above, any such amendment may not modify any of the rights or obligations of the Paying Agent without its written consent. The Paying Agent may obtain an opinion of counsel that any such supplemental indenture entered into by the City and the Paying Agent complies with the provisions of this Section 29 and the Paying Agent may conclusively rely on such opinion. (b) This Indenture and the rights and obligations of the City and the owners may also be modified or amended at any time by a supplemental indenture, without the consent of any owners, only to the extent permitted by law and only for any one or more of the following purposes: (1) to add to the covenants and agreements of the City contained in this Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein reserved to or conferred upon the City; (2) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of this Indenture, or in regard to questions arising under this Indenture, 12 as the City and the Paying Agent may deem necessary or desirable and not inconsistent with this Indenture, and which shall not materially adversely affect the rights of the owners; or (3) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess earnings to the United States of America or otherwise as may be necessary to assure exclusion from gross income for federal income tax purposes of interest on the Bonds or to conform with the federal tax regulations. SECTION 30. Notices to and Demands on City and Paying Agent. Any notice or demand which by any provision of this Indenture is required or permitted to be given to or served on the City or the Paying Agent may be given or served by first class mail, postage prepaid and addressed (until another address is filed by the City or the Paying Agent) as follows: Paying Agent: U.S. Bank National Association 633 West Fifth Street, 24' Floor LM- CA -T24T Los Angeles, CA 90071 Attn: Corporate Trust Services City: City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 Attn: Finance Officer SECTION 31. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase of this Indenture shall for any reason be held by a court of competent jurisdiction to be illegal or unenforceable, such holding shall not affect the validity of the remaining portions of this Indenture. The City hereby declares that it would have executed and delivered this Indenture and each and every other section, paragraph, sentence, clause or phrase thereof and authorized the issuance of the Bonds pursuant thereto irrespective of the fact that anyone or more sections, paragraphs, clauses or phrases of this Indenture may be held illegal, invalid or unenforceable. SECTION 32. Applicable Law. This Indenture shall be governed by and enforced in accordance with the laws of the State of California applicable to contracts made and performed in the State of California. SECTION 33. Conflict with Act. In the event of a conflict between any provision of this Indenture with any provision of the Act as in effect on the closing date, the provision of the Act as in effect on the closing date shall prevail over the conflicting provision of this Indenture. SECTION 34. Payment on Business Day. In any case where the date of the payment of principal of or interest (and premium, if any) on the Bonds or the date fixed for redemption is other than a business day (i.e., any day other than a Saturday or Sunday or any day the Paying Agent is authorized or obligated by law or executive order to be closed), the payment of interest or principal (and premium, if any) need not be made on the scheduled date but may be made on the next succeeding date which is a business day with the same force and effect as if made on the date required, and no interest shall accrue for the period from and after the scheduled date. SECTION 35. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and carry out all of the provisions of that certain Disclosure Dissemination Agent Agreement, dated as of September 1, 2009, by and between the City and the Digital Assurance Certification, L.L.C., acting as dissemination agent (the "Disclosure Agreement'). Notwithstanding any other provision of this Indenture, 13 failure of the City to comply with the Disclosure Agreement shall not be considered an event of default; however, any Participating Underwriter (as such term is defined in the Disclosure Agreement) or any Bbnd owner may take such actions as may be necessary and appropriate, including seeking mandate or specific performance by court order, to cause the City to comply with its obligations under this Section. SECTION 36. Defeasance. If the City shall pay or cause to be paid, or there shall otherwise be paid, to the owner of an outstanding Bond the interest due thereon and the principal thereof, at the times and in the manner stipulated in this Indenture, then other than as set forth below, all covenants, agreements and other obligations of the City to the owner of such Bond under this Indenture shall thereupon cease, terminate and become void and discharged and satisfied. Any outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding paragraph if such Bond is paid in any one or more of the following ways: (1) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; (2) by depositing with the Paying Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds established pursuant to this Indenture (exclusive of the Rebate Fund) and available for such purpose, is fully sufficient to pay the principal of premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (3) by depositing with an escrow bank appointed by the City, in trust, noncallable United States Treasury Obligations, in such amount as a certified public accountant shall determine (as set forth in a verification report from such accountant) will be sufficient, together with the interest to accrue thereon and monies then on deposit in the funds established under this Indenture (exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; then, at the election of the City, and notwithstanding that any outstanding Bonds shall not have been surrendered for payment, all obligations of the City under this Indenture with respect to such Bond shall cease and terminate, except for the obligation of the Paying Agent to pay or cause to be paid to the owners of any such Bond not so surrendered and paid, all sums due thereon and except for the covenants of the City to preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice of such election shall be filed with the Paying Agent not less than ten (10) days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Paying Agent. In connection with a defeasance under (2) or (3) above, there shall be provided to the Paying Agent a certificate of a certified public accountant stating its opinion as to the sufficiency of the monies or securities deposited with the Paying Agent or the escrow bank, together with the interest to accrue thereon and monies then on deposit in the funds established under this Indenture (exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon to pay and discharge the principal of premium, if any, and interest on all such Bonds to be defeased in accordance with this Indenture as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with this Indenture. [Remainder of page intentionally blank.] 14 SECTION 37. Counterparts. This Bond Indenture may be executed in counterparts, each of which shall be deemed an original. IN WITNESS WHEREOF, the parties hereto have executed this Bond Indenture effective the date first written hereinabove. ATTEST: Leilani Brown, City Clerk APPROVED AS TO FORM: City Attorney Assistant City Attorney City of Newport Beach Dennis Danner Director of Administrative Services U.S. Bank National Association, as Paying Agent, Transfer Agent, and Registrar M 15 Authorized Officer Authorized Officer Total EXHIBIT A MATURITY SCHEDULE Year Amount ($) Rate 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 A -1 EXE TT "B" Book -Entry Bonds Provisions All initial Bonds shall be book -entry Bonds. All book -entry Bonds shall be registered in the name of Cede & Co., as nominee of The Depository Trust Company ("DTC"). The Issuer and the Paying Agent acknowledge that they have executed and delivered a Letter of Representations with DTC. All payments of principal of, redemption premium, if any, and interest on the book -entry Bonds and all notices with respect thereto, including notices of full or partial redemption shall be made and given at the times and in the manner set out in the Letter of Representations. The terms and provisions of the Letter of Representations shall govern in the event of any inconsistency between the provisions of the Indenture and the Letter of Representations. The Letter of Representations may be amended without Bond owner consent. The book -entry registration system for all of the book -entry Bonds maybe terminated and certificates delivered to and registered in the name of the beneficial owners, under either of the following circumstances: (a) DTC notifies the Issuer and the Paying Agent that it is no longer willing or able to act as securities depository for the book -entry Bonds and a successor securities depository for the book -entry Bonds is not appointed by the Issuer at the direction of the borrower prior to the effective date of such discontinuation; or (b) the Issuer determines that continuation of the book -entry system through DTC (or a successor securities depository) is not in the best interest of the owners of the book -entry Bonds. The beneficial owners of Bonds will not receive physical delivery of certificates except as provided herein. For so long as there is a securities depository for Bonds, all of such Bonds shall be registered in the name of the nominee of the securities depository, all transfers of beneficial ownership interests in such Bonds will be made in accordance with the rules of the securities depository, and no investor or other party purchasing, selling or otherwise transferring beneficial ownership of such Bonds is to receive, hold or deliver any certificate. The Issuer and the Paying Agent shall have no responsibility or liability for transfers of beneficial ownership interests in such Bonds. In the event a successor securities depository is appointed by the Issuer, the book -entry Bonds will be registered in the name of such successor securities depository or its nominee. In the event certificates are required to be issued to beneficial owners, the Paying Agent and the Issuer shall be fully protected in relying upon a certificate of DTC or any DTC participant as to the identity of and the principal amount of book -entry Bonds held by such beneficial owners. The Issuer and the Paying Agent will recognize the securities depository or its nominee as the Bond owner of book -entry Bonds for all purposes, including receipt of payments, notices and voting; provided the Paying Agent may recognize votes by or on behalf of beneficial owners as if such votes were made by Bond owners of a related portion of the Bonds when such votes are received as provided in the Indenture. With respect to book -entry Bonds, the Issuer and the Paying Agent shall be entitled to treat the person in whose name such Bond is registered as the absolute owner of such Bond for all purposes of the Indenture, and neither the Issuer nor the Paying Agent shall have any responsibility or obligation to any beneficial owner of such book -entry Bond. Without limiting the immediately preceding sentence, neither the Issuer nor the Paying Agent shall have any responsibility or obligation with respect to (a) the accuracy of the records of any securities depository or any other person with respect to any ownership interest in book -entry Bonds, (b) the delivery to any person, other than a Bond owner, of any notice with respect to book -entry Bonds, including any notice of redemption or refunding, (c) the selection of the particular Bonds or portions thereof to be redeemed or refunded in the event of a partial redemption or refunding of part of the Bonds outstanding or (d) the M payment to any person, other than a Bond owner, of any amount with respect to the principal of, redemption premium, if any, or interest on book -entry Bonds. M. EXMIT "C" t •tu 6 16 1D United States of America State of California No. R City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bond Interest Rate: Maturity Date: Bond Date: CUSIP: % September 2, 20_ September _, 2009 651784_ REGISTERED OWNER: Cede & Co. PRINCIPAL SUM: Dollars Under and by virtue of the Improvement Bond Act of 1915, being Division 10 of the Streets and Highways Code of the State of California (the "Act "), the City of Newport Beach, California (the "Issuer"), will, out of the Redemption Fund for the payment of the Bonds issued upon the assessments in Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ooean Boulevard) as more fully described in the Resolution of Intention for said Assessment District, adopted by the City Council of the Issuer on June 9, 2009, pay to the registered owner stated above, on maturity date stated above, the principal sum stated above in lawful money of the United States of America upon presentation at the corporate trust office or agency of U.S. Bank National Association (together with any successor paying agent under the Bond Indenture, the "Paying Agent ") in St. Paul, Minnesota (or such other office designated by the Paying Agent, herein called the "Principal Office" of the Paying Agent), with interest thereon from the Interest Payment Date next preceding the date on which this Bond is authenticated, unless (i) the date of authentication is an Interest Payment Date, in which event it shall bear interest from such date of authentication, (ii) the date of authentication is after a Record Date butprior to the immediately succeeding Interest Payment Date, in which event it shall bear interest from that Interest Payment Date, or (iii) the date of authentication is prior to the close of business on the first Record Date, in which event interest shall be payable from the Bond Date set forth above; provided, however, that if at the time of authentication of any Bond, interest is in default, interest on that Bond shall be payable from the last Interest Payment Date to which the interest has been paid or made available for payment or from the Bon Date set forth above if no interest has been paid or made available for payment, at the rate per annum stated above, all as is hereinafter specified. This Bond is one of a series of Bonds of like date, tenor and effect, but differing in amounts, interest rates and maturities, issued by the Issuer under the Act for the purpose of providing means for paying for the work and improvements described in said Resolution of Intention, is secured by the monies in the Redemption Fund and the Reserve Fund and by the unpaid assessments made for the payment of said work, and is payable as to both principal and interest exclusively out of the Redemption Fund. Further terms and conditions of the Bonds are provided for by a Bond Indenture, by and between the Issuer and the Paying Agent, dated as of September 1, 2009 (the `Bond Indenture "), and this reference incorporates the Bond Indenture herein, and by acceptance hereof the owner of this Bond assents to the terms and conditions of the Bond Indenture. All capitalized terns used herein shall have the same meanings given such terms in the Bond Indenture unless otherwise specified herein. C-1 The interest on this Bond is payable semiannually on March 2 and September 2 in each year, commencing March 2, 2010 (each an "Interest Payment Date"), to the registered owner hereof bycheck mailed by first-class mail to the registered owner at the registered owner's address as it appears on the registration books kept by the Paying Agent on the fifteenth day of the month immediately preceding said Interest Payment Date regardless of whether such day is a business day (the "Record Date' ), or by wire transfer to an account in the United States of America made on an Interest Payment Date upon written instructions received by the Paying Agent on or before the Record Date from an owner of $1,000,000 or more in aggregate principal amount of Bonds. Interest shall be calculated on the basis of a 360 -day year composed of twelve 30 -day months. This Bond will continue to accrue interest after maturity at the rate above stated, provided it is presented at maturity and payment thereof is refused upon the sole ground that there are not sufficient monies in the Redemption Fund with which to pay same. If this Bond is not presented at maturity, interest hereon will cease to accrue at maturity. The Bonds are issuable only as fully- registered Bonds in denominations of $5,000 or any integral multiple thereof, except for one Bond maturing in the fast year of maturity which shall include the amount by which the total aggregate principal amount of the Bonds exceeds the minimum integral multiple of $5,000. This Bond is transferable by the registered owner hereof in person or by the registered owner's attorney duly authorized in writing at the Principal Office of the Paying Agent, subject to the payment of any tax or governmental charges, if any, upon surrender and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of any authorized denomination or denominations of the same maturity, for the same aggregate principal amount, will be issued to the transferee in exchange therefor. The Bonds are limited obligations of the Issuer and are not a lien or charge upon the funds or property of the Issuer, except to the extent of the funds in the Redemption Fund and the Reserve Fund. The Bonds are not a debt of the Issuer or the State of California or any subdivision thereof, and neither the Issuer nor the State of California or any subdivision thereof is liable for the payment of the Bonds. THE ISSUER DETERMINED AND DECLARED THAT THE ISSUER WILL NOT OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS FROM ITS TREASURY TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND. This Bond or any portion of thereof may be redeemed, in whole or in part in increments of $5,000, in advance of maturity on any Interest Payment Date, from any source of funds legally available, including, without limitation, the prepayment of assessments and surplus funds, if any, remaining in the Improvement Fund following completion of the authorized improvement work, at the redemption prices (expressed as a percentage of the principal amount to be redeemed) set forth below, together with accrued interest to the date of redemption: Redemption Date Redemption Price March 2, 2010 through September 2, 2014 103% March 2, 2015 and September 2, 2015 102% March 2, 2016 and September 2, 2016 101% March 2, 2017 and thereafter 100% In lieu of payment at maturity or redemption as described above, monies in the Redemption Fund (other than monies representing prepaid assessments) may be used and withdrawn by the Paying Agent upon the direction of the Issuer for purchase of outstanding Bonds which mature on the next principal payment date, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, the premium, if any, plus interest accrued to the date of maturity or redemption that would otherwise be payable. Notice of redemption in advance of maturity shall be given in accordance with the provisions of the Bond Indenture. If notice of redemption has been duly given and the amount necessary for the redemption has been made available for that purpose on the date fixed for such redemption, then from and after the redemption date, the Bonds or C -2 portions thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds orportions thereof shall cease to accrue further interest and no owner of any of the Bonds or portion thereof so designated for redemption shall be entitled to any of the benefits of the Bond Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so trade available. This Bond is subject to refunding pursuant to the Act. The Bond Indenture and the rights and obligations of the Issuer and of the owners of the Bonds and of the Paying Agent may be modified or amended from time to time and at any time in the manner, to the extent, and upon the terns provided in the Bond Indenture; provided that no such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the Issuer to pay the principal of, and the interest and any premium on, any Bond, without the express consent ofthe owner ofsuch Bond, (ii) permit the creation of any pledge of or lien upon the assessments superior to or on a parity with the pledge and lien created for the benefit of the Bonds, (iii) reduce the percentage of Bonds required for the amendment, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. This Bond shall not be entitled to any benefit under the Act or the proceedings or become valid or obligatory for any purpose until the Certificate of Authentication hereon endorsed shall have been dated and signed by the designated transfer agent, registrar and paying agent. IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed by its Treasurer and its City Clerk, as of September . 2009. Treasurer CER711F'ICATE OF AUTHENTICATION This Bond has been authenticated on 2009. DTC LEGEND City Clerk U.S. Bank National Association, as Paying Agent, Transfer Agent, and Registrar Authorized Officer Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York corporation ( "DTC "), to the Issuer or the Paying 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 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. C -3 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 - mentioned registered Bond and hereby irrevocably constitute(s) and appoint(s), attorney, to transfer the same on the books of the Paying Agent with full power of substitution in the premises. Dated: Guaranteed: Signature NOTICE: Signature must be guaranteed by a qualified guarantor_ NOTICE: The signature on this assignment most correspond with the name as it appears on the two of the within Bond in every particular, without alteration or enlargement or any change whatsoever. C -4 EXHIBIT D AUTHORIZED INVESTMENTS "Authorized Investments" is defined to mean the following types of investments: (i) (a) 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) or (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are unconditionally guaranteed by the full faith and credit of the United States of America; (ii) interest- bearing demand or time deposits (including certificates of deposit) in federal or State of California chartered savings and loan associations or banks (including the Paying Agent and its affiliates), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the two highest rating categories by a nationally recognized rating service, and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one ofthe two highest rating categories by a nationally recognized rating service; (iii) repurchase agreements collateralized by obligations described in (i) above with a registered broker /dealer subject to Securities Investors Protection Corporation liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the two highest rating categories by a nationally recognized rating service, or such bank shall be the lead bank of a bank holding company whose unsecured obligations are rated in one of the two highest rating categories by a nationally recognized rating service; (b) the most recently reported combined capital, surplus and undivided profits of such bank shall be not less than $100,000,000; and (c) the entity holding such repurchase agreement shall have a perfected first security interest in the collateral securities for the benefit of the City under the California Commercial Code or pursuant to the book -entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq.; (iv) bankers acceptances endorsed and guaranteed by banks described in clause (iii) above; (v) obligations, the interest on which is exempt from federal income taxation under Section 103 of the Code and which are rated in one of the two highest rating categories by a nationally recognized rating service; (vi) money market funds registered under the Federal investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's of "AAAm -G," "AAA -m" or "AA -m" and, if rated by Moody's, rated "Aaa " "Aal" or "Aa2; (vii) units of a taxable government money market portfolio (including portfolios of the Paying Agent and its affiliates) comprised solely of obligations listed in clause (i) or clause (ii) above; D -1 (viii) commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating by Moody's or Standard & Poor's of issuing corporations that are organized and operating within the United States and have total assets in excess of $500,000,000 and have an "Aa," "AA" or higher rating for the issuer's debentures, other than commercial paper, as provided by Moody's or Standard & Poor's, respectively, and provided that purchases of eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10 %) of the outstanding paper of an issuing corporation; (ix) any general obligation of a bank or insurance company whose long -term debt obligations are rated in one of the two highest rating categories of a nationally recognized rating service; (x) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code; and (xi) any other investment which, in the City's sole discretion, is consistent with or of like security to authorized investments specifically authorized herein and at the time of investment is a legal investment under the laws of the State of California for the monies proposed to be invested therein. The Paying Agent shall be entitled to rely upon any written investment direction from the City as a certification to the Paying Agent that such investment constitutes an Authorized Investment. 1277297.4 D -2 tAW OFFICES OF McFarlin & Anderson LLP 23101 LAKE CENTER DRIVE GEORGE 9). MCFARLIN SUITE 200 lhn F. ANDERSON LAKE FOREST, CALIFORNIA 92630 FAX (9M 4M71 (949)452 -0500 September 1, 2009 City Council and City Staff City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92663 Re: City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard /Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds Review of Preliminary Official Statement relating to 2009 Bonds Ladies and Gentlemen: In connection with the City's Assessment District No. 103 (G Street(East Balboa Boulevard/Channel Road/Ocean Boulevard) bond financing,. the Preliminary Official Statement and other documents will be presented to the legislative body for approval. Disclosure Counsel, Bond Counsel, the Financial Adviser, the Underwriter and City staff have reviewed the documents and provided their input and continents in order that the documents comply with applicable securities laws requirements. The City Council's approval is currently scheduled for consideration at the September 8, 2009, City Council meeting. The Preliminary Official Statement discloses information with respect to among other things (i) the estimated sources and uses of funds, (ii) the facilities to be financed with proceeds of the Bonds, (iii) the Bonds (interest rate, redemption terms, etc.), (iv) the security for repayment of the Bonds (assessment installments, foreclosure covenants, etc.), (v) information regarding the Assessment District and the City, (vi) Bond Owners' risks, (vii) continuing disclosure requirements and (viii) various legal matters. At public conferences, Martha Haynes, the municipal securities chief of the Securities and Exchange Commission, reiterated the importance the SEC places on a review by elected officials of the relevant portions of Preliminary Official Statements and other key offering documents before issuing bonds. As an example, with respect to a City of San Diego matter, Ms. Haynes noted that elected officials and staff must read the offering documents. "It is not possible for issuers just to rely on lawyers and underwriters to handle this alone. Public officials have a different perspective and knowledge base than members of the financing team. It is critically important that members of the legislative body and other appropriate officials outside the financing team personally review disclosure documents and speak up if they have questions. Ten years after [the Commission published its report regarding the Orange County bankruptcy], it is not reasonable for issuer officials to expect the SEC and others to overlook such conduct." The securities laws require that (i) the Preliminary Official Statement not contain any misleading information and (ii) not omit any material information. While it is important that the City have its staff, Disclosure Counsel, and other consultants review and provide input regarding the Preliminary Official Statement, the Preliminary Official Statement is the City's document, and ultimate responsibility for the Preliminary and final Official Statements rests with the legislative body. While staff and the City's consultants have discussed a range of topics relating to the financing so that the securities laws requirements are met, there is the possibility that, as elected NIS POs COVER NEMORANDIJW,w d McFarlin & Anderson LLP City Council and City Staff City of Newport Beach September 1, 2009 Page 2 of 2 officials, you might be aware of something, or have a different perspective on something that should be considered and disclosed in the Preliminary Official Statement. Some of the questions City Council members and staff may ask, and may review the Preliminary Official Statement to be sure it discloses information concerning answers to those questions, include: Is there information about the Assessment District, the City, revenues, the project facilities or other matters that would be important for an investor to know before purchasing the Bonds? 2. Is there any pending or threatened litigation against the City or involving the Assessment District that could have a negative impact on the finances of either? 3. Are there any circumstances that exist or that are now unfolding that could affect assessment installment revenues or for that matter, even though not security for the Bonds and not directly material to the repayment of the Bonds, circumstances that could create budget difficulties for the City that are not described in the Preliminary Official Statement and that should be discussed before the Preliminary Official Statement is finalized? Since you have a different perspective and knowledge base than members of the financing team, it is important that you review the Preliminary Official Statement and that your input and questions be considered in finalizing the documents. Staff and the financing team are available to review and respond to questions and comments you may have with respect to information included in these documents. Please review, in particular, the sections of the Preliminary Official Statement captioned "THE FINANCING PLAN" and "THE DISTRICT" with a view as to whether all material information you are aware of is described accurately, whether anything you think might be important has been omitted, or whether there are risks that might have been omitted. If you have any questions or suggestions, please contact me at 949/452 -0500, Ext. 301, or you may call Sam Sperry at 510/808 -2000. T el, Anderson cc: Mr. Dan Matusiewicz,. City of Newport Beach Mr. Paul Pender, Fieldman Rolapp & Associates Samuel Sperry, Esq., Meyers, Nave, Riback, Silver & Wilson NB POs COVER MEMORANDUNU.nd Drafts dated: August 13, 2009;August 21, 2009; September 1, 2009 PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER . 2009 In the opinion of Meyers, Nave, Riback Silver & Wilson, a Professional law Corporation, Bond Counsel, based upon an analysis oferisting laws, regulations, rulings and court decisions, and assuming, among other things, the accuracy ofcertain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income 1as purposes under Section 103 of the Internal Revenue Cade of 1986 and is exempt from State of California personal income taxes. In the further opinion of Band Counsel, interest on the Bonds is not a Specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of or the accrual or receipt of interest on, the Bonds. See "CONCLUDING INFORMATION— Tax Matters. " $3,429,200 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET /EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS Dated: Date of Delivery Due: September 2, as shown below The City of Newport Beach Assessment District No. 103 (G StreeUEast Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (the'Bonde') are limited obligations of the City of Newport Beach, California (the "City"), secured by special assessments on real property located within the City's Assessment District No. 103 (the "District "). The installation and construction of the District's improvements and the levy of special assessments will be undertaken as provided by the Municipal Improvement Act of 1913. The Bonds are issued pursuant to provisions of the improvement Bond Act of 1915 and a Bond Indenture, dated as of September 1, 2009 (the "Indenture'), by and between the City and U.S. Bank National Association, as Paying Agent (the "Paying Agent "). The Bonds are being issued in book -entry form and, when issued, will be registered in the name of Cede & Co., as nomince of The Depository Trust Company, New York, New York. Purchasers of Bonds will not receive certificates representing their beneficial ownership thereof but will receive credit balances on the books of their respective nominees. The Bonds will not be transferable or exchangeable except for transfer to another nominee of The Depository Trust Company or as otherwise described herein. Individual purchases maybe made in principal amounts of $5,000 and integral multiples thereof, except for one Bond (which shall be the Bond maturing in the first year of maturity) which shall include the amount by which the total aggregate principal amount of the Bonds exceeds the maximum integral multiple of $5,000. Interest on the Bonds will be payable on March 2, 2010, and semiannually thereafter on each March 2 and September 2. Principal of and interest on the Bonds will be paid by the Paying Agent to Cede & Co., and such payments are expected to be disbursed to the beneficial owners of the Bonds through their nominees. The Bonds are subject to redemption prior to maturity as described under "THE BONDS – Redemption" herein. Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual debt service on the Bonds will be billed by the County of Orange (the "County") to owners of property within the District against which them are unpaid assessments. Upon receipt by the Paying Agent from the City, these annual installments are to be paid into the Redemption Fund to be held by the Paying Agent and used to pay debt service on the Bonds as it becomes due. Unpaid assessments constitute fixed Bens on the lots and parcels assessed within the District and do not constitute a personal indebtedness of the respective owners of such lots and parcels. Accordingly, In the event of delinquency, proceedings may be had only against the real property securing the delinquent assessment. Thus, the value of land within the District is a critical factor in determining the investment quality of the Bonds. The City will establish a Reserve Fund and deposit therein Bond proceeds in the amount of the Reserve Requirement to provide funds for payment of principal and interest on the Bonds in the event of any delinquent assessment installments. The City's obligation to advance funds to the Redemption Fund as a result of delinquent installments is limited to the balance in the Reserve Fund. The City has covenanted to initiate judicial foreclosure in the event of a delinquency as described herein. See 'SECURITY FOR THE BONDS – Covenant for Superior Court Foreclosure." MATURITY SCHEDULE on inside cover Neither the faith and credit nor the facing power of the City, the County, the State of California or any political subdivision thereof is pledged to the payment of the Bonds, and the payment thereof is not secured by any encumbrance, mortgage or other pledge of property of the City except the pledge of the assessments and moneys on deposit in the Redemption Fund and the Reserve Fund. The City has determined not to obligate itself to advance available funds from its treasury in the event of delinquencies in the payment of assessments. This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement, including, without limitation, "BOND OWNERS' RISKS, " to obtain information essential to the making ofan informed investment decision. The Bonds are offered when, as and if issued subject to the approval of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Oakland, California, Bond Counsel. Certain matters will be passed upon for the City by the City Attorney and by McFarlin & Anderson LLP, Lake Forest, California, as Disclosure Counsel. It is anticipated that the Bonds will be available for delivery to The Deposhory Trust Company or its agent on or about September _, 7009. Dated: September—, 2009 SOUTHWEST SECURITIES, INC. The following language to be inserted by the printer, in red, at the top of the POS front cover: PRELIMINARY OFFICIAL STATEMENT DATED SEPTEMBER _, 2009 The following language to be inserted by the printer, in red, vertically along the left margin of the POSfront cover: This Preliminary Official Statement and the information contained herein are subject to completion or amendment. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. MATURITY SCHEDULE $3,429,200 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS Maturity Principal Interest September 2 Amount Rate 2010 $ % 2011 September 2 2012 % % 2013 $ 2014 2019 2015 2016 2017 2021 Base CUSIeNo. 651784t custpo Maturity Principal Yield Price N_t September 2 Amount % % 2018 $ 2019 2020 2021 2022 2023 2024 Interest cuss Rate Yield Price No.t % t CUSIP® A registered trademark of the American Bankers Association. Copyright © 1999 -2009 Standard & Poor's, a Division of The McGraw -Hill Companies, Inc. CUSIP® data herein is provided by Standard & Poor's CUSIP® Service Bureau. This data is not intended to create a database and does not serve in any way as a substitute for the CUSIP® Service Bureau. CUSIP® numbers have been assigned by an independent company not affiliated with the City and are included solely for the convenience of the registered owners of the Bonds. The City is not responsible for the selection or uses of these CUSIP® numbers, and no representation is made as to their correctness on the Bonds or as included herein. The CUSIP® number for a specific maturity is subject to being changed after the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding, in whole or in part, or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds. Lei Il z D1JLt N WFW4 41. MAYOR AND CITY COUNCIL Edward D. Selich, Mayor, District 5 Keith D. Curry, Mayor Pro Tem, District 7 Michael F. Henn, District 1 Steven Rosansky, District 2 Don Webb, District 3 Leslie Daigle, District 4 Nancy Gardner, District 6 CITY STAFF Homer Bludau, City Manager David R. Hunt, Esq., City Attorney Leilani Brown, City Clerk Dennis Danner, Director of Administrative Services Dan Matusiewicz, Finance Officer Stephen Badum, Public Works Director David Webb, City Engineer BOND COUNSEL Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation Oakland, California FINANCIAL ADVISOR Fieldman, Rolapp & Associates Irvine, California ASSESSMENT ENGINEER Harris & Associates Irvine, California PAYING AGENT U.S. Bank National Association Los Angeles, California DISCLOSURE COUNSEL McFarlin & Anderson LLP Lake Forest, California UNDERWRITER Southwest Securities, Inc. Encino, California DISSEMINATION AGENT Digital Assurance Certification, L.L.C. Orlando, Florida GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT Use of Official Statement. This Official Statement is submitted in connection with the offer and sale of the Bonds referred to herein 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 City, in any press release and in any oral statement made with the approval of an authorized officer of the City or any other entity described or referenced herein, 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, Section 21E of the United States Securities Exchange Act of 1934, as amended, and Section 27A of the United States Securities Act of 1933, as amended. 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 herein 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 City or any other entity described or referenced herein since the date hereof. The City does not plan to issue any updates or revision to the forward- looking statements set forth in this Official Statement. Limited Offering. No dealer, broker, salesperson or other person has been authorized by the City to give any information or to make any representations in connection with the offer or sale of the Bonds other than those contained herein and if given or made, such other information or representation must not be relied upon as having been authorized by the City 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, 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. The information and expressions of opinions herein 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 City or any other entity described or referenced herein 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. Stabilization of Prices. In connection with this offering, the Underwriter may over allot or effect transactions which stabilize or maintain the market price of the Bonds at a level above that which might otherwise prevail in the open market. Such stabilizing, if commenced, may be discontinued at any time. The Underwriter may offer and sell the Bonds to certain dealers and others at prices lower than the public offering prices set forth on the cover page hereof and said public offering prices maybe changed from time to time by the Underwriter. THE BONDS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS CONTAINED IN SUCH ACT. THE BONDS HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE SECURITIES LAWS OF ANY STATE. TABLE OF CONTENTS PAGE INTRODUCTION............................................................................................................ ..............................1 THE FINANCING PLAN ................................................................................................ ..............................1 Purposeof the Bonds .................................................................................................. ..............................1 Sources and Uses of Funds ......................................................................................... ..............................2 THEBONDS .................................................................................................................... ..............................2 Authorityfor Issuance ................................................................................................ ..............................2 Descriptionof the Bonds ............................................................................................ ..............................2 Redemption- .............................................................................................................................................. 3 ImprovementFund ..................................................................................................... ..............................4 RedemptionFund ....................................................................................................... ..............................5 ReserveFund .............................................................................................................. ..............................5 RebateFund ................................................................................................................ ..............................6 Investments................................................................................. ............................... .......................1.111... 6 AnnualDebt Service ................................................................................................... ..............................7 SECURITY FOR THE BONDS... ... .................................................... ..............................7 General....................................................................................................................... ..............................7 ReserveFund .............................................................................................................. ..............................8 Covenant for Superior Court Foreclosure .................................................................. ..............................8 Covenant to Maintain Tax - Exempt Status ................................................................. .............................10 AssessmentsCreate a Lien ........................................................................................ .............................10 Limited City Obligation Upon Delinquency ............................................................. .............................10 BONDOWNERS' RISKS ............................................................................................... .............................17 General...................................................................................................................... .............................18 Risks of Real Estate Secured Investments Generally ................................................ .............................18 ForeclosureShortfall .................................................................................................... .............................18 Property Tax Delinquencies ...................................................................................... .............................18 Delinquency Resulting in Ultimate or Temporary Loss on Bonds ............................ .............................19 Concentration of Ownership ...................................................................................... .............................19 Non -Cash Payments of Assessments... ................. ...... ...... ............. ...... ........................................ .... . 19 LandValues ............................................................................................................... .............................19 Limited City Obligation Upon Delinquency ............................................................. .............................20 Collection of the Assessments ................................................................................... .............................20 -i- TABLE OF CONTENTS CONCLUDING INFORMATION ........... Continuing Disclosure....... Legal Opinion .................... Tax Matters ........................ No Litigation ..................... No Rating ........................... Financial Interests .............. Underwriting ...................... Financial Advisor.. ...... Miscellaneous.. .................. ............................................ .............................25 ............................................ .............................25 ............................................ .............................26 ................28 ................28 ................28 ................29 ................29 ................29 APPENDIX A — ASSESSMENT DIAGRAM ........................................................ ............................... PAGE Availability of Funds to Pay Delinquent Assessment Installments ........................... .............................20 Owner Not Obligated to Pay Assessments ................................................................ .............................21 Parity Taxes and Special Assessments; Future Indebtedness .................................... .............................21 Bankruptcyand Foreclosure ...................................................................................... .............................22 FDIC/Federai Government Interests in Parcels ......................................................... .............................22 NaturalDisasters ....................................................................................................... .............................23 Hazardous Substances ............................................................................................... .............................23 NoAccel eration ......................................................................................................... .............................23 Lossof Tax Exemption .............................................................................................. .............................24 IRS Audit of Tax - Exempt Bond Issues ..................................................................... .............................24 LimitedSecondary Market ........................................................................................ .............................24 Ballot Initiatives and Legislative Measures ............................................................... .............................24 Constitutional Amendment — Articles XMC and XIM ........................................... .............................25 CONCLUDING INFORMATION ........... Continuing Disclosure....... Legal Opinion .................... Tax Matters ........................ No Litigation ..................... No Rating ........................... Financial Interests .............. Underwriting ...................... Financial Advisor.. ...... Miscellaneous.. .................. ............................................ .............................25 ............................................ .............................25 ............................................ .............................26 ................28 ................28 ................28 ................29 ................29 ................29 APPENDIX A — ASSESSMENT DIAGRAM ........................................................ ............................... A -1 APPENDIX B — INFORMATION ABOUT THE NEWPORT BEACH AREA ....................... ... ........ B -1 APPENDIX C— SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE ........................0 -1 APPENDIX D — FORM OF LEGAL OPINION ....................................................... ............................D -1 APPENDIX E — INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY ........ E-1 APPENDIX F — DISCLOSURE DISSEMINATION AGENT AGREEMENT ........ ........................... F -1 APPENDIX G — FINAL ENGINEER'S REPORT ................................................ ............................... G -1 APPENDIX H — LIST OF UNPAID ASSESSMENTS .......................................................... ...... ......... H -1 -ii- SUMMARY STATEMENT Purpose Proceeds of the $3,429,200 principal amount of the City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (the "Bonds "), together with certain investment earnings and certain other moneys, will be used to finance the costs of relocation of certain overhead electrical and communication facilities to underground locations, together with appurtenances and appurtenant work in connection therewith (the "Improvement Project "). See "THE DISTRICT — The Improvement Project" herein. Bond proceeds will also be used to establish a debt service reserve fund and to pay the costs of issuance of the Bonds. The District The City of Newport Beach Assessment District No. 103 ( "the District ") consists of approximately 26.5 acres located in Newport Beach, California (the "City "). The District is bordered by G Street, East Balboa Boulevard, Channel Road and Ocean Boulevard. The District was formed by the City on July 28, 2009. The amount of assessments levied in the District was $5,863,059, and prepayments have been made with respect to $2,433,812 of assessments. There are currently 218 parcels in the District with unpaid assessments in the amount of $3,429,247. Security for the Bonds The Bonds are issued upon and secured by a pledge of revenues received by the City in each Fiscal Year from the collection of annual installments of unpaid assessments, including penalties and interest and proceeds from the sale of property for delinquent assessments, on parcels within the District but excluding amounts collected by the City for the payment of administration costs ( "Assessment Revenues "). See "SECURITY FOR THE BONDS — Reserve Fund —No Additional Bonds Except for Refunding Bonds" herein. The unpaid assessments represent fixed liens on the assessed parcels. They do not, however, constitute a personal indebtedness of the owners of such parcels. Pursuant to the Improvement Bond Act of 1915, installments of principal of assessments and interest thereon sufficient to meet annual debt service on the Bonds will be billed by the County of Orange (the "County ") to owners of parcels within the District against which there are unpaid assessments (the "Assessment Installments "). Upon receipt by the Paying Agent from the City, these Assessment Installments are to be deposited into the Redemption Fund, which will be held by the Paying Agent and used to pay Bond principal and interest as they become due. The Assessment Installments billed against each parcel each Fiscal Year represent pro rata shares of the total principal and interest coming due in the ensuing calendar year, based on the percentage which the unpaid assessment against that parcel bears to the total of unpaid assessments levied to repay the Bonds. The City will deposit $ hnm Bond proceeds into a Reserve Fund (the "Reserve Fund "). The Reserve Fund will be a source of available funds to advance to the Redemption Fund in the event of delinquent installments. The City's obligation to advance funds to the Redemption Fund in the event of delinquent installments is limited to the balance in the Reserve Fund. Pursuant to the Indenture, the City has no obligation to replenish the Reserve Fund except to the extent that delinquent assessments are paid or proceeds from foreclosure sales are realized. See "SECURITY FOR THE BONDS — Reserve Fund." The City covenants with and for the benefit of the owners of the Bonds that it will commence judicial foreclosure proceedings against properties with delinquent Assessment Installments under certain circumstances. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." Redemption Any Bond or any portion of a Bond may be redeemed, in whole or in part, in increments of $5,000, in advance of maturity on any Interest Payment Date, commencing March 2, 2010, from any source of funds legally available, including, without limitation, the prepayment of assessments and surplus funds from the Improvement Fund, if any, together with accrued interest to the date of redemption at the redemption prices shown on the table under "TILE BONDS — Redemption — Optional Redemption " herein. Bond Owners' Risks Unpaid assessments do not constitute a personal indebtedness of the owners of the parcels within the District. There is no assurance that such owners will be able to pay the Assessment Installments or that they will pay such installments even though financially able to do so. Because the City has not obligated itself to advance funds to pay debt service on the Bonds in the event of delinquent Assessment Installments, failure by owners of the parcels to pay Assessment Installments when due, depletion of the Reserve Fund or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent Assessment Installments levied against such parcels may result in the inability of the City to make full or punctual payments of debt service on the Bonds; and owners of the Bonds would therefore be adversely affected. See "BOND OWNERS' RISKS." $3,429,200 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS INTRODUCTION The purpose of this Official Statement, which includes the cover page and the appendices hereto, is to provide certain information concerning the City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (the `Bonds "). Assessment District No. 103 (the "District") was formed by the City of Newport Beach (the "City") on July 28, 2009, to underground power and communication facilities and associated street rehabilitation in the District. The Bonds are being issued pursuant to the Improvement Bond Act of 1915 (the "1915 Act") and a Bond Indenture, dated as of September 1, 2009 (the "Indenture"), by and between the City and U.S. Bank National Association, as paying agent (the "Paying Agent"). Unpaid assessments represent liens on the parcels in the District on which they have been confirmed; they do not, however, constitute a personal indebtedness of the owners of the parcels. Installments of principal of assessments and interest thereon sufficient to meet annual debt service on the Bonds will be billed by the County of Orange (the "County") to owners of parcels within the District against which there are unpaid assessments (the "Assessment Installments "). Unpaid assessments and all moneys and securities from time to time held by the City or by the Paying Agent in certain specified funds and accounts under the Indenture are pledged to the payment of the principal of and interest on the Bonds. The Bonds do not constitute a debt of the City, and the City will not be Gable thereon except for amounts pledged under the Indenture. The full faith and credit of the City is not pledged to the payment of the Bonds; and the payment of the Bonds is not secured by any encumbrance, mortgage or other pledge of property of the City except the pledge described under the heading "SECURITY FOR THE BONDS." Brief descriptions of the Bonds, the District, the Indenture, the Disclosure Dissemination Agent Agreement, dated as of September 1, 2009, by and between the City and Digital Assurance Certification, L.L.C. ( "DAC ") (the "Disclosure Agreement ") and certain other matters are set forth below. Such descriptions do not purport to be comprehensive or definitive. All references herein to any of the aforesaid documents are qualified in their entirety by reference to the forms thereof, which are available for inspection at the office of the Paying Agent in Los Angeles, California, and at the office of the City Clerk in Newport Beach, California. Capitalized terms not defined herein have the respective meanings ascribed to them in the Indenture. THE FINANCING PLAN Purpose of the Bonds Proceeds from the sale of the Bonds will be used to finance the cost of undergrounding power and communication facilities and associated street rehabilitation (the "Improvement Project") that serve the property within the District, as further described in the section herein entitled "TRE DISTRICT — The Improvement Project." The estimated costs of the Improvement Project are $5,065,143 (excluding financing and incidental costs). The total amount of assessments levied in the District was $5,863,059, and prepayments have been made with respect to 2,433,812 of assessments. There are currently 2I8 parcels in the District with unpaid assessments in the amount of $3,429,247. See Table 2 under the caption "THE DISTRICT — The Improvement Project" for a more detailed statement of all costs and expenses relating to the Improvement Project. Sources and Uses of Funds The Paying Agent will receive the proceeds from the sale of the Bonds upon delivery of such Bonds to the purchasers thereof. The proceeds of the Bonds will be applied as set forth in the following table: SOURCES AND USES OF FUNDS (Exclusive of accrued interest, if any) SOURCES: Par Amount of Bonds $ Less Original Issue Discount ( ) Less Underwriter's Discount ( ) Total Sources $ USES: Improvement Fund Reserve Fund Costs of IssuancelO Total Uses Costs of issuance include legal fees, printing costs, Paying Agent Fees and other miscellaneous issuance costs. See Table 2 under the caption "THE DISTRICT — The Improvement Project" for more detailed information regarding costs and expenses relating to the Improvement Project. THE BONDS Authority for Issuance The proceedings for the District were conducted pursuant to the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code) (the "1913 Act'). The Bonds, which represent the unpaid assessments levied against the property in the District, are issued pursuant to the provisions of the 1915 Act and the Indenture. Pursuant to the 1913 Act and Proposition 218, which added Article XII11) to the California Constitution, the City held a public hearing on July 28, 2009, in the proposed District. The City received a favorable response from the landowners casting assessment ballots prior to the conclusion of the public hearing. Description of the Bonds The $ principal amount of Bonds are dated as of the date of delivery and will mature in the amounts and on the dates set forth on the inside cover hereof. Interest will be paid at the rates set forth on the inside cover, commencing on March 2, 2010, and semiannually thereafter on March 2 and September 2 of each year (each an "Interest Payment Date ") until maturity. The Bonds are issued only as fully- registered bonds without coupons in the denomination of $5,000 or any integral multiple thereof, except for one Bond (which shall be the Bond maturing in the fast year of maturity) which shall include the amount by which the total aggregate principal amount of the Bonds exceeds the maximum integral multiple of $5,000. The Bonds will he executed and delivered as fully- registered Bonds in the name of Cede & Co., nominee of The Depository Trust Company, New York, New York ("DTC "), as registered owner of all Bonds. The principal of and interest with respect to the Bonds will be paid directly to Cede & Co. by the Paying Agent, as long as DTC or its nominee, Cede & Co., is the registered owner of the Bonds. For information relating to DTC and the DTC book -entry system as it relates to the Bonds, see APPENDIX E — "INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY." The information presented therein is based solely on information provided by DTC and no representation is made by the City concerning the accuracy thereof. Principal and redemption premium, if any, will be payable at the Principal Office of the Paying Agent on presentation of the Bonds. Interest will be calculated on the basis of a 360 -day year composed of twelve 30 -day months. Each Bond will bear interest from the Interest Payment Date next preceding the date of authentication thereof unless otherwise specified in the Indenture. Redemption Optional Redemption. Any Bond or any portion of a Bond may be redeemed, in whole or in part, in increments of $5,000, in advance of maturity on any Interest Payment Date, commencing March 2, 2010, from any source of funds legally available including, without limitation, the prepayment of assessments and surplus funds from the Improvement Fund, if any, at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forth below, together with accrued interest to the date of redemption: Redemption Date Redemption Price March 2, 2010 through September 2, 2014 103% March 2, 2015 and September 2, 2015 102% March 2, 2016 and September 2, 2016 101% March 2, 2017 and thereafter 100% Purchase of Bonds In lieu of payment at maturity or redemption, moneys in the Redemption Fund (other than moneys representing prepaid assessments) may be used and withdrawn by the Paying Agent for purchase of Outstanding Bonds which mature on the next principal payment date, upon the filing with the Paying Agent, prior to the selection of Bonds for redemption, of a written request from the City requesting such purchase, at public or private sale as and when, and at such prices (including brokerage and other charges) as such request may provide, but in no event may Bonds be purchased at a price in excess of the principal amount thereof, the premium, if any, plus interest accrued to the date of maturity or redemption that would otherwise be payable. Selection of Bonds for Redemption. If less than all of the outstanding Bonds or portions thereof are to be redeemed, the Paying Agent shall select the Bonds to be redeemed in authorized denominations in such a way that the ratio of outstanding Bonds to issued Bonds shall be approximately the same for each annual maturity insofar as possible. Notice of Redemption. When the Paying Agent receives notice from the City of its election to redeem Bonds at least sixty (60) days prior to the applicable redemption date, or when Bonds are otherwise to be redeemed pursuant to the Indenture, the Paying Agent shall give notice, in the name and at the expense of the City, of the redemption of such Bonds. Such notice of redemption shall (a) specify the numbers of the Bonds selected for redemption, except that where all the Bonds are subject to redemption or all the Bonds of a maturity date are subject to redemption, the numbers thereof need not be specified; (b) state the date fixed for redemption; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of the Bond which is to be redeemed; and (f) state the CUSIP® numbers of the Bonds to be redeemed. Such notice shall further state that on the date fixed for redemption there shall become due and payable on each Bond, or portion thereof called for redemption, the principal thereof, together with any premium and interest accrued to the redemption date, and that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no more than 45 days prior to the redemption date, the Paying Agent shall mail by registered or certified mail, postage prepaid, or deliver by personal service, a copy of such notice, to the respective owners of the Bonds to be redeemed at their addresses appearing on the bond register. The actual receipt by the owner of any Bond of notice of such redemption shall not be a condition precedent thereto, and failure to receive such notice shall not affect the validity of the proceedings for the redemption of such Bonds or the cessation of interest on the redemption date. A certificate by the Paying Agent that notice of such redemption has been given as provided in the Indenture shall be conclusive as against all parties, and it shall not be open to any Bond Owner to show that he or she failed to receive notice of such redemption. Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City shall execute and the Paying Agent shall authenticate and deliver to the Bond Owner, at the expense of the City, a new Bond or Bonds of authorized denominations equal in aggregate amount to the unredeemed portion of the Bond surrendered, with the same interest rate and the same maturity. Effect afNatice and Availability of Redemption Money. Notice of redemption having been duly given, as provided in the Indenture, and the amount necessary for the redemption having been made available for that purpose and being available therefor on the date fixed for such redemption: (1) The Bonds, or portions thereof, designated for redemption shall, on the date fixed for redemption, become due and payable at the redemption price thereof as provided in the Indenture, anything in the Indenture or in the Bonds to the contrary notwithstanding; (2) Upon presentation and surrender thereof at the Principal Office of the Paying Agent, such Bonds shall be redeemed at the specified redemption price; (3) From and after the redemption date, the Bonds or portions thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds or portions thereof shall cease to bear further interest; and (4) From and after the date fixed for redemption, no owner of any of the Bonds or portion thereof so designated for redemption shall be entitled to any of the benefits of the Indenture, or to any other rights, except with respect to payment of the redemption price and interest accrued to the redemption date from the amounts so made available. Improvement Fund Moneys in the Improvement Fund (as defined in the Indenture), will be used only for the Improvement Project as authorized in the assessment proceedings and all incidental costs related thereto, including the costs of issuing the Bonds, all as more particularly described in the Assessment Engineer's Report for the District on file in the Office of the City Clerk of the City, as the report may be amended from time to time pursuant to the Municipal Improvement Act of 1913. Upon completion of the acquisition and construction of the Improvements, the Superintendent of Streets of the City will file a certificate of completion (the "Certificate of Completion ") with the Treasurer. Any funds remaining in the Improvement Fund following receipt by the Treasurer of the Certificate of Completion shall constitute surplus ( "Surplus "), and in accordance with the provisions of the Resolution of Intention (as defined in the Indenture), the Surplus shall be utilized or distributed in such manner as shall be determined by the City Council for any one or more purposes set forth in said Resolution of Intention. Redemption Fund The Paying Agent will establish and maintain a Redemption Fund (as defined in the Indenture) designated by the name of the District and deposit therein from time to time (i) the amount of the proceeds of the Bonds which represents accrued and capitalized interest, if any, on the Bonds, (ii) all sums received from the City representing the collection of the assessments (other than assessments for administrative costs) and the interest thereon and (iii) any surplus in the Improvement Fund to the extent provided in the Indenture. Prepayment Account There will be established by the Paying Agent a prepayment subaccount within the Redemption Fund (the "Prepayment Account "). The Paying Agent will not be required to establish the Prepayment Account until the time when deposits are required to be made therein. The City will transfer to the Paying Agent for deposit in the Prepayment Account all moneys received by the City representing the prepayment of the principal of, and interest and redemption premium on, any Bonds. Such moneys will be applied solely to the payment of the principal of, and interest and premium on, Bonds to be redeemed prior to maturity pursuant to the optional redemption provisions of the Indenture. Except for money received with respect to assessment surcharges for administrative costs, the City will transfer or cause to be transferred to the Paying Agent at least five days prior to each Interest Payment Date all sums received and not previously transferred from the collection of the assessments and any interest thereon and all sums received for the partial or full prepayment of assessments as required by Streets and Highways Code Section 8767. Any transfer representing the prepayment of assessments will be accompanied by written instructions as to the disposition of such sums to redeem Bonds prior to maturity or to pay accrued interest on any Bonds to be redeemed. Principal of and interest on the Bonds will be paid by the Paying Agent to the registered owners out of the Redemption Fund to the extent funds on deposit in the Redemption Fund are available therefor. Reserve Fund The City will create and maintain the Reserve Fund to be designated by the name of the District. The Reserve Fund will be initially funded from a portion of the Bond proceeds in an amount equal to 6% of the original principal amount of the Bonds. The City will also deposit in the Reserve Fund funds which represent the proceeds of (i) payments made to redeem delinquent Assessment hutallments or (ii) the judicial foreclosure sale of parcels pursuant the Indenture, in each case if and to the extent that any advance was made from the Reserve Fund to the Redemption Fund as a result of such delinquencies. Moneys in the Reserve Fund will be applied as follows: (1) Amounts in the Reserve Fund will be transferred to the Paying Agent for deposit in the Redemption Fund if there are insufficient moneys in said Redemption Fund to pay principal of and interest on the Bonds when due. Amounts so transferred will be repaid to the Reserve Fund from proceeds from the redemption or foreclosure of property with respect to which an assessment is unpaid and from payments of delinquent assessments. (2) Interest earned on the permitted investment of moneys on deposit in the Reserve Fund will remain in the Reserve Fund to the extent required to maintain the Reserve Fund at the Reserve Requirement (as defined herein). Not later than July 15 of each fiscal year, the amount on deposit in the Reserve Fund in excess of the Reserve Requirement will be transferred from the Reserve Fund to the Redemption Fund and credited to the unpaid Assessment Installments payable during such fiscal year. "Reserve Requirement' shall mean the least of (i) the maximum annual debt service on the outstanding Bonds, (ii) 125% of the average annual debt service on the outstanding Bonds or (iii) 6% of the original principal amount of Bonds (the "Reserve Requirement "). The City Auditor's records will reflect the credits against each of the unpaid assessments in amounts equal to each parcel's proportionate share of such transfer. Notwithstanding the above, interest earnings on moneys on deposit in the Reserve Fund in excess of the "yield" on the Bonds, as that term is defined in the Internal Revenue Code of 1986 (the "Code"), will be subject to transfer and rebate to the United States Treasury. (3) Whenever moneys in the Reserve Fund, together with available funds in the Redemption Fund, are sufficient to fully and timely pay and redeem all outstanding Bonds, plus accrued interest thereon, the money will be transferred to the Redemption Fund and collection of a corresponding amount of the remaining unpaid assessments will cease. (4) In the event an assessment is to be prepaid in cash, the City will credit the prepaid assessment with a proportionate share of the Reserve Fund and transfer an amount equal to such credit to the Redemption Fund to be utilized for the advance retirement of Bonds. Rebate Fund The City will establish and maintain a Rebate Fund (as defined in the Indenture). Deposits shall be made to the Rebate Fund only as may be required by and in accordance with the provisions of the Tax Certificate (as defined in the Indenture) pertaining to the Bonds. Amounts, if any, on deposit in the Rebate Fund will be paid to the United States of America. All earnings on amounts on deposit in the Rebate Fund will remain therein until all amounts payable to the United States of America have been paid. Investments Obligations purchased as investments of moneys in any of the funds in which investments are authorized will be deemed at all times to be part of such funds. Subject to the restrictions set forth in the Indenture, moneys in the Redemption Fund may from time to time be invested by the Paying Agent at the written direction of the Treasurer of the City, which written direction will contain a certification to the Paying Agent that such investments are Authorized Investments as defined in the Indenture. In the absence of written direction from the City, the Paying Agent will invest the moneys deposited in the Redemption Fund and any account of such funds in money market fimds as described in the Indenture. Such moneys will be invested only in obligations which will by their terms mature on such dates so as to ensure the payment of principal of and interest on the Bonds as the same become due; provided, investments of money in the Reserve Fund will mature not later than five years from the date of purchase except such money may be invested in a repurchase agreement or an investment agreement without such five -year limitation so long as the repurchase agreement or investment agreement provides for withdrawals at par on or before any Interest Payment Date. The City, and if applicable, the Paying Agent, will sell at the best price reasonably obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer for such funds or from such fiords. For the purpose of determining at any given time the balance in any such funds, any such investments constituting a part of such funds will be valued at their market value. Notwithstanding anything to the contrary, the Paying Agent will not be responsible for any loss from any investments pursuant to the Indenture, except for its own negligence or willful misconduct. The Paying Agent may act as principal or agent in the acquisition or disposition of investments. The Paying Agent and the City may commingle the funds established under the Indenture for investment purposes but will nonetheless account for each fund separately. Annual Debt Service Table 1 below sets forth the annual debt service on the Bonds based on the maturity schedule and interest rates set forth on the inside cover page of this Official Statement. TABLE 1 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS Year Ending September 2 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Totals General ANNUAL DEBT SERVICE Principal Interest Total SECURITY FOR THE BONDS The Bonds are issued upon and secured by a pledge of Assessment Revenues. The Bonds are secured by the moneys in the Redemption Fund and the Reserve Fund and any earnings thereon (except to the extent earnings must be transferred to the Rebate Fund under the Indenture) and by the unpaid assessments. Principal of and interest on the Bonds are payable exclusively out of the Redemption Fund. The payment of the amount of each Assessment Installment, interest and any penalties and collection costs is secured by an assessment lien upon the applicable property in the District. Such lien is co -equal with the latest lien thereon to secure the payment of general ad valorem property taxes, is not subject to extinguishment by the sale of any property on account of the non - payment of general property taxes, and is prior and superior to all Gees, claims, encumbrances and titles other than the liens of assessments, special taxes and general property taxes. Such lien is subordinate to all fixed special assessment liens previously imposed upon the same property but has priority over all private liens and over all fixed special assessment liens which may thereafter be created against the property. The Assessment Installments are pledged to secure the payment of the principal of, premium, if any, and interest on the Bonds, and, as received by or otherwise credited to the City, will immediately be subject to the lien of such pledge. Although the unpaid assessments constitute liens upon the parcels assessed, they do not constitute a personal indebtedness of the owners of said parcels. There can be no assurance as to the financial or legal ability, or the willingness, of such property owners to pay the unpaid assessments. The failure of a property owner to pay an Assessment Installment will not result in an increase in Assessment Installments applicable to other parcels within the District. The unpaid assessments will be collected in semi - annual installments, together with interest on the declining balances, on the County tax roll on which general taxes on real property are collected, and the unpaid assessments are payable and become delinquent at the same time and in the same proportionate amounts and bear the same proportionate penalties and interest after delinquency as do general taxes, and the assessment parcels are subject to the same provisions for sale and redemption as are properties for nonpayment of general taxes. See also the section herein below entitled "Covenant for Superior Court Foreclosure." Reserve Fund The Reserve Fund will be a source of available funds to advance to the Redemption Fund in the event of delinquent Assessment Installments. See "THE BONDS — Reserve Fund" herein. The City's obligation to advance funds to the Redemption Fund in the event of delinquent Assessment Installments is limited to the balance in the Reserve Fund. Pursuant to the Indenture, the City has no obligation to replenish the Reserve Fund except to the extent that delinquent Assessment Installments are paid or proceeds from foreclosure sales are realized. However, the determination by the City not to obligate itself to advance available funds to cure delinquencies will not prevent the City from, in its sole discretion, advancing such funds. No Additional Bonds Except for Refunding Bonds. Except for refunding bonds, no additional bonds or other obligations will be issued or incurred that will be secured by or payable from the assessments of the District. Covenant for Superior Court Foreclosure The City has covenanted in certain circumstances to institute judicial foreclosure in the event of a delinquency and thereafter to prosecute diligently to completion court foreclosure proceedings upon the lien of any and all delinquent assessments and interest. Pursuant to Part 14 of Division 10 of the California Streets and Highways Code, as amended, in the event any Assessment Installment is not paid when due, the City may order the institution of a court action to foreclose the lien of the delinquent unpaid Assessment Installments. In such an action, the property subject to the unpaid Assessment Installments may be sold at judicial foreclosure sale. This foreclosure sale procedure is not mandatory. The City will review the public records of the County of Orange, California, in connection with the collection of the Assessment Installments not later than August 1 of each year to determine the amount of Assessment Installments collected in the prior Fiscal Year. If the City determines that any parcel or parcels are delinquent in the payment of Assessment Installments, then the City will cause judicial foreclosure proceedings to be filed in the superior court not later than December 1 of each year and will prosecute diligently such foreclosure proceedings to judgment and judicial foreclosure sale; provided, however, the commencement of any foreclosure action may be deferred in the sole discretion of the City if, and only so long as, the amount in the Reserve Fund is not less than seventy percent (70 1/6) of the Reserve Requirement. Judicial Foreclosure Proceedings. The 1915 Act provides that the court in a foreclosure proceeding has the power to order property securing delinquent Assessment Installments to be sold for an amount not less than all Assessment Installments, interest, penalties, costs, fees and other charges that are delinquent at the time the foreclosure action is ordered and certain other fees and amounts as provided therein (the "Minimum Price "). The court may also include subsequent delinquent Assessment Installments and all other delinquent amounts. The City may, at its discretion but is not required to, become the purchaser of any property sold in a foreclosure proceeding. If the City becomes the purchaser, it shall pay into the Redemption Fund an amount necessary to satisfy the judgment, less any advances by the City to cover delinquent Assessment Installments, plus simple interest on such net amount at the interest rates home by the Bonds, from the dates of delinquency. Unless such property is subsequently resold, the City must transfer to the Redemption Fund any future Assessment Installments pending redemption. The City may thereupon be reimbursed for any amount advanced from the City to the Redemption Fund to cover such future Assessment Installments with respect to the property so sold from the proceeds of such sale. If the property is sold to a purchaser other than the City, the City shall deposit the proceeds from the sale of the property into the Redemption Fund. From such amount, the City shall reimburse the Reserve Fund the amount, if any, of funds advanced from the Reserve Fund to the Redemption Fund to cover the delinquent Assessment Installments with respect to the property which is sold. After reimbursement of the Reserve Fund, the City may be reimbursed for any other amounts advanced from it to the Redemption Fund to cover delinquent Assessment Installments and interest with respect to the property sold in such proceedings. Any funds in excess of the amount necessary to reimburse the City may be applied by the City to pay interest and penalties, costs, fees and other charges, to the extent they were included in the sales proceeds. If the property to be sold fails to sell for the Minimum Price, the City may petition the court to modify the judgment so that the property may be sold at a lesser price or without a Minimum Price. Notice of the hearing on such petition must be given to all Bond Owners. In certain circumstances, the court may modify the judgment after the hearing to permit the sale of the property at a price lower than the Minimum Price if the court makes certain determinations, including determinations that the sale at less than the Minimum Price will not result in an ultimate loss to Bond Owners or that Bond Owners of at least 75% of the principal amount of Bonds outstanding have consented to the petition and certain other circumstances described in the statute exist. Neither the property owner nor any holder of a security interest in the property nor any defendant in the foreclosure action may purchase the property at the foreclosure sale for less than the Minimum Price. A period of 140 days must elapse after the date notice of levy of the interest in real property is served on the judgment debtor before the sale of such lot or parcet, with not more than 4 dwelling units, can be made. However, pursuant to Streets and Highways Code Section 8832, the 140 -day period may be shortened to 20 days for undeveloped property. If the judgment debtor fails to redeem, and if the purchaser at the sale is the judgment creditor (e.g., the City), an action may be commenced by the delinquent property owner within 90 days after the date of sale to set aside such sale. The constitutionality of the repeal of the one year redemption period has not been tested; and there can be no assurance that, if tested, such legislation will be upheld. In the event such superior court foreclosure or foreclosures are necessary, there may be a delay in payments to Bond Owners pending prosecution of the foreclosure proceedings and receipt by the City of the proceeds of the foreclosure sale; it is also possible that no bid for the purchase of the applicable property would be received at the foreclosure sale. See the section herein entitled "BOND OWNERS' RISKS." Covenant to Maintain Tax - Exempt Status The City covenants that it will not make any use of the proceeds of the Bonds issued under the Indenture which would cause the Bonds to become "arbitrage bonds" subject to federal income taxation pursuant to the provisions of Section 148(k) of the Code, or to become "federally- guaranteed obligations" pursuant to the provisions of Section 149(b) of the Code, or to become "private activity bonds" pursuant to the provisions of Section 14 1(a) of the Code. To that end, the City will comply with all applicable requirements of the Code and all regulations of the United States Department of Treasury issued thereunder to the extent such requirements ace, at the time, applicable and in effect. Additionally, the City agrees to implement and follow each and every recommendation provided by bond counsel and deemed to be necessary to be undertaken by the City to ensure compliance with all applicable provisions of the Code in order to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes. Assessments Create a Lien The Assessment Installments and any interest and penalties thereon constitute a lien against the parcels on which they were imposed until the same is paid. Each lien is subordinate to all fixed special assessment liens previously imposed upon the same property but has priority over all private liens and over all fixed special assessment liens which may thereafter be created against the property. Each lien is also co- equal to and independent of the lien for general and special taxes. Limited City Obligation Upon Delinquency The City's obligation to advance moneys to pay debt service on the Bonds in the event of delinquent Assessment Installments is limited to the balance in the Reserve Fund. Neither the faith and credit nor the taxing power of the City, the State of California or any political subdivision thereof is pledged to the payment of the Bonds. THE DISTRICT Description The District consists of approximately 26.5 acres located in the City. The District is bordered by G Street, East Balboa Boulevard, Channel Road and Ocean Boulevard. The District was formed by the City on July 28, 2009. The amount of assessments levied in the District was $5,863,059, and prepayments have been made with respect to $2,433,812 of assessments. There are currently 218 parcels in the District with unpaid assessments in the amount of $3,429,247. The Improvement Project The following is a summary of the District Improvement Project Cost Estimate as contained in the Final Engineer's Report prepared by Harris & Associates, Irvine, California, Assessment Engineers, attached hereto as APPENDIX G. 10 TABLE 2 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS ENGINEER'S ESTIMATE OF COSTS AND EXPENSES DESIGN & CONSTRUCTION COSTS* Electrical Costs (Southern California Edison) Electrical Construction Costs $3,053,100 Construction Contingency ( —I0 %) 305,310 Edison Design Engineering 135 800 $3,494,210 Telephone Costs (AT &T) Telephone Construction Costs $992,998 Construction Contingency ( -10 %) 99,300 AT &T Design Engineering 102.000 $1,194,298 Street / Alley Rehabilitation $1,000,000 Construction Contingency ( -7.5 %) 75.000 $1,075,000 Estimated Utility Contribution for Equivalent Overhead System - 678.621 Total Design & Construction Costs: $5,084,887 INCIDENTAL EXPENSES(') Less deduct from contingency: - 19.744 Modified Total Design & Construction Costs: $5,065,143 Total Incidental Expenses: $348,113 Less deduct from contingency: -1.352 Modified Total Incidental Expenses: $346,761 Total Construction and Incidental Expenses: $5,411,904 FINANCING COSTS(`) Total Financing Costs): $451,155 TOTAL AMOUNT TO ASSESSMENT: $5,863,059 Time Warner Cable is required to pay for undergmunding through the Franchise Agreement with the City. to Includes costs for inspection, engineering, administration, printing, consultants and legal fees. 14 includes Reserve Requirement and Undavvritees discount. The actual Reserve Requirement represents 6% of the principal amount of the Bonds. to Amount shown does not include savings due to payments received during the cash collection period. Total Financing Costs amounted to $264,061 due to these savings. Source: Harris & Associates. 11 Assessments The City Council has taken proceedings under the 1913 Act for the formation of the District and has confirmed an assessment, which assessment and a related diagram were recorded in the office of the City Engineer, acting as the Superintendent of Streets, and with the County Recorder of the County of Orange. A notice of assessment, as prescribed in Section 3114 of the Streets and Highways Code, has been recorded with the County Recorder of the County of Orange, whereupon the assessment attached as a lien upon the property assessed within the District as provided in Section 3115 of the Streets and Highways Code. On July 28, 2009, the City Council conducted a duly noticed public hearing and ballot procedure regarding the formation of the District and the issuance of the Bonds. At the ballot procedure, the property owners approved the levy of the assessments. At the end of the 30-day cash collection period, a list of unpaid assessments was filed with the City Treasurer pursuant to Section 8620 of the 1915 Act. During the 30-day cash collection period, prepayments have been made with respect to $2,433,812 of assessments, and the Administrative Services Director has listed all unpaid assessments in the aggregate amount of $3,429,247. The amounts to be assessed against the parcels of property to pay the costs and expenses of the acquisition and construction of the improvements have been based on the estimated benefits to be derived by the various properties within the District. Teeter Plan A Teeter Plan is an alternative method for the distribution of secured property taxes to local agencies. Teeter Plan provisions are set forth in Sections 4701 to 4717 of the California Revenue and Taxation Code. If a Teeter Plan is adopted and implemented by a County Board of Supervisors, local agencies for which a county acts as "bank" and certain other public agencies and taxing areas located in that county receive annually the full amount of their share of property taxes on the secured rolls, including delinquent property taxes which have yet to be collected. No Teeter Plan applies to the District. Estimated Direct and Overlapping Indebtedness Within the District's boundaries are numerous overlapping local agencies providing public services. Some of these local agencies have outstanding bonds which are secured by taxes and assessments on the parcels within the District and others have authorized but unissued bonds which, if issued, will be secured by taxes and assessments levied on parcels within the District. The approximate amount of the direct and overlapping debt secured by such taxes and assessment on the parcels within the District for Fiscal Year 2009 -10 is shown in Table 3 below (the "Debt Report"). The Debt Report has been derived from data assembled and reported to the District by California Municipal Statistics, Inc. Neither the District nor the City have independently verified the information in the Debt Report and do not guarantee its completeness or accuracy. 12 TABLE 3 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS DIRECT AND OVERLAPPING DEBT (Excludes Parcels with Prepaid Assessments) 2009 -10 Local Secured Assessed Valuation: S [TO COME] Assessed Value -to -Lien Ratios As of July, 2009, the assessed value of the parcels with unpaid assessments, is $178,860,830. The total amount of unpaid assessments is $3,429,247. The total overall value -to -lien ratio for parcels with unpaid assessments is 52.16 -to -1. The numbers provided in the following Tables 4, 5 and 6 exclude parcels that paid all of the assessment assigned to such parcels prior to issuance of the Bonds. Table 4 provides information breaking down the overall value -to -lien ratio of parcels into groups of parcels having a value -to -lien ratio within the specified range. TABLE 4 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREETIEAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS Value -to -Lien Ratio Greater than 100:1 50:1 to 99.99:1 25:1 to 49.99:1 10:1 to 24.99:1 Less than 9.99:1 Number of Parcels 41 53 52 28 44 ASSESSED VALUE -TO -LIEN RATIOS Fiscal Year 2009 -10 Assessed Value Land $67,576,066 44,306,447 24,870,313 4,470,306 2,801 040 Structure $11,183,234 11,807,197 6,581,889 3,459,426 1,804 912 Total $78,759,300 56,113,644 31,452,202 7,929,732 4.605.952 Assessment Lien $578,345.07 805,361.25 846,663.56 496,230.27 702.647.12 Totals 218 $144,024,172 $34,836.658 $178,860,830 $3,429,247.26 'Totals do not add due to rounding. Source: Harris & Associates. 14 % of Lien 16.53% 23.02% 24.20% 14.18% 20.08% 98.02% Table 5 provides information breaking down the overall value -to -lien ratio of parcels by land use within the District. TABLE 5 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS ASSESSED VALUE -TO -LIEN RATIOS BY ACTUAL LAND USE Fiscal Year 2009 -10 Assessed Value Number of Assessment % of Land Use Parcels Land Structure Total Lien" Lien' Single Family Res. 196 $128,988,833 $32,825,508 $161,814,341 $3,031,625.14 86.66% Multi - Family Res. 17 9,950,512 1,650,071 11,600,583 337,235.87 9.64940 Condominium 3 2,153,835 361,079 2,514,914 26,548.68 0.76% Vacant 2 2.930.992 0 2.930.992 33.836.57 0.97% Totals 218 $144,024,172 $34,836,658 $178,860,830 $3,429,247.00 98.02% Totals do not add due to rounding. Source: Harris & Associates. 15 Top Ten Property Owners Table 6 shows the ten property owners (as reflected in County records available as of July 2009) within the District with the largest unpaid assessments and the percentage of the assessments attributable to each of these owner's property. The table also shows the same information for all remaining landowners as a group. TABLE 6 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREETIEAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS TOP TEN PROPERTY OWNERS Fiscal Year 2009 -10 Assessed Value 20.478,061 406.559.23 1 1.62% All other properties: 202 $126,887,627 $31,495,142 $158,382,769 $3,022,688.03 86.40% Total: 218 $144,024,172 $34,836,658 $178,860,830 $3,429,247.26 98.02% Totals do not add due to rounding. t')County records may not reflect recent ownership changes, if any. Source: Harris & Associates. As of August 12, 2009, $62,984.17 of the property taxes levied in Fiscal Year 2008 -09 on the parcels with unpaid assessments was delinquent. Property Taxes for Fiscal Year 2009 -10 are not yet due. The level of delinquencies relating to property taxes in Fiscal Year 2008 -09 and prior years may or may not be indicative of future delinquencies for the Assessment Installments. 16 Number % of Total Owner Nametll of Parcels Land Structure Collins, James B & Lorie R 1 $1,616,511 $236,195 Anderson, Nils & Nancy 1 546,555 581,158 Bibb, John M 2 1,937,710 203,254 Toohey, Thomas D 2 3,030,891 350,476 Wadsworth, John S 111 2 3,753,928 388,836 Jones, Graham M 2 171,381 57,083 Mortenson, Kay H l 251,183 172,071 Gates, Charles Edward 2 4,263,948 972,052 B1aha,John Joseph 2 380,557 246,275 Sims, Wayne R 1 1,183,881 134,116 Subtotal Top 10 Owners: 16 17,136,545 3,341,516 20.478,061 406.559.23 1 1.62% All other properties: 202 $126,887,627 $31,495,142 $158,382,769 $3,022,688.03 86.40% Total: 218 $144,024,172 $34,836,658 $178,860,830 $3,429,247.26 98.02% Totals do not add due to rounding. t')County records may not reflect recent ownership changes, if any. Source: Harris & Associates. As of August 12, 2009, $62,984.17 of the property taxes levied in Fiscal Year 2008 -09 on the parcels with unpaid assessments was delinquent. Property Taxes for Fiscal Year 2009 -10 are not yet due. The level of delinquencies relating to property taxes in Fiscal Year 2008 -09 and prior years may or may not be indicative of future delinquencies for the Assessment Installments. 16 Assessment % of Total Lien* Lien* $1,852,706 $52,576.64 1.50% 1,127,713 48,932.89 1.40% 2,140,964 46,330.07 1.32% 3,381,367 43,727.26 1.25% 4,142,764 41,645.00 1.19% 228,464 38,521.64 1.10% 423,254 37,480.51 1.07% 5,236,000 35,398.25 1.01% 626,832 30,713.21 0.88% 1,317,997 31,233.76 0.89% 20.478,061 406.559.23 1 1.62% All other properties: 202 $126,887,627 $31,495,142 $158,382,769 $3,022,688.03 86.40% Total: 218 $144,024,172 $34,836,658 $178,860,830 $3,429,247.26 98.02% Totals do not add due to rounding. t')County records may not reflect recent ownership changes, if any. Source: Harris & Associates. As of August 12, 2009, $62,984.17 of the property taxes levied in Fiscal Year 2008 -09 on the parcels with unpaid assessments was delinquent. Property Taxes for Fiscal Year 2009 -10 are not yet due. The level of delinquencies relating to property taxes in Fiscal Year 2008 -09 and prior years may or may not be indicative of future delinquencies for the Assessment Installments. 16 Historical Property Tax Collections and Delinquencies Table 7 sets forth ad valorem property tax collections and delinquencies for properties in the District for Fiscal Years 2005 -06 through 2008 -09. TABLE 7 CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS PROPERTY TAX DELINQUENCIES FISCAL YEARS 2005 -06 THROUGH 2008 -09 Tax Roll as Tax Roll as Tax Roll as Delinquencies - as of August 12, 2009 of Jul -09 of Jul -09 Land Value Fiscal Fiscal Fiscal Fiscal Aggregate Asmt 1,452,382 Year Year Year Year Delinquency No. APN 2005-06 2006-07 2007 -08 2008 -09 Amt 5 048 - 201 -39 — — — $11,035.64 11,035.64 59 048 -191-06 — — — 9,171.35 9,171.35 112 048- 222 -35 — — — 6,306.14 6,306.14 182 048 - 261 -06 — — $120.22 — $120.22 262 048- 272 -14 — — 1,389.72 — 1,389.72 282 048- 271 -05 — — — 27,823.66 27,823.66 330 048 -292 -04 $12,007M — 9.814.26 8.647.38 30,469.62 $12,007.98 — $11,324.20 $62,984.17 $86,316.35 Tax Roll as Tax Roll as Tax Roll as of Jul -09 of Jul -09 of Jul -09 Land Value Imp Value Total Value $789,572 $147,825 $937,397 1,452,382 77,006 1,529,388 2,869,056 600,944 3,470,000 1,993,329 240,671 2,234,000 1,104,188 494,190 1,598,378 2,012,610 341,679 2,354,289 664.856 156.626 821.482 $10,885,993 $2,058,941 $12,944,934 The August 12, 2009 delinquencies of $86,316.35 represeu approximately .67°!0 of the assessed value of the delinquent parcels. The City does not have information regarding the aggregate Fiscal Year 2009 -10 tax levies for the parcels included within the DistricL Assuming the Fiscal Year 2009 -10 tax levies were approximately one percent of the Fiscal Year 2009 -10 assessed value of $178,860,830, the Fiscal Year 2008 -09 delinquencies of $62,984.17 represent an approximately 3.52% delinquency rate on taxes levied in Fiscal Year 2008 -09 on the parcels with unpaid assessments. Source: Harris & Associates. BOND OWNERS' RISKS In addition to the other information contained in this Official Statement, the following riskfactors should be carefully considered in evaluating the investment quality of the Bonds. The City cautions prospective investors that this discussion does not purport to be comprehensive or definitive and does not Purport to be a complete statement of all factors which may be considered as risks in evaluating the credit quality of the Bonds. The occurrence of one or more of the events discussed herein could adversely affect the ability or willingness of property owners in the District to pay their Assessment Installments when due. Any such failure to pay Assessment Installments could result in the inability of the City to make full and punctual payments of debt service on the Bonds. In addition, the occurrence of one or more of the events discussed herein could adversely affect the value of the property in the District. 17 General In order to pay debt service on the Bonds, it is necessary that unpaid Assessment Installments on land within the District are paid in a timely manner. To the extent available, the Reserve Fund will be used to pay delinquent Assessment Installments should they occur. The assessments are secured by a lien on the parcels of land located in the District and the City may institute foreclosure proceedings to sell land with delinquent Assessment Installments for the amount of such delinquent installments in order to obtain funds to pay debt service on the Bonds. Failure by owners of the parcels to pay Assessment Installments when due, depletion of the Reserve Fund or the inability of the City to sell parcels which have been subject to foreclosure proceedings for amounts sufficient to cover the delinquent Assessment Installments for such parcels may result in the inability of the City to make full or punctual payments of debt service on the Bonds, and Bond Owners would therefore be adversely affected. Risks of Real Estate Secured Investments Generally The Bond Owners will be subject to the risks generally incident to an investment secured by real estate, including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of real property in the vicinity of the District, the supply of or demand for comparable properties in such area and the market value of residential or commercial property in the event of sale or foreclosure; (h) changes in real estate tax rate and other operating expenses, governmental rules ( including, without limitation, zoning laws and laws relating to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without limitation, earthquakes, tsunamis, fires and floods), which may result in uninsured losses. Unpaid Assessment Installments do not constitute a personal indebtedness of the owners of the parcels within the District. There is no assurance the owners will be able to pay the Assessment Installments or that they will pay such installments even if financially able to do so. Foreclosure Shortfall Amendments to the 1915 Act enacted in 1988 and effective January 1, 1989, provide that under certain circumstances property may be sold upon foreclosure at a lesser Minimum Price or without a Minimum Price. "Minimum Price" as used in the 1915 Act is the amount equal to the delinquent installments of principal or interest of the assessment or assessment, together with all interest, penalties, costs, fees, charges and other amounts more fully detailed in the 1915 Act. The court may authorize a sale at less than the Minimum Price if the court determines that sale at less than the Minimum Price will not result in an ultimate loss to the Bond Owners or, under certain circumstances, if owners of 75% or more of the outstanding Bonds consent to such sale. There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid depletion of the Reserve Fund and a delay in payments of debt service on the Bonds. See "SECURPI'Y FOR THE BONDS — Covenant for Superior Court Foreclosure — Judicial Foreclosure Proceedings. " Property Tax Delinquencies As of August 12, 2009, $62,984.17 of the property taxes levied in Fiscal Year 2008 -09 remained delinquent, representing approximately .49% of the property taxes levied on the parcels that did not pay the assessments during the cash collection period. Property taxes for Fiscal Year 2009 -10 are not yet due. The delinquency rate relating to property taxes may or may not be indicative of future delinquency rates for the Assessment Installments. 18 Delinquency Resulting in Ultimate or Temporary Loss on Bonds If a temporary deficiency occurs in the Redemption Fund with which to pay principal and interest due on Bonds that have then matured, past due interest or the principal and interest on Bonds coming due during the current year, but it does not appear to the City Treasurer that there will be an ultimate toss to the Bond Owners, the City Treasurer shall cause the Paying Agent to pay the principal of Bonds which have matured as presented and make interest payments on the Bonds when due, as long as there are available funds in the Redemption Fund, in the order of priority and as required by the Indenture. If it appears to the City Treasurer that there is a danger of an ultimate loss accruing to the Bond Owners for any reason, he or she is required pursuant to the 1915 Act to withhold payment on all matured Bonds and interest on all Bonds and report the facts to the City Council so that the City Council may take proper action to equitably protect all Bond Owners. Concentration of Ownership Ownership of the parcels is concentrated among approximately property owners. See "THE DISTRICT — Top Ten Property Owners." The timely payment of the Assessment Installment will depend upon the willingness and ability of the owners of the parcels to pay such installments when due. The City has not undertaken to assess the financial condition of the owners of the parcels or the likelihood that they will pay or will be able to pay the Assessment Installments when due and expresses no view concerning these matters. Non -Cash Payments of Assessments The 1915 Act may permit the owner of a parcel that is subject to an unpaid Assessment Installment to tender any bond secured by such assessment in payment or partial payment of any installment of the assessment or interest or penalties thereon which may be due or payable. A bond so tendered is to be accepted at the par amount thereof and credit is to be given for any interest thereon accrued to the date of the tender. Thus, if Bonds can be purchased at a discount, it may be to the advantage of a property owner to pay amounts due with respect to an assessment by tendering a Bond. Such a practice would decrease the cash flow available to the City to make payments with respect to other Bonds then outstanding and could result in a default in payment on the Bonds. Land Values The value of the property within the District is a critical factor in determining the investment quality of the Bonds. If a property owner is delinquent in the payment of Assessment Installments, the District's only remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to pay the delinquent Assessment Installments. Reductions in property values due to a downturn in the economy, physical events, such as earthquakes, tsunamis, fires or floods, stricter land use regulations, delays in development or other events will adversely impact the security underlying the assessments. See "THE DISTRICT — Assessed Value -to -Lien Ratios" herein. The assessed values of the property within the District contained herein do not represent market values arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by its current owner, adjusted annually by an amount determined by the County Assessor not to exceed an increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its assessed value. No assurance can be given that the values of the property within the District will not decline in the future if one or more events, such as natural disasters or adverse economic conditions, occur. 19 No assurance can be given that any bid will be received for a parcel with delinquent Assessment Installments offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all delinquent Assessment Installments. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." Limited City Obligation Upon Delinquency Pursuant to the 1915 Act, the City has elected not to be obligated to advance funds from the treasury of the City for delinquent Assessment Installments. The only obligation of the City with respect to such delinquencies and the consequent deficiencies in the Redemption Fund is to advance money to the Redemption Fund from the Reserve Fund. The City has no obligation to replenish the Reserve Fund except to the extent that delinquent Assessment Installments are paid or proceeds from foreclosure sales are realized. There is no assurance that the balance in the Reserve Fund will always be adequate to pay all delinquent Assessment Installments and if during the period of delinquency there are insufficient funds in the Reserve Fund, a delay may occur in payments to the Bond Owners. Collection of the Assessments The Assessment Installments are to be collected in the same manner as ordinary ad valorem real property taxes are collected and, except as provided in the special covenant for foreclosure in the Indenture, are to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is provided for ad valorem real property taxes. Pursuant to these procedures, if taxes are unpaid for a period of five years or more, the property may be deeded to the State and then is subject to sale by the County. Pursuant to the 1915 Act, in the event any delinquency in the payment of an Assessment Installment occurs, the City may commence an action in superior court to foreclose the lien therefor within the specified time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial foreclosure sale. Such judicial foreclosure action is not mandatory. Amendments to the 1915 Act enacted in 1988 and effective January 1, 1989, provide that under certain circumstances property may be sold upon foreclosure at a lesser Minimum Price or without a Minimum Price. The court may authorize a sale at less than the Minimum Price if the court determines that sale at less than Minimum Price will not result in an ultimate loss to the Bond Owners or, under certain circumstances, if owners of 75% or more of the outstanding Bonds consent to such sale. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure — Judicial Foreclosure Proceeding. " There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid a delay in payments of debt service on the Bonds. The City has covenanted that the City will commence foreclosure upon the occurrence of a delinquency as provided in the Indenture and thereafter diligently prosecute an action in the superior court to foreclose the lien of the delinquent Assessment Installments against parcels of land in the District for which such installment has been billed but has not been paid and will diligently prosecute and pursue such foreclosure proceedings to judgment and sale, all as provided in the Indenture. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." In the event that sales or foreclosures of property are necessary, there could be a delay in payments on the Bonds pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of sale. Availability of Funds to Pay Delinquent Assessment Installments Upon receipt of the proceeds from the sale of the Bonds, the City will initially establish the Reserve Fund in the amount of the "Reserve Requirement." The moneys in the Reserve Fund constitute a 20 trust fund for the benefit of the Bond Owners, will be held by the Paying Agent and will be administered by the Paying Agent in accordance with and pursuant to the provisions of the Indenture. If a deficiency occurs in the Redemption Fund for payment of interest on or principal of the Bonds, the Paying Agent will transfer into such fund an amount out of the Reserve Fund needed to pay debt service on the Bonds. There is no assurance that the balance in the Reserve Fund will always be adequate to pay the debt service on the Bonds in the event of delinquent Assessment Installments. If, during the period of delinquency, there are insufficient funds in the Reserve Fund to pay the principal of and interest on the Bonds as they become due, a delay may occur in payment of principal and/or interest to the owners of the Bonds. Owner Not Obligated to Pay Assessments Unpaid assessments do not constitute a personal indebtedness of the owner of parcels within the District, and the property owners have made no commitment to pay the principal of or interest on the Bonds or to support payment of the Bonds in any manner. There is no assurance that the property owners have the ability to pay the Assessment Installments or that, even if they have the ability, they will choose to pay such Assessment Installments. An owner may elect not to pay the assessments when due and cannot be legally compelled to do so. If an owner decides it is not economically feasible to develop or to continue owning its property encumbered by the lien of the assessment, or decides that for any other reason it does not want to retain title to the property, such owner may choose not to pay assessments and to allow the property to be foreclosed. Such a choice may be made due to a decrease in the market value of the property. A foreclosure of the property will result in such owner's interest in the property being transferred to another party. Neither the City nor any Bond Owner will have the ability at any time to seek payment directly from any owner of property within the District of any assessment or any principal or interest due on the Bonds or the ability to control who becomes a subsequent owner of any property within the District. Parity Taxes and Special Assessments; Future Indebtedness The ability or willingness of a property owner in the District to pay the Assessment Installments could be affected by the existence of other taxes and assessments imposed upon the property. The assessments and any penalties thereon constitute alien against the lots and parcels of land on which they have been levied until they are paid. Such lien is subordinate to all fixed special assessment liens previously imposed on the same property but has priority over all existing and future private liens and over all fixed special assessment liens which may thereafter be created against the property. Such lien is co- equal to and independent of the lien for general property taxes and the lien for any community facilities district special taxes regardless of when they are imposed upon the same property. In addition, other public agencies whose boundaries overlap those of the District could, with or in some circumstances without the consent of the owners of the land in the District, impose additional taxes or assessment liens on the property in the District in order to finance public improvements to be located inside or outside of the District. The City, however, has no control over the ability of other entities and districts to issue indebtedness secured by special taxes or assessments payable from all or a portion of the property in the District. In addition, the City has not prohibited itself from establishing assessment districts, community facilities districts or other districts which might impose assessments or taxes against property in the District. The imposition of additional liens on a parity with the assessments could reduce the ability or willingness of the owners of parcels in the District to pay the assessments and increases the possibility that foreclosure proceeds will not be adequate to pay delinquent assessments or the principal of and interest on the Bonds when due. See "THE DISTRICT — Estimated Direct and Overlapping Indebtedness." 21 [CONFIRM There are no existing assessment liens on the property in the District other than the Assessments securing the Bonds, and there are no existing special tax liens on the property.] Bankruptcy and Foreclosure The payment of the assessments and the ability of the City to foreclose the lien of a delinquent unpaid assessment, as discussed in "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure," may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws of the State of California relating to judicial foreclosure. .In addition, the prosecution of a foreclosure action could be delayed due to crowded local court calendars, delays in the legal process and procedural delaying tactics. The various legal opinions to be delivered concurrently with the delivery of the Bonds (including Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors' rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases. Although bankruptcy proceedings would not cause the assessments to become extinguished, bankruptcy of a property owner or of a partner or other equity owner of a property owner could result in a stay in the enforcement of the lien for the assessment, a delay in prosecuting superior court foreclosure proceedings or adversely affect the ability or willingness of a property owner to pay the Assessment Installments and could result in delinquent Assessment Installments not being paid in full. In addition, the amount of any lien on property securing the payment of delinquent Assessment Installments could be reduced if the value of the property were determined by the bankruptcy court to have become less than the amount of the lien and the amount of the delinquent Assessment Installments in excess of the reduced lien could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien, or any such delay or nonpayment, would increase the likelihood of a delay or default in payment of the principal of and interest on the Bonds and the possibility of delinquent Assessment Installments not being paid in full. Where property is encumbered by liens securing mortgage loans, it is highly probable that bankruptcy of a property owner would delay foreclosure for an extended period of time. Such a delay would increase the likelihood of a delay or default in payment of the principal and interest on the Bonds. FDIC/Federal Government Interests in Parcels The ability of the City to collect interest and penalties specified by the 1915 Act and to foreclose the lien of delinquent Assessment Installments may be limited in certain respects with regard to parcels in which the Federal Deposit Insurance Corporation (the "FDIC "), the Internal Revenue Service, the Drug Enforcement Agency or other similar federal government agencies has or obtains an interest. Specifically, with respect to the FDIC, in the event that any financial institution making a loan which is secured by parcels is taken over by the FDIC and the applicable Assessment Installment is not paid, the remedies available to the City may be constrained. The FDIC's policy statement regarding the payment of state and local real property taxes (the "Policy Statement ") provides that taxes other than ad valorem taxes which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement provides that the FDIC generally will not pay installments of non -ad valorem taxes, such as the Assessment Installments, which are levied after the time the FDIC acquires its fee interest, nor will the FDIC recognize the validity of any lien to secure payment except in certain cases where the Resolution Trust Corporation had an interest in property on or prior to December 31, 1995. Moreover, the Policy Statement provides that, with respect to parcels on which the FDIC holds a mortgage lien, the FDIC wilt not permit its 22 lien to be foreclosed out by a taxing authority without its specific consent, nor will the FDIC pay or recognize liens for any penalties, fines or similar claims imposed for the non - payment of taxes. The City is unable to predict what effect the application of the Policy Statement would have in the event of a delinquency with respect to a portion of the parcels in which the FDIC has or obtains an interest, although prohibiting the lien of the FDIC to be foreclosed out at a judicial foreclosure sale would prevent or delay the foreclosure sale. Natural Disasters Property within the District may be subject to unpredictable seismic activity, fires, floods or other natural disasters. Southern California is a seismically active area. Seismic activity represents a potential risk for damage to buildings, roads and property within the District. In addition, land susceptible to seismic activity may be subject to liquefaction during the occurrence of such event. Homes within the District near the shore of the Pacific Ocean are susceptible to flooding as a result of high tides from the Pacific Ocean. The City currently uses a `tidal valve" system to prevent flooding and to protect the homes. No assurances can be given that such system will always protect homes in the District near the shore of the Pacific Ocean from high tides and flooding. Should such homes be damaged or destroyed as a result of flooding, owners of such homes may be unable or unwilling to pay the Assessment Installments when due. In the event of a severe earthquake, tsunami, fire, flood or other natural disaster, there may be significant damage to both property and infrastructure in the District. As a result, a substantial portion of the property owners may be unable or unwilling to pay the Assessment Installments when due. In addition, the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Assessment Installments. Hazardous Substances While government taxes, assessments and charges are a common claim against the value of a parcel, other less common claims may also be relevant. The value of a parcel may be reduced as a result of a claim with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as "CERCLA" or the "Super Fund Act," is the most well known and widely applicable of these laws, but California laws with regard to hazardous substances are also stringent and similar in effect. Under many of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel whether or not the owner (or operator) had anything to do with creating or handling the hazardous substance. The effect, therefore, should any of the parcels within the District be affected by a hazardous substance, is to reduce the marketability and value by the costs of remedying the condition because the prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to remedy the condition just as the seller of such a parcel is so obligated. No Acceleration The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a payment default or other default under the terms of the Bonds or the Indenture. There is no provision in the Act or the Indenture for acceleration of the Assessment Installments in the event of a payment default 23 by an owner of a parcel or otherwise, or upon any adverse change in the tax status of interest on the Bonds. Pursuant to the Indenture, a Bond Owner is given the right for the equal benefit and protection of all Bond Owners to pursue certain remedies described in Appendix C — "SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE." Loss of Tax Exemption As discussed under the heading "CONCLUDING INFORMATION — Tax Matters," interest on the Bonds could cease to be.excluded from gross income for purposes of federal income taxation, retroactive to the date the Bonds were issued as a result of acts or omissions of the City in violation of certain provisions of the Code and the covenants of the Indenture. In order to maintain the exclusion from gross income for federal income tax purposes of the interest on the Bonds, the City has covenanted in the Indenture not to take any action, or fail to take any action, if such action or failure to take such action would adversely affect the exclusion from gross income of interest on the Bonds under Section 103 of the Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the Bonds are not subject to early redemption and will remain outstanding to maturity or until redeemed under the optional redemption provisions of the Indenture. See "THE BONDS — Redemption," Future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislative proposals, clarification of the Code or court decisions may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which Bond Counsel expresses no opinion. IRS Audit of Tax - Exempt Bond Issues The Internal Revenue Service has initiated an expanded program for the auditing of tax- exempt bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be affected as a result of such an audit of the Bonds (or by an audit of similar bonds). Limited 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. Although the City has committed to provide certain statutorily- required financial and operating information, there can be no assurance that such information will be available to Bond Owners on a timely basis. The failure to provide the required annual financial information does not give rise to monetary damages but merely an action for specific performance. Occasionally, because of general market conditions, lack of current information, the absence of a credit rating for the Bonds or because of adverse history or economic prospects connected with a particular issue, secondary marketing practices in connection with a particular issue are suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then prevailing circumstances. Such prices could be substantially different from the original purchase price. Ballot Initiatives and Legislative Measures WE From time to time constitutional initiatives or other initiative measures may be adopted by California voters and the State legislature has in the past enacted legislation which has altered the spending limitations or established minimum funding provisions for particular activities. The adoption of any such initiative or legislation might place limitations on the ability of the State, the County or local districts to increase revenues or to increase appropriations. Constitutional Amendment — Articles XIIIC and XIIID An initiative measure commonly referred to as the "Right to Vote on Taxes Act" (the "Initiative ") was approved by the voters of the State of California at the November 5, 1996, general election. The Initiative added Article XBIC ("Article XMC ") and Article XMD ("Article X)TID") to the California Constitution. According to the "Title and Summary" of the Initiative prepared by the California Attorney General, the Initiative limits "the authority of local governments to impose taxes and property- related assessments, fees and charges." Article XMD requires that, beginning July 1, 1997, the proceedings for the levy of any assessment by the City under the 1913 Act (including, if applicable, any increase in such assessment or any supplemental assessment under the 1913 Act) must be conducted in conformity with the provisions of Section 4 of Article X10D. The City completed its proceedings for the levy of assessments in the District on July 28, 2009, after complying with the procedural requirements of Section 4 of Article XM. Under Section 10400 of the 1913 Act, any challenge to the proceedings or the Assessment must be brought within 30 days after the date the assessment was levied. Article XIIIC removes limitations on the initiative power in matters of local taxes, assessments, fees and charges. Article XIHC does not define the term "assessment," and it is unclear whether this term is intended to include assessments levied under the 1913 Act. In the case of the unpaid assessments which are pledged as security for payment of the Bonds, the 1915 Act provides a mandatory, statutory duty of the City and the County Auditor to post Assessment Installments on account of the unpaid assessments to the property tax roll of the County each year while any Bonds are outstanding, commencing with property tax year 2009- 10, in amounts equal to the principal of and interest on the Bonds coming due in the succeeding calendar year, plus certain administrative costs. Although the matter is not free from doubt, it is unlikely that a court would hold that the initiative power can be used to reduce or repeal the unpaid assessments which are pledged as security for payment of the Bonds or to otherwise interfere with performance of the mandatory, statutory duty of the City and the County Auditor with respect to the unpaid assessments which are pledged as security for payment of the Bonds. The interpretation and application of the Initiative will ultimately be determined by the courts with respect to a number of the matters discussed above, and it is not possible at this time to predict with certainty the outcome of such determination. CONCLUDING INFORMATION Continuing Disclosure The City has agreed to execute a Disclosure Dissemination Agent Agreement (the "Disclosure Agreement ") prior to delivery of the Bonds for the benefit of the Underwriter, holders and beneficial owners of the Bonds to provide certain financial information and operating data relating the District not later than March 31 after the end of the City's fiscal year (the "Annual Report") and to provide notices of the occurrence of certain enumerated events (the "Listed Events "). Each Annual Report will be filed on 25 behalf of the City by the Dissemination Agent with the Municipal Securities Rulemaking Bond (the "MSRB ") through the Electronic Municipal Market Access system (the "EMMA System ") in an electronic format and accompanied by identifying information as prescribed by the MSRB, with a copy to the Paying Agent and the Underwriter. Any Notice Event (as defined in the Disclosure Dissemination Agent Agreement) will be filed by the City or the Dissemination Agent on behalf of the City, with the MSRB through the EMMA System. The specific nature of the information to be included in the Annual Report and the notices of Notice Events is set forth in APPENDIX F — "DISCLOSURE DISSEMINATION AGENT AGREEMENT." The City has agreed to execute the Disclosure Agreement in order to assist the Underwriter in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5) (the "Rule "). See APPENDIX F— "DISCLOSURE DISSEMINATION AGENT AGREEMENT." It should be noted that the City is required to file certain financial statements with the Annual Report. This requirement has been included in the Disclosure Agreement solely to satisfy the provisions of the Rule. The inclusion of this information does not mean that the Bonds are secured by any resources or property of the City other than as described hereinabove. See `BOND OWNERS' RISKS — Limited City Obligation Upon Delinquency." It should also be noted that the list of significant events which the City has agreed to report includes one item which has absolutely no application to the Bonds. These items have been included in the list solely to satisfy the requirements of the Rule. Any implication from the inclusion of these items in the list to the contrary notwithstanding, the Bonds have not been assigned a credit rating. The City has never failed to comply in all material respects with any previous undertakings with regard to the Rule to provide annual reports or notices of material events. Legal Opinion All proceedings in connection with the issuance of the Bonds are subject to the approval of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel ("Bond Counsel "). The opinion of Bond Counsel attesting to the validity of the Bonds will be delivered with each Bond. A form of the opinion to be delivered by Bond Counsel is set forth in Appendix D hereto. The descriptions of the Bonds and statements of law and legal conclusions set forth in this Official Statement under the headings "THE BONDS," "SECURITY FOR THE BONDS," "CONCLUDING INFORMATION — Tax Matters" and Appendices C and D herein have been reviewed by Bond Counsel. Bond Counsel's engagement is limited to a review of the legal procedures required for the authorization of the Bonds and the exemption of interest on the Bonds from income taxation. See "CONCLUDING INFORMATION — Tax Matters" herein. The opinion of Bond Counsel will not consider or extend to any documents, agreements, representations, offering circulars or other material of any kind concerning the Bonds, including the Official Statement, not mentioned in this paragraph. Tax Matters In the opinion of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other things, the accuracy of certain representations and compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Code and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or 26 the accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of Bond Counsel is set forth in Appendix D hereto. To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the extent properly allocable to each beneficial owner thereof, is treated as interest on the Bonds which is excluded from gross income for federal income tax purposes and State of California personal income taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the Bonds accrues daily over the term to maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight - line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale, redemption or payment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their own tax advisors with respect to the tax consequences of ownership of such Bonds with original issue discount, including the treatment of beneficial owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such Bonds is sold to the public. Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) ("Premium Bonds ") will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of Bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the amount of tax - exempt interest received, and a beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their own tax advisors with respect to the property treatment of amortizable bond premium in their particular circumstances. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The City, as issuer of the Bonds, has made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the Bonds being included in gross income for federal income tax purposes, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of any person other than Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation. 27 Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross income for federal income tax purposes and is exempt from State of California personal income taxes, the ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a beneficial owner's federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax consequences. Future legislation, if enacted into law, or clarification of the Code may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial owners from realizing the full current benefit of the tax status of such interest. The introduction or enactment of any such future legislation or clarification of the Code may also affect the market price for, or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no opinion. The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (the "IRS ") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the City, or about the effect of future changes in the Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted, however, to comply with the requirements of the Code. Bond Counsel's engagement with respect to the Bonds ends with the issuance and delivery of the Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the beneficial owners regarding the tax- exempt status of the Bonds in the event of an audit examination by the IRS. Under current procedures, parties other than the City and its appointed counsel, including the beneficial owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax- exempt bonds is difficult, obtaining an independent review of IRS positions with which the City legitimately disagrees, may not be practicable. Any action of the IRS, including but not limited to selection of the Bonds to audit, or the course or result of such audit, or the audit of bonds representing similar tax issues may affect the market price for, or the marketability of, the Bonds, and may cause the City or the beneficial owners to incur significant expense. No Litigation There is no action, suit or proceeding known by the City to be pending at the present time restraining or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the Bonds or any proceedings of the City taken with respect to the execution or delivery thereof A no litigation certificate executed by the City will be required to be delivered to the Underwriter simultaneously with the delivery of the Bonds. No Rating The City has not made, and does not contemplate making, application to any rating agency for the assignment of a rating for the Bonds. Financial Interests 28 The fees being paid to the Financial Advisor, Disclosure Counsel and Bond Counsel are contingent upon the issuance and delivery of the Bonds. Underwriting The Bonds were sold to Southwest Securities, Inc. (the "Underwriter") at a negotiated sale. The Underwriter has agreed to purchase the Bonds at a price of $ ($ par value, less an Underwriter's discount of $ and less /plus original issue discount/premium of $ . The purchase contract for the Bonds provides that the Underwriter will purchase all of the Bonds if any are purchased, the obligation to make such purchase is subject to certain terms and conditions set forth in such purchase contract, the approval of certain legal matters by Bond Counsel and certain other conditions. The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time by the Underwriter. Financial Advisor Fieldman, Rolapp & Associates, Irvine, California, served as financial advisor to the City with respect to the sale of the Bonds. Fieldman, Rolapp & Associates will receive compensation contingent upon the sale and delivery of the Bonds. Miscellaneous All quotations from, and summaries and explanations of, the Indenture and other statutes and documents contained herein do not purport to be complete, and reference is made to said documents, the 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 City. All estimates, assumptions, statistical information and other statements contained herein, while taken from sources considered reliable, are not guaranteed by the City. The information contained herein should not be construed as representing all conditions affecting the City or the Bonds. 99 APPENDIX B INFORMATION ABOUT THE NEWPORT BEACH AREA This appendix sets forth general information about the Newport Beach area. This information is included only for general background purposes. It is not intended to suggest that the Bonds are payable from any source other than the assessments and certain funds and accounts created by the Indenture. General Description The City of Newport Beach (the "City") was incorporated September 1, 1906. The Council - Manager form of government was established by Municipal Charter on January 7, 1955. The City is located in Orange County, California, and is 75 miles north of San Diego, 15 miles south of Long Beach and 50 miles south of Los Angeles. The tourist population is high throughout the year. Its harbor, recreation and special attractions draw many to the City. Climate & Topography The City's climate is moderate. Because the City is a beach city, temperatures are generally cooler in the summer and warmer in the winter than other Southern California areas. While much of the City is just above sea level, the City does rise inland. The total area of the City in square miles is: Land -25.0, Bay -2.5 and Ocean-23.0, for a total of 50.5 square miles. Population The table below shows the recent population of the City and County of Orange (the "County"). POPULATION GROWTH, 2005 -2009 City of Newport Beach and the County of Orange Smsrce: California State Department of Finance, E-4 Population Estimates far Cities, Counties and the State, 2001 -2009 with 2000 DRUBenchmark. City of County of Year Newport Beach Orange 2005 82,984 3,050,403 2006 83,503 3,071,924 2007 84,218 3,098,121 2008 84,231 3,107,500 2009 86,252 3,139,017 Smsrce: California State Department of Finance, E-4 Population Estimates far Cities, Counties and the State, 2001 -2009 with 2000 DRUBenchmark. Employment The following table summarizes wage and salary employment in the County from 2004 through May 2009. The total wage and salary employment in the County increased by 1.0% between 2004 and 2008. "Service Providing" is the largest employment sector in the County. ANNUAL AVERAGE INDUSTRY EMPLOYMENTtt1 Orange County Primary PMSA Source: State of California, Employment Development Department, Orange PhlSA Industry Employment &Labor Force by Annual Average, March 2008 Benchmark. B -2 2004 2005 2006 2007 2008 2009* Total Farm 6,700 5,600 5,300 5,000 4,700 5,100 Total Nonfarm 1,456,700 1,491,000 1,518,900 1,515,500 1,484,700 1,426,300 Total Private 1,303,300 1,335,600 1,362,200 1,356,200 1,322,600 1,263,700 Goods Producing 276,300 283,500 289,900 284,000 265,600 244,000 Natural Resources and Mining 600 700 600 600 600 600 Construction 92,200 99,900 106,600 103,100 91,200 78,300 Manufacturing 183,500 182,900 182,700 180,400 173,800 165,100 Service Providing 1,180,500 1,207,400 1,229,000 1,231,500 1,219,100 1,182,300 Trade, Transportation and Utilities 264,900 269,800 272,800 277,000 270,900 252,800 Wholesale Trade 82,400 83,000 83,700 86,900 85,900 79,600 Retail Trade 153,200 158,100 160,800 161,200 155,700 144,800 Transportation, Warehousing and Utilities 29,200 28,700 28,200 28,900 29,400 28,400 Information 33,800 32,800 31,900 31,200 30,100 27,900 Financial Activities 132,300 138,400 138,200 127,700 113,700 108,800 Professional and Business Services 254,900 264,300 274,500 273,300 267,900 256,400 Educational and Health Services 131,000 133,500 137,700 142,600 149,600 151,600 Government 153.400 155.300 1563 00 159.400 162.10 162.600 Total, All Industries 1,463,400 1,496,500 1,524,300 1,520,500 1,489,400 1,431,400 Note: The "Total All Industries" data is not directly comparable to the employment data found herein. (1) Employment is reported by place of work; it does not include persons involved in labor- management disputes. Figures are rounded to the nearest hundred. Columns may not add to totals due to rounding. 2009 data through May 2009. Source: State of California, Employment Development Department, Orange PhlSA Industry Employment &Labor Force by Annual Average, March 2008 Benchmark. B -2 The following table summarizes civilian labor force, employment and unemployment in the City, the County, the State of California (the "State ") and the United States of America from 2004 to 2009. CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT City of Newport Beach, County of Orange, State of California and United States of America Annual Averages, 2004 -2009 Civilian Civilian Labor Civilian Civilian Unemployment Year and Area Force Employment(() Unemployment(') Rate (3) 2004 Newport Beach 44,500 43,400 1,200 2.6% Orange County 1,589,300 1,521,300 68,000 4.3 California 17,655,000 16,576,000 1,080,000 6.2 United States (4) 147,401,000 139,252,000 8,149,000 5.5 2005 Newport Beach 45,200 44,200 1,100 2.3% Orange County 1,602,262 1,541,800 60,400 3.8 California 17,695,600 16,746,900 948,700 5.4 United States (4) 149,320,000 141,730,000 7,591,000 5.1 2006 Newport Beach 45,900 44,900 1,000 2.1% Orange County 1,623,700 1,568,300 55,400 3.4 California 17,907,200 17,029,900 877,300 4.9 United States ") 152,571,000 146,081,000 6,491,000 4.3 2007 Newport Beach 46,000 44,900 1,100 2.4% Orange County 1,633,100 1,568,800 64,300 3.9 California 18,188,100 17,208,900 979,200 5.4 United States(4) 153,836,000 146,294,000 7,541,000 4.9 2008 Newport Beach 45,900 44,000 1,500 3.3% Orange County 1,638,600 1,552,300 86,200 5.3 California 18,391,800 17,059,600 1,332,300 7.2 United States") 154,287,000 145,362,000 8,924,000 5.8 2009 Newport Beach 44,900 42,300 2,600 5.8% Orange County 1,628,200 1,477,700 150,500 9.2 California 18,530,800 16,378,800 2,152,000 11.6 United States(4) 155,921,000 140,826,000 15,095,000 9.7 i0 Includes persons involved in labor- management trade disputes. (Z) Includes all persons without jobs who are actively seeking work. t3) The unemployment rate is computed from unrounded data; therefore, it may differ from rates computed from rounded figures in this table. (4) Not strictly comparable with data for prior years. *2009 data through June 2009. Source: State of California, Employment Development Department„ based on March 2008 benchmark and U.S. Department of Labor, Bureau of Labor Statistics. 1 Median Household Income The following table summarizes the median household income for the City and the County, from 2005 to 2007. MEDIAN HOUSEHOLD INCOME City of Newport Beach Newport Beach County of Orange Source: U.S. Census Bureau. Major Employers 2005 2006 97,428 103,068 65,953 70,232 The principal employers as of June 30, 2008, in the City are as follows: Name Hoag Memorial Hospital Pacific Life Insurance US Bank City of Newport Beach Pacific Investment Management Co. Jazz Semiconductor The Island Hotel Newport Beach Marriott & Tennis Club Conexant Systems Inc. Mindspeed Technology PRINCIPAL EMPLOYERS of City of Newport Beach Type of Business or Entity Hospital and health care Life insurance, investment Banking City government Investment company Semiconductor networking solutions Hotel, resort Hotels, resorts Semiconductor networking solutions Semiconductor networking solutions 2007 110,511 73,263 Numbered Employed 4,168 2,997 2,234 827 735 649 520 473 290 280 (D Figures reflect number of employees of each employer as of June 30, 2008, and do not reflect current number of employees for each employer. Source: Newport Beach Chamber of Commerce. m The largest private sector employers within the County reported as of November 24, 2008: LARGEST PRIVATE SECTOR EMPLOYERSin County of Orange Name Walt Disney Co. University of California, Irvine St Joseph Health System Boeing Co. Yum Brands Inc. Target Corp. Supervalu California State University, Fullerton Bank of America Corp. Kaiser Permanente Home Depot Inc. Memorial Health Services Wal -Mart Stones Inc. AT &T Inc. Costco Wholesale The Kroger Co. Hoag Memorial Hospital Presbyterian Tenet Healthcare Corp. Cedar Fair LP C VS Caremark Corp. United Health Group Inc. Leine Company Edison International Marriott International Inc. Automobile Club of Southern California P1 Excludes public sector employment such as the federal goverrunmt, the County, local cities, school districts and water districts and other govern memal agencies. Figures reflect number of employees of each employer as of November 24, 2008, and do not reflect current number of employees for each employer. Source: Orange County Business Journal —1009 Book of Lists. M Number Type of Business or Entity Employed Entertainment 20,000 Higher education and health care 17,500 Health care 10,656 Aerospace and communications 8,100 Fast food restaurants 7,000 Retail 6,100 Grocery retailer 6,082 Higher education 5,768 Banldng 5,500 Health care 5,496 Retail 5,450 Health care 5,309 Retail 5,260 Telephone service 4,730 Discount retailer 4,500 Grocery retailer 4,500 Hospital and health care 4,150 Health care 4,000 Entertainment 3,950 Pharmacy 3,920 Health care 3,900 Residential and commercial development 3,700 Utilities and investments 3,545 hotels, resorts and senior living communities 3,379 information systems, insurance and automotive assistance 3,325 P1 Excludes public sector employment such as the federal goverrunmt, the County, local cities, school districts and water districts and other govern memal agencies. Figures reflect number of employees of each employer as of November 24, 2008, and do not reflect current number of employees for each employer. Source: Orange County Business Journal —1009 Book of Lists. M Construction Activity The following table shows building permit valuations and new housing units in Newport Beach for years 2004 through 2008. City of Newport Beach Building Permit Valuation and New Housing Units (Dollar Amounts Are Stated Fully) Non - Residential New Commercial $ 7,746,165 2004 2005 2006 2007 2008 Residential 0 2,000,000 0 Other(l) 18,442,820 34,025,725 Single- Family $ 56,021,134 $ 73,381,227 $ 82,967,310 $ 68,054,930 $ 82,504,056 Multi- Family 31,833,538 7,658,741 7,450,000 11,283,560 9,791,756 Altemtion/Additions 50,009,411 53,783.612 56,805,626 58,058,723 49,507,192 Total $137,864,083 $136,823,580 $147,222,936 $137,397,213 $140,803,004 Non - Residential New Commercial $ 7,746,165 $ 18,235,000 $ 36,300,000 $ 57,666,475 $ 17,000,000 New Industry 0 0 0 2,000,000 0 Other(l) 18,442,820 34,025,725 37,093,731 29,236,976 32,513,364 Alteration/Additions 46.776,521 54,026,316 53,803,425 40,431,975 62,653.046 Total $ 72,965,506 $106,287,041 $127,197,156 $129,335,426 $112,166,410 Total AllIndustry (2) $210,829,589 $243,110,621 $274,420,092 $266,732,639 $252,969,414 New Housing Units Single-Family Units 100 141 126 107 90 Multi- Family Units 231 34 34 40 38 Total 331 175 160 147 128 1p Indudes churches and religious building, hospitals and institutional buildings, schools and educational buildings, residential garages, public works and utilities buildings and non - residential alterations and additions. !n May not add up due to rounding. Source: Construction Industry Research Board. Ia Taxable Sales Taxable sales in the City are shown below. Taxable sales in the City increased by 38.4% between 2003 and 2007. The largest taxable sales sectors in the City are automotive, eating and drinking places and general merchandise. Apparel General Merchandise Food Stores Eating and Drinking Places Home Furnishings & Appliances Building Materials and Farm Automotive Service Station Other Retail Stores Total Retail Stores All Other Outlets Total All Outlets * Includes laved 2°d Quarterof2008. Sou- Caltfomta Board ofFqualianrorc Assessed Valuation TAXABLE SALES City of Newport Beach 2003 - 2008' (In Thousands) Below is a table which indicates the secured, unsecured and total assessed valuations for the City for the Fiscal Years 2005 -06 through 2009 -10: Fiscal Year Secured Valuation Taxable Sales 2005 -06 $28,136,554,256 53,310 2003 2004 2005 2006 2007 2008 $ 116,461 $ 138,308 $ 159,346 $ 168,773 $ 172,604 $ 77,006 216,676 237,968 256.604 259,294 247.316 106,172 75,576 76,493 82,662 86,262 88,522 41,255 309,219 344,205 381,592 392,918 403,373 194,803 82,783 81,027 99,458 96,501 94,043 33,336 21,369 25,548 29,130 30,566 29,774 13,152 350,740 382,748 430,653 538,993 647,238 269,040 61,231 74,715 89,411 105,462 116,143 67,592 276.253 288.372 327,910 334,155 217,538 96.614 $1,510,308 $1,649,348 $1,856,766 $2,012,924 $2,016,551 $ 898,970 402.738 475,161 501,875 559,897 631,800 311.005 $1,913,046 $2,124,545 $2,358,641 $2,572,821 $2,648,351 $1,209,975 Below is a table which indicates the secured, unsecured and total assessed valuations for the City for the Fiscal Years 2005 -06 through 2009 -10: Fiscal Year Secured Valuation State Assessed 2005 -06 $28,136,554,256 53,310 2006 -07 31,423,419,732 53,310 2007 -08 34,188,515,273 53,310 2008 -09 36,435,406,840 699,230 2009 -10 Source. County of Orange Auditor- Controller's Office. ON Unsecured Valuation $1,914,106,993 1,569,867,249 1,668,015,342 1,538,539,482 Total Assessed Value $30,050,714,559 32,993,340,291 35,856,583,925 37,974,645,552 APPENDIX C SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE The following is a summary of certain provisions of the Indenture not otherwise summarized in the text of this Official Statement. 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. Purchasers of the bonds are referred to the complete text of the Indenture, copies of which are available upon written request from the Paying Agent. Capitalized terms not otherwise defined herein shall have the meanings given such terms in the body of the Official Statement. TRANSFER OF REGISTERED BONDS. Any Bond may, in accordance with its terms, be transferred upon the books of registration required to be kept by the Paying Agent pursuant to the provisions of the Indenture by the owner in whose name it is registered, or by his or her duly authorized attorney or legal representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a written instrument of transfer in a form approved by the Paying Agent and duly executed by the owner of said Bonds. The Paying Agent may require the payment by the Bond owner requesting such transfer of any tax or other governmental charge required to be paid with respect to such transfer and such charges as provided for in the system of registration for registered debt obligations. The Paying Agent may refuse to transfer or exchange either (i) any Bond during the period established by the Paying Agent for the selection of Bonds for prepayment, or (ii) any Bond which the Paying Agent has selected for prepayment in whole or in part under the provisions of the Indenture. Upon any registration of transfer, a new Bond or Bonds shall be authenticated and delivered by the Paying Agent, in exchange for such Bond, in the name of the transferee, in any denomination or denominations authorized by the Indenture and in an aggregate principal amount equal to the principal amount of such Bond or principal amount of such Bond or Bonds so surrendered. EXCHANGE OF BONDS. Bonds may be exchanged at the Principal Office of the Paying Agent for a like aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the payment of any tax or governmental charges, if any, upon surrender and cancellation of the Bond. Upon such transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same series and maturity for the same aggregate principal amount will be issued to the transferee in exchange therefor. The Paying Agent shall not be required to register the exchange of any Bonds during the fifteen (15) days preceding the selection of any Bonds for redemption prior to the maturity thereof, nor with respect to any Bond which has been selected for redemption prior to the maturity thereof. MUTILATED, DESTROYED, STOLEN OR LOST BONDS. In case any Bond shall become mutilated or be destroyed, stolen or lost, the City shall cause to be executed and authenticated a new Bond of like date and tenor and principal or maturity amount in exchange and substitution for and upon the cancellation of such mutilated Bond or in lieu of and in substitution for such Bond mutilated, destroyed, stolen or lost, upon the Bond owner's paying reasonable expenses and charges in connection therewith, and, in the case of a Bond destroyed, stolen or lost, the filing by the Bond owner with the Paying Agent and City of evidence satisfactory to them that such Bond was destroyed, stolen or lost, and of ownership thereof, and furnishing the Paying Agent and City with indemnity satisfactory to them. OWNERSHIP OF BONDS. The person in whose name any Bond shall be registered shall be deemed and regarded by the Paying Agent and the City as the absolute owner thereof for all purposes and shall C -1 not be affected by any notice to the contrary, and payment of or on account of the principal and redemption premium, if any, of any such Bond, and the interest on any such Bond, shall be made only to or upon the order of the registered owner thereof or the owner's legal representative shown on the books of registration. Ali such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond, including the redemption premium, if any, and interest thereon, to the extent of the sum or sums so paid. UNCLAIMED FUNDS. Notwithstanding any provisions of the Indenture, subject to applicable state escheat laws, any moneys held by the Paying Agent in trust for the payment of the principal of, or premium, if any, or interest on, any Bonds and remaining unclaimed for one year after the principal of all of the Bonds has become due and payable (whether at maturity or upon call for redemption or by declaration as provided in the Indenture), if such moneys were held at such date, or one year after the date of deposit of such moneys if deposited after said date when all of the Bonds became due and payable, shall be repaid to the City free from the lien created by the Indenture, and all liability of the Paying Agent with respect to such moneys shall thereupon cease awl the Bond owners shall, upon such payment, look only to the City for payment; provided, however, that before the repayment of such moneys to the City as aforesaid, the Paying Agent shall (at the written request and cost of the City) first publish at least once in a nationally recognized financial publication published in New York, New York, a notice, in such form as may be deemed appropriate by the Paying Agent, with respect to the provisions relating to the repayment to the City of the moneys held for the payment thereof. FUNDS AND ACCOUNTS. The Paying Agent and the City, as applicable, are authorized and directed to establish the following funds for purposes of collecting Assessment Installments, making payment for the designated costs and expenses and payment of principal and interest on the Bonds pursuant to the Indenture. Redemption Fund: The Paying Agent is authorized and directed to establish and maintain a Redemption Fund (as defined in the Indenture) designated by the name of the District and to deposit therein from time to time (i) the amount of the proceeds of the Bonds which represents accrued and capitalized interest, if any, on the Bonds, (n) all sums received from the City representing the collection of the assessments (other than assessments for administrative costs) and the interest thereon, and (iii) any surplus in the Improvement Fund (as defined in the Indenture) to the extent as provided below. Except for money received with respect to assessment surcharges for administrative costs, the City shall transfer or cause to be transferred to the Paying Agent all sums received and not previously transferred from the collection of the assessments and any interest thereon and all sums received for the partial or full prepayment of assessments as required by Streets & Highways Code Section 8767. Principal of and interest on the Bonds shall be paid by the Paying Agent to the registered owners out of the Redemption Fund to the extent funds on deposit in said Redemption Fund are available therefor. Under no circumstances shall the Bonds or interest thereon be paid out of any other fund except as provided in the Indenture. Then: shall be established by the Paying Agent a prepayment subaccount within the Redemption Fund to be known as the Prepayment Account ("Prepayment Account"). The Paying Agent shall not be required to establish the Prepayment Account until the time when deposits are required to be made therein. The City shall transfer to the Paying Agent for deposit in the Prepayment Account all moneys received by the City representing the prepayment of the principal of, and interest and redemption premium on, any Bonds. Such moneys shall be applied solely to the payment of the principal of, and interest and premium on, Bonds to be redeemed prior to maturity pursuant to the provisions of the Indenture. Reserve Fund: The City shall create and maintain a special reserve fund for the Bonds (the "Reserve Fund "). The City shall also deposit in the Reserve Fund funds which represent the proceeds of (i) payments made to redeem delinquent Assessment Installments or (ii) the judicial foreclosure sale of parcels pursuant to the C -2 Indenture, in each case if and to the extent that any advance was made from the Reserve Fund to the Redemption Fund as a result of such delinquencies. Moneys in the Reserve Fund shall be applied as follows 1. Amounts in the Reserve Fund shall be transferred to the Paying Agent for deposit in the Redemption Fund if there are insufficient moneys in the Redemption Fund to pay principal of and interest on the Bonds when due. Amounts so transferred shall be repaid to the Reserve Fund from proceeds from the redemption or foreclosure of property with respect to which an assessment is unpaid and from payments of the delinquent assessments. 2. Interest earned on the permitted investment of moneys on deposit in the Reserve Fund shall remain in the Reserve Fund to the extent required to maintain the Reserve Fund at the Reserve Requirement. Not later than July 15 of each fiscal year, the amount on deposit in the Reserve Fund in excess of the Reserve Requirement shall be transferred from the Reserve Fund to the Redemption Fund and credited to the unpaid Assessment Installments payable during such fiscal year. Notwithstanding the above, interest earnings on moneys on deposit in the Reserve Fund in excess of the `yield ' on the Bonds, as that term is defined in the Internal Revenue Code of 1986 (the "Code" ), shall be subject to transfer and rebate to the United States Treasury. 3. Whenever moneys in the Reserve Fund, together with available funds in the Redemption Fund, are sufficient to fully and timely pay and redeem all outstanding Bonds, plus accrued interest thereon, the money shall be transferred to the Redemption Fund and collection of a corresponding amount of the remaining unpaid assessments shall cease. 4. In the event an assessment is prepaid in cash, the City shall credit the prepaid assessment with a proportionate share of the Reserve Fund and transfer an amount equal to such credit to the Redemption Fund to be utilized for the advance retirement of Bonds. Improvement Fund: The moneys in the Improvement Fund, including the prescribed portion of proceeds of sale of the Bonds and the proceeds of assessment prepayments received by the City prior to issuance and sale of the Bonds, shall be used only for the payment of Project Costs as that term is defined in the Indenture. "Project Costs" shall mean the costs of the conversion of certain overhead electrical and communication facilities to underground locations, together with appurtenances and appurtenant work in connection therewith (the "Improvements ") as authorized in the assessment proceedings and all incidental costs related thereto, including the costs of issuing the Bonds, all as more particularly described in the Assessment Engineer's Report. Interest earned on the investment of the moneys held in the Improvement Fund shall be deemed at all times to be part of the Improvement Fund. Upon completion of the acquisition and construction of the Improvements, the Superintendent of Streets of the City will file a certificate of completion (the "Certificate of Completion ") with the Treasurer. Any funds remaining in the Improvement Fund following receipt by the Treasurer of the Certificate of Completion shall constitute surplus ( "Surplus "), and in accordance with the provisions of the Resolution of Intention (as defined in the Indenture), the Surplus shall be utilized or distributed in such manner as shall be determined by the City Council for any one or more purposes set forth in said Resolution of Intention. Rebate Fund: The City shall establish and maintain a Rebate Fund (as defined in the Indenture). Deposits shall be made to the Rebate Fund only as may be required by and in accordance with the provisions of the Tax C -3 Certificate (as defined in the Indenture) pertaining to the Bonds. Amounts, if any, on deposit in the Rebate Fund shall be paid to the United States of America. INVESTMENTS. Obligations purchased as investments of moneys in any of the funds in which investments are authorized shall be deemed at all times to be part of such funds. Subject to the restrictions set forth in the Indenture, moneys in the Redemption Fund may from time to time be invested by the Paying Agent, at the written direction of the Treasurer of the City, which written direction shall contain a certification to the Paying Agent that such investments are Authorized Investments. In the absence of written direction from the City, the Paying Agent shall invest the moneys deposited in the Redemption Fund and any account of such fund in investments described in paragraph (vi) below. Such moneys shall be invested only in obligations which will by their terms mature on such dates so as to ensure the payment of principal of and interest on the Bonds as the same become due; provided, investments of money in the Reserve Fund shall mature not later than five years from the date of purchase except such money may be invested in a repurchase agreement or an investment agreement without such five -year limitation so long as the repurchase agreement or investment agreement provides for withdrawals at par on or before any Interest Payment Date. The City and, if applicable, the Paying Agent shall sell at the best price reasonably obtainable or present for redemption any obligations so purchased whenever it may be necessary to do so in order to provide moneys to meet any payment or transfer for such funds or from such funds. For the purpose of determining at any given time the balance in any such funds, any such investments constituting a part of such funds shall be valued at their market value. Notwithstanding anything in the Indenture to the contrary, the Paying Agent shall not be responsible for any loss from any investments pursuant such Indenture, except for its own negligence or willful misconduct. The Paying Agent may act as principal or agent in the acquisition or disposition of investments. The Paying Agent and the City may commingle the fimds established under such Indenture for investment purposes but shall nonetheless account for each separately. The Paying Agent is authorized, in making or disposing of any investment permitted by this Section, to deal with itself (in its individual capacity) or with any one or more of its affiliates, whether it or such affiliate is acting as an agent of the Paying Agent or for any third person or dealing as principal for its own account. The City acknowledges that to the extent regulations of the Comptroller of the Currency or other applicable regulatory entity grant the City the right to receive brokerage confirmations of security transactions as they occur, the City specifically waived receipt of such confirmations to the extent permitted by law. Notwithstanding the preceding sentence, the Paying Agent will deliver confirmations to the City upon the written request of the City with respect to any specific transaction identified in the request. The Paying Agent will famish the City periodic cash transaction statements that include details for all investment transactions made by the Paying Agent. "Authorized Investments" is defined to mean the following types of investments: (i) (a) 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) or (b) obligations of any agency, department or instrumentality of the United States of America the timely payment of principal of and interest on which are unconditionally guaranteed by the full faith and credit of the United States of America; (ii) interest- bearing demand or time deposits (including certificates of deposit) in federal or State of California chartered savings and loan associations or banks (including the Paying Agent and its affiliates), provided that (a) in the case of a savings and loan association, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such savings and loan association shall be rated in one of the two C-4 highest rating categories by a nationally recognized rating service, and (b) in the case of a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the parent bank holding company of which such bank is the lead bank) shall be rated in one of the two highest rating categories by a nationally recognized rating service; (iii) repurchase agreements collateralized by obligations described in (i) above with a registered broker /dealer subject to Securities Investors Protection Corporation liquidation in the event of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such bank shall be rated in one of the two highest rating categories by a nationally recognized rating service, or such bank shall be the lead bank of a bank holding company whose unsecured obligations are rated in one of the two highest rating categories by a nationally recognized rating service; (b) the most recently reported combined capital, surplus and undivided profits of such bank shall be not less than $100,000,000; and (c) the entity holding such repurchase agreement shall have a perfected fast security interest in the collateral securities for the benefit of the City under the California Commercial Code or pursuant to the book -entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq.; (iv) bankers acceptances endorsed and guaranteed by banks described in clause (iii) above; (v) obligations, the interest on which is exempt from federal income taxation under Section 103 of the Code and which are rated in one of the two highest rating categories by a nationally recognized rating service; (vi) money market funds registered under the Federal Investment Company Act of 1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating by Standard & Poor's of "AAAm -G," "AAA -m" or "AA -m" and, if rated by Moody's, rated "Aaa," "Aal" or "Aa2;" (vii) units of a taxable government money market portfolio (including portfolios of the Paying Agent and its affiliates) comprised solely of obligations listed in clauses (i) or clause (ii) above; (viii) commercial paper of "prime" quality of the highest ranking or of the highest letter and numerical rating by Moody's or Standard & Poor's of issuing corporations that are organized and operating within the United States of America and have total assets in excess of $500,000,000 and have an "Aa," "AA" or higher rating for the issuer's debentures, other than commercial paper, as provided by Moody's or Standard & Poor's, respectively, and provided that purchases of eligible commercial paper may not exceed one hundred eighty (180) days' maturity nor represent more than ten percent (10 %) of the outstanding paper of an issuing corporation; (ix) any general obligation of a bank or insurance company whose long -term debt obligation: are rated in one of the two highest rating categories of a nationally recognized rating service; (x) the Local Agency Investment Fund in the State Treasury of the State of California as permitted by the State Treasurer pursuant to Section 16429.1 of the California Government Code; and (xi) any other investment which, in the City's sole discretion, is consistent with or of like security to authorized investments specifically itemized herein and at the time of investment is a legal investment under the laws of the State of California for the moneys C -5 proposed to be invested therein. The Paying Agent shall be entitled to rely upon any written investment direction from the City as a certification to the Paying Agent that such investment constitutes an Authorized Investment. PROVISIONS OF INDENTURE CONSTITUTE A CONTRACT. The provisions of the Indenture and the Bonds shall constitute a contract between the City and the Bond owners and the provisions thereof shall be enforceable by any Bond owner for the equal benefit and protection of all Bond owners similarity situated by mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is now or may hereafter be authorized under the laws of the State of California in any court of competent jurisdiction. Such contract is made under and is to be construed in accordance with the laws of the State of California. After the issuance and delivery of the Bonds, the Indenture shall not be subject to rescission, but shall be subject to modification to the extent and in the manner provided in the Indenture but to no greater extent and in no other manner. MODIFICATION OR AMENDMENT TO THE INDENTURE. A. The Indenture and the rights and obligations of the City, of the owners of the Bonds and of the Paying Agent may be modified or amended at any time by a supplemental indenture pursuant to the affirmative vote at a meeting of the owners, or with the written consent without a meeting, of the owners of at least a majority in aggregate principal amount of the Bonds then outstanding. No such modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond, without the express consent of the owner of such Bond, (ii) permit the creation of any pledge of or lien upon the assessments superior to or on a parity with the pledge and lien created for the benefit of the Bonds, (iii) reduce the percentage of Bonds required for the amendment of the Indenture, or (iv) reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon. Notwithstanding the above, any such amendment may not modify any of the rights or obligations of the Paying Agent without its written consent. The Paying Agent may obtain an opinion of counsel that any such supplemental indenture entered into by the City and the Paying Agent complies with the provisions of the Indenture and the Paying Agent may conclusively rely on such opinion. B. The Indenture and the rights and obligations of the City and the owners may also be modified or amended at any time by a supplemental indenture, without the consent of any owners, only to the extent permitted by law and only for any one or more of the following purposes: (1) to add to the covenants and agreements of the City contained in the Indenture, other covenants and agreements thereafter to be observed, or to limit or surrender any right or power therein reserved to or conferred upon the City; (2) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or supplementing any defective provisions of the Indenture, or in regard to questions arising under the Indenture, as the City and the Paying Agent may deem necessary or desirable and not inconsistent with the Indenture, and which shall not materially adversely affect the rights of the owners; or (3) to make such additions, deletions or modifications as may be necessary or desirable to assure compliance with Section 148 of the Code relating to required rebate of excess earnings to the United States of America or otherwise as may be necessary to assure exclusion from gross C -6 income for federal income tax purposes of interest on the Bonds or to conform with the federal tax regulations. DEFEASANCE. If the City shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an outstanding Bond the interest due thereon and the principal thereof at the times and in the manner stipulated in the Indenture, other than as set forth below, all covenants, agreements and other obligations of the City to the Owner of such Bond under the Indenture shall thereupon cease, terminate and become void and discharged and satisfied Any outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding paragraph if such Bond is paid in any one or more of the following ways: (1) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; (2) by depositing with the Paying Agent, in trust, at or before maturity, money which, together with the amounts then on deposit in the funds established pursuant to the Indenture (exclusive of the Rebate Fund) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; or (3) by depositing with an escrow bank appointed by the City, in trust, noncallable United States Treasury Obligations, in such amount as a certified public accountant shall determine (as set forth in a verification report from such accountant) will be sufficient, together with the interest to accrue thereon and moneys then on deposit in the funds established under the Indenture (exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such Bond, as and when the same shall become due and payable; then, at the election of the City, and notwithstanding that any outstanding Bonds shall not have been surrendered for payment, all obligations of the City under the Indenture with respect to such Bond shall cease and terminate, except for the obligation of the Paying Agent to pay or cause to be paid to the Owners of any such Bond not so surrendered and paid, all sums due thereon and except for the covenants of the City to preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice of such election shall be filed with the Paying Agent not less than ten (10) days prior to the proposed defeasance date, or such shorter period of time as may be acceptable to the Paying Agent. In connection with a defeasance under (2) or (3) above, there shall be provided to the Paying Agent a certificate of a certified public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Paying Agent or the escrow bank, together with the interest to accrue thereon and moneys then on deposit in the funds established under the Indenture (exclusive of the Rebate Fund) and available for such purpose, together with the interest to accrue thereon to pay and discharge the principal of, premium, if any, and interest on all such Bonds to be defeased in accordance with the Indenture as and when the same shall become due and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with the Indenture. PAYING AGENT. The City appoints U.S. Bank National Association, as Paying Agent for the Bonds. The Paying Agent is authorized to and shall mail or wire transfer interest payments to the Bond owners, select Bonds for redemption, give notice of redemption of Bonds, maintain the bond register and maintain and administer the Redemption Fund. The Paying Agent is authorized to pay the principal of and premium, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the cancellation of Bonds and to provide for the authentication of Bonds. The Paying Agent shall keep accurate records of all funds administered by it and all Bonds paid and C -7 discharged by it. The Paying Agent initially appointed, and any successor thereto, may be removed by the City and a successor or successors may be appointed. So long as any Bonds are outstanding and unpaid, the Paying Agent and any successor or successors thereto designated by the City shall continue to be Paying Agent of the City for all of said purposes until the designation of a successor or successors as Paying Agent. The Paying Agent may rely and shall be protected in acting or refraining from acting upon any notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or proper parties. The Paying Agent may consult with counsel, who may be counsel to the City, 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 it under the Indenture in good faith and in accordance therewith. Whenever the Paying Agent shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering any action under the Indenture, such matter (unless other evidence in respect thereof be therein specifically prescribed) may, in the absence of negligence or willful misconduct on the part of the Paying Agent, be deemed to be conclusively proved and established by a certificate of the City, and such certificate shall be full warrant to the Paying Agent for any action taken or suffered under the provisions of the Indenture or any Supplemental Indenture upon the faith thereof, but in its discretion, the Paying Agent may, in lieu thereof, accept other evidence of such matter or may require such additional evidence of such matter or may require such additional evidence as to it may deem reasonable. The City shall pay to the Paying Agent from time to time reasonable compensation for all services rendered as Paying Agent under the Indenture and also all reasonable expenses, charges, counsel fees and other disbursements, including those of its attorneys, agents and employees, incurred in and about the performance of its powers and duties under the Indenture, and the Paying Agent shall have a lien therefor on any funds at any time held by it under the Indenture. The City further agrees, to the extent permitted by applicable law, to indemnify and save the Paying Agent, it officers, employees and agents harmless against any liabilities which it may incur in the exercise and performance of its powers and duties under the Indenture which are not due to its negligence or willful misconduct. A Paying Agent appointed under the Indenture may resign at any time upon written notice to the City and after appointment of a successor, provided the successor is either the Treasurer of the City or is a bank or trust company having (or, if such bank or trust company is a member of a bank holding company, its bank holding company has) combined capital (excluding borrowed capital) and surplus of at least $50,000,000 and is subject to State or federal supervision. Any company into which the Paying Agent may be merged or converted or with which it may be consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a party or any company to which the Paying Agent may sell or transfer all or substantially all of its corporate trust business, provided such company shall be eligible, shall succeed to the rights and obligations of such Paying Agent without the execution or filing of any paper or further act. If a successor to the Paying Agent is not appointed by the City within sixty (60) calendar days after notice of resignation by the Paying Agent, the Paying Agent may petition a court of competent jurisdiction to appoint a successor. LIABILITY OF PAYING AGENT. The recitals of fact and all promises, covenants and agreements contained in the Indenture and in the Bonds shall be taken as statements, promises, covenants and agreements of the City, and the Paying Agent assumes no responsibility for the correctness of the same and makes no representations as to the validity or sufficiency of the Indenture or of the Bonds and shall incur no responsibility in respect thereof other than in connection with its duties or obligations in the Indenture, or in the Bonds or in the certificate of authorization assigned to or imposed upon the Paying W. Agent. No implied duties or obligations shall be read into the Indenture against the Paying Agent. The Paying Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value. The Paying Agent shall not be liable in connection with the performance of its duties under the Indenture, except for its own negligence or willful misconduct. The Paying Agent shall be protected in acting on any notice, resolution, request, consent, certificate or other document believed by it to be genuine and to have been signed or presented by the proper party. The Paying Agent assumes no responsibility or liability for any information, statement or recital in any offering memorandum or other disclosure material prepared or distributed with respect to the issuance of the Bonds. The Paying Agent shall not be liable for any error of judgment made in good faith by a responsible officer of the Paying Agent unless it shall be proved that the Paying Agent was negligent in ascertaining the pertinent facts. No provision of the Indenture shall require the Paying Agent to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties thereunder or in the exercise of any of its rights or powers. All indemnification and releases from liability granted to the Paying Agent shall extend to the officers and employees of the Paying Agent. The Paying Agent shall not be chargeable with taking any actions under the Indenture in accordance with the Act but shall solely be charged with taking action in accordance with the Indenture and any other written direction furnished by the City. C -9 APPENDIX D FORM OF LEGAL OPINION Upon delivery of the Bonds, Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Oakland, California, Bond Counsel to the City of Newport Beach, proposes to render its final approving opinion with respect to the Bonds in substantially the following form (see "CONCLUDING INFORMATION— Tax Matters') ME City Council City of Newport Beach 3300 Newport Boulevard Newport Beach, CA 92663 City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (Final Opinion) Ladies and Gentlemen: We have acted as bond counsel to the City of Newport Beach (the "Issuer") in connection with the issuance by the Issuer of $3,429,200 aggregate principal amount of the City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (the "Bonds ") pursuant to the provisions of the Municipal Improvement Act of 1913 and the Improvement Bond Act of 1915 and the Bond Indenture, dated as of September 1, 2009 (the "Indenture "), between the Issuer and U.S. Bank National Association, as Paying Agent, approved by Resolution No. 2009 -_, passed and adopted by the City Council on September 8, 2009 (the "Resolution "). Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture. In such connection, we have reviewed the Resolution, the Indenture, the Tax Certificate of the Issuer dated the date hereof (the "Tax Certificate "), an opinion of the City Attorney as general legal counsel to the Issuer, certifications of the Issuer and others and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein. Certain agreements, requirements and procedures contained or referred to in the Resolution, the Indenture, the Tax Certificate and other relevant documents may be changed and certain actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and conditions set forth in such documents. No opinion is expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or omitted upon the advice or approval of counsel other than ourselves. The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or D -1 events do occur. Our engagement with respect to the Bonds has concluded with their issuance, and we disclaim any obligation to update this opinion. We have assumed the genuineness of all documents and signatures presented to us (whether as originals or copies) and the due and legal execution and delivery thereof by, and validity against, any parties other than the Issuer. We have not undertaken to verify independently, and have assumed, the accuracy of the factual matters represented, warranted or certified in the documents, and of the legal conclusions contained in the opinion, referred to in the second paragraph hereof. Furthermore, we have assumed compliance with all covenants and agreements contained in the Resolution, the Indenture and the Tax Certificate, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes. In addition, we call attention to the fact that the rights and obligations under the Bonds, the Resolution, the Indenture and the Tax Certificate may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent conveyance, moratorium and other similar laws relating to or affecting creditors' rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against cities in the State of California. We express no opinion on the plans, specifications, maps and other engineering details of the proceedings, or upon the validity of the individual separate assessments securing the Bonds which validity depends, in addition to the legal steps required, upon the accuracy of certain of the engineering details. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto. Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions: 1. The Bonds constitute valid and binding special assessment obligations of the Issuer, payable solely from and secured by the unpaid assessments and certain funds held under the Indenture. 2. The Resolution and the Indenture have been duly adopted and constitute valid and binding obligations of the Issuer. 3. Interest on the Series Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, although we observe that it is included in adjusted current earnings in calculating corporate alternative minimum taxable income. We express no opinion regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of interest on, the Bonds. Faithfully yours, MEYERS, NAVE, RIBACK, SILVER & WILSON D -2 APPENDIX E INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY The information in this section concerning DTC and DTC's book- entry -only system has been obtained from sources that the District believes to be reliable, but the District takes no responsibility for the completeness or accuracy thereof. The following description of the procedures and record keeping with respect to beneficial ownership interests in the Bonds, payment ofprincipal, premium, if any, accreted value and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants and the Beneficial Owners is based solely on information provided by DTC. The Depository Trust Company ( "DTC "), New York, NY, will act as securities depository for the Bonds (the "Bonds "). The Bands 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 each maturity of the Bonds, in the aggregate principal amount of such maturity, and will be deposited with DTC. DTC, the world's largest securities depository, is a limited - purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code, and a "clearing agency" registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non -U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC's participants ("Direct Participants') deposit with DTC. DTC also facilitates the post -trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book -entry transfers and pledges between Direct Participants' accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly -owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC "). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non -U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly ("Indirect Participants "). DTC has 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.dtce.com and www.dtc.org. 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 OwneP) 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. 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 E -1 requested by an authorized representative of DTC. The deposit of Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not 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. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may wish to take certain steps to augment the trarrsmission to them of notices of significant events with respect to the Bonds, such as redemptions, tenders, defaults, and proposed amendments to the Bond documents. For example, Beneficial Owners of Bonds may wish to ascertain that the nominee holding the Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them. Redemption notices shall be sent to DTC. If less than all of the Bonds within a maturity are being redeemed, DTC's practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with respect to Bonds unless authorized by a Direct Participant in accordance with DTC's MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy). Principal, redemption price 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 the District or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying Agent, or the District, subject to any statutory or regulatory requirements as may. be in effect from time to time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying 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. DTC may discontinue providing its services as depository with respect to the Bonds at any time by giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Bond certificates are required to be printed and delivered. The District 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. E -2 APPENDIX F DISCLOSURE DISSEMINATION AGENT AGREEMENT This Disclosure Dissemination Agent Agreement (the "Disclosure Agreement "), dated as of September 1, 2009, is executed and delivered by the City of Newport Beach (the "Issueel and Digital Assurance Certification, L.L.C., as exclusive Disclosure Dissemination Agent (the "Disclosure Dissemination Agent" or "DAC ") for the benefit of the Holders (hereinafter defined) of the Bonds (hereinafter defined) and in order to provide certain continuing disclosure with respect to the Bonds in accordance with Rule 15c2 -12 of the United States Securities and Exchange Commission under the Securities Exchange Act of 1934, as the same may be amended from time to time (the "Rule "). SECTION 1. Definitions. Capitalized terms not otherwise defined in this Disclosure Agreement shall have the meaning assigned in the Rule or, to the extent not in conflict with the Rule, in the Official Statement (hereinafter defined). The capitalized terms shall have the following meanings: "Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report is to be filed with the MSRB. "Annual Financial Information" means annual financial information as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement. "Annual Report" means an Annual Report described in and consistent with Section 3 of this Disclosure Agreement. "Audited Financial Statements" means the financial statements (if any) of the Issuer for the prior fiscal year, certified by an independent auditor as prepared in accordance with generally accepted accounting principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b) of this Disclosure Agreement. "Bonds" means the bonds as listed on the attached Exhibit A, with the 9 -digit CUSIP® numbers relating thereto. "Certification" means a written certification of compliance signed by the Disclosure Representative stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice required to be submitted to the MSRB under this Disclosure Agreement. A Certification shall accompany each such document submitted to the Disclosure Dissemination Agent by the Issuer and include the full name of the Bonds and the 9 -digit CUSe numbers for all Bonds to which the document applies. "Disclosure Dissemination Agent" means Digital Assurance Certification, L.L.C., acting in its capacity as Disclosure Dissemination Agent hereunder, or any successor Disclosure Dissemination Agent designated in writing by the Issuer pursuant to Section 9 hereof. "Disclosure Representative" means the Finance Officer of the Issuer, or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to time as the person responsible for providing Information to the Disclosure Dissemination Agent. "EMMA System" means the Electronic Municipal Market Access system of the MSRB or such other electronic system designated by the MSRB or the SEC for compliance with SEC Rule 15c2- 12(b). F -1 "Holder" means any person (a) having the power, directly or indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees, depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax purposes. "Information" means the Annual Financial Information, the Audited Financial Statements (if any), the Notice Event notices and the Voluntary Reports. "MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section 1513(b)(1) of the Securities Exchange Act of 1934. "Notice Event" means an event listed in Section 4(a) of this Disclosure Agreement. "Official Statement" means that Official Statement prepared by the Issuer in connection with the Bonds, as listed on Exhibit A. "Paying Agent" means the institution identified as such in the document under which the Bonds were issued. "SEC" means Securities and Exchange Commission. "Underwriter" shall mean any underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds. "Voluntary Report" means the information provided to the Disclosure Dissemination Agent by the Issuer pursuant to Section 7. SECTION 2. Provision of Annual Reports. (a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification to the Disclosure Dissemination Agent, together with a copy for the Paying Agent and the Underwriter, not later than 30 days prior to the Annual Filing Date. Upon receipt of an electronic copy of the Annual Report and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB through the EMMA System in an electronic format and accompanied by identifying information as prescribed by the MSRB, not later March 31 after the end of each fiscal year of the Issuer, commencing with the fiscal year ending June 30, 2009; provided, however, that the first Annual Report due on March 31, 2010, shall consist solely of a copy of the Official Statement together with a copy of the audited Financial Statements of the Issuer. Such date and each anniversary thereof is the Annual Filing Date. The Annual Report may be submitted as a single document or as separate documents comprising a package and may cross reference other information as provided in Section 3 of this Disclosure Agreement. (b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Upon such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with an electronic copy of the Annual Report and the Certification (no later than two (2) business days prior to the Annual Filing Date), or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be able to file the Annual Report within the time required under this Disclosure Agreement, state the date by which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to the MSRB through the EMMA System in substantially the form attached as Exhibit B. F -2 (c) If the Disclosure Dissemination Agent has not received an Annual Report and Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual Report, a Notice Event described in Section 4(a)(12) shall have occurred and the Issuer irrevocably directs the Disclosure Dissemination Agent to immediately send a notice to the MSRB through the EMMA System in substantially the form attached as Exhibit B. (d) If Audited Financial Statements of the Issuer are prepared but not available prior to the Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, together with a copy for the Paying Agent for filing with the MSRB through the EMMA System. (e) The Disclosure Dissemination Agent shall: (i) determine the electronic filing requirements of the MSRB each year prior to the Annual Filing Date; (it) upon receipt, promptly file each Annual Report received under Section 2(a) with the MSRB through the EMMA System; (iii) upon receipt, promptly file each Audited Financial Statement received under Section 2(d) with the MSRB through the EMMA System; (iv) upon receipt, promptly file the text of each disclosure to be made with the MSRB through the EMMA System, together with a completed copy of the Event Notice Cover Sheet in the form attached as Exhibit C describing the event by checking the applicable line as described below when filing pursuant to the Section of this Disclosure Agreement indicated: 1. "Principal and interest payment delinquencies," pursuant to Sections 4(c) and 4(a)(1); 2. "Non- Payment related defaults," pursuant to Sections 4(c) and 4(a)(2); 3. "Unscheduled draws on debt service reserves reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(3); 4. "Unscheduled draws on credit enhancements reflecting financial difficulties," pursuant to Sections 4(c) and 4(a)(4); 5. "Substitution of credit or liquidity providers, or their failure to perform," pursuant to Sections 4(c) and 4(a)(5); 6. "Adverse tax opinions or events affecting the tax- exempt status of the security," pursuant to Sections 4(c) and 4(a)(6); 7. "Modifications to rights of security holders," pursuant to Sections 4(c) and 4(a)(7); 8. "Bond calls," pursuant to Sections 4(c) and 4(a)(8); 9. "Defeasances," pursuant to Sections 4(c) and 4(a)(9); 10. "Release, substitution or sale of property securing repayment of the Bonds," pursuant to Sections 4(c) and 4(a)(10); F -3 11. "Ratings changes," pursuant to Sections 4(c) and 4(a)(11); or 12. "Other material event notice (specify)," pursuant to Section 7 of this Agreement, together with the summary description provided by the Disclosure Representative (e.g., "Failure to provide annual financial information as required," pursuant to Section 2(b)(ii) or Section 2(c), together with a completed copy of Exhibit B to this Disclosure Agreement). (v) provide the Issuer evidence of the filings of each of the above when made, which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination Agent under this Disclosure Agreement. (f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination Agent, Paying Agent (if any) and the MSRB through the EMMA System, provided that the period between the existing Annual Filing Date and new Annual Filing Date shall not exceed one year. Notwithstanding any other provisions of this Disclosure Agreement, any of the required filings hereunder may be made with the MSRB through the Electronic Municipal Market Access (EMMA), approved by the Securities and Exchange Commission. SECTION 3. Content of Annual Reports. (a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer, including (1) the audited financial statements of the City; (2) the principal amount of Bonds outstanding; (3) the status of the public improvements which have been financed by the City with proceeds of the Bonds; (4) a table setting forth the percentage of delinquent Assessment Installments as of June 30 of each fiscal year and a description of the status of any foreclosure actions being pursued by the City with respect to delinquent Assessment Installments; (5) the Reserve Fund balance; (6) an update of the table entitled "Top Ten Property Owners" in the Official Statement and (7) the total assessed value of property within the District. (b) Audited Financial Statements prepared in accordance with generally accepted accounting principles ( "GAAP ") will be included in the Annual Report. If audited financial statements are not available, then unaudited financial statements, prepared in accordance with GAAP, will be included in the Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d). Any or all of the items listed above may be included by specific reference from other documents, including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined by the Rule), which have been previously filed with the MSRB through the EMMA System or the Securities and Exchange Commission. If the document incorporated by reference is a final official statement, it must be available from the MSRB. The Issuer will clearly identify each such document so incorporated by reference. Any annual financial information containing modified operating data or financial information is required to explain, in narrative form, the reasons for the modification and the impact of the change in the type of operating data or financial information being provided. F4 SECTION 4. Reporting of Notice Events. (a) The occurrence of any of the following events with respect to the Bonds constitutes a Notice Event: Principal and interest payment delinquencies; 2. Non - payment related defaults; 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 or events affecting the tax - exempt status of the security; 7. Modifications to rights of security holders; 8. Bond calls; 9. Defeasances; 10. Release, substitution or sale of property securing repayment of the securities; 11. Rating changes; or 12. Other material event notice (e.g., failure to provide annual financial information as required). The Issuer shall promptly notify the Disclosure Dissemination Agent in writing upon the occurrence of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence pursuant to subsection (c). Such notice shall be accompanied with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information and the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. (b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will, within five business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure Dissemination Agent is to report the occurrence pursuant to subsection (c), together with the text of the disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to disseminate such information and the date the Issuer desires for the Disclosure Dissemination Agent to disseminate the information. (c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure F -5 Dissemination Agent shall promptly file a notice of such occurrence with the MSRB through the EMMA System in accordance with Section 2 (e)(iv) hereof. SECTION 5. CUSIP® Numbers. Whenever providing information to the Disclosure Dissemination Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual Reports, Audited Financial Statements, notices of Notice Events and Voluntary Reports filed pursuant to Section 7(a), the Issuer shall indicate the full name of the Bonds and the 9 -digit CUSe numbers for the Bonds as to which the provided information relates. SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb -5 promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the failure of the Disclosure Dissemination Agent to so advise the Issuer shall not constitute a breach by the Disclosure Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The Issuer acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement. SECTION 7. Voluntary Reports. (a) The Issuer may instruct the Disclosure Dissemination Agent to file information with the MSRB through the EMMA System from time to time pursuant to a Certification of the Disclosure Representative accompanying such information (a "Voluntary Report"). (b) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from disseminating any other information through the Disclosure Dissemination Agent using the means of dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary Report or Notice Event notice. SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds upon the legal defeasance, prior redemption or payment in full of all of the Bonds when the Issuer is no longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that continuing disclosure is no longer required. SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Paying Agent, replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds. Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure Dissemination Agent may resign at any time by providing thirty days' prior written notice to the Issuer. F -6 SECTION 10. Remedies in Event of Default. In the event of a failure of the Issuer or the Disclosure Dissemination Agent to comply with any provision of this Disclosure Agreement, the Holders' rights to enforce the provisions of this Agreement shall be limited solely to a right, by action in mandamus or for specific performance, to compel performance of the party's obligation under this Disclosure Agreement. Any failure by a party to perform in accordance with this Disclosure Agreement shall not constitute a default on the Bonds or under any other document relating to the Bonds, and all rights and remedies shall be limited to those expressly stated herein. SECTION 11. Duties. Immunities and Liabilities of Disclosure Dissemination Agent. (a) The Disclosure Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure Agreement. The Disclosure Dissemination Agent's obligation to deliver the information at the times and with the contents described herein shall be limited to the extent the Issuer has provided such information to the Disclosure Dissemination Agent as required by this Disclosure Agreement. The Disclosure Dissemination Agent shall have no duty with respect to the content of any disclosure or notice made pursuant to the temrs hereof. The Disclosure Dissemination Agent shall have no duty or obligation to review or verify any hrformation or any other information, disclosures or notices provided to it by the Issuer and shall not be deemed to be acting in any fiduciary capacity for the Issuer, the Holders of the Bonds or any other party. The Disclosure Dissemination Agent shall have no responsibility for the Issuer's failure to report to the Disclosure Dissemination Agent a Notice Event or a duty to determine the materiality thereof. The Disclosure Dissemination Agent shall have no duty to determine, or liability for failing to determine, whether the Issuer has complied with this Disclosure Agreement. The Disclosure Dissemination Agent may conclusively rely upon certifications of the Issuer at all times. The obligations of the Issuer under this Section shall survive resignation or removal of the Disclosure Dissemination Agent and defeasance, redemption or payment of the Bonds. (b) The Disclosure Dissemination Agent may, from time to time, consult with legal counsel (either in -house or external) of its own choosing in the event of any disagreement or controversy or question or doubt as to the construction of any of the provisions hereof or its respective duties hereunder and shall not incur any liability and shall be fully protected in acting in good faith upon the advice of such legal counsel. The reasonable fees and expenses of such counsel shall be payable by the Issuer. SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such amendment or waiver had been effective on the date hereof but taking into account any subsequent change in or official interpretation of the Rule; provided neither the Issuer nor the Disclosure Dissemination Agent shall be obligated to agree to any amendment modifying their respective duties or obligations without their consent thereto. Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from time to time by giving not less than 20 days' written notice of the intent to do so together with a copy of the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall, within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in writing that it objects to such amendment. F -7 SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit of the Issuer, the Paying Agent of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the Holders from time to time of the Bonds, and shall create no rights in any other person or entity. SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws of the State of California (other than with respect to conflicts of laws). SECTION 15. Counterparts. This Disclosure Agreement 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. The Disclosure Dissemination Agent and the Issuer have caused this Disclosure Dissemination Agent Agreement to be executed, on the date first written above, by their respective officers duly authorized. ATTEST: Leilani Brown, City Clerk APPROVED AS TO FORM: Mynette D. Beauchamp, Assistant City Attorney DIGITAL ASSURANCE CERTIFICATION, L.L.C., as Disclosure Dissemination Agent MA Name: Title: By: Name: Title: CITY OF NEWPORT BEACH, as Issuer By City Manager IN EXMBIT A NAME AND CUSe NUMBERS OF BONDS Name of Issuer: City of Newport Beach Obligated Person(s): Name of Bond Issue: $ City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds Date of Issuance: September 2009 Date of Official Statement: 12009 Maturity (September 2) CUSIP ®No. 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 F -9 NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT Issuer: City of Newport Beach [Obligor:] Name of Bond Issue: S City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds Date of Issuance: September _, 2009 NOTICE IS HEREBY GIVEN that the Issuer has not provided an Annual Report with respect to the above named Bonds as required by the Disclosure Agreement, dated as of September 1, 2009, between the Issuer and Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent. The Issuer has notified the Disclosure Dissemination Agent that it anticipates that the Annual Report will be filed by Dated: cc: Issuer [Obligated Person] Digital Assurance Certification, L.L.C., as Disclosure Dissemination Agent, on behalf of the Issuer F -10 APPENDIX H LIST OF UNPAID ASSESSMENTS Assessed Value (AV) Tax Roll as of Jutv 2009 H -I Value -lo -Lien Ratio for Assessment Structure Confirmed Confirmed No. "N Land Value Value Total Value Assessment Assessment 1 048 - 201-47 $1,662,524 $618,029 $2,280,553 $22,384.20 101.88 :1 2 048 -201 -46 623,617 409,641 1,033,258 18,219.69 56.71 :1 3 048 -201 -41 57,122 33,893 91,015 15,096.32 6.03 :1 4 048 - 201-40 283,462 62,443 345,905 15,096.32 22.91 :1 5 048- 201 -39 789,572 147,825 937,397 15,096.32 62.09 :1 6 048- 201 -38 409,685 65,470 475,155 15,096.32 31.47 :1 7 048- 201 -37 1,451,249 64,155 1,515,404 14,575.75 103.97 :1 8 048 - 201 -52 1,537,016 309,351 1,846,367 29,151.51 63.34 :1 9 048 - 201 -34 1,493,875 41,125 1,535,000 14,575.75 105.31 :1 11 048- 201 -32 57,122 12,013 69,135 14,055.19 4.92 :1 12 048 - 201 -31 927,281 51,198 978,479 14,055.19 69.62 :1 13 048 - 201 -30 334,887 71,542 406,429 14,055.19 28.92 :l 15 048- 201-44 404,708 44,169 448,877 14,055.19 31.94 :1 17 048- 201 -26 596,953 48,267 645,220 13,534.62 47.67 :1 18 048- 201 -25 286,771 113,271 400,042 13,534.62 29.56 :1 19 048- 201 -24 298,277 39,177 337,454 13,534.62 24.93 :1 20 048- 201 -23 97,095 183,832 280,927 15,616.89 17.99 :1 21 048- 201 -22 511,648 165,452 677,100 17,178.57 39.42 :1 22 048- 201-48 819,704 361,222 1,180,926 15,096.32 78.23 :1 26 048 - 201 -03 57,126 38,886 96,012 13,014.07 7.38 :1 27 048 - 201 -04 651,416 36,894 688,310 13,014.07 52.89 :1 28 048 - 201 -05 820,599 211,565 1,032,164 13,014.07 79.31 :1 30 048 - 201 -07 665,746 135,746 801,492 13,014.07 61.59 :1 32 048- 201 -09 792,038 43,431 835,469 13,014.07 64.20 :1 33 048- 201 -10 846,228 0 846,228 13,014.07 65.02 :1 34 048 - 201 -11 456,943 191,950 648,893 13,014.07 49.86 :1 35 048- 201 -12 242,236 75,037 317,273 13,014.07 24.38 :1 37 048- 201 -14 696,802 62,050 758,852 13,OI4.07 58.31 :1 38 048 - 201 -15 57,123 37,338 94,461 13,014.07 7.26 :1 41 048 - 201 -18 424,657 75,511 500,168 13,014.07 38.43 :1 43 048- 201 -20 275,703 183,792 459,495 13,014.07 35.31 :1 44 048 - 201 -21 57,127 28,191 85,318 16,137.44 5.29 :1 45 048- 192 -01 79,922 215,973 295,895 24,987.01 11.84 :1 46 048- 192 -02 66,690 35,020 101,710 18,219.69 5.58 :1 47 048 -192 -03 251,183 172,071 423,254 37,480.51 11.29 :1 48 048- 192 -04 1,734,000 102,000 1,836,000 20,822.50 88.17 :1 H -I Assessed Value (AV) Tax Roll as of July 2009 H -2 Value -to -Lien Ratio for Assessment Structure Confirmed Confirmed No. APN Land Value Value Total Value Assessment Assessment 49 048- 192 -05 $514,563 $124,008 $638,571 $20,822.50 30.67 :1 50 048- 192 -06 1,017,827 140,829 1,158,656 21,863.63 52.99 :1 52 048 -192 -08 740,526 111,652 852,178 23,425.32 36.38 :1 53 048- 192 -09 1,616,511 236,195 1,852,706 52,576.64 35.24 :1 54 048- 191 -19 128,110 118,055 246,165 5,897.98 41.74 ; 1 55 048- 191 -02 322,508 190,128 512,636 14,315.47 35.81 :1 56 048- 191 -03 435,706 84,476 520,182 15,096.32 34.46 :1 57 048 - 191-04 797,735 37,734 835,469 14,055.19 59.44 :l 58 048 -191 -05 73,557 25,098 98,655 14,055.19 7.02 :1 59 048- 191 -06 1,452,382 77,006 1,529,388 13,534.62 113.00 :1 61 048- 191 -08 167,812 53,044 220,856 13,534.62 16.32 :1 64 048 - 191 -11 57,127 58,235 115,362 16,658.00 6.93 :1 65 930 - 504 -15 627,577 113,593 741,170 8,849.56 83.75 :1 67 930 - 504 -17 876,626 126,374 1,003,000 8,849.56 113.34 :1 68 930 - 504 -18 649,632 121,112 770,744 8,849.56 87.09 :1 69 048- 191 -14 995,571 70,637 1,066,208 17,178.57 62.07 :1 70 048- 191 -15 398,967 235,027 633,994 15,616.89 40.60 :1 72 048- 221 -01 684,443 1,029,996 1,714,439 17,699.13 96.87 :1 73 048- 221 -02 57,125 31,075 88,200 13,534.62 6.52 :1 74 048 -221 -03 246,771 98,103 344,874 13,534.62 25.48 :1 77 048- 221 -29 72,319 40,994 113,313 20,301.95 5.58 :1 78 048- 221 -24 1,383,000 265,000 1,648,000 20,301.95 81.17 :1 81 048 - 221 -12 303,593 36,011 339,604 13,534.62 25.09 :1 83 048 - 221 -14 398,952 147,295 546,247 15,616.89 34.98 :1 85 048- 221 -35 1,258,649 41,351 1,300,000 12,493.51 104.05 :1 86 048- 221 -22 57,124 30,984 88,108 13,014.07 6.77 :1 91 048 - 221 -33 600,719 234,017 834,736 13,014.07 64.14 :1 93 048- 221 -31 1,675,437 90,563 1,766,000 13,014.07 135.70 :1 94 048- 221 -30 57,124 116,917 174,041 13,014.07 13.37 :1 95 048 - 221 -26 403,555 49,074 452,629 13,014.07 34.78 :1 99 048 -222 -02 128,117 69,071 197,188 13,014.07 15.15 :1 100 048- 222 -03 463,435 198,219 661,654 13,014.07 50.84 :1 101 048 -222 -04 1,794,794 347,206 2,142,000 13,014.07 164.59 :1 102 048 - 222 -05 1,244,226 102,774 1,347,000 13,014.07 103.50 :1 103 048- 222 -06 405,331 186,181 591,512 13,014.07 45.45 :1 105 048- 222 -08 684,371 194,051 878,422 13,014.07 67.50 :1 112 048 - 222 -35 2,869,056 600,944 3,470,000 14,055.19 246.88 :1 113 048- 222 -27 57,124 51,495 108,619 14,575.75 7.45 :1 H -2 Assessed Value (AV) Tax Roll as of July 2009 Value -to -Lien Ratio for Assessment Structure Confirmed Confirmed No. APN Land Value Value Total Value Assessment Assessment 114 048 - 222 -26 $820,945 $61,670 $882,615 $13,534.62 65.21 :1 115 048- 222 -25 1,748,230 51,770 1,800,000 14,055.19 128.07 :1 116 048- 222 -24 939,258 462,742 1,402,000 14,575.75 96.19 :l 117 048 - 222 -23 57,125 29,180 86,305 15,096.32 5.72 :1 120 048 - 222 -20 57,119 35,301 92,420 16,137.44 5.73 :1 122 048 - 222 -31 57,127 27,486 84,613 17,178.57 4.93 :1 123 048- 222 -30 125,590 49,654 175,244 17,178.57 10.20 :1 125 048- 222 -29 568,933 131,133 700,066 17,699.13 39.55 :1 127 048- 222 -37 1,772,711 77,289 1,850,000 16,137.44 114.64 :1 128 048- 222 -36 367,200 292,631 659,831 17,178.57 38.41 :1 130 048 - 211 -35 637,658 50,172 687,830 13,014.07 52.85 :1 133 048 -211 -03 1,200,067 37,093 1,237,160 13,014.07 95.06 :1 136 048- 211 -05 57,125 39,307 96,432 13,014.07 7.41 :1 143 048 - 211 -11 483,617 41,252 524,869 13,014.07 40.33 : l 145 048 - 211 -39 1,683,938 135,062 1,819,000 15,616.89 116.48 :1 147 048- 211 -23 1,543,014 48,798 1,591,812 13,534.62 117.61 :1 149 048 - 211 -21 1,320,422 62,578 1,383,000 13,534.62 102.18 : l 151 048- 211 -19 57,127 33,823 90,950 13,534.62 6.72 :1 152 048 - 211 -18 57,125 161,079 218,204 13,534.62 16.12 :1 153 048- 211 -17 57,120 88,043 145,163 13,534.62 10.73 :1 154 048- 211 -30 57,119 266,337 323,456 12,462.12 25.96 :1 155 048- 211 -32 57,124 57,679 114,803 13,534.62 8.48 :1 156 048- 211 -31 335,001 67,069 402,070 13,534.62 29.71 :1 157 048- 211 -25 667,144 36,000 703,144 13,534.62 51.95 :1 158 048- 211 -15 1,376,663 52,337 1,429,000 13,534.62 105.58 :1 167 048 - 261 -32 312,263 73,866 386,129 13,534.62 28.53 :1 168 048 - 261 -25 57,122 33,474 90,596 13,534.62 6.69 :1 169 048- 261 -24 814,011 353,219 1,167,230 13,534.62 86.24 :1 171 048- 261 -22 57,126 29,532 86,658 13,534.62 6.40 :1 174 048- 261 -19 57,122 24,047 81,169 13,534.62 6.00 :1 176 048- 261 -17 60,923 135,764 196,687 16,658.00 11.81 :1 177 048- 261 -01 709,902 58,433 768,335 15,616.89 49.20 :1 180 048- 261 -04 1,878,814 171,186 2,050,000 10,931.81 187.53 :1 181 048- 261 -05 471,976 432,972 904,948 10,931.81 82.78 :l 182 048- 261 -06 1,993,329 240,671 2,234,000 10,931.81 204.36 :1 183 048 - 261 -07 53,319 24,959 78,278 10,931.81 7.16 :1 188 048 - 261 -11 398,286 41,896 440,182 10,931.81 40.27 :1 190 048- 261 -13 784,857 66,354 851,211 10,931.81 77.87 :1 H -3 Assessed Value (AV) Tax Roll as of July 2009 H4 Value- to-Lien Ratio for Assessment Structure Confirmed Confirmed No. APN Land Value Value Total Value Assessment Assessment 191 048 - 261 -14 $2,327,692 $406,308 $2,734,000 $10,931.81 250.10 :1 192 048- 261 -15 497,922 300,807 798,729 10,931.81 73.06 :1 194 048- 252 -12 1,183,881 134,116 1,317,997 31,233.76 42.20 :1 195 048 - 252 -11 1,002,301 550,759 1,553,060 12,493.51 124.31 :1 196 048- 252 -10 118,050 35,088 153,138 11,972.94 12.79 :1 197 048- 252 -15 110,533 83,950 194,483 20,351.88 9.56 :1 202 048- 252 -05 76,123 27,773 103,896 14,575.75 7.13 : 1 204 048- 252 -20 1,311,094 302,906 1,614,000 10,931.81 147.64 :1 205 048- 252 -03 68,520 29,180 97,700 16,658.00 5.87 :1 206 048- 252 -02 1,165,567 34,433 1,200,000 10,931.81 109.77 :1 209 048- 251 -21 72,324 28,750 101,074 26,028.13 3.88 :1 212 048- 251 -24 57,121 419,339 476,460 20,822.50 22.88 :1 213 048 - 251 -25 1,098,392 50,608 1,149,000 20,822.50 55.18 :1 214 048 - 251 -26 2,084,764 0 2,084,764 20,822.50 100.12 :1 215 048- 251 -27 1,669,164 388,836 2,058,000 20,822.50 98.84 :1 216 048 - 251 -28 57,127 37,122 94,249 20,822.50 4.53 :1 217 048 - 251 -29 57,123 24,675 81,798 20,822.50 3.93 :1 218 048- 251 -30 348,388 360,035 708,423 20,822.50 34.02 :1 221 048- 251 -33 57,122 25,235 82,357 18,577.93 4.43 :1 224 048 - 251 -37 1,192,093 505,407 1,697,500 30,192.63 56.22 :1 225 048 - 251 -38 835,475 463,093 1,298,568 27,069.26 47.97 :1 226 048 - 251 -34 361,573 66,387 427,960 26,028.13 16.44 :1 227 048 - 251 -35 360,998 250,009 611,007 26,028.13 23.47 :1 231 048- 251 -17 57,127 136,953 194,080 20,822.50 9.32 :1 232 048- 251 -18 93,357 104,731 198,088 20,822.50 9.51 :1 233 048- 251 -19 788,650 47,991 836,641 20,822.50 40.18 :1 234 048 - 251 -20 978,333 477,452 1,455,785 20,822.50 69.91 :1 237 048 - 251 -04 837,168 139,196 976,364 20,822.50 46.89 :1 239 048- 272 -28 1,403,406 296,594 1,700,000 16,658.00 102.05 :1 241 048- 272 -20 598,277 387,486 985,763 14,575.75 67.63 :1 242 048- 272 -19 2,529,948 870,052 3,400,000 14,575.75 233.26 :1 246 048 - 272 -05 477,782 90,760 568,542 14,575.75 39.01 :1 248 048- 272 -32 536,197 88,089 624,286 14,575.75 42.83 :1 249 048- 272 -33 339,680 85,586 425,266 14,575.75 29.18 :1 250 048- 272 -22 379,629 84,898 464,527 14,575.75 31.87 :l 251 048 - 272 -26 409,986 127,577 537,563 14,575.75 36.88 :1 252 048- 272 -27 57,122 35,228 92,350 14,575.75 6.34 : l H4 Assessed Value (AV) Tax Roll as of Ju1v 2009 H -5 Value -to -Lien Ratio for Assessment Structure Confirmed Confirmed No. APN Land Value Value Total Value Assessment Assessment 253 048- 272 -21 $546,555 $581,158 $1,127,713 $48,932.89 23.05 :1 254 048- 272 -09 438,002 67,436 505,438 13,014.07 38.84 :1 255 048- 272 -10 1,084,047 44,953 1,129,000 13,014.07 86.75 :1 256 048- 272 -11 57,123 56,124 113,247 13,014.07 8.70 :1 258 048- 272 -18 527,750 246,363 774,113 15,096.32 51.28 :1 259 048- 272 -17 937,168 214,864 1,152,032 13,014.07 88.52 :1 260 048 - 272 -16 1,940,869 87,131 2,028,000 13,014.07 155.83 :1 262 048 - 272 -14 1,104,188 494,190 1,598,378 13,014.07 122.82 :1 265 048 - 271 -29 1,315,477 48,523 1,364,000 14,575.75 93.58 :1 267 048- 271 -28 148,939 39,384 188,323 16,137.44 11.67 :1 268 048- 271 -26 60,922 31,643 92,565 16,137.44 5.74 :1 269 048- 271 -25 138,388 33,823 172,211 16,137.44 10.67 :1 271 048- 271 -14 280,427 151,886 432,313 13,014.07 33.22 :1 272 048- 271 -13 57,126 39,448 96,574 13,014.07 7.42 :1 275 048 - 271 -31 230,272 157,927 388,199 13,883.40 27.96 :1 276 048- 271 -19 422,368 71,856 494,224 14,575.75 33.91 :1 278 048- 271 -02 114,255 41,063 155,318 25,507.57 6.09 :1 279 048- 271 -03 57,126 16,020 73,146 13,014.07 5.62 :1 282 048- 271 -05 2,012,610 341,679 2,354,289 13,014.07 180.90 :1 283 048 - 271 -06 839,318 152,646 991,964 25,507.57 38.89 :1 284 048- 271 -07 1,506,044 1,125,784 2,631,828 24,466.44 107.57 :1 287 048- 302 -01 133,181 110,043 243,224 17,178.57 14.16 :1 288 048- 302 -02 562,299 210,255 772,554 15,616.89 49.47 :1 290 048 -302 -04 666,602 70,102 736,704 15,616.89 47.17 :1 295 048- 302 -09 570,851 324,200 895,051 15,616.89 57.31 :1 297 048 - 302 -11 93,289 39,169 132,458 17,178.57 7.71 :1 299 048- 302 -16 58,947 89,431 148,378 17,178.57 8.64 :1 301 048 - 302 -14 526,407 34,637 561,044 17,178.57 32.66 :1 307 048- 291 -22 948,720 427,903 1,376,623 12,493.51 110.19 :1 308 048- 291 -23 2,072,485 268,415 2,340,900 13,014.07 179.87 :1 310 048 - 291 -26 498,494 518,719 1,017,213 13,064.91 77.86 :1 311 048- 291 -19 675,461 576,685 1,252,146 12,493.51 100.22 :1 316 048 - 291 -15 58,949 81,813 140,762 13,014.07 10.82 :1 320 048- 291 -06 2,334,953 511,047 2,846,000 15,616.89 182.24 :1 323 048 - 291 -09 467,684 68,222 535,906 14,575.75 36.77 :1 324 048- 291 -10 664,081 472,261 1,136,342 14,575.75 77.96 :1 326 048- 292 -28 419,095 96,127 515,222 15,096.32 34.13 :1 329 048- 292 -03 538,777 203,586 742,363 13,014.07 57.04 :1 H -5 Assessed Value (AV) Tax Roll as of July 2009 Assessment No. APN Land Value Structure Value Total Value Confirmed Assessment Value- to-Lien Ratio for Confirmed Assessment 330 048 -292 -04 $664,856 $156,626 $821,482 $13,014.07 63.12 :1 331 048 - 292 -05 1,483,000 67,000 1,550,000 13,014.07 119.10 :1 332 048 - 292 -06 1,516,140 183,860 1,700,000 13,014.07 130.63 :1 333 048 - 292 -07 1,484,926 82,074 1,567,000 13,014.07 120.41 :1 334 048- 292 -27 58,949 31,998 90,947 14,055.19 6.47 :1 335 048- 292 -26 244,062 498,103 742,165 14,055.19 52.80 :1 336 048 - 292 -32 58,952 24,811 83,763 14,055.19 5.96 :1 337 048- 292 -33 515,095 71,875 586,970 14,055.19 41.76 :1 338 048- 292 -10 135,786 53,244 189,030 15,616.89 12.10 :1 339 048 - 292 -25 1,633,009 413,991 2,047,000 13,534.62 151.24 :1 340 048- 292 -24 620,784 265,079 885,863 13,014.07 68.07 :1 341 048- 292 -23 454,411 231,928 686,339 13,014.07 52.74 :1 346 048- 292 -18 262,901 177,102 440,003 10,931.81 40.25 :1 347 048- 292 -17 58,115 38,957 97,072 10,931.81 8.88 :1 348 048 - 292 -35 438,525 136,976 575,501 10,931.81 52.64 :1 349 048 - 292 -34 984,756 105,070 1,089,826 13,014.07 8174 :1 351 048 - 292 -14 130,649 35,368 166,017 11,972.94 13.87 : I 353 048 - 292 -12 58,953 106,857 165,810 11,972.94 13.85 :1 355 048- 281 -01 58,944 66,245 125,189 15,616.89 8.02 :1 359 048- 281 -05 1,390,173 287,596 1,677,769 13,014.07 128.92 :1 360 048- 281 -06 253,638 82,231 335,869 13,014.07 25.81 :l 363 048- 281 -35 128,111 95,674 223,785 13,534.62 16.53 :1 371 048- 281 -30 761,646 323,315 1,084,961 16,658.00 65.13 :1 372 048- 281 -29 58,949 90,951 149,900 13,148.16 11.40 :1 373 048- 281 -28 1,613,559 100,441 1,714,000 13,534.62 126.64 :1 375 048- 281 -26 128,118 38,183 166,301 13,534.62 12.29 :1 376 048- 281 -25 1,764,150 347,850 2,112,000 13,534.62 156.04 :1 379 048 - 281 -21 66,692 38,396 105,088 17,178.57 6.12 :1 381 048 - 281 -19 1,783,638 75,362 1,859,000 24,466.44 75.98 :1 383 048 - 281 -33 1,038,698 54,340 1,093,038 15,616.89 69.99 :1 386 048 - 281 -15 3175.068 457.318 3.632.386 23.425.32 155.06 :1 $144,024,172 $34,836,658 $178,860,830 $3,429,247.26 52.16 :1 46 S CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS BOND PURCHASE CONTRACT September _ 2009 City of Newport Beach 3300 Newport Boulevard Newport Beach, California 92663 Ladies and Gentlemen: The undersigned (the "Underwriter"), acting not as fiduciary or agent for you, but on behalf of itself, offers to enter into this Bond Purchase Contract (the "Purchase Contract ") with the City of Newport Beach (the "City ") in connection with Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District ") which, upon acceptance, will be binding upon the City and upon the Underwriter. This offer is made subject to acceptance of it by the City on the date hereof, and, if not accepted, will be subject to withdrawal by the Underwriter upon notice delivered to the City at any time prior to the acceptance hereof by the City. Purchase. Sale and Delivery of the Bonds. (a) Subject to the terms and conditions and in reliance upon the representations, warranties and agreements set forth herein, the Underwriter agrees to purchase from the City, and the City agrees to sell to the Underwriter, all (but not less than all) of $ aggregate principal amount of the City of Newport Beach Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) Limited Obligation Improvement Bonds (the "Bonds "), bearing interest (payable semiannually on March 2 and September 2 in each year, commencing March 2, 2010) at the rates per annum and maturing on the dates and in the amounts set forth in Appendix A attached hereto and incorporated herein. The purchase price for the Bonds shall be $ (representing a price of par, less an original issue discount of $ and less an Underwriter--s discount of $ ). The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and subject to redemption as provided in, a Bond Indenture, by and between the City and U.S. Bank National Association, as paying agent (the "Paying Agent "), dated as of September 1, 2009 (the "Indenture"), approved by a resolution (the "Resolution "), adopted by the City Council of the City sitting as the legislative body of the Assessment District (the "City Council ") on September 8, 2009. The Bonds shall be substantially in the form described in, shall be issued and secured under the provisions of, and shall be payable and be subject to redemption as provided in, the Indenture. (b) Pursuant to the authorization of the City, the Underwriter has distributed copies of the Preliminary Official Statement, dated September _, 2009, relating to the Bonds, which, together with the cover page and all appendices thereto, is herein called the "Preliminary Official Statement" and which, as amended with the prior approval of the Underwriter and executed by the City, will be referred to herein as the "Official Statement." The City hereby ratifies the use by the Underwriter of the Preliminary Official Statement and the Official Statement and authorizes the Underwriter to use and distribute the Indenture, the Official Statement, the Disclosure Dissemination Agent Agreement, dated as of September 1, 2009, by and between the City and Digital Assurance Certification, L.L.C. ( "DAC' ), as dissemination agent (the "Disclosure Agreement"), and other documents or contracts to which the City is a party, including this Purchase Contract, and all information contained therein, and all other documents, certificates and statements furnished by the City to the Underwriter in connection with the transactions contemplated by this Purchase Contract, in connection with the offer and sale of the Bonds by the Underwriter. (c) The Underwriter agrees to make a bona fide public offering of the Bonds at the initial offering price set forth in the Official Statement; however, the Underwriter reserves the right to make concessions to dealers and to change such initial offering price as the Underwriter shall deem necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the Underwriter will deliver or cause to be delivered to each purchaser a copy of the Official Statement prepared in connection with the Bonds. The Underwriter also agrees to notify the City by phone or in writing of the "end of the underwriting period," as defined in Rule 15c2 -12 promulgated under the Securities Exchange Act of 1934 ("Rule 15c2 -12 "). Terms defined in the Official Statement are used herein as so defined. (d) The City shall deliver, or cause to be delivered, to the Underwriter two (2) executed copies of the final Official Statement prepared in connection with the Bonds, in such form as shall be approved by the City and the Underwriter and such additional conformed copies thereof as the Underwriter may reasonably request. The City deems the Preliminary Official Statement (the "Preliminary Official Statement ") to be "final" as of its date for purposes of Rule 15c2 -12. By acceptance of this Purchase Contract, the City hereby authorizes the use of copies of the Official Statement in connection with the public offering and sale of the Bonds and ratifies and approves the distribution by the Underwriter of the Preliminary Official Statement. (e) At approximately 8:00 a.m., Pacific Time, on September 2009, or at such earlier or later time or date as shall be agreed upon by the City and the Underwriter (such time and date herein referred to as the "Closing Date "), the City shalt deliver (i) through the facilities of The Depository Trust Company (all Bonds being in book -entry form, registered in the name of Cede & Co. and having the CUSIP' numbers assigned to them printed thereon) duly executed by the officers of the City as provided in the Indenture and with facsimile seals printed thereon, and (ii) to the Underwriter at the offices of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, the other documents herein mentioned, and the Underwriter shall accept such delivery and pay the purchase price of the Bonds in same day funds (such delivery and payment being herein referred to as the "Closing "). The Bonds, as so registered, shall be made available to the Underwriter for inspection not later than the first business day before the Closing Date. 2. Representations, Warranties and Agreements of the City. The City represents, warrants and covenants to and agrees with the Underwriter that: (a) The City is duly organized and validly existing as a municipal corporation under the laws of the State; and has, and at the Closing Date will have, as the case may be, full legal right, power and authority (i) to execute, deliver and perform its obligations under this Purchase Contract, the Indenture, the Resolution and the Disclosure Agreement (collectively, the "City Documents "), (ii) to execute and deliver the Official Statement, and to carry out all transactions contemplated by each of the City Documents, (iii) to adopt the Resolution approving the Indenture and enter into the other authorizing documents, (iv) to issue, sell and deliver the Bonds to the Underwriter pursuant to the Indenture as provided herein, and (v) to carry out, give effect to and consummate the transactions contemplated by the Official Statement and the City Documents; NBt03 BPAg.doMMC/ (b) The City Council has duly and validly (i) taken or caused to be taken, all proceedings necessary under the Constitution and the laws of the State of California in order to form the Assessment District and to confirm assessments (the "Assessments ") on the parcels located within the Assessment District in the respective amounts shown in the report of the Assessment Engineer approved by the City Council on July 8, 2009 (the "Engineer =s Report'), to cause each of the Assessments to be a valid lien upon the parcel upon which it was confirmed and to authorize the sale and issuance of the Bonds, (ii) authorized and approved the execution and delivery of the City Documents and the Bonds, (iii) authorized the preparation and delivery of the Preliminary Official Statement and the Official Statement and (iv) approved the performance by the City of its obligations contained in, and the taking of any and all action as may be necessary to cant' out, give effect to and consummate the transactions contemplated by each of the City Documents (including, without limitation, the collection of the Assessments) and the Assessment District has been validly formed, the Assessments have been validly confirmed and constitute liens on the respective parcels within the Assessment District, and (assuming due authorization, execution and delivery by other parties thereto, where necessary) the City Documents and the Bonds will constitute the valid, legal and binding obligations of the City and will be enforceable in accordance with their respective terns, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors= rights in general and to the application of equitable principles if equitable remedies are sought; (c) The City is not in breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound, a consequence of which could be to materially and adversely affect the performance by the City of its obligations under the Bonds or the City Documents, and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or default under any applicable law or administrative rule or regulation of the State, the United States of America, or of any department, division, agency or instrumentality thereof, or under any applicable court or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which the City is a party or is otherwise subject or bound; (d) Except as may be required under the "blue sky" or other securities laws of any jurisdiction, all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which would constitute a condition precedent to, or the absence of which would materially adversely affect, the performance by the City of its obligations hereunder, or under the City Documents or the Bonds have been obtained and are in full force and effect; (e) Except as disclosed in the Official Statement, there are, to the best knowledge of the City, no outstanding assessment liens against any of the properties within the City which are senior to or on a parity with the Assessments; (f) Each of the Assessments has been duly and lawfully confirmed, may be collected in installments under the laws of the State, and constitutes a valid and legally binding lien on the property on which it has been confirmed; (g) As of the date thereof, to the best knowledge of the City, the Preliminary Official Statement did 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. The information contained in the Official Statement is, as of the date hereof and will be, as of the Closing Date and as of the date of any supplement or amendment thereto pursuant to paragraph (i) below, true, correct and complete in all material respects and does not, as of the date hereof and will not, as of the Closing Date or as of the date of any supplement or amendment thereto pursuant to NBI03 BPAgdocIMC/ paragraph (i) below, 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; (h) Until the date which is twenty -five (25) days after the "end of the underwriting period" (as hereinafter defined) if any event shall occur of which the City becomes aware as a result of which it may be necessary to supplement the Official Statement in order to make the statements therein, in light of the circumstances existing at such time, not misleading, the City shall forthwith notify the Underwriter of any such event, and shall cooperate fully in furnishing any information available to it for any supplement to the Official Statement necessary so that the statements therein as so amended or supplemented will not be misleading in light of the circumstances existing at such time; and the City shall promptly furnish to the Underwriter a reasonable number of copies of such supplement (as used herein, the term "end of the underwriting period" means the later of such time as (i) the City delivers the Bonds to the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting syndicate, an unsold balance of the Bonds for sale to the public); (i) If the information contained in the Official Statement is amended or supplemented pursuant to paragraph (h) above, at the time of each supplement or amendment thereto and (unless subsequently again supplemented or amended pursuant to such paragraph), at all times subsequent thereto up to and including the Closing Date, the Official Statement so supplemented or amended (including any financial and statistical data contained therein), 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 such information therein, in light of the circumstances under which it was presented, not misleading; 0) The Indenture creates a valid pledge of the Assessments and the moneys in the Redemption Fund, the Improvement Fund and the Reserve Fund established pursuant to the Indenture, including the investments thereof, subject in all cases to the provisions of the Indenture permitting the application thereof for the purposes and on the terms and conditions set forth therein; and said pledge constitutes a first lien on and security interest in all of the foregoing; (k) Except as disclosed in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or, to the knowledge of the City, threatened against the City (i) which would materially adversely affect the ability of the City to perform its obligations under the City Documents or the Bonds, or (ii) seeking to restrain or to enjoin: (A) the development of any of the land within the Assessment District, (B) the issuance, sale or delivery of the Bonds, (C) the application of the proceeds thereof in accordance with the Indenture, or (D) the collection or application of the Assessments, or the pledge thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the City Documents, any tentative or final subdivision map or building permits applicable to property within the Assessment District, any other instruments relating to the development of any of the property within the Assessment District, or any action contemplated by any of said documents, or (iii) in any way contesting the completeness or accuracy of the Preliminary Official Statement, or the Official Statement or the powers or authority of the City with respect to the Bonds, the City Documents, or any action of the City contemplated by any of said documents; nor is there any action pending or, to the knowledge of the City, threatened against the City which alleges that interest on the Bonds is not excludable from gross income for federal income tax purposes or is not exempt from California personal income taxation; (1) The City will furnish such information, execute such instruments and take such other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for the Underwriter to qualify the Bonds for offer and sale under the "blue sky" or other securities laws and regulations of such states and other jurisdictions of the United States of America as the Underwriter may 4 Na103 aPAgdodMC/ designate; provided, however, the City shall not be required to register as a dealer or a broker of securities or to consent to service of process in connection with any "blue sky" filing; (m) Any certificate signed by any authorized official of the City authorized to do so shall be deemed a representation and warranty to the Underwriter as to the statements made therein; (n) The City will apply the proceeds of the Bonds in accordance with the Indenture and as described in the Official Statement; (o) Based upon projections which the City believes are reasonable, the Assessments supporting the Bonds, when levied and collected by the City in accordance with the terms of the Assessments formula, assuming normal and reasonable delinquency rates, will provide a yearly cash flow at least sufficient to make timely payment of principal and interest on the Bonds; (p) The City is not aware of any toxic waste conditions or adverse soils condition which would impair development within the Assessment District; (q) The City will undertake, pursuant to the Disclosure Agreement, to provide annual reports, the City Annual Report and notice of certain events; (r) The Official Statement (except the portions thereof entitled "CONCLUDING INFORMATION B Legal Opinion" and " B Tax Matters," and "APPENDIX E B INFORMATION CONCERNING THE DEPOSITORY TRUST COMPANY," as to which no view need be expressed) is, as of the date thereof, and will be, as of the Closing Date, true, correct and complete in all material respects; and the Official Statement (except the portions thereof mentioned above, as to which no view need be expressed) does not, as of the date thereof, and will not, as of the Closing Date, 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; and (s) The Preliminary Official Statement heretofore delivered to the Underwriter has been deemed final by the City as of its date, except for the omission of such information as is permitted to be omitted in accordance with paragraph (b)(1) of Rule 15c2 -12. The City hereby covenants and agrees that, within seven (7) business days from the date hereof, or (upon reasonable written notice from the Underwriter) within sufficient time to accompany any confirmation requesting payment from any customers of the Underwriter, the City shall cause a final printed form of the Official Statement to be delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the City so that the Underwriter may comply with paragraph (b)(4) of Rule 15c2 -12 and Rules G -12, G -15, G -32 and G -36 of the Municipal Securities Rulemaking Board. 3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the Underwriter, to the accuracy in all material respects of the representations and agreements on the part of the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material respects of the statements of the officers and other officials of the City made in any certificates or other documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to be performed hereunder at or prior to the Closing Date and to the following additional conditions: (a) At the Closing Date, the City Documents, the Resolution of Formation and any other applicable agreements shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated NB103 BPA&AWMC/ thereby and by this Purchase Contract, all such actions as, in the opinion of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation., Bond Counsel for the City, shall be necessary and appropriate; (b) Between the date hereof and the Closing Date, the market price or marketability of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason of any of the following: (1) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America or recommended to the Congress by the President of the United States of America, the Department of the Treasury, the Internal Revenue Service, or any member of Congress, or favorably reported for passage to either House of Congress by any committee of such House to which such legislation had been referred for consideration or a decision rendered by a court established under Article III of the Constitution of the United States of America or by the Tax Court of the United States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal income taxation upon the interest as would be received by the owners of the Bonds beyond the extent to which such interest is subject to taxation as of the date hereof; (2) legislation introduced in or enacted (or resolution passed) by the Congress of the United States of America, or an order, decree or injunction issued by any court of competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of the Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as amended and then in effect; (3) any amendment to the federal or State Constitution or action by any federal or State court, legislative body, regulatory body or other authority materially adversely affecting the tax status of the City, its property, income, securities (or interest thereon), the validity or enforceability of the Assessments or the ability of the City to construct or acquire the improvements as contemplated by the City Documents, the Resolution of Formation and the Official Statement; (4) any event occurring, or information becoming known, which, in the judgment of the Underwriter, makes untrue in any material respect any statement or information contained in the Official Statement, or results in the Official Statement containing any untrue statement of a material fact or omitting 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; (5) the United States of America has become engaged in hostilities which have resulted in a declaration of war or a national emergency or there has occurred any other outbreak or escalation of hostilities (it being agreed by the Underwriter that there is no outbreak, calamity or crisis of such character as of the date hereof); Na103 BPAgdndMC/ (6) The declaration of a general banking moratorium by federal, New York or California authorities or the general suspension of trading on any national securities exchange; or (7) The imposition by the New York Stock Exchange or other national securities exchange, or any governmental authority, of any material restrictions not now in force with respect to the Bonds or obligations of the general character of the Bonds or securities generally or the material increase of any such restrictions now in force, including those relating to the extension of credit by, or the charge to the net capital requirement of, the Underwriter. (c) On the Closing Date, the Underwriter shall have received counterpart originals or certified copies of the following documents, in each case satisfactory in form and substance to the Underwriter: (1) The City Documents and the Resolution of Formation together with a certificate dated as of the Closing Date of the City Clerk of the City, as applicable, to the effect that each such document is a true, correct and complete copy of the one duly adopted by the City Council and that it has not been amended, modified or rescinded since its adoption (except as may have been agreed to by the Underwriter) and is in full force and effect as of the Closing Date; (2) The Official Statement duly executed; (3) An unqualified approving opinion, dated the Closing Date and addressed to the City, of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel for the City, in customary form for such transactions, to the effect that the Bonds are legal, valid and binding obligations of the City, the City has the full right, power and authority to levy and pledge the Assessments to the payment of the Bonds, interest on the Bonds is excluded from gross income for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax, and is exempt from State personal income taxation, and an unqualified opinion of such counsel, dated the Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the City may be relied upon by the Underwriter to the same extent as if such opinion were addressed to it; (4) A supplemental opinion, dated the Closing Date and addressed to the Underwriter, of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel for the City, to the effect that (i) the statements contained in the Official Statement on the cover and under the captions "INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS," "THE DISTRICT — Assessments," "CONCLUDING INFORMATION — Legal Opinion" and "CONCLUDING INFORMATION — Tax Matters," "APPENDIX C — Summary of Certain Provisions of the Indenture" and "APPENDIX D — Form of Legal Opinion," insofar as such statements purport to summarize certain provisions of the Improvement Bond Act of 1915, the Indenture, Bond Counsel's final approving legal opinion with respect to the Bonds, and federal and State tax law, present an accurate summary of such provisions; (ii) the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the Resolution, which authorized issuance of the Bonds and approved the form and substance of the Indenture, the Purchase Contract and the Disclosure Dissemination Agent Agreement, has been duly adopted by the City Council of the City; and (iv) the Indenture, the Purchase Contract and the Disclosure Dissemination Agent Agreement have been duly authorized, executed and delivered by the City and, assuming due authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding agreements of the City enforceable in accordance with their respective terms, subject to laws relating to bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the application of equitable principles if equitable remedies are sought; N13103 HPAg.dodMC/ (5) An opinion, dated the Closing Date and addressed to the City and the Underwriter, of McFarlin & Anderson LLP, Disclosure Counsel, to the effect that, without passing upon or assuming any responsibility for the accuracy, completeness or fairness of any of the statements contained in the Official Statement or making any representation that they have independently verified the accuracy, completeness or fairness of any such statements, but on the basis of their participation in telephone conferences with the City =s representatives, Bond Counsel, representatives of the Underwriter and others, during which conferences the contents of the Official Statement and related matters were discussed and in reliance thereon and on the records, documents, certificates and opinions herein mentioned (as set forth above), during the course of their representation of the City on the matter, no facts came to the attention of the attorneys in such fain rendering legal services in connection with such representation which caused such firm to believe that the Official Statement as of its date contained any untrue statement of a material fact or omitted to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading (except that no opinion need be expressed as to the Appendices of the Official Statement or any financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts, tables, graphs, estimates, projections, assumptions or expressions of opinion or any information about feasibility, valuation, appraisals, absorption, real estate, archaeological or environmental matters, or any information about book -entry, tax exemption or The Depository Trust Company included or referred to therein); (6) A Certificate, dated the Closing Date and signed by an authorized representative of the City, ratifying the use and distribution by the Underwriter of the Preliminary Official Statement and the Official Statement in connection with the offering and sale of the Bonds; and certifying that (i) the representations and warranties of the City contained in Section 2 hereof are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date; (ii) to the best of his or her knowledge, no event has occurred since the date of the Official Statement affecting the matters contained therein which should be disclosed in the Official Statement for the purposes for which it is to be used in order to make the statements and information contained in the Official Statement not misleading in any material respect and the Bonds and the City Documents conform as to form and tenor to the descriptions thereof contained in the Official Statement and (iii) the City has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied under the City Documents and the Official Statement at or prior to the Closing Date; (7) An opinion, dated the Closing Date and addressed to the Underwriter, of City Attorney, to the effect that (i) to the best of his or her knowledge, except as described in the Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or body is pending or threatened in any way affecting the existence of the City or the titles of its officers to their respective offices, or seeking to restrain or to enjoin the development of property within the City, the issuance, sale or delivery of the Bonds or the exclusion from gross income for federal income tax purposes or State personal income taxes of interest on the Bonds, or the application of the proceeds thereof in accordance with the Indenture, or the collection or application of the Assessments to pay the principal of and interest on the Bonds, or in any way contesting or affecting the validity or enforceability of the Bonds, the Indenture, the Resolution of Formation, this Purchase Contract or any action of the City or which the City contemplated by any of said documents; (ii) the City is duly organized and validly existing under the laws of the State, with, as the case may be, full legal right, power and authority to issue the Bonds and to perform all of its obligations under this Purchase Contract, the Bonds and the Indenture; (iii) to the best of his or her knowledge after due inquiry, the City has obtained all approvals, consents, authorizations, elections and orders of or filings or registrations with any State governmental authority, board, agency or commission having jurisdiction which constitute a condition precedent to the levy of the Assessments, the issuance of the Bonds or the performance by the City of its obligations thereunder or under the Indenture, except that no opinion is expressed regarding compliance with "blue sky" or other securities laws or regulations, whatsoever; (iv) the City Council has duly and validly adopted the resolutions and the Resolution of Formation at meetings of the City Council which 8 NB103 BPA &dodMC/ were called and held pursuant to law and with all public notice required by law, and the resolution and the Resolution of Formation are now in full force and effect and have not been amended; and (v) the City has duly authorized, executed and delivered this Purchase Contract, the Indenture, and the Bonds and has duly authorized the preparation and delivery of the Official Statement, and this Purchase Contract, the Bonds, and the Indenture constitute legal, valid and binding agreements of the City, enforceable in accordance with their respective terms, subject to bankruptcy, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors= rights in general and to the application of equitable principles if equitable remedies are sought; (8) One counterpart original or copy certified by the Clerk of the City of a transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds; (9) The Certificate of the Paying Agent, dated the Closing Date, to the effect that (i) the Paying Agent is duly organized and existing as a national association under the laws of the State having the full power and authority to perform its duties under the Indenture; (ii) the Paying Agent is duly authorized to accept the obligations created by the Indenture and to authenticate the Bonds pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any governmental or regulatory authority having jurisdiction over the Paying Agent that has not been obtained is or will be required for the authentication of the Bonds or the consummation by the Paying Agent of the other transactions contemplated to be performed by the Paying Agent in connection with the authentication of the Bonds and the acceptance and performance of the obligations created by the Indenture; and (iv) compliance with the terms of the Indenture will not conflict with, or result in a violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution or any other agreement or instrument to which the Paying Agent is a party or by which it is bound, or any law or any rule, regulation, order or decree of any court or governmental agency or body having jurisdiction over the Paying Agent or any of its activities or properties; (10) A certified copy of the general resolution of the Paying Agent authorizing the execution and delivery of any City Documents to which the Paying Agent is a party; (11) An opinion, dated the Closing Date and addressed to the Underwriter and the City, of counsel to the Paying Agent in form and substance acceptable to the Underwriter, (12) The Disclosure Agreement; (13) A certificate of Harris & Associates dated the Closing Date, to the effect that the statements contained in the Official Statement relating to the size and location of the Assessment District, the amounts of the Assessments and the Engineer--s Report and all other information furnished by it therein do not contain an 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; (14) A certificate of the City dated the Closing Date, in a form acceptable to Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal Revenue Code of 1986, as amended; (15) A copy of Internal Revenue Service Form 8038 -G, executed by an authorized officer of the City; (16) Evidence satisfactory to the Underwriter that, other than as disclosed in the Official Statement, there are no ad valorem taxes, special taxes or assessments applicable to the property within the Assessment District that are delinquent; and NB103 BPAg.dadMC/ (17) Such additional legal opinions, certificates, instruments and other documents as the Underwriter or Bond Counsel may reasonably request to evidence the truth and accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in the Preliminary Official Statement and the Official Statement, of the City =s representations and warranties contained herein, and the due performance or satisfaction by the City and the Paying Agent at or prior to the Closing of all agreements then to be performed and all conditions then to be satisfied by either of them in connection with the transactions contemplated hereby by the City Documents and by the Official Statement. If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds contained in this Purchase Contract, or if the obligations of the Underwriter to purchase, accept delivery of and 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 City shall be under any further obligation hereunder, except that the respective obligations of the City and the Underwriter set forth in Section 4 and Section 5 hereof shall continue in full force and effect. 4. Conditions of the City =s Obligations. The City =s obligations hereunder are subject to the Underwriter= performance of their obligations hereunder, and are also subject to the following conditions: (a) As of the Closing Date, no litigation shall be pending or, to the knowledge of the duly authorized officer of the City executing the certificate referred to in Section 3 hereof, threatened, to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the validity of the Bonds or the City Documents or the existence or powers of the City; and (b) As of the Closing Date, the City shall receive the approving opinions of Bond Counsel and Disclosure Counsel referred to in Section 3 hereof, dated as of the Closing Date. 5. Expenses. Whether or not the Bonds are delivered to the Underwriter set forth herein: (a) The Underwriter shall be under no obligation to pay, and the City shall pay or cause to be paid (out of any legally available funds of the City) all expenses incident to the performance of the City =s obligations hereunder, including, but not limited to, the cost of printing and delivering the Bonds to DTC, the cost of printing, distribution and delivery of the Indenture, the Preliminary Official Statement, the Official Statement and all other agreements and documents contemplated hereby (and drafts of any thereof) in such reasonable quantities as requested by the Underwriter; the cost of the overlapping debt statement and the fees and disbursements of the Paying Agent for the Bonds, Disclosure Counsel [DISCUSS] and the Bond Counsel and any accountants, engineers or any other experts or consultants the City have retained in connection with the Bonds; and (b) The City shall be under no obligation to pay, and the Underwriter shall pay, CUSIP' Bureau and CDIAC fees; the cost of preparation of any "blue sky" or legal investment memoranda; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws; and all other expenses incurred by the Underwriter in connection with its public offering and distribution of the Bonds (except those specifically enumerated in paragraph (a) of this section), including the fees and disbursements of its counsel and any advertising expenses. 6. Notices. Any notice or other communication to be given to the City under this Purchase Contract may be given by delivering the same in writing to the City of Newport Beach, 3300 Newport 10 NM03 BPAg.d /MC/ Boulevard, Newport Beach, California 92663; any notice or other communication to be given to the Underwriter under this Purchase Contract may be given by delivering the same in writing to Southwest Securities, Inc., 15760 Ventura Boulevard, Suite 1740, Encino, California 91436. 7. Parties in Interest. This Purchase Contract is made solely for the benefit of the City and the Underwriter (including their successors or assigns), and no other person shall acquire or have any right hereunder or by virtue hereof. This Purchase Contract shall not be assigned by the City or the Underwriter. 8. Survival of Representations, Warranties and Agreements. The representations, warranties and agreements of the City set forth in or made pursuant to this Purchase Contract shall not be deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or termination of this Purchase Contract and regardless of any investigations made by or on behalf of the Underwriter (or statements as to the results of such investigations) concerning such representations and statements of the City and regardless of delivery of and payment for the Bonds. 9. Effective. This Purchase Contract shall become effective and binding upon the respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and enforceable as of the time of such acceptance. This Purchase Contract may be signed in counterparts by each party. 10. No Prior Agreements. This Purchase Contract supersedes and replaces all prior negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by the City and represents the entire agreement of the parties as to the subject matter herein. 11. Governing Law. This Purchase Contract shall be governed by the laws of the State of California. 11 NBI03 BPAg.dociMC/ 12. Counterparts. This Purchase Contract may be executed simultaneously in several counterparts, each of which shall be an original and all of which shall constitute one and the same instrument. ATTEST: By: Leilani Brown, City Clerk APPROVED AS TO FORM: 0 Mynette D. Beauchamp, Assistant City Attorney Very truly yours, SOUTHWEST SECURITIES, INC. By: Vice President By: Authorized Officer ACCEPTED: CITY OF NEWPORT BEACH By: City Manager 12 NBI03 BPAg.doc/MC/ APPENDIX A MATURITY SCHEDULE CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) LIMITED OBLIGATION IMPROVEMENT BONDS Maturity Date 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Principal E Interest Yield Rate Price Any Bond or any portion of a Bond may be redeemed, in whole or in part, in increments of $5,000, in advance of maturity on any Interest Payment Date, commencing March 2, 2010, from any source of funds legally available, including, without limitation, the prepayment of assessments and surplus funds from the Improvement Fund, if any, at the redemption prices (expressed as percentages of the principal amount to be redeemed) set forth below, together with accrued interest to the date of redemption: Redemption Date Redemption Price March 2, 2010 through September 2, 2014 103% March 2, 2015 and September 2, 2015 102 March 2, 2016 and September 2, 2016 101 March 2, 2017 and thereafter 100 A -1 NB103 BPA AOUMC/ CITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT Agenda Item No 24 September 8, 2009 SUPPLEMENTAL REPORT TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C Danner, Administrative Services Director (949) 644 -3123 or DDanner(o)newportbeachca.gov Dan Matusiewicz, Finance Officer (949) 644 -3126 or DanM(d-)newportbeachca.goV SUBJECT: Sale of Bonds for Assessment District 103 Subsequent to the submittal of the subject staff report, staff received additional property owner payments that the City would like to consider in connection with Assessment District 103 The additional payments will further reduce the remaining unpaid assessments as set forth in Exhibit A of the Change Proceedings Resolution. The additional payments will also reduce the unpaid assessments referenced in the resolution authorizing sale of bonds. Both amended resolutions are attached to this supplemental report Please refer to the original staff report for additional information regarding this item. Prepared by an Matusiewi cz Finance Officer Submitted by Dennis C. Danner Administrative Services Director Attachments. Change Proceeding Resolution to Reduce Assessments (Amended) Resolution Authorizing Sale of Bonds and related documents (Amended) RESOLUTION NO. 2009- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ORDERING CHANGE OF PROCEEDINGS TO REDUCE ASSESSMENTS TO REFLECT DELETION OF CAPITALIZED INTEREST FROM ESTIMATED COSTS AND DETERMINING REMAINING UNPAID ASSESSMENTS FOR ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD) The City Council of the City of Newport Beach determines, orders and resolves as follows: SECTION 1. RECITALS. a. By proceedings duly had and taken, this City Council (this "Council ") of the City of Newport Beach (the "City ") has provided for (a) the formation of its Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District "), under and pursuant to the provisions of the Municipal Improvement Act of 1913 ( Division 12 of the California Streets and Highways Code) (the "1913 Act "), and (b) the issuance of limited obligation improvement bonds (the "Bonds ") under and pursuant to the provisions of the Improvement Bond Act of 1915 (Division 10 of said Streets and Highways Code; hereafter the "1915 Act "). b. On July 28, 2009, this Council adopted its resolution approving the Final Engineer's Report, dated July 28, 2009, as identified in said resolution (the "Final Engineer's Report"), among other things approving and ordering implementation of the undergrounding of the existing overhead utility facilities (the " Undergrounding Project ") located within the public rights -of -way and easements and within or adjacent to the Assessment District, and levying the assessments on the parcels determined to be specially benefited by the Undergrounding Project, in the amounts set forth in the Final Engineer's Report. C. Thereafter, on July 30, 2009, the Notice of Assessment and the assessment diagram for the Assessment District were recorded in the official records of the Orange County Recorder, and the individual assessments thereby became a lien upon the respective individual parcels upon which they had been levied. d. On July 31, 2009, a notice of assessment was mailed to the owner or owners of each parcel assessed, advising that all or any portion of each such assessment could be paid in cash, without interest and at a discount of thirteen percent (13 %) (representing avoided financing costs respecting bond discount, capitalized interest and bond reserve fund), with a deadline of August 31, 2009, for receipt of such cash payments at the office of the Finance Officer of the City (the "Finance Officer "). e. Based upon the completion of these steps, this Council is advised by the Finance Officer that the City will be able to post an installment on account of unpaid assessments on the 2009 -2010 property tax roll of the County of Orange, providing for payment of the debt service on the Bonds on March 2 and September 2, 2010, thereby making unnecessary the inclusion of capitalized interest in the amount of the assessments. f This Council is authorized and by this resolution wishes to order a change of proceedings pursuant to Section 10352 of the 1913 Act, without notice to the property owners in the Assessment District or public hearing, to provide for the reduction of assessments to reflect deletion of the allowance for capitalized interest and thereby pass on to the property owners this savings. g. Following the close of the cash payment period on August 31, the Administrative Services Director of the City (the "Director'), in consultation with the Finance Officer, prepared and submitted to the City Clerk of the City (the "City Clerk ") a Certificate Respecting Paid and Unpaid Assessments, a copy of which certificate is attached to this resolution as Exhibit A and by this reference incorporated herein, certifying that the amount of unpaid assessments, as revised to reflect both the deletion of capitalized interest ordered by this resolution and the cash payments received from property owners wishing to prepay their respective assessments, in whole or in part, without interest, is $3,335,546. h. By this resolution, this Council wishes to establish said amount of unpaid assessments, rounded down to the nearest $100, as the principal amount of limited obligation improvement bonds to be authorized and issued in these proceedings upon the security of said unpaid assessments. SECTION 2. RECITALS TRUE AND CORRECT. The foregoing recitals are true and correct, and this Council so finds and determines. SECTION 3. REDUCTION OF UNPAID ASSESSMENTS. Pursuant to the provisions of Section 10352 of the 1913 Act, this Council hereby orders a reduction in the principal amount of each unpaid assessment equal to five and seventy-five one- hundredths percent (5.75 %) to pass on to the property owners the savings achieved by eliminating the need to capitalize interest payable on the Bonds on March 2 and September 2, 2010. Those property owners who prepaid, whether in whole or in part, their assessments during the cash payment period have already received this discount as part of the thirteen percent (13.0 %) discount applied to such cash payments. SECTION 4. DETERMINATION OF AMOUNT OF UNPAID ASSESSMENTS. This Council hereby finds and determines that, as set forth in the attached certificate, and there being no information to the contrary, the amount of assessments remaining unpaid in the Assessment District is the amount set forth in said certificate, namely $3,335,546, and by 2 separate resolution, this Council will authorize the issuance of the Bonds in said principal amount, rounded down to the nearest $100. SECTION 5. RECORDATION OF ADDENDUM TO NOTICE OF ASSESSMENT. The City Clerk is authorized and directed to cause the preparation and recording of an appropriate addendum to the notice of assessment which was recorded on July 30, 2009, to reflect (a) the discharge of lien respecting those parcels for which the assessment has been fully prepaid and discharged, (b) the reduced amount of the assessment for those parcels for which the assessment has been partially prepaid, and (c) the reduced amount of the remaining unpaid assessments as ordered by this resolution. SECTION 6. TRANSMITTAL TO COUNTY AUDITOR. The Clerk is hereby directed to transmit a certified copy of this resolution to the Orange County Auditor, and the Orange County Auditor is requested to proceed in accordance with Section 8682 of the California Streets and Highways Code in the collection of installments of principal, interest and administrative costs respecting these unpaid assessments on the secured property tax assessment roll of the County of Orange, commencing with the 2009 -2010 tax roll. SECTION 7. EFFECTIVE DATE OF RESOLUTION. This resolution shall take effect immediately upon its adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Newport Beach held on 8's day of September, 2009. Mayor ATTEST: City Clerk EXHIBIT A CERTIFICATE. RE PAID AND UNPAID ASSESSMENTS CITY OF NEWPORT BEACH ASSESSMENT DISTRICT NO. 103 (G STREET /EAST BALBOA BOULEVARD /CIIANNEL ROAD /OCEAN BOULEVARD) I HEREBY CERTIFY that the attached list of Paid and Unpaid Assessments correctly reflects the following: (1) The total amount of assessments levied on parcels within Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District ") on July 28, 2009, and thereafter recorded in the official records of the Orange County Recorder on July 30, 2009, is $6,220,752. (2) The foregoing total amount of assessments is being reduced, by resolution to be adopted by the City Council on September 8, 2009, prior to consideration of this certificate, by the amount of $357,693, to a revised total amount of assessments of $5,863,059 on account of deletion of the allowance for capitalized interest which has been determined to be not needed in view of the fact that the City will be able to bill installments on account of unpaid assessments on the 2009 -2010 property tax roll to provide funds fiom which to pay all debt service on the Bonds of the Assessment District coming due on March 2 and September 2, 2010. (3) The total amount of cash payments received by the City from property owners on account of assessments levied in the Assessment District, prior to expiration of the cash payment period on August 31, 2009, as reported to me by the Finance Officer of the City, has resulted in a total reduction in the amount of unpaid assessments of $2,527,513 (when rounded to the nearest dollar). (4) After deducting the amount set forth in paragraph 3 above on account of cash payments received during the cash payment period, the amount of assessments remaining unpaid in the Assessment District is $3,335,546. 1278133.1 Executed at Newport Beach, California, on September 3, 2009. 4 r Dennis Danner Administrative Services Director City of Newport Beach City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Amount of Asml. Unpaid No. APN Owner Name Assessment 1 048 - 20147 MATHIES, WILLIAM A $22,384.20 2 048- 201-46 - ------- ----- BRAWLEY, JOHN B JR _ $18,219.69 3 048- 201 -41 WALKER, DARLINE R $15,096.32 4 048 - 201-40 BLAHA, JOHN JOSEPH _ $15,096.32 5 048. 201_ -39 DE ROUSSE, GARY EUGENE $15,096.32 6 048- 201 -38 MC NEISH, STANLEE 6 $15,096.32 7 048. 201 -37 WELBOURN, JOHN RUSSELL $14,575.75 8 048- 201 -52 TOOHEY, THOMAS D $29,151.51 9 048- 201 -34 TOOHEY, THOMAS D $14,575.75 10 048- 201 -33 RODRIGUEZ, EDWARD J & MARTHA A $0.00 11 048. 201 -32 FLOTRON, MARK 8 KIMBERLEE GENOFILE $14,055.19 12 048- 201 -31 ROSENBERGER, DAVID W $14,055.19 13 048 - 201 -30 CORUM, SUSAN LARKEY $14,055.19 14 048 - 201 -29 GODBER, JAMES R $0.00 15 048 -201 44 _ DIMICK, BRIAN L _$_14,055.19 16 048 - 20145 ARMBRUSTER, THOMAS E $0.00 17 048- 201 -26 JAMIDAR, PRIYA & MELISSA S $13,534.62 18 048- 201 -25 MELLEN, LINDA D $13,534.62 _ 19 048- 201 -24 WALKER, ROBERT R $13,534.62 20 048- 201 -23 BLAHA, JOHN JOSEPH _ _ $15,616.89 21 048- 201.22 STAFFORD, RICHARD TIMBERLAKE_ _ $17,178.57 22 048 - 20148 PERRING, JOSEPH L $15,0_96.32 23 048. 201 -51 _ EASTERBROOK, FRANK N _ $0.00 24 048 - 201 -50 OLSON. GEORGE A $0.00 25 D48 -201 -02 MC WILLIAMS, JOHN G $0.00 26 048 -201 -03 _ WOOD, CHARLES W _ _ $.13,014.07 27 048- 201 -04 PAROTTI, JOSEPH M $13,014.07 28 048. 201 -05 HOLMES, PAUL $13,014.07 29 048 - 201 -06 TOBIN, THOMAS B _ $0.00 30 048.201 -07 OSWALD, THOMAS P $13,014.07 31 048 -201 -08 GARRETT, PHILIP L $0.00 32 048 -201 -09 KIRBY, SCOTT M & RHONDA A $13,014.07 33 048- 201 -10 _ JABARA, GARY $13,014.07 34 048 - 201 -11 JABARA, GARY $13,014.07 35 048- 201 -12 ASPER, BRUCE E & SANDRA D _ $13,0_14.07 36 048- 201 -13 COGBILL, BRIAN C $0.00 37 048 - 201 -14 KING, ROBERT W $13,014.07 38 048 - 201 -15 TAKEMOTO, ARTHUR M JR $13,014.07 39 048- 201 -16 FRICKER, MARK A $0.00 40 048- 201 -17 SHEPHERD, STEPHEN R _ $0.00_ 41 048- 201 -18 DAILY, STEVEN R _ $1.3,014.07 42 048- 201 -19 NICHOLSON, GERALD T $0.00 43 048 - 201 -20 CASTRONOVA, DANIEL C $13,014.07 Asmt 44 45 46 47 48 49 50 51 52 53 54 City of Newport beach Assessment District 103 List of Paid and Unpaid Assessments APN Owner Name 048- 201 -21 048- 192 -01 048 - 192 -02 048 - 192 -03 048- 192 -04 048 - 192 -05 048- 192 -06 048 -192 -07 048 -192 -08 048-192 -09 048- 191 -19 Amount of Unpaid Assessment ALDER, HORACE B $16,137.44 OFT, FAMILY CORP THE $24,987.01 ANDERSON, WILLIAM E TR & LIVING TRUST $18,219.69 MORTENSON, KAY H $37,480.51 GATES, CHARLES EDWARD TR & FAMILY TR $20,822.50 AB_RAMOWITZ, PHILIP FUHRMANN, BRUCE MAYER, EMIL D MULLIN, MICHAEL COLLINS, JAMES B & LORE R MATOS,JOANN GAULDEN 55 048 - 191 -02 CUMMINGS, SUZANNE GREGG 56 048- 191 -03 FOWLER, KRISTEN 57 048- 191-04 58 048 - 191 -05 59 048- 191 -06 60 0_48- 191 -07 61 048- 191 -08 62 048- 191 -09 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 ... 82 63 _ 84 _. __85 86 048- 191 -10 048 - 191 -11 930- 504 -15 930 - 504 -16 930 - 504 -17 930. 504 -18 048- 191 -14 048 - 191 -15 048 - 191 -16 048-221-01 048- 221 -02 048- 221 -03 048 - 221 -28 048 7221 -06_ 048- 221 -29 048- 221 -24 048- 221 -10 048 - 221 -11 048 - 221 -12 048-221 -13 048- 221 -14 048 - 221 -34 048- 221 -35 048 - 221 -22 LEE, ROBERT E SELDERS, JULIE G $20,822.50 $21,863.63 $0.00 $23,425.32 $52,576.64 $5,897.98 $14,315.47 $15,096.32 $14,055.19 $14,055.19 BALL, CHRISTOPHER J $_13,534.62 BARANYAY, MIKEL C $0.00 AVERY, WILLIAM BRADLEY $13.534.62 REXMERE LAKE VILLAGE LLC _ $_0.00 POELSTRA, GARY _ _ _$0.00 GIESLER, HOWARD _ _ $16,658.00 NELSON, RICHARD J & SH_E_RYL J $8,849.56 STOLZBENBERG,LARRY $0.00 LOGAN, DOUGLAS N _ $8,849.56 KASCHMITTER, DANIEL J $8,649.56 MUTH, JAMES T 11 $17,178.57 LEFFLER, RICHARD ABBOTT $15,616.89 GIORDANO. SANDRA L _ $0.00 SCALZO, NICHOLAS B $17,699.13 GOBEL, JANIS $13,534.62 KRAUS, FAMILY PARTNERSHIP LP $13,534.62 PAPPAS, PAULETTE $0.00 ROBERTS, ZOE B $0.00 SCHMIDT, ROBERTA USHER $20,301.95 COREY, SHARON 1 $20,301.95 MILLER, TERESE A $0.00 FREDERICK, JEFFREY D $0.00 HOGAN, THOMAS _ _ $13,534.62 GOODING, JOHN P _ $0.00 BAER, S RONALD L _ $15.616.89 ARC_HIE, DAVID S_ & ANN K _ $0.00 BRIGAND[, CHRIS & CHRISTY $12,493.51 BENDEL, SALLY 0 NEILL $13,014.07 City of Newport beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. No. APN Owner Name Amount of Unpaid Assessment 87 048- 221 -21 PAULSON, DONALD H $0.00 88 048- 221 -20 PETERSON, ROBERT G & JANET R $0.00 89 048- 221 -19 BURGESS, TIM J $0.00 90 048221 -18 STILES, ROBERT A $0.00 91 048221 -33 EVANS, ANDREW J II & JANE P $13,014.07 92 048221 -32 ESPENSCHIED, MARY FRANCES $0.00 93 048- 221 -31 WASLEY, RICHARD JONA_THO_N & WENDY LEE_ $0.00 94 048- 221 -30 DETLING, LOIS BANTA $13,014.07 95 048- 221 -26 JAVELERA, MARY ANN LUCILLE $13,014.07 96 048221 -27 JAVELERA, MARY ANN LUCILLE $0.00 98 048 -222 -01 JOHNSON, MARGARET R _ _ $0.00 99 048222 -02 CAVANEY, BYRON M JR $13,014.07 _100 048222 -03 MUENCHOW, JEROME C & SARA _J $13,014.07 101 048 - 222 -04 PUCCIO, KENNETH J _ _ $13,014.07 102 048 -222 -05 BOGGESS, WILLIAM W $13,014.07 103 048 -222 -06 WILTCHIK, YVONNE L $13,014.07 104 048- 222 -07 LESSARD, DARRALD G $0.00 105 048 -222 -08 HOMER, MILTON R $13,014.07 106 048 -222 -09 CAMPBELL, GARY A $0.00 107 04_8. 222 -10 HARTLESS. FRANK J_ JR & KATHY A $0.00 108 048 - 222 -11 PETTTI, ROBERT E $0.00 109 048222 -32 MARR, LOIS M $0.00 110 048 - 222 -33 WRIGHT, STEWART REX $0.00_ 111 048- 222 -34 KEYS, DONALD _ $0.00 112 048-222 -35 CUMMINS, ALAN & BONNIE $14,055.19 113 048- 222 -27 MC GUY, JAMES W $14,575.75 114 048- 222 -26 BROWN, JOHN D $13,534.62 115 048-222 -25 BROWN, JOHN & KATHLEEN $14,055.19 116 048 - 222 -24 PERLMAN, NEIL $14,575.75 117 048-222 -23 KRANYAK, BARBARA A & EDWARD $15,096.32 118 048222 -22 RHODES, JOHN E & JUDY A $0.00 119 048- 222 -21 BRAME. ALICE PARIS 120 048 - 222 -20 GURR, JOHN W $16,137.44 121 048- 222 -19 HANAWALT, WARD $0.00 122 048- 222 -31 WARNER, ROBERT_ E SR $17,178.57 123 048 - 222 -30 DAVIS, DONALD G $17,178.57 124 048 - 222 -28 KIRCHNER, NINA VERMOYNE $0.00 125 048-222 -29 KUMAR, NIRMAL $17,699.13 126 048 - 222 -16 WAYDELICH, JAMES C $0.00 127 048- 222 -37 BENNETT, JON L JRJ $16,137.44 128 048 - 222 -36 FRIEDMAN, ARTHUR S $17,178.57 129 048 -211 -36 _ CONZONIRE, RONALD H & MARILYN_ L $0.00_ 130 048-211 -35 JOHNS, JEAN C $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Amount of Asmt. Unpaid No. APN Owner Name Assessment 131 048- 211 -34 DIETRICK, WILLIAM R $0.00 132 048- 211 -02 GUTHRIE, JOHN $0.00 133 048-211 -03 SCHOTZ, ERIC ROBERT $13,014.07 134 048 - 211 -37 THOMSEN, GARY CLARKE $0.00 135 048- 211 -38 BECKMAN. MICHAEL & JEAN $0.00 136 048 -211 -05 YEOMAN_S. JOHN RAY _ $13,014.07 137 048 -211 -06 CLARK, HOWARD ALAN $0.00 _138 048- 211 -27 MOSS, ROBERT J & SUSAN J $0.00 139 048- 211 -28 MOSES, LINDA L $0.00 140 048- 211 -08 ROYSE. STEVEN B $0.00 141 048- 211 -09 SCANLON, MARK $0.00 142 048. 211 -10 RICHMAN, STEVEN N $0.00 143 048 - 211 -11 ANDERSON, RONALD E $13,014.07 144 048 - 211 -12 LANTING, RONALD J & LORENE C $0.00 145 D48- 211 -39 ABEL, JOHN K & DEBORAH K $15,616.89 146 048- 211-40 LORA, MICHAEL R $0.00 147 048- 211 -23 REILLY, PATRICK C $13,534.62 148 048- 211 -22 ODELL, ROBERT C _ $0.00 149 048- 211 -21 SCHNEIDER. MARK E & MARY $13,534.62 150 048 - 211 -20 FRANK, BEAZ A $0.00 151 048 - 211 -19 PAYNE, EUGENE L JR $13,534.62 152 048 - 211 -18 HAMILTON, MARY R $13,534.62 153 _ 048- 211 -17 PECK, DONALD W $13,534.62 154 .. 048- 211 -30 CARPENTER, SANDRA & JOHN F __...._..... —_... _ _ $12,462.12 ._ .. ....... 155 048- 211 -32 CLARK, WARREN J $13,534.62 156 048 - 211 -31 UAQUILA, BERNARDINO & LIA $13,534.62 157 048- 211 -25 VAIRO, JOHN R $13,534.62 158 048 - 211 -15 BAKER, BYRON DOUGLAS $13,534.62 159 048 - 211 -14 ELLIOTT, STEVEN _ $0.00 160 048 - 211 -13 LINHOFF, RALPH STRATTON _ $0.00 161 048 - 261 -30 JOHNSON, ERIC P $0.00 162 048- 261 -29 NESLEN- RAMSAY, ELEANOR K $0.00 163 048- 261 -28 ASSE_N_HEIMER, LEE C $0.00 164 048- 261 -33 SEIDLER, TERRY O MALLEY $0.00 165 048- 261 -34 THOMAS, GLORIA M _$0.00 166 048- 261 -31 CAD, HON V _ $0.00 167 048 - 261 -32 MIDDLEBROOKS, CAROLYN J $13,534.62 168 048 - 261 -25 DAHL, BARBARA $13,534.62 169 048- 261 -24 JOHNSON, MICHAEL A $13,534.62 170 048- 261 -23 MC EWENS, INC $0.00 171 048- 261 -22 CARLTON, JOHN C. $13,534.62 172 048- 261 -21 COGAN, STUART A $0.00 173 048 - 261 -20 MATICH, ROBERT M $0.00 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. No. APN Owner Name Amount of Unpaid Assessment 174 048- 261 -19 ZILL, STANLEY R $13.534.62 175 048- 261 -18 RHYMER, DONALD E $0.00 176 048 - 261 -17 ALLEN, LAWRENCE W $16,658.00 177 048- 261 -01 FIGGE, SCOTT J $15,616.89 178 048 - 261 -02 AVER, BONNIE J $0.00 179 048 -261 -03 HOWARD, JOHN E $0.00 180 048 -261 -04 181 048 -261 -05 182 048 -261 -06 183 048. 261 -07 184 048 - 261 -08 185 186 187 188 189 190 048 - 261 -09 048 - 261 -35 048- 261 -36 048- 261 -11 FARGO LLP $10,931.81 MCEWEN, DAVID R $10,931.81 BURNISON, GARY 0 & LESLIE $10,931.81 FULLER, RICHARD H $10,931.81 D'ELISCU, JEFFREY B $0.00 ERNST, JOHN W $0.00 CHAPMAN,ROBERTJ KRAMER, EDWARD J CAHILL, PATRICK A 048- 261 -12 ANDRUS, TERRY C 048 - 261 -13 PIANI, RICHARD D & SHANNA E $0.00 $0.00 $10,931.81 $0.00 $10,931.81 191 048- 261.14 CAHILL, PATRICK A _ $10,931.81_ 192 048 - 261 -15 SWIFT, TOM & KELLY $10,931.81 193 048 - 261 -16 LAZICKI, WALTER H $0.00 194 0_48- 252 -12 SIMS, WAYNE R $3_1,233.76 195 048- 252 -11 THOMSON, FRANKLIN GREG & JILL RENEE $12,493.51 196 048- 252 -10 BLEDSOE, ALAN A $11,972.94 197 0487252 -15 SOMERS, LAWRENCE $20,351.88 198 048-252 -14 GUENTHER, ALAN S & LINDA A $0.00 199 048 - 252 -13 MALE_, ALFRETTA B $0.00 200 048 - 252 -19 MAAS, RALPH W $0.00 201 048- 25_2 -18 KEPHART, LESTER E _ $0.00 202 048- 252 -05 MC NAMEE, ANN $14,575.75 203 048 - 252 -21 WHITEHEAD. JAMES W $0.00 204 048 - 252 -20 FRIEDMAN, JERALD & JUDITH _ $10,931.81 205 048-252 -03 DE LAWTER, CHARLES PIERRE $16,658.00 _206 048 - 252 -02 JOHNSON, CATHERINE _ $0.00 207 048- 252 -17 RIFE, ROBERT S $0.00 208 048- 252 -16 FI_TZGEORGE, KELLEE_N ANN _ $0.00 209 048- 251 -21 ST CLAIR, JOAN C $26,028.13 210 048- 251 -22 LOCKE, ARCHIE Y 211 048 - 251 -23 GERIA_K, JAMES WILLIAM $0._00_ 212 048-25_1 -24 MC MAHON, WILLIAM J _ _ $2_0,822.50 213 048- 251 -25 BIBB, JOHN M & KIMBERLY PEASE $20,822.50 214 048- 251 -26 WADSWORTH, JOHN S III _ $20,822.50 215 048. 251 -27 WADSWORTH, JOHN S III _ $_20,622.50 216 048 - 251 -28 KUSBY, EDWARD D $20,822.50 City of Newport Beach Assessment District 103 List of Pald and Unpaid Assessments Asmt. No. APN Owner Name Amount of Unpaid Assessment 217 048- 251 -29 TOLER, NANCY B _$20,822.50_ 218 048- 251 -30 ERICKSON, RALPH E _ _ $20,822.50 219 048 - 251.31 GESSFORD, SUSAN _ $0.00 220 048- 251 -32 DEATON, KARRIE L $0.00 221 048- 251 -33 LEWIS, ALICE N $18,577.93 222 048 -251 -07 HILKER, MARY LOU $0.00 223 048 -251 -06 JOHANSEN. JAMES ROBERT $0.00 224_ 048-251 -37 MORABITO, CARL $30,192.63 225 048- 251 -38 O'BECK, RICHARD 8 PATRICIA $27,069.26 226 046. 251 -34 MARSHALL, JOHN W $26,028.13 227 048- 251 -35 RAWLINGS, GARY L _ $26,028.13 228---. 048- 251 -14 HOFMANN, LEROY W $0.00 229 048- 251 -15 BAILEY, ELIZABETH H $0.00 230 048- 251 -16 DAVIS, MARC P $0.00 231 048- 251 -17 FOHRMAN, RALEIGH S $20,822.50 232 048 - 251 -18 COLLINS, TIMOTHY _C_ $20,822.50 233 048- 251 -19 BECKER, MARK S $_20,822.50 234 048- 251 -20 SNYDER, DOUGLAS G $20,822.50 235 048 -251 -02 KINNEY, ROBERT 18 CATHERINE S $0.00 236 048-251 -03 POWERS, ALICE M _ $0.00 _237 048 - 251 -04 JALET, JAMES G III 8 LU ANN M.- $20,822.50 238 048 - 251 -05 LAMBIE, JOAN B $0.00 239 048- 272 -28 MAZZARELLI, JOSE D $16,656.00 240 048- 272 -29 BRIGHTON, CARLETON C $0.00 241 048- 272 -20 SHIVELY, ROBERT N JR 8 CHRISTINE $14,575.75 242 048- 272 -19 GATES, CHARLES EDWARD $14,575.75 243 048- 272 -31 BENNETT, BRUCE W JR _ _ $0.00 244 048- 272 -30 HANSEN, NEIL CALVIN JR $0.00 245 048 - 272 -04 ROGERS, ROBERT E _ $0.00 246 048- 272 -05 DORAN, THOMAS FREDERICK_ $14,57575 247 048- 272 -24 STORCH, JOHN C $0.00 248 048- 272 -32 HALL, FRANK HERBERT $14,575.75 _249 048- 272 -33 HOLDER, THOMAS W _ $14,575.75 250 048- 272 -22 LEPPEK, HARRIET J $14,575.75 251 048- 272 -26 DAVIS, GEOFFREY 0 _$14,575.75_ 252 048- 272 -27 MATCHA, MORRIE $14,575.75 253 048 - 272 -21 ANDERSSON, NILS 8 NANCY $48_,932.89 254 048- 272 -09 THOMAS, LEONARD O 8 JEAN_N_ETTE L _ $13,014.07 255 048 - 272 -10 BOROWSKY, DENNIS M $13,014.07 256 048 - 272 -11 SCAPPLE, JOHN M ............ ... $13,014.07 — 257 048- 272 -12 ROGERS. JOHN B $0.00 258 048- 272 -18 QUEEN, STEPHEN_ _ $15,096.3_2 259 048 - 272 -17 GORDON. DEBRA LYNN $13,014.07 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments 274 275 276 048 - 271 -23 FISHER, GEORGE H $0.00 048 - 271 -31 DUNN, LAURA $13,883.40 048 - 271 -19 LAINER, MARK $14,575.75 277 048 -271 -01 278 Amount of Asmt. 048- 271 -03 280 _ Unpaid No. APN Owner Name Assessment 260 048 - 272 -16 NESS, MIKE & CHRISTINE $13,014.07 261 048 - 272 -15 SALCITO, DANIEL R_ $0.00 262 D48- 272 -14 J_OCHIM, RANDAL J $13,014.07 263 048 - 27_2 -13 SHELDON, SUSAN $0.00 264 048 - 271 -30 CUMMING_, NANCY $0.00 265 048- 271 -29 ACKERMAN, ROBERT A $14,575.75 266 048 - 271 -17 JACOBS, MICHAEL K & PAMELA D $0.00 267 048 - 271 -28 WHITE, JAMES DON $16,137.44 268 048- 271 -26 COOK, HERBERT O $16,137.44 269 048- 271 -25 CORBO, LOUIS C $16,_1.37.44 270 048- 271 -27 _ DERRICK, FOLK BARBARA _ _ _ $0.00 271 048 - 271 -14 AIELLO, SAM N & NANCY ANN $13,014.07 272 048- 271 -13 LOVELL, ROBERT E $_13,014.07 273 048 - 271 -21 BAIKER, ASHLEY TR $0.00 274 275 276 048 - 271 -23 FISHER, GEORGE H $0.00 048 - 271 -31 DUNN, LAURA $13,883.40 048 - 271 -19 LAINER, MARK $14,575.75 277 048 -271 -01 278 048- 271 -02 279 048- 271 -03 280 _ 048- 271 -32 281 048-271 -33 282 048 -271 -05 GAUT, BARTON C JONES, GRAHAM M JONES, GRAHAM M DE CUBELLIS, ARTHUR _ ST_ONEHOUSE, RICHARD EARL _ MACKENZIE, JAMES M & PATRICIA A � m 283 048 -271 -06 BIBB, JOHN M 284 048- 271 -07 SYNERGY GROUP FUND_ V LLC 285 048- 271 -08 FISHER, GEORGE H _ 286 048- 271 -09 TAYLOR, SUSAN J 287 048- 302 -01 BOYD, JEAN M 288 048 - 302 -02 KING, JOSEPHINE D 289 048 -302 -03 JACOBSON, DONALD A 290 048 - 302 -04 CAMPBELL -VOIT, MARY LAVONNE 291 048 -302 -05 THOMPSON, CHARLES M _ 292 048 -302 -06 THOMPSON, CHARLES M 293 048- 302 -07 MEERMANS, GARY J 294 048- 302 -08 LEACH, WILLIS ROY _ 295 048 - 302 -09 MARSHALL, ROBERT B _ 296 048 - 302 -10 COGAN, STUART A 297 048 -302 -11 L PIERRETTE BAKER M 298 048- 302 -17 _ MEANS, EDWARD GLEN III _ 299 048- 302 -16 CLARK, HOWARD MARSTON 300 048 - 302 -15 BEIDLE, LEONARD A JR 301 048 - 302 -14 OWEN, SCOTT CHRISTIAN 302 048- 302 -13 VAN WAGENEN, RICHARD A $25,507.57 $13.014.07 $0.00 $_0.00 $13,014.07 $25,507.57 $24,466.44 - $0.00 $0.00 $17,_178.57 $15_,_616.89 $0.00 $15,616.89 $0.00 $0.00 $0.00 $0.00 $15,616.89_ $0.00 $17,178.57 $0.00_ $17,178.57 $0.00 $17,178.57 $0.00 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments Asmt. No. APN Owner Name Amount of Unpaid Assessment 303 048 - 302 -12 FLOWERS, JACK S _ _ _ $0._00 305 048- 291 -01 KIM, MICHAEL J $0.00 306 048- 291 -02 VOIT, WILLARD S $0.00 307 048. 291 -22 CLEMENTS, CRAIG A $12,493.51 308_ 048- 291 -23 SCHNIPPEL, MARK A _ $13,014.07 309 048 - 291 -20 CUNNISON, STEPHEN 0 $0.00 310 048 - 291 -26 COTTON, JOHN PEYTON $13,064.91 311 048- 291 -19 ALEXANDER, ARCHIBALD B _ $0.00 312 048- 291 -18 MATHISEN, JUDITH T $0.00 313 048 - 291 -17 LEACH. WILLIS R & LINDA A $0.00 314 048- 291 -24 ARMSTRONG, BILLIE JOE & A_O_RI_E_NNE $0.00 315 048. 291 -25 MC LAIN, MILLARD H $0.00 316_ 048- 291 -15 HAWKES, JULIE E _ $13,014.07 317 048 - 291 -14 TRI PACIFIC LTD LIABILITY CO _ $0.00 318 048- 291 -13 THOMSON, KIRK ALAN $0.00 319 048 - 291 -12 THOMPSON,_RICHARD L $0.00 320 048- 291 -06 GONZALES, MARIO J $15,616.89 321 048 - 291 -07 BOURKE, EDMOND F $0.0_0 322 048 -291 -08 OAKES, STUART B & GLORIA ANN $0.00 323 048 -291 -09 TOMASECK. JANET S $14,575.75 324 048. 291 -10 ANDERSON, CRAIG S & SUSAN L $0.00 _325 048- 291 -11 SPRAGUE, CHARLES T & PATRICIA E $0.00 326 048- 292 -28 TOLAN, JOHANNA $15,096.32 327 048 - 292 -29 KLEIN, JEFFREY ALAN $0.00 _328 048. 292 -02 CRAIG, ALLEN BRUCE $0.00 329 048 -292 -03 KENOWSKY, ANN ELIZABETH $13,014.07 330 048 -292 -04 BETZLER, ERIC S & CYNTHIA JOAN $13,014.07 331 048 -292 -05 GASKILL, JOHN R $13,014.07 332 048- 292 -06 BOPPELL, KARLYN L_ &_CHARLES LE R_O_ $13,014.07 333 048- 292 -07 COSTA, LISA MARIE $13,014.07 334 048 - 292 -27 MACK, RUTH L _ $14,055.19 _335 __ 048- 292 -26 REID, FRANCES M $14,055.19 336 048- 292 -32 MORSE, BURTON_ W $14,055.19 337 048 - 292 -33 E G UTAH LLC $14,055.19 338 048- 292 -10 SEYMOUR, BEEK H $15,616.89 339 048- 292 -25 BALLARD, JEFFREY PAUL _ _ $13,534.62 340 048- 292 -24 MACIAS, FREDRICK & DENISE 8 $13,014.07_ 341 048- 292 -23 GRUBER, GEOFFREY L $13,014.07 „ 342 048- 292 -22 MILLER, MARY E _ _ $0.00 343 048- 292 -21 FORTANASCE, ARLENE M _ $0.00 344 048 - 292 -20 JOHNSON, GLORIA $0.00 345 048-292 -19 _ SUSAN, DOLE F $0.00 346 048-292 -18 LANDON, GEOFFREY EDWARD $10,931.81 City of Newport Beach Assessment District 103 List of Paid and Unpaid Assessments 379 048- 261 -21 BODINUS, ALICE M Amount of AsmL 048 - 281 -20 EDSON. RICHARD J & CATHERINE C Unpaid No. APN Owner Name Assessment 347 048- 292 -17 GIBBS, LUVERNE D $10,931.81 348 048- 292 -35 GABRIEL, PHYLLIS $10,931.81 349 048 - 292 -34 ALLARD. RANDALL STEVENS & LEE K $13,014.07 350 048 - 292 -15 MALCOMB, WILLIAM EARL _ $0.00 351 048- 292 -14 MCKELVEY, PAUL _AYRES _ _ $1.1,972.94 352 048- 292 -13 PISTOLE. JAMES A $0.00 353 048- 292 -12 BAUMAN, CHARLES M $11,972.94 354 048- 292 -11 SATTLER, ROBERT L $0.00 355 048 -281 -01 SCHNIEDERS, JOHN A JR $15,616.89 356 048 -281 -02 ENRIQUEZ, LOUIS ANTHONY $0.00 357 048 - 281 -03 MELMET, STEVEN J $0.00 358 048 -281 -04 CONNELLA, RICHARD D $0.00 359 048- 281 -05 SCHARING, WILLIAM S $13,014.07 360 048- 281 -06 BANNIGAN, HARRY F $13,014.07 361 048- 281 -31 POMO, VIBIANA C $0.00 362 048 - 281 -36 COBB, N F $0.00 363 048 - 281 -35 MENZIES, DALE $13,534.62 364 048 -281 -09 RICHARDS, BETTY E $0.00 365 048- 281 -10 CHRISTENSEN. LELAND D $0.00 366 048 - 281 -11 MARK, PHILIP A $0.00 - 367 048- 281 -12 BRIDGES, TERRY $0.00_ 368 048 - 281 -13 TODD, JOHN W $0.00 369 048 - 281 -37 MOYER, NORMAN EDWARD $0.00 370 048- 281 -38 MEXIA, MARIO A $0.00 371 048- 281 -30 PEREZ, RAM_ONA GODOY TRUST $16,658.00 372 048- 281 -29 DUDLEY, MARIE AILEEN $13,148.16 373 048. 281 -28 JONES, KIMBERLY MOFFATT $0.00 374 048 - 281 -27 POWERS, PATRICK M $0.00 _375 048- 281 -26 NETHERCUTT, MARY ANN $0.00 376 048- 281 -25 PECK, CURT A $13,534.62 377 048- 281 -24 WALTE_RS & PONDER LLC $0.00 378 048- 281 -39 BREECH, WILLIAM E $0.00 379 048- 261 -21 BODINUS, ALICE M $17,178.57 380 048 - 281 -20 EDSON. RICHARD J & CATHERINE C $0.00 _ 381 _ 048- 281 -19 LI, MANDY $24,466.44 382 048- 281 -18 MOLLOY, JAMES R $0.00 383 048- 281 -33 COVENANT GROUP 2 LLC _ __$0.00 384 048 - 281 -34 CLARKE, THEODORE F $0.00 385 048 - 281 -16 ROBINS, THEODORE JR $0.00 386 048 - 281 -15 INTEGRITAS DESIGN AND DEVELOPMENT LLC $23,425.32 $3,335.545.99 RESOLUTION NO. 2009- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH AUTHORIZING THE ISSUANCE AND SALE OF LIMITED OBLIGATION IMPROVEMENT BONDS OF THE CITY WITH RESPECT TO ASSESSMENT DISTRICT NO. 103 (G STREET/EAST BALBOA BOULEVARD /CHANNEL ROAD /OCEAN BOULEVARD); APPROVING THE FORM OF THE BOND INDENTURE PROVIDING FOR THE FORM, EXECUTION AND ISSUANCE OF SAID BONDS; APPROVING THE FORM OF THE BOND PURCHASE CONTRACT, THE PRELIMINARY OFFICIAL STATEMENT, AND THE DISCLOSURE DISSEMINATION AGENT AGREEMENT, ALL PERTAINING TO SAID BONDS; AND AUTHORIZING RELATED ACTIONS AND EXECUTION OF RELATED DOCUMENTS IN RESPECT OF THE ISSUANCE, SALE AND DELIVERY OF SAID BONDS The City Council of the City of Newport Beach determines, orders and resolves as follows: SECTION 1. RECITALS. a. This City Council (this "Council ") of the City of Newport Beach (the "City "), by proceedings duly had and taken, previously provided for the formation of its Assessment District No. 103 (G Street/East Balboa Boulevard/Channel Road/Ocean Boulevard) (the "Assessment District "), under and pursuant to the provisions of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code), and indicated its intention to provide for the issuance of limited obligation improvement bonds under and pursuant to the provisions of the Improvement Bond Act of 1915 (Division 10 of said Streets and Highways Code; hereafter the "Act ") in a principal amount equal to the unpaid assessments of the Assessment District. b. On July 28, 2009, this Council adopted its resolution approving the Final Engineer's Report, as identified in said resolution (the "Final Engineer's Report"), and among other things approving and ordering implementation of the undergrounding of the existing overhead and ground -level utility facilities (the " Undergrounding Project ") within the Assessment District, and levying the assessments on the parcels determined to be specially benefited by the Undergrounding Project, in the amounts set forth in the Final F,nginecr's Report. C. The assessment diagram and the Notice of Assessment respecting the Assessment District were thereafter recorded in the official records of the County Recorder of the County of Orange, thereby establishing liens upon the respective parcels upon which the individual assessments were levied to secure payment of said assessments as provided by the Act. d. The period of time within which property owners could, if they wished to do so, prepay all or any portion of the assessment levied upon the parcel or parcels owned by such property owners within the Assessment District expired on August 31, 2009, and the Administrative Services Director of the City has executed and submitted to this Council at its September S meeting a Certificate Respecting Paid and Unpaid Assessments, certifying to this Council that the amount of unpaid assessments is $3,335,546, and this Council, by separate resolution adopted this same date, has determined on the basis of said Certificate Respecting Paid and Unpaid Assessments, that the amount of unpaid assessments is $3,335,546. e. The City is empowered under the provisions of the Act to provide for the issuance, sale and delivery of limited obligation improvement bonds upon the security of the unpaid assessments and in a principal amount which as nearly as practicable is equal to the amount of the unpaid assessments. f This Council wishes by this resolution to authorize the issuance of a series of bonds, under and pursuant to the Act, to be designated the "City of Newport Beach Assessment District No. 103 (G St/Fast Balboa Blvd/Channel Rd/Ocean Blvd) Limited Obligation Improvement Bonds (the "Bonds "), in a principal amount equal to the amount of the unpaid assessments, rounded down to the nearest $100, to complete the funding for the Undergrounding, to fund a reserve fund and to pay incidental costs of the Assessment District proceedings and the costs of issuance for the Bonds. g. The City has determined that all things necessary to make the Bonds, when authenticated and issued as provided in that certain Bond Indenture (the "Bond Indenture "), dated as of September 1, 2009, between the City and U.S. Bank National Association, as paying agent (the "Paying Agent "), the valid, binding and legal obligations of the City according to the import thereof and hereof have been done and performed. h. In furtherance of implementing the financing, there have been filed with the City Clerk and presented to this meeting for consideration and approval by this Council the following documents: (1) a Bond Indenture, under the terns and provisions of which the Bonds are to be issued and administered; (2) a Bond Purchase Contract, under the terms of which, among other things, the City agrees to sell and Southwest Securities, Inc. (the "Underwriter ") agrees to purchase the Bonds; (3) a Preliminary Official Statement, describing the Bonds, the Assessment District, the Undergrounding Project and related matters; and (4) a Disclosure Dissemination Agent Agreement for the purpose of making undertakings to provide certain annual financial information and notice of certain prescribed events, if deemed material, as required for compliance with Rule 15c2 -12 of the United States Securities and Exchange Commission. i. Being fully advised in the matter of the financing, this Council wishes to proceed with implementation of said financing. SECTION 2. ISSUANCE OF BONDS AUTHORIZED. Pursuant to the Act, the Bonds shall be issued in the aggregate principal amount equal to the unpaid assessments, rounded down to the nearest $100; provided, however, that (a) the bond discount, consisting of the net amount of Underwriter's discount, less original issue discount, if any, plus original issue premium, if any, shall not exceed the amount set forth in the Final Engineer's Report, as adjusted to reflect the discounted cash payments made on account of assessments during the cash payment period, (b) the maximum net interest rate on any maturity shall not exceed 7.00 %, and (d) the last maturity shall not extend beyond the year 2024. The Bonds may be issued as either (1) traditional tax- exempt Bonds or (2) direct payment Build America Bonds ( "Direct Payment BABs "), to be structured and issued as authorized by and pursuant to the American Reinvestment and Recovery Act of 2009 (the "Recovery Act"), or any combination of the two, as shall be determined by the Finance Director of the City (the "Finance Director ") in consultation with the Underwriter to be in the best interest of the City. As used in the foregoing paragraph, the term "net interest rate" shall mean, with respect to Direct Payment BABs, if issued as authorized by this resolution, the interest rate payable to holders of the Bonds less the rate at which the direct payment to the City, as issuer of the Bonds, is determined. SECTION 3. FORM OF BOND INDENTURE APPROVED. The form and substance of the Bond Indenture is hereby approved. The Administrative Services Director or designee thereof (all references hereafter to the "Administrative Services Director" shall be deemed to include any designee thereof, including but not limited to the Finance Officer of the City) is hereby authorized and directed to execute and deliver the Bond Indenture on behalf of the City in substantially said form, with such changes therein as the Administrative Services Director may require or approve in consultation with Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel to the City for the Assessment District and the Bonds ( "Bond Counsel "), such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 4. FORM OF BOND PURCHASE CONTRACT APPROVED. The form and substance of the Bond Purchase Contract is hereby approved. The Administrative Services Director is hereby authorized and directed to execute and deliver the Bond Purchase Contract on behalf of the City in substantially said form, with such changes therein as the Administrative Services Director may require or approve in consultation with McFarlin & Anderson LLP, Disclosure Counsel to the City for the Bonds (`Disclosure Counsel'), such approval to be conclusively evidenced by the execution and delivery thereof. SECTION 5. FORM OF PRELIMINARY OFFICIAL STATEMENT APPROVED; 011IER ACTIONS RESPECTING THE PRELIMINARY OFFICIAL STATEMENT AND FINAL. OFFICIAL STATEMENT AUTHORIZED. a. The form and substance of the Preliminary Official Statement is hereby approved. The Mayor or designee thereof (all references hereafter to the "Mayor" shall be deemed to include any designee thereof, including but not limited to the Mayor Pro Tem and the Administrative Services Director) is authorized to execute a certificate respecting the finality of the Preliminary Official Statement and to execute the final Official Statement to be derived therefrom. b. The Mayor is authorized to approve corrections and additions to the Preliminary Official Statement by supplement or amendment thereto, by appropriate insertions, or otherwise as appropriate, provided that such corrections or additions shall be regarded by the Mayor in consultation with Disclosure Counsel as necessary to cause the information contained therein to conform to facts material to an informed investment decision respecting the Bonds or to the proceedings of this Council or that such corrections or additions are in form rather than in substance. C. The Underwriter is authorized to distribute said Preliminary Official Statement and the final Official Statement to be derived therefrom in connection with sale and delivery of the Bonds. SECTION 6. FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT APPROVED. The form and substance of the Disclosure Dissemination Agent Agreement is hereby approved. The Administrative Services Director is hereby authorized and directed to execute and deliver the Disclosure Dissemination Agent Agreement on behalf of the City in substantially said form, with such changes as may be approved by the Administrative Services Director in consultation with Disclosure Counsel, such approval to be conclusively evidenced by such execution and delivery. SECTION 7. GENERAL, AUTHORIZATION RESPECTING OTHER ACTIONS. The officers of the City are hereby authorized and directed, jointly and severally, to do any and all things, to take such actions, and to execute and deliver any and all documents, including but not limited to agreements, certificates and opinions which they may deem necessary or advisable in consultation with Bond Counsel and Disclosure Counsel in order to carry out, give effect to and comply with the terms and intent of this resolution in general and the Bond Purchase Contract in particular. Any such actions heretofore taken by such officers are hereby ratified, confirmed and approved. SECTION 8. EFFECTIVE DATE OF RESOLUTION. This resolution shall be effective immediately upon adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Newport Beach held on the 81h day of September, 2009. Mayor ATTEST: City Clerk 12781 I I.I Authorved to Publish Advertisements of all kinds including public notice, S coax of the. 19 1. a Copal of Orange 11. 196. Ca�Mly}rrre f4yy�INNI,\ (t D September 29. 1961, and A-24831 June 1 I, 1963 n FL— PROOF OF PUBL1AMN 1 AM 9' THE ORCE OF STATE OF CALIFORNIA)CR0FKr:1'fPCATBK' ) SS. COUNTY OF ORANGE ) I am a Citizen of the United States and a resident of the County aforesaid; I am over the age of eighteen years, and not a party to or interested in the below entitled matter. I am a principal clerk of the NEWPORT BEACH - COSTA MESA DAILY PILOT, a newspaper of general circulation, printed and published in the City of Costa Mesa, County of Orange, State of California, and that attached Notice is a true and complete copy as was printed and published on the following dates: August 15, 22, 2009 I declare, under penalty of perjury, that the foregoing is true and correct. Executed on August 25, 2009 at Costa Mesa, California. LIZ Signatufe MY Of NEWPORT BEACH ASSESSMENT OISTRI(1 N0. 103 (6 ST/E BALROA REVD /Willi RD /OCEAN REVD) rsuant to the reouvements of Section 10404 of the Streets and Mghwal de of the State of California, notice is hereby [wen by the City i wport Beach (the "City) that an Assessment Diagram respecting It 'cars within the City's Assessment District No. 103 (G St/E Balk d/Chumel Rd /Ocean Blvd) (the "Assessment District) and the relate lessment Roil were ecorded in the office of the Director of Pub[ rks of the City (the "Dneclor"). in his capacity as Superintendent i eats for the Assessment District. TILE IS FURTHER GIVEN that the indiwdual assessments have also bee orded in the office of the Orange County Recorder and. as a resul individual assessments assessed upon the lots. paces or parcels r it have become a lien upon the lots or patrons of lots assessor uence is made to the Assessment Diagram heron above referred 1 I the Assessment Roll recorded in the office of the Director. In additmr Assessment Diagram and Assessment Roll are on f11e with the Cd rk at the Newport Reach City Nap. 33DO Newport Boulevard. Newpor ,ch. CA_ Any interested person is referred to the Assessment Roll a recorded in the office of the Director and on file with the City Cler determine the amount of each assessment levied against each parer and shown upon the Assessment Diagram. TICE IS FURTHER GNEN that. pursuant to Section 10204(p of su refs and Highways Code. the City Council (are "City Council") of th r has reserved entitlement to impose an annual adm nistratwe car essment on each unpaid assessment, which will be added to th laliment otherwise payable on account of each such unpaid assessment pay Lasts incurred by the City and not otherwise reimbursed wh¢ alt from the administration and collection of unpaid assessments o n the administration or registration of any associated bonds and th lave fund or other related funds, provided that such additional annul essment shall not exceed the maximum amount of $50 per parcel I the ISO maximum being subject to increase annually based upon th isumer Price Index during the preceding year ending in January, to Urban Consumers in the Los Angeles. Riverside and Orange Count as. as prescribed in the Final Engineer's Report for these assessmen ceedmgs, approved by resolution of the City Council on )pry 28. 2009 on file in the office of the Director. as well as the office of the Cit 'h in the Newport Beach City HalL (ICE IS FURTHER GIVEN that a ash payment period Ill payment o or any portion of the Individual assesNnenls. without interest. he n established and will expire on Monday, August 31. 2009. Asussmerd r be paid, in whole or rn put. without mistreat. at the Office of IN Inge Drector of the City (the "Finance Deector'). Newport Beach Cd! , 3300 Newport Boulevard. Newport Beach, CA 92663. Persons wishm) e Information respecting such cash payment opportunity may call 6n (949) 6143323 or Peter Tauschar (949) 644.3316. bath In the Pubin ks Department of the Cdy. ICE IS FURTHER GIVEN that upon expiration of the cash paymen ad. a list of assessments remaining unpaid will be prepared and coil Diet the City Council, and limited obligation improvement bonds (Ina vdi) will thereafter be issued. sold and delivered. pursuant to Ihl rovement Bond Act 01 1915 (Sections 8500 and follow nt. Cahfornn eta and Highways Code)(the 1915 Act) m the amount of the .norm" laments to War,& a portion of the funding for the authorized ul, impounding protect of the City. The balance of the funding wil, ved from contributions made by each of the affected utility server . assessments remaining unpaid will become payable in ann [ailments consisting of principal. Interest. collection charges a nimstrabve costs. and the principal and interest installments will fched to the terms of the Bonds, with the principal repayment sched I the mteest rate Or rates to be established at the lime of sale Bonds. presently scheduled to Occur in mid September. 2009. 11 sently anticipated that the Bonds wig have a 15 year term, and I uest rate is limited by law to not to exceed twelve percent (12 %). adance with the 1915 Act, such installments will be posted to I gage County property tax bill, starting with the lax bill for 2OD9 20 a sepuately stated line item and will be Iblect to payment In 1 sir mariner as for property taxes. except Mat nonpayment of su lallments will subject the parcel to Iubicral foreclosure without 1 ear pace period applicable to property taxes ad: July 29. 2009