HomeMy WebLinkAbout15 - Sale of Bonds for Assessment District 99-20
CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 15
November 12, 2008
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Dennis C. Danner, Administrative Services Director
(949) 644 -3123 or dda n nerO- city. newport-beach. ca. us
Dan Matusiewicz, Finance Officer
(949) 644 -3126 or dmatusieO—city.newport- beach.ca.us
SUBJECT: Sale of Bonds for Assessment District No. 99 -2
ISSUE:
Should the City Council adopt a resolution approving the attached documents
necessary for staff to sell bonds for the remaining unpaid assessments related to
• Assessment District No. 99 -2?
RECOMMENDATION:
1) Adopt the resolution authorizing:
a) The sale of 1915 Act Assessment bonds not to exceed $1,978,488 for
Assessment District 99 -2;
b) The execution and delivery of one or more Indentures in substantially the form
presented;
c) The execution and delivery of one or more Official Statements and Continuing
Disclosure Agreement in substantially the form presented;
d) The execution and delivery of one or more Bond Purchase Contracts in
substantially the form presented; and
e) Staff to take the necessary steps to provide for the sale and issuance of the
bonds; and,
2) Approve a budget amendment for funding and assessment on the 15th Street
Restrooms, included in this assessment district.
DISCUSSION:
The purpose of Assessment District 99 -2 is to finance and construct underground
utilities and remove the overhead utility poles partly for aesthetic, safety and reliability
• purposes. Assessment District 99 -2 has been brought to City Council several times
during a lengthy and rigorous approval process but ultimately the district originates by
Sale of Bonds for Assessment District No. 99 -2
November 12, 2008
Page 2
the request of residents that reside within the district boundaries. The district formation •
approval process occurred as follows:
• Petitions were circulated to all affected property owners within the district and sufficient
resident interest was certified.
• Council approved the advance funding of the design work necessary to determine a
guaranteed maximum cost.
• The completed designs, preliminary Engineers Report, with cost estimates and
Resolution of Intent were brought back to Council for approval during a required public
hearing on July 22, 2008.
• Official Ballots were then prepared and sent to the residents on August 8'".
• On September 23d, another public hearing was opened to hear testimony from
opponents and proponents of the district, count ballots and approve resolutions to
accept the final Engineer's Report and utility contracts. Of the ballots submitted, 57%
were in favor of the district and 43% were in opposition.
• On September 29, 2008, the assessment district map and assessments were
recorded.
• Residents were informed that they had the opportunity to pay their assessment in cash
during a 30 -day Cash Collection period ending on October 24'". •
• Approximately 49% of the assessed residents opted to pay their entire assessment in
cash.
At this Council meeting, we are now asking the City Council to adopt a resolution which
essentially approves the legal documents necessary to finance the remaining unpaid
assessments through the sale of bonds.
The total assessment levied for the District amounted to $3,845,000 which represents the
cost of the improvement project and financing costs. To date, the City has received
$1,623,703 in prepaid contributions from property owners that amounted to a total levy
credit of $1,866,513, which includes the exercised financing discount of $242,809. The
remaining amount of unpaid assessments amounts to $1,978,487, as depicted below.
Assessment levied — cost of improvement project and financing
$3,845,000
City received — prepaid contributions from property owners
$1,623,703
Exercised financing discount
$242,809
Remaining unpaid assessment amount
$1,978,488
The unpaid assessment amount will be sold as bonds to Wedbush Morgan, on a
negotiated basis. On the date of the bond sale, Fieldman Rolapp & Associates, the City's •
Financial Advisor, will assist the City in pricing the bonds. The decision to sell the bonds,
Sale of Bonds for Assessment District No_ 99 -2
November 12, 2008
Page 3
• at the negotiated price, will be delegated to the Administrative Services Director. The
attached resolution approves all formal terms, and a condition related to the sale of bonds
through approval of the Bond Indenture, and approves the Bond Purchase Contract,
subject to modifications as necessary with approval by the City Manager. The remaining
financing schedule is expected as follows:
November 14, 2008 Print and electronically distribute Preliminary Official
Statement
November 18, 2008 Pre - pricing of Bonds
November 19, 2008 Price Bonds
December 4, 2008 Bond Closing (Proceeds Available)
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: Submitted by:
an Matusiewicz b6nnis C. Danner
Finance Officer Administrative Services Director
is Attachments: District No. 99 -2 Boundary Maps
Resolution — Sale of Bonds
Sale of Bonds for Assessment District No. 99 -2
November 12, 2008
Page 4
Bond Indenture
Preliminary Official Statement Cover Letter
Preliminary Official Statement
Bond Purchase Contract
Budget Amendment
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• RESOLUTION NO. 2008
RESOLUTION AUTHORIZING ISSUANCE OF BONDS AND
APPROVING THE FORM OF CERTAIN BOND DOCUMENTS
FOR ASSESSMENT DISTRICT NO. 99 -2
WHEREAS, this City Council, on September 23, 2008, ordered the
acquisition of certain public works of improvement, namely, the conversion of
certain overhead electrical and communication facilities to underground
locations, together with appurtenances and appurtenant work, in a special
assessment district designated as Assessment District No. 99 -2 (hereinafter
referred to as the "Assessment District ") pursuant to the terms and provisions of
the "Municipal Improvement Act of 1913 ", being Division 12 of the Streets and
Highways Code of the State of California, as adopted and modified by Ordinance
No. 2000 -17 of the City of Newport Beach (together, the "Improvement Act ");
WHEREAS, this City Council adopted a final Assessment Engineer's
Report for the Assessment District and ordered the assessments, as now
itemized in the Assessment Engineer's Report upon the properties identified
therein and on the assessment diagram, be confirmed and levied;
WHEREAS, this City Council previously declared its intention to issue
• bonds against any unpaid assessments as certified by the City Treasurer, such
bond issuance to be pursuant to the terms and provisions of the "Improvement
Bond Act of 1915 ", being Division 10 of the Streets and Highways Code (the
"Bond Act ");
•
WHEREAS, this City Council desires to approve and authorize the sale
and delivery of the bonds and to set forth the general terms and conditions
relating to the authorization, sale, delivery, and administration of such bonds;
WHEREAS, the bonds are to be sold by negotiated sale to Wedbush
Morgan Securities pursuant to the provisions of a bond purchase contract (the
"Bond Purchase Contract ");
WHEREAS, the City of Newport Beach has caused to be prepared and
filed with the City Clerk drafts of the Bond Purchase Contract, a bond indenture
(the "Bond Indenture "), a preliminary official statement describing the
Assessment District, the improvements, and the bonds (the "Preliminary Official
Statement "), and an agreement to provide continuing disclosure of certain
information contained in the Preliminary Official Statement (the "Disclosure
Dissemination Agent Agreement'), which drafts have been reviewed by this City
Council;
1
NOW, THEREFORE, it is hereby Resolved, Determined, and Ordered as •
follows:
SECTION 1. Recitals. The above recitals are true and correct.
SECTION 2. Bonds Authorized. Pursuant to the Bond Act, this Resolution
and the Bond Indenture, limited obligation improvement bonds of the City for the
benefit of the Assessment District and designated as "City of Newport Beach
Assessment District No. 99 -2 Limited Obligation Improvement Bonds' (the
"Bonds ") are hereby approved and authorized to be issued, sold and delivered.
The Bonds shall be in an aggregate principal amount equal to the aggregate
unpaid assessments in the Assessment District as certified by the City Treasurer.
The date, manner of payment, interest rate or rates, interest payment dates,
denominations, form, registration privileges, manner of execution., place of
payment, terms of redemption and other terms, covenants and conditions of the
Bonds shall be as provided in the Bond Indenture and Bond Purchase Contract.
SECTION 3. Authorization and Conditions. The City Manager, Director of
Administrative Services, City Treasurer, Finance Officer and such other officials
of the City as may be designated by the City Council, or any of them (each an
"Authorized Officer"), are hereby authorized and directed to execute and deliver
the various documents and instruments described in this Resolution and the
Bond Purchase Contract with such additions and changes as the Authorized •
Officer deems advisable, provided that no additions or changes shall authorize
an aggregate principal amount of Bonds in excess of the aggregate unpaid
assessments. The approval of such additions or changes shall be conclusively
evidenced by the execution and delivery of such documents or instruments by an
Authorized Officer, upon consultation with and review by the City Attorney and
bond counsel.
SECTION 4. Bond Indenture. The form of Bond Indenture with respect to
the Bonds as presented to this City Council and on file with the City Clerk is
hereby approved. The Authorized Officer is hereby authorized and directed to
cause the same to be completed and executed on behalf of the City.
SECTION 5. Official Statement and Continuinq Disclosure Agreement.
This City Council hereby approves the forms of Preliminary Official Statement
and the Disclosure Dissemination Agent Agreement on file with the City Clerk.
The Authorized Officer is authorized to approve corrections and additions to the
Preliminary Official Statement and to certify on behalf of the City that the
approved Preliminary Official Statement is final as of its date except for the
omission of certain information as permitted by Section 240.15c2- 12(b)(1) of Title
17 of the Code of Federal Regulations. The Authorized Officer is further
authorized and directed to cause the completion of the Preliminary Official
Statement into the form of a final official statement (the "Final Official Statement")
and to execute a statement that the facts contained in the Final Official •
2
Statement, and any supplement or amendment thereto (which shall be deemed
an original part thereof for the purpose of such statement) were, at the time of
sale of the Bonds, true and correct in all material respects and that the Final
Official Statement did not, on the date of sale of the Bonds, and does not, as of
the date of delivery of the Bonds, contain any untrue statement of a material fact
or omit to state material facts required be stated where necessary to make any
statement made therein not misleading in the light of the circumstances under
which it was made. The Authorized Officer shall take such further action as the
Authorized Officer deems necessary or appropriate to verify the accuracy
thereof.
The form of Disclosure Dissemination Agent Agreement as presented to
this City Council and on file with the City Clerk is hereby approved. The
Authorized Officer is hereby authorized and directed to cause the same to be
completed and executed on behalf of the City.
SECTION 6. Sale of Bonds. This City Council hereby authorizes and
approves the sale of the Bonds by negotiated sale. The form of the Bond
Purchase Contract as presented to this City Council and on file with the City
Clerk is hereby approved and the Authorized Officer is hereby authorized and
directed to sell and deliver the Bonds subject to the following conditions: the
aggregate principal amount of the Bonds does not exceed the unpaid
• assessments within the Assessment District, the underwriter's discount does not
exceed two percent (2 %), and the net interest rate on the bonds shall not exceed
seven percent (7 %) per annum.
SECTION 7. Bonds Prepared and Delivered. Upon the sale of the Bonds,
the Bonds shall be prepared, authenticated and delivered, all in accordance with
the applicable terms of the Bond Act and the Bond Indenture, and the Authorized
Officer and other responsible City officials are hereby authorized and directed to
take such actions as are required under the Bond Purchase Contract and the
Bond Indenture to complete all actions required to evidence the delivery of the
Bonds upon the receipt of the purchase price thereof from the purchaser.
SECTION 8. Annual Assessment Installments. A copy of the resolution
confirming the assessments, which assessments shall constitute the security for
the Bonds, shall be delivered to the City Treasurer, and the City Treasurer shall
keep or cause to be kept the record showing the several installments of principal
and interest on the assessments which are to be collected each year during the
term of the bonds. An annual portion of each assessment, together with annual
interest on the assessment, shall be payable in the same manner and at the
same time and in the same installment as the general property taxes of the
County of Orange and shall be payable and become delinquent at the same time
and in the same proportionate amount. Each year the annual installments shall
be submitted to the County Auditor for purposes of collection.
•
4.1
SECTION 9. Covenant to Initiate Foreclosure Proceedings. This legislative •
body does further specifically covenant for the benefit of the bondholders to
commence and prosecute to completion foreclosure actions regarding delinquent
installments of the assessments in the manner, within the time limits, and
pursuant to the terms and conditions as set forth in the Bond Indenture as
submitted and approved through the adoption of this Resolution.
SECTION 10. Actions. All actions heretofore taken by the officers and
agents of the City with respect to the establishment of the Assessment District
and the sale and delivery of the Bonds are hereby approved, confirmed and
ratified, and the proper officers of the City are hereby authorized and directed to
do any and all things and take any and all actions and execute any and all
certificates, agreements, contracts, and other documents, which they, or any of
them, may deem necessary or advisable in order to consummate the lawful
issuance, sale and delivery of the Bonds in accordance with Bond Act, this
Resolution, the Bond Indenture, the Bond Purchase Contract, the Disclosure
Dissemination Agent Agreement, and any certificate, agreement, contract, and
other document described in the documents herein approved.
SECTION 11. Effective Date. This resolution shall take effect from and
after its adoption.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City •
Council of the City of Newport Beach on the 12th day of November, 2008 by the
following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
City Clerk
Gf
Mayor
CJ
0
•
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LJ
'Preliminary, subject to change
BOND INDENTURE
by and between
City of Newport Beach,
California
and
U.S. Bank National Association,
as Paying Agent
Dated as of December 1, 2008
$3,845,000'
City of Newport Beach
Assessment District No. 99 -2
Limited Obligation Improvement Bonds
TABLE OF CONTENTS •
•
Page
SECTION 1.
Authorization, Designation and Amount ................................. ...............................
1
SECTION 2.
Issuance, Unpaid Assessments ...................................................... ...............................
1
SECTION 3.
Alternative Procedure for Advance Payment ............................. ...............................
1
SECTION 4.
Registered Bonds; Denominations and Book -Entry Only ......... ...............................
1
SECTION5.
Date of Bonds ................................................................................. ...............................
1
SECTION6.
Maturity ......................................................................................... ...............................
1
SECTION7.
Interest ............................................................................................ ...............................
1
SECTION 8.
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
SECTION18.
Application of Bond Proceeds .................................... :................................................
6
SECTION 19.
Creation of Funds .......................................................................... ...............................
6
SECTION20.
Investment s .................................................................................... ...............................
8
SECTION 21.
SECTION 22.
No City Liability ............................................................................ ...............................
Covenant for Superior Court Foreclosure .................................. ...............................
8 •
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
SECTION 28.
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
SECTION 32.
Applicable Law ............................................................................ ...............................
12
SECTION 33.
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 PROVISIONS
B-1
Exhibit C
FORM OF BOND
C -1
Exhibit D
AUTHORIZED INVESTMENTS
D -1
•
• BONDINDENTURE
This Bond Indenture (the `Indenture'), dated as of December 1, 2008, 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. 99 -2
(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 in an aggregate principal amount of $000.00, and to be designated as the City of
Newport Beach Assessment District No. 99 -2 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,
is 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 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. 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 December 4, 2008 (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
is September 2 of each year (each, an "Interest Payment Date "), commencing March 2, 2009, 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 1 5th •
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 precedingthe 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, 2009, from
any source of funds including, without limitation, the prepayment of assessments, 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, 2009 through September 2, 2013 103%
March 2, 2014 and September 2, 2014 102%
March 2, 2015 and September 2, 2015 101%
March 2, 2016 and thereafter 100%
(b) Purchase of Bonds. In 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 ofa
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 Wedbush Morgan Securities 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 at least one of the Nationally Recognized
Municipal Securities Information Repositories selected by the City.
Neither failure to give the notice described in the two immediately preceding paragraphs nor any defecttherein
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 thereofshall 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 Subject to Refunding. The Bonds shall be subject to refunding pursuant to Division 11.5 ofthe
Streets and Highways Code of the State of California.
(h) No Mandatory Call. 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 ofa 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 ofthis 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 corporate trust 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.
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• 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 be 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
Lo
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 thereoffor 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
$ ) shall be received by the City and deposited or transferred 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 $ 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 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 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 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 ofthe 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 wit 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. The City shall also deposit in the Reserve Fund funds which represent
the proceeds of 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 that any advance was 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 ofthe
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 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. "Reserve Requirement" shall mean the least of 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 record 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 inthe 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 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 Bonds (the
"Improvement Fund ") to be designated by the name of the Assessment District.
(2) Project Casts. The monies in the Improvement Fund 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 and all incidental costs related thereto, including the costs of issuing the Bonds and capitalized
interest, all as more particularly described in the Assessment Engineer's Report for the Assessment 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.
A least five days prior to March 2, 2009 and September 2, 2009, the City shall transfer to the Paying
Agent for deposit in the Redemption Fund established pursuant to Section 19 (a) hereof monies sufficient to
pay in full interest due and payable on the Bonds on such dates.
The Treasurer of the City shall be responsible for the safekeeping and investment ofthe monies held in
the Improvement Fund. Interest earned on the investment of the monies 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 shall file a certificate of completion with the Treasurer. Any surplus in the Improvement
Fund after completion of the Improvements, but prior to December 30, 2010, shall remain in the Improvement
Fund until at least December 30, 2010, and thereafter shall be utilized or distributed in any manner authorized
by the Act.
(d) Rebate Fund: The City shall establish and maintain a "Rebate Fund ". 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 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 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 detail 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 I
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 (76 %) 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 printed, and to proceed to cause said Bonds to
be authenticated and delivered to an authorized representative of the purchaser, 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 ofnegligence 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
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 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
10
• 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.
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
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 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
famished 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
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 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 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
11
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, and Los Angeles, California, 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, ofthe 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,
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:
Paving Agent: U.S. Bank National Association
633 West Fifth Street, 24h Floor
12
E
• LM- CA -T24T
Los Angeles, CA 90071
Attn: Corporate Trust Services
CiW City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92658
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 any one 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 ofthis 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
December 1, 2008, 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,
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 Bond
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:
13
(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 District 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 Indenture may be executed in counterparts, each of which shall be
deemed an original.
L J
•
IN WITNESS WHEREOF, the parties hereto have executed this Bond Indenture effective the date first written
hereinabove.
City of Newport Beach
0
Dennis Danner
Director of Administrative Services
U.S. Bank National Association,
as Paying Agent, Transfer Agent, and Registrar
LM
15
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
•
E
• EXHIBIT "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 ofRepresentations. 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 holder consent.
The book -entry registration system for all of the book -entry Bonds may be 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
holder 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
holders 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 holder, 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 Bondholder, of any amount with respect to the principal of, redemption •
premium, if any, or interest on book -entry Bonds.
�J
•
IM
•
No. R -_
Interest Rate:
EXHIBIT "C"
• : 85 [ll2K1h1�.
United States of America
State of California
City of Newport Beach
Assessment District No. 99 -2
Limited Obligation Improvement Bond
Maturity Date: Bond Date: CUSIP:
September 2, 20_ December 4, 2008 651784_
REGISTERED OWNER: Cede & Co.
PRINCIPAL SUM: Dollars
Under and by virtue of the Improvement Bond Act of 1 915, 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. 99 -2 as
more fully described in the Resolution of Intention for said Assessment District, adopted by the City Council of
the Issuer on July 22, 2008, 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 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 this Bond is authenticated as of an Interest Payment Date, in
which case it shall bear interest from said Interest Payment Date, or unless this Bond is authenticated and
registered prior to the first Interest Payment Date, in which case it shall bear interest from its dais or unless interest
is in default on this Bond on such date, in which case it shall bear interest from the last date interest was paid in
full or from its dated date if no interest has been paid, until payment of such principal sum has been discharged, at
the rate per annum stated above, all as is hereinafter specified.
0
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 said Redemption Fund and by
the unpaid assessments made for the payment of said work, and, including principal and interest, is payable
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 December I, 2008 (the "Bond
Indenture'), and this reference incorporates the Bond Indenture herein, and by acceptance hereofthe owner ofthis
Bond assents to the terms and conditions of the Bond Indenture. All capitalized terms 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, •
2009 (each an "Interest Payment Date"), to the registered owner hereof by check mailed by first class mail to the
registered owner at the registered owner's address as it appears on the registration books of the Issuer 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.
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 $5,000.00 or any integral multiple thereof,
except for one Bond maturing in the first year ofmaturity which shall include the amount by which the total aggregate
principal amount of the Bonds exceeds the maximum 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. 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 including, without limitation, the prepayment of
assessments, 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, 2009 through September 2, 2013 103%
March 2, 2014 and September 2, 2014 102%
March 2, 2015 and September 2, 2015 101%
March 2, 2016 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 ofthe 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, ifany, plus interest accrued to the date of
maturity or redemption that would otherwise be payable.
Notice of redemption in advance ofmaturity shall be given in accordance with the provisions ofthe 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 portions
thereof so designated for redemption shall be deemed to be no longer outstanding and such Bonds or portions 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 ofthe 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 made available.
C -2
• 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 terms
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 of the owner of such Bond,
or (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 the Treasurer of the Issuer and by the City
Clerk, as of December 4, 2008.
Treasurer
CERTIFICATE OF AUTHENTICATION
This Bond has been authenticated on December 4, 2008.
ASSIGNMENT
City Clerk
U.S. Bank National Association,
as Paying Agent, Transfer Agent, and
Registrar
Authorized Officer
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 must correspond
with the name as it appears on the face of the within Bond in
every particular, without alteration or enlargement or any
change whatsoever.
C -3
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 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 recent 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 (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, otherthan 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;
•
�i
(x) 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;
(xi) 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
(xii) 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
a Authorized Investment.
D -2
Re: City of Newport Beach Assessment District No. 99-2
Limited Obligation Improvement Bonds
Review of Preliminary Official Statement relating to 2008 Bonds
Ladies and Gentlemen:
In connection with the City's Assessment District No. 99 -2 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 comments in order that the
documents comply with applicable securities laws requirements. The City Council's approval is
currently scheduled for consideration at the November 12, 2008, 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 staffmust 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 foal 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
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. •
NB POS COVER MEMORANDUMc.,vd
LAW OFFICES OF
MCFarlin & Anderson LLP
23101 LAKE CENTER DRIVE
OFAROEW.MCFARUN
SUITE 200
•
IAMEs F. ANDERSON
LAKE FOREST, CALIFORNIA 92630 FAX (949) 452aYn
(949)452 -0500
November 3, 2008
City Council and City Staff
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663
Re: City of Newport Beach Assessment District No. 99-2
Limited Obligation Improvement Bonds
Review of Preliminary Official Statement relating to 2008 Bonds
Ladies and Gentlemen:
In connection with the City's Assessment District No. 99 -2 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 comments in order that the
documents comply with applicable securities laws requirements. The City Council's approval is
currently scheduled for consideration at the November 12, 2008, 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 staffmust 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 foal 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
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. •
NB POS COVER MEMORANDUMc.,vd
McFarlin & Anderson LLP
City Council and City Staff
City of Newport Beach
November 3, 2008
Page 2 of 2
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 Robert Hessell at 858(735 -7228.
Sinc ly,
James F. Anderson
cc: Mr. Dan Matusiewicz, City of Newport Beach
Robert E. Hessell, Esq., Law Offices of Robert E. Hessell
•
M POS COVER MEMORANDOMempd
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER _, 2008
NEW ISSUE — BOOK -ENTRY ONLY NOT RATO
In the opinion of Robert E. Hessell, Esq., San Diego, California, Bond Counsel, subject to certain qualifcatlons described herein, under existing laws,
regulations, rulings and court decisions, interest on the Bonds is excluded from gross income for federal income tax purposes and is not an item for purposes of the
federal alternative minimum tax imposed on individuals and corporations, allhough for the purpose of computing the alternative minimum tax imposed on certain
corporations, such interest is taken into account in determining certain Income and earnings. In the farther opinion of Bond Counsel, such interest is exempt from
Calforniapersonalincome taxes. See "CONCLUDING INFORMATION —Tax Matters " herein
$1,978,487'
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99 -2
LIMITED OBLIGATION IMPROVEMENT BONDS
Dated: Date of Delivery
Due: September 2, as shown below
The City of Newport Beach Assessment District No. 99 -2 Limited Obligation Improvement Bonds (tine "Bonds) 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. 99 -2 (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 December 1, 2008 (the
"Indenture "), by and between the City and U.S. Bank National Association, as Paying Agent (the "Paying Agent'7.
The Bonds are being issued in book -entry form and, when issued, will be registered in the time of Cede & Co., as nominee 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 may be 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, 2009, 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 w'
billed by the County of Orange (the "County") to owners of property within the District against which there are unpaid assessments. Upon receipt by the Paying
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
becomes due.
Unpaid assessments constitute Fuced liens 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 taxing 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. his not a summary of this issue. Imestors must read the entire Official Statement,
including without limitation, "BOND OWNERS' RISK$ "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 Robert E. Hessell, Esq., San Diego, 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 Depository Trust Company or its agent on or about , 2008.
Dated: , 2008
WEDBUSH MORGAN SECURITIES
* Preliminary, subject to change.
•
• The following language to be inserted by the printer, in red, at the top of the POS front cover:
PRELIMINARY OFFICIAL STATEMENT DATED NOVEMBER. 2008
The following language to be inserted by the printer, in red, vertically along the left margin of the POS
frond 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.
is
u
Maturity
Principal
Interest
September
Amount
Rate
2010
$
%
2011
2020
2012
2021
2013
2023
2014
2024
2015
2016
2017
MATURITY SCHEDULE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
LIMITED OBLIGATION IMPROVEMENT BONDS
Base CUSIP®No.
CUSS
Maturity
Yield Price No!
September 2
%
2018
2019
2020
2021
2022
2023
2024
s Preliminary, subject to change.
Principal Interest
Amount Rate Yield Price
t CUSIP® A registered trademark of the American Bankers Association. Copyright C 1999 -2008 Standard &
Poor's, a Division of The McGraw -Hill Companies, Inc. CUSIe 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 CUSIPg' Service Bureau. CUSIe numbers have been assigned by an independent company not affiliated
with the Issuer 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 CUSIe 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.
r1
LJ
CUSIP®
Nor
•
•
• C IYOFNEWPORTBEACH
MAYOR AND CITY COUNCIL
Edward D. Selich, Mayor, District 5
Michael F. Henn, District I
Steven Rosansky, District 2
Don Webb, District 3
Leslie Daigle, District 4
Nancy Gardner, District 6
Keith D. Curry, District 7
CITY STAFF
Homer Bludau, City Manager
Robin Clauson, Esq., City Attorney
LaVonne M. Harkless, City Clerk
Dennis Danner, Director of Administrative Services
Dan Matusiewicz, Finance Officer
Stephen Badum, Public Works Director
David Webb, City Engineer
BOND COUNSEL
Robert E. Hessell, Esq.
San Diego, 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
Wedbush Morgan Securities
Solano Beach, 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 may be 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.
U
TABLE OF CONTENTS
• PAGE
INTRODUCTION............................................................................................................. ..............................1
THEFINANCING PLAN ................................................................................................. ..............................1
Purposeof the Bonds ................................................................................................. ............................... l
Sourcesand Uses of Funds ......................................................................................... ..............................2
...................................................................... ...............................
ReserveFund ............................................................................................ ...............................
Covenant for Superior Court Foreclosure ................................................. ...............................
• Covenant to Maintain Tax- Exempt Status ................................................ ...............................
AssessmentsCreate a Lien ....................................................................... ...............................
Limited City Obligation Upon Delinquency ............................................ ...............................
................2
................2
................2
................3
................4
................4
................5
................6
................6
................6
.................7
.................7
.................8
.................8
.................9
...............10
...............10
THEDISTRICT ...............................................................................................................
.............................10
Description.................................................................................................................
.............................10
TheImprovement Project ..........................................................................................
.............................10
Assessments..............................................................................................................
..............................1 1
TeeterPlan .................................................................................................................
.............................12
Estimated Direct and Overlapping Indebtedness ..........................................................
.............................12
AssessedValue -to -Lien Ratios ..................................................................................
.............................14
TopTen Property Owners .........................................................................................
.............................15
BONDOWNERS' RISKS ...............................................................................................
.............................16
General.......................................................................................................................
.............................16
Risks of Real Estate Secured Investments Generally ................................................
.............................17
ForeclosureShort fall ....................................................................................................
.............................17
PropertyTax Delinquencies ......................................................................................
.............................17
Delinquency Resulting in Ultimate or Temporary Loss on Bonds ............................
.............................17
Concentrationof Ownership ......................................................................................
.............................19
Non -Cash Payments of Assessments ......................................................................... .............................19
LandVal ues ...............................................................................................................
.............................19
Limited City Obligation Upon Delinquency ............................................................. .............................19
Collection of the Assessments ................................................................................... .............................20
Availability of Funds to Pay Delinquent Assessment Installments ........................... .............................20
•
-i-
TABLE OF CONTENTS
ContinuingDisclosure ............................................................................................... .............................26
•
LegalOpinion ............................................................................................................ .............................26
PAGE
Owner Not Obligated to Pay Assessments ................................................................
.............................21
Parity Taxes and Special Assessments; Future Indebtedness ....................................
.............................21
Bankruptcyand Foreclosure ......................................................................................
.............................21
FDIC/Federal Government Interests in Parcels .........................................................
.............................22
NaturalDisasters ........................................................................................................
.............................22
HazardousSubstances ...............................................................................................
.............................23
NoAcceleration .........................................................................................................
.............................24
Lossof Tax Exemption ..............................................................................................
.............................24
IRS Audit of Tax - Exempt Bond Issues .....................................................................
.............................24
LimitedSecondary Market ........................................................................................
.............................24
Ballot Initiatives and Legislative Measures ...............................................................
.............................25
Constitutional Amendment — Articles XIIIC and YHID ...........................................
.............................25
CONCLUDING INFORMATION .................................................................................. .............................26
ContinuingDisclosure ............................................................................................... .............................26
LegalOpinion ............................................................................................................ .............................26
TaxMatters ................................................................................................................ .............................27
NoLitigation .............................................................................................................. .............................27
NoRating ................................................................................................................... .............................27
FinancialInterests ...................................................................................................... .............................27
Underwriting............................................................................................................. ..............................2
8
FinancialAdvisor ....................................................................................................... .............................28
Miscellaneous............................................................................................................ .............................28
•
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
-i- •
• INSERT CITY OF NEWPORT BEACH AND VICINITY MAP
SUMMARY STATEMENT •
Purpose Proceeds of the $1,978,487' principal amount of the City of
Newport Beach Assessment District No. 99-2 Limited Obligation Improvement
Bonds (the `Bonds "), together with certain investment earnings and certain
other moneys will be used to finance the costs of conversion of certain
overhead electrical and communication facilities to underground locations,
together with appurtenances and appurtenant work in connection therewith (the
"Improvement Projecf'). See "THE DISTRICT — The Improvement Project"
herein. Bond proceeds will also be used to establish a debt service reserve fund
and to fund capitalized interest through September 2, 2009 and to pay the costs of
issuance of the Bonds.
The District The City of Newport Beach Assessment District No. 99 -2 ( "the District ")
consists of approximately 14.74 acres located in Newport Beach, California
(the "City "). The District is bordered by Balboa Boulevard and Ocean Front
West, from west of 20" Street to 14`h Street, and 191h Street between Newport
Channel and Balboa Boulevard. The District was formed by the City on
September 23, 2008. The amount of assessments levied in the District was
$3,845,000, of which $1,623,703 has been prepaid. There are currently 112
parcels in the District with unpaid assessments in the amount of $1,978,487.
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" 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 Instalhnen&'). 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 year represent pro rata shares of the total principal and interest
coming due that year, based on the percentage which the unpaid assessment
against that parcel bears to the total of unpaid assessments levied to repay the
Bonds.
* Preliminary, subject to change.
•
• The City will deposit $118,627.42' from 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, 2009, from any source of funds, including, without
limitation, the prepayment of assessments, together with accrued interest to the
date of redemption at the redemption prices shown on the table under "THE
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"
• s Preliminary, subject to change.
$1,978,487' •
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99 -2
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. 99 -2 Limited
Obligation Improvement Bonds (the "Bonds "). Assessment District No. 99 -2 (the "District ") was formed by
the City of Newport Beach (the "City ") on September 23, 2008, to underground power and telephone 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 December 1, 2008 (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
Bands 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 liable 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 December I, 2008, 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 shall 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
telephone facilities and associated street rehabilitation (the "Improvement Project ") to serve the property
within the District, as further described in the section herein entitled "THE DISTRICT — The Improvement
Project." The estimated costs of the Improvement Project are $2,963,072 (excluding financing and
* Preliminary, subject to change.
•
• incidental costs. The total amount of assessments levied in the District was $3,845,000 of which $1,623,703
has been prepaid. There are currently 112 parcels in the District with unpaid assessments in the amount
of $1,978,487. See Table 2 under the caption "THE DISTRICT —The Improvement Project" for a more
detailed statement of all sources and uses of funds 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 Underwriter's Discount
Total Sources
USES:
Improvement Fund
Reserve Fund
Costs of Issuance(l)
Capitalized Interest(2)
Total Uses
Costs of issuance include legal fees, printing costs, Paying Agent Fees and other miscellaneous
• issuance costs.
(Z) Capitalized interest through September 2, 2009.
See Table 2 under the caption "THE DISTRICT — The Improvement Project" for a more detailed
statement of all sources and uses of funds 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 XHID to the
California Constitution, the City held a public hearing on September 23, 2008, in the proposed District.
The City received a favorable response from the landowners casting assessment ballots upon 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
cover, commencing on March 2, 2009, 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 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. The Bonds •
will be 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 corporate trust 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, 2009,
from any source of funds including, without limitation, the prepayment of assessments, 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, 2009 through September 2, 2013 103% •
March 2, 2014 through September 2, 2014 102
March 2, 2015 through September 2, 2015 101
March 2, 2016 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 CUSe 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 of Notice 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 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 Assessment 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 Improvement Project, the Superintendent of Streets of the
City will file a certificate of completion with the Treasurer. Any surplus in the Improvement Fund after
completion of the Improvement Project, but prior to December 31, 2010, will remain in the Improvement
Fund until at least December 31, 2010, and thereafter will be utilized or distributed in any manner authorized
by the 1913 Act.
• Redemption Fund
The Paying Agent will establish and maintain a Redemption Fund designated by the name of the •
Assessment 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 to be known as the Prepayment Account (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 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 transfened 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 Assessment
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 Installments 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 transferfed 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'
means 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
City Auditor's record 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. 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 funds 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 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 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 such 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. 99-2
LIMITED OBLIGATION IMPROVEMENT BONDS
ANNUAL DEBT SERVICE
Year Ending
September 2
Principal Interest Total
2009
$ $ $
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
•Totals $ $ $
SECURITY FOR THE BONDS
General
The Bonds are issued upon and secured by a pledge of Assessment Revenues. All the Bonds are
secured by the moneys in the Redemption Fund and the Reserve Fund and any earnings thereon (except to the
extent earnings are to 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 liens, 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
Assessment 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 %) of
the Reserve Requirement.
Judicial Foreclosure Proceedings. The 1913 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 parcel, 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 j udgment 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 he 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 hid 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(6) 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 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.
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. 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. Such lien is coequal
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.
• . Description
r]
THE DISTRICT
The District consists of approximately 14.74 acres located in the City. The District is generally
between Balboa Boulevard and Ocean Front West, from west of 20s' Street to 14s' Street, and 19s' Street
between Newport Channel and Balboa Boulevard. The District was formed by the City on September 23,
2008. The amount of assessments levied in the District was $3,845,000. There are currently 112 parcels in
the District with unpaid assessments in the amount of $1,978,487.
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. 99-2
ENGINEER'S ESTIMATE OF COSTS AND EXPENSES
CONSTRUCTION COSTS
North of Balboa Zone
Electrical Construction Costs (Southern California Edison)
$96,755
Telephone Construction (AT &T)
59,722
Estimated Utility Contribution for Equivalent Overhead System
(13,005)
Street Rehabilitation
45,000
Contingency (10 %)
18,847
AT &T Design Engineering (prorated)
3,386
Edison Design Engineering (prorated)
882
Subtotal North of Balboa Zone Construction Costs:
$211,587
South of Balboa Zone
Electrical Construction Costs (Southern California Edison)
$1,857,75
Telephone Construction Costs (AT &T)
552,970
Estimated Utility Contribution for Equivalent Overhead System
(171,495)
Street Rehabilitation
200,000
Contingency (10%)
243,923
AT &T Design Engineering (prorated)
54,214
Edison Design Engineering (prorated)
14.118
Subtotal South of Balboa Zone Construction Costs:
$ 2,751,485
Total Construction Costs:
$2,963,072 •
INCIDENTAL EXPENSES()
Total Incidental Expenses:
$ 382,078
Total Construction and Incidental Expenses:
$3,345,150
FINANCING COSTS(2)
Total Financial Costs('):
$ 499,850
TOTAL AMOUNT TO ASSESSMENT:
$3,845,000
Time Warner Cable is required to pay for undergrounding through the Franchise Agreement with the City.
nt Includes costs for inspection, engineering, administration, printing, consultants and legal fees.
m Includes Reserve Requirement, capitalized interest through September 2, 2009, and Underwriter's discount The actual Reserve Requirement
represents 6% of the principal amount of the Bonds.
m Amount shown does not include savings due to payments received during the cash collection period. Total Financial Costs amounted to
$257,039.71 due to these savings.
Source.' Harris & Associates.
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
September 23, 2008, 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. The
• amount of assessments prepaid during the 30 -day cash collection period was $1,623,703 and the
Superintendent of Streets has listed all unpaid assessments in the aggregate amount of $1,978,487.
The amounts to be assessed against the parcels of property to pay the costs and expenses of the work
and 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 2008 -09 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. 99-2
DIRECT AND OVERLAPPING DEBT
(Excludes Parcels with Prepaid Assessments)
2008 -09 Local Secured Assessed Valuation: $86,732,900
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
% Applicable
Debt 1111108
Orange County Teeter Plan Obligations
0.023%
$ 28,457
Metropolitan Water District
0.005
16,361
Coast Community College District
0.089
304,085
Newport Mesa Unified School District
0.182
302,254
City of Newport Beach Assessment District No. 99 -2
100.
- (1)
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
$651,157
OVERLAPPING GENERAL FUND DEBT
Orange County General Fund Obligations
0.023%
Orange County Pension Obligations
0.023
16,034
Orange County Board of Education Certificates of Participation
0.023
4,506
Municipal Water District of Orange County Water Facilities Corporation
0.027
4,775
Newport Mesa Unified School District Certificates of Participation
0.187
982
City of Newport Beach Certificates of Participation
0.234
10,916
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
$148,663
Less: MWDOC Water Facilities Corporation (100% self - supporting)
4,775 •
TOTAL NET OVERLAPPING GENERAL FUND DEBT
$143,888
GROSS COMBINED TOTAL DEBT $799,820 (2)
NET COMBINED TOTAL DEBT $795,045
(1) Excludes 1915 Act bonds to be sold. Issuance not to exceed $1,985,000.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non - bonded capital lease obligations.
Ratios to 2008 -09 Assessed Valuation:
DirectDebt ................................................. ............................... . %
Total Direct and Overlapping Tax and Assessment Debt ............ 0.75%
Gross Combined Total Debt .............................. ..........................0.92%
Net Combined Total Debt ... ............................... ..........................0.92%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6130108: $0
Source: California Municipal Statistics, Inc.
13
•
• Assessed Value- to-Lien Ratios
The assessed value of the parcels, as of October 25, 2008, that did not pay the assessments during the
cash collection period is $84,226,579. The total amount of unpaid assessments is $1,978,487. The total
overall value -to -lien ratio for parcels with unpaid assessments is 42.57 -to -1.
The numbers provided in the following Tables 4, 5 and 6 exclude parcels that paid all of the
assessment.
Table 4 provides information breaking down the overall value - to-lien ratio of groups of parcels with
unpaid assessments.
Value -to -Lien
Number
Ratio
of Parcels
Greater than 100:1
14
50:1 to 99.99:1
26
25:1 to 49.99:1
25
10:1 to 24.99:1
23
Less than 9.99:1
24
• Totals
112
Source: Harris & Associates.
TABLE 4
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
ASSESSED VALUE -TO -LIEN RATIOS
Fiscal Year 2008 -09 Assessed Value
Fiscal Year 2008 -09 Assessed Value
Assessment
% of
Land
Structure
Total
Lien
Lien
$24,482,574
$3,791,200
$28,273,774
$180,314.71
9.11%
$25,710,650
$4,131,235
$29,841,885
$382,540.39
19.33%
$11,905,326
$3,442,296
$15,347,622
$436,635.62
22.07%
$5,944,743
$1,856,603
$7,801,346
$496,628.49
25.10%
$ 1,999,398
$ 962,554
$ 2,961,952
$ 482,367.84
24.38%
$70,042,691
$14,183,888
$84,226,579
$1,978,487.05
100.00%
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. 99-2
ASSESSED VALUE -TO -LIEN RATIOS BY PERMITTED LAND USE
Fiscal Year 2008 -09 Assessed Value
Number
of
Assessment
% of
Land Use
Parcels
Land
Structure
Total
Lien
Lien
Single Family Res.
36
$29,465,577
$5,770,212
$35,235,789
$644,720.23
32.59%
Multi - Family Res.
54
$30,887,191
$5,241,798
$36,128,989
$1,059,155.03
53.53%
Condominium
18
$7,541,319
$2,719,859
$10,261,178
$165,603.93
8.37%
Commercial
4
2148,604
$ 452,019
$ 2,600,623
$ 109,007.86
5.51%
112
$70,042,691
$14,183,888
$84,226,579
$1,978,487.00
100.00%
There are no vacant properties with a remaining lien.
• Source: Harris & Associates.
14
Top Ten Property Owners •
Table 6 shows the ten property owners (as of January 2008) 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. 99-2
TOP TEN PROPERTY OWNERS
Fiscal Year 2008 -09 Assessed Value
D'ALLESSIO INVESTMENTS LLC I
JAMES R CANTWELL 1
C. DARLE HALE TRUST 1
WEST COAST HIGHWAY LLC 1
EDWARD G. HEALY 2
Subtotal Top 10 Owners: I 1
All other properties: 101
Total: 112
Source: Harris & Associates.
$2,165,573
Number
$2,262,553
$225,058
$537,753
Assessment
% of
Owner Name
of Parcels
Land
Structure
Total
Lien
Lien
WILLIAM B. MARTIN
1
$295,594
$112,511
$408,105
$80,147.58
4.05%
7AVALA C. FRANK
1
$431,090
$152,522
$583,612
$55,101.45
2.79%
GRACEE.DOVE
1
$134,501
$98,307.
$232,808
$35,780.17
1.81%
RUTH E. WHITACRE
1
$1,250,870
$198,324
$1,449,194
$35,780.17
1.81%
JAMES & ANN M. LAHR
1
$465,001
$71,310
$536,311
$29,339.73
1.48%
D'ALLESSIO INVESTMENTS LLC I
JAMES R CANTWELL 1
C. DARLE HALE TRUST 1
WEST COAST HIGHWAY LLC 1
EDWARD G. HEALY 2
Subtotal Top 10 Owners: I 1
All other properties: 101
Total: 112
Source: Harris & Associates.
$2,165,573
$96,980
$2,262,553
$225,058
$537,753
$762,811
$486,968
$193,451
$680,419
$323,803
$97,496
$421,299
$ 588.256
$ 102346
$ 690.602
$6,366,714 $1,661,000 $8,027,714
$28,656.12 1.45%
$25,761.72 1.30%
$25,761.72 1.300/4
$25,046.12 1.27 %•
$ 24,480.16 1.24%
$365,854.94 18.49%
$76,997,661 $12,522,888 $76,198,865 $1,612,632.11 81.51%
$83,364,375 $14,183,888 $84,226,579 $1,978,487.05 100.00%
As of October 25, 2008, $69,823.98 of the property taxes levied in Fiscal Year 2007 -08 on the
parcels that did not pay the assessments during the cash collection period was delinquent. Property Takes
for Fiscal Year 2008 -09 are not yet due. The level of delinquencies relating to property taxes in Fiscal Year
2007 -08 and prior years may or may not be indicative of future delinquencies for the Assessment
Installments.
15 •
. Table 7 sets forth ad valorem property tax collections and delinquencies for properties in the District
for Fiscal Years 2004 -05 through 2007 -08.
TABLE 7
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
PROPERTY TAX LEVIES AND COLLECTIONS
FISCAL YEARS 2004 -05 THROUGH 2007 -08
Delinquencies - as of October 25, 2008
Fiscal Fiscal Fiscal Aggregate Tax Roll as Tax Roll as Tax Roll as
Mort Year Year Year Fiscal Year Delinquency of Jul-08 of Jul -08 ofJuF08
No. APN 2004 -05 2005 -06 2006 -07 2007 -08 Amt Land Value Imp Value Total Value
102 047 - 201 -01 $ —
25 047 - 152 -07 9,222.42
129 047 - 201 -14 —
122 047 - 201 -20 —
— $11,413.08 $20,134.98 $31,548.06
8,321.54 7,049.54
$9,222.42 $8,321.54 $18,462.62
6,232.78 30,826.28
5,508.00 5,508.00
1,941.64 1,941.64
$33,817.40 $69,823.98
$1,519,974
$101,555
$1,621,529
439,430
57,892
497,322
1,550,983
653,946
2,204,929
97916
22,300
120,216
$3,608,303
$835,693
$4,443,996
The October 25, 2008 delinquencies of $33,817.40 represent approximately .8% of the assessed value of the delinquent parcels.
The City does not have information regarding the aggregate Fiscal Year 2007 -08 tax levies for the parcels included within the
District. Assuming the Fiscal Year 2007 -08 tax levies were approximately one percent of the Fiscal Year 2008 -09 assessed
ue of $84226,579, the Fiscal Year 2007 -08 delinquencies of $33,817.40 represent an approximately 4% delinquency rate on
es levied in Fiscal Year 2007 -08.
Source: Harris & Associates.
0
BOND OWNERS' RISKS
In addition to the other information contained in this Official Statement, the following risk factors
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.
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. The Reserve Fund will be used to pay delinquent Assessment
Installments should they occur. The assessments are a lien on the parcels of land and the City can 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.
l7
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 Bondowners
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 competitive properties in such area, and the
market value of residential or commercial property in the event of sale or foreclosure; (ii) 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, 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 "SECURITY
FOR THE BONDS — Covenant for Superior Court Foreclosure —Judicial Foreclosure Proceedings. "
Property Tax Delinquencies
As of October 25, 2008, $33,817.40 remained delinquent of the property taxes levied in Fiscal
Year 2007 -08, representing approximately 4% of the property taxes levied on the parcels that did not pay
the assessments during the cash collection period. Property taxes for Fiscal Year 2008 -09 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.
Delinquency Resulting in Ultimate or Temporary Loss on Bonds
If a temporary deficiency occurs in the Redemption Fund with which to pay 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 loss 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 •
17
• 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.
•
40 18
Concentration of Ownership
Ownership of the parcels is concentrated among approximately 111 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 express not 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, 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 or 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.
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 •
19
• 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 Bond Law, 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 Bond Law 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 Cott Foreclosure." In the event
that sales or foreclosure 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
trust fund for the benefit of the Bond owners, will be held by the Paying Agent and 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 funds 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 it becomes due, a delay may occur in payments of principal and/or
interest to the owners of the Bonds.
• 20
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 Instalhnents. An owner may elect to not 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
parry. 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 a lien 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 is 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."
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.
21 •
• 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 will not permit its
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, flood or other
• natural disasters. Southern California is a seismically active area. Seismic activity represents a potential
22
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, 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 1480, 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.
23
•
• 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
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.
• 24
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
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 X111C ( "Article XIIIC") and Article XIIID ( "Article XIIID') 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 XIIID 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 XIIID. The City completed its proceedings for the levy of assessments in the District
on September 23, 2008, after complying with the procedural requirements of Section 4 of Article XIIID.
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 XIIIC 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.
25 •
11
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 "). The Annual Reports will be filed on
behalf of the City by the Dissemination Agent with each Nationally Recognized Municipal Securities
Information Repository and the State Repository, if any. Notices of Listed Events will be filed by the
Dissemination Agent with the Municipal Securities Rulemaking Board. The specific nature of the
information to be included in the Annual Report and the notices of Listed 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 Robert E.
Hessell, Esq., San Diego, California, 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.
is 26
Tax Matters •
In the opinion of Robert E. Hessell, Esq., San Diego, California, Bond Counsel, under existing
statutes, regulations, rules and court decisions, interest on the Bonds is excluded from gross income for federal
income tax purposes and is exempt from personal income taxation imposed by the State of California.
Bond Counsel is fiather of the opinion that interest on the Bonds is not a specific preference item for
purposes of the alternative minimum tax provisions of the Code. However, with respect to the Bonds owned
by corporations (as defined for federal income tax purposes), interest on the Bonds may be included in
adjusted current earnings, a portion of which may increase the alternative minimum taxable income of such
corporations. In addition, although interest on the Bonds is excluded from gross income for federal income
tax purposes, the accrual or receipt of interest on the Bonds and the ownership of the Bonds may otherwise
affect the federal income tax liability of certain persons or entities. Bond Counsel expresses no opinion
regarding any such consequences.
The Code sets forth certain requirements which must be met subsequent to the issuance and
delivery of the Bonds for interest paid with respect thereto to be and remain exempt from federal income
taxation. Noncompliance with such requirements might cause the interest paid on the Bonds to be subject to
federal income taxation retroactive to the date of issue of the Bonds. These requirements include, but are not
limited to, provisions which prescribe yield and other limits within which the proceeds of the Bonds and
other amounts are to be invested and require that certain investment earnings on the foregoing must be rebated
on a periodic basis to the Treasury Department of the United States of America. Pursuant to the
Indenture, the City has covenanted to comply with all such requirements.
In rendering such opinions, Bond Counsel is assuming that the City will comply with its covenants •
in the Indenture to comply with the requirements of the Code. Noncompliance with the Code might cause the
interest on the Bonds to be subject to federal income taxation retroactive to the date of issuance and delivery of
the Bonds.
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
The fees being paid to the Financial Advisor, Disclosure Counsel and Bond Counsel are contingent
upon the issuance and delivery of the Bonds.
27 •
• Underwriting
The Bonds were sold to Wedbush Morgan Securities (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 $ ). 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 cover page hereof. The offering prices may be changed firm 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.
• 28
The execution and delivery of this Official Statement have been authorized by the City. •
CITY OF NEWPORT BEACH
29
Mayor
•
•
n
u
APPENDIX A
ASSESSMENT DIAGRAM
u
• A
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 mites
south of Los Angeles. The tourist population is high throughout the year. Its harbor, recreation and special
attractions draw many to the City.
Climate At 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, 2004 -2008
City of Newport Beach and the County of Orange
Source: California State Department ofFimnce, E4 Population lish'mates for Cities, Counties and the State, 1001 -1008 wish 1000
DRUBenchmark
B_I •
City of
County of
Year
Newport Beach
Orange
2004
82,177
3,017,390
2005
82,774
3,045,218
2006
83,200
3,066,483
2007
83,834
3,089,707
2008
84,554
3,121,251
Source: California State Department ofFimnce, E4 Population lish'mates for Cities, Counties and the State, 1001 -1008 wish 1000
DRUBenchmark
B_I •
• Employment
The following table summarizes wage and salary employment in the County from 2003 to 2007.
The total wage and salary employment in the County increased by 5.7% between 2003 and 2007.
Service Providing is the largest employment sector in the County.
ANNUAL AVERAGE INDUSTRY EMPLOYMENT()
Orange County Primary PMSA
is B-2
2003
2004
2005
2006
2007
Total Farm
7,200
6,700
5,600
5,300
5,000
Total Nonfarm
1,429,000
1,456,700
1,491,000
1,518,900
1,513,000
Total Private
1,274,800
1,303,300
1,335,600
1,362,200
1,353,700
Goods Producing
268,100
276,300
283,500
289,900
284,500
Natural Resources and Mining
500
600
700
600
600
Construction
83,700
92,200
99,900
106,600
103,700
Manufacturing
183,900
183,500
182,900
182,700
180,300
Service Providing
1,160,900
1,180,500
1,207,400
1,229,000
1,228,400
Trade, Transportation and Utilities
265,000
264,900
269,800
272,800
276,500
Wholesale Trade
83,200
82,400
83,000
83,700
87,100
Retail Trade
152,800
153,200
158,100
160,800
160,700
Transportation, Warehousing and
Utilities
29,000
29,200
28,700
28,200
28,700
Information
35,200
33,800
32,800
31,900
31,300
Financial Activities
122,200
132,300
138,400
138,200
128,500
Professional and Business Services
•
252,600
254,900
264,300
274,500
272,300
Educational and Health Services
126,000
131,000
133,500
137,700
141,600
Government
154,200
153.400
155,300
156,700
159,200
Total, All Industries
1,436,200
1,463,400
1,496,500
1,524,300
1,518,000
Note: The "Total All Industries" data is not directly
comparable to the employment data found herein.
0l 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.
Source: Stare of California, Employment Development Department, Orange PMSA Industry Employment & Labor Force
by Annual
Average, March 2007 Benchmark
is 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 2003 to 2007.
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
City of Newport Beach, County of Orange, State of California and United States of America
Annual Averages, 2003 -2007
(l) Includes persons involved in labor- management trade disputes.
(2) Includes all persons without jobs who are actively seeking work.
(3) The unemployment rate is computed from unrounded data; therefore, it may differ from rtes computed from rounded
figures in this table.
(4) Not strictly comparable with data for prior years.
(5) Data is not available.
Source: State of California, Employment Development Department„ based on March 2007 benchmark and U.S. Department of
Labor, Bureau of Labor Statistics-
B-3 •
Civilian Labor
Civilian
Civilian
Civilian
Year and Area
Force
Emplovmentltl
UnemploymentO
Unemployment Rate(a)
2003
Newport Beach
47,730
46,600
1,130
2.4%
Orange County
1,575,600
1,515,900
59,700
3.8
California
17,460,000
16,282,700
1,177,300
6.7
United States (4)
146,510,000
137,736,000
8,774,000
6.0
2004
Newport Beach(5)
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 141
147,401,000
139,252,000
8,149,000
5.5
2005
Newport Beach(5)
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[^]
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 (4)
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 (4X5)
(l) Includes persons involved in labor- management trade disputes.
(2) Includes all persons without jobs who are actively seeking work.
(3) The unemployment rate is computed from unrounded data; therefore, it may differ from rtes computed from rounded
figures in this table.
(4) Not strictly comparable with data for prior years.
(5) Data is not available.
Source: State of California, Employment Development Department„ based on March 2007 benchmark and U.S. Department of
Labor, Bureau of Labor Statistics-
B-3 •
• 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
2005 2006 2007
Newport Beach 97,428 103,068 110,511
County of Orange 65,953 70,232 73,263
Source: U.S. Census Bureau
Major Employers
The principal employers as of June 30, 2007, in the City are as follows:
Name
• Hoag Memorial Hospital
Pacific Life Insurance
Downey Savings & Loan
City of Newport Beach
Jazz Semiconductor
Conexant Systems Inc.
The Island Hotel
Pacific Investment Management Co.
Newport Beach Marriott & Tennis Club
Mindspeed Technology
PRINCIPAL EMPLOYERS to
City of Newport Beach
Tvae of Business or Entitv
Hospital and health care
Life insurance, investment
Banking
City government
Seminconductor networking solutions
Seminconductor networking solutions
Hotel, resort
Investment company
Hotels, resorts
Semiconductor networking solutions
Numbered Emnloved
4,390
2,788
2,566
814
730
650
550
530
500
390
(0 Figures reflect number of employees of each employer as of June 30, 2007, and do not reflect current number of employees for
each employer.
Source: Newport Beach Chamber of Commerce.
• &4
The largest private sector employers within the County reported as of November 26, 2007:
•
LARGEST PRIVATE SECTOR EMPLOYERS(')
County of Orange
Number
Name
Type of Business or Entity
Employed
Walt Disney Co.
entertaimnent
20,000
University of California, hvine
higher education and health care
17,579
St. Joseph Health System
health care
10,047
Boeing Co.
aerospace and communications
9,961
Yum Brands Inc.
fast food restaurants
7,200
AT &T Inc.
telephone service
6,000
California State University, Fullerton
higher education
5,634
Home Depot hic.
retail
5,450
Bank of America Corp.
banking
5,000
Memorial Health Services
health care
4,956
Target Cap.
retail
4,855
Supervalu
grocery retailer
4,751
Costco Wholesale
discount retailer
4,500
The Kroger Co.
grocery retailer
4,500
Kaiser Pemmanente
health care
4,440
Wal -Mart Stores hic.
retail
4,405
Hoag Memorial Hospital Presbyterian
hospital and health care
4,240 •
Tenet Healthcare Corp.
health care
4,000
Cedar Fair LP
entertainment
3,950
United Health Group hic.
health care
3,900
Edison International
utilities and investments
3,546
Nordstrom hic.
retail
3,339
Automobile Club of Southern California
information systems, insurance and automotive assistance
3,324
Marriott International hic.
hotels, resorts and senior living communities
3,256
CVS Caremark Corp.
pharmacy
3,100
tq Excludes public sector employment such as
the federal government, the County, local cities, school districts and
water districts and
other governmental agencies. Figures reflect number of employees of each employer as of November 26, 2007, and do not reflect
current number of employees for each employer.
Source: Orange County Business Journal — 2008 Book of Lists.
B -5 •
Construction Activity
•
for
The following table shows building permit valuations and new housing units in Newport Beach
years 2003 through 2007.
City of Newport Beach
Building Permit Valuation and New Housing Units
(Dollar Amounts Are Stated Fully)
2003 2004 2005 2006
2007
Residential
Single Family
$ 64,150,467 $ 56,021,134 $ 73,381,227 $ 82,967,310
$ 68,054,930
Multi - Family
7,987,086 31,833,538 7,658,741 7,450,000
11,283,560
Alteration/Additions
44,089,403 50,009,411 53,783,612 56,805,626
58,058,723
Total
$116,226,956 $137,864,083 $136,823,580 $147,222,936
$137,397,213
Non - Residential
New Commercial $
New Industry
other(')
Alteration/Additions
Total
Total All Industryl �1
New Housing Units
• Single Family Units
Multi - Family Units
Total
3,781,500 $ 7,746,165 $ 18,235,000 $ 36,300,000
0 0 0 0
19,089,752 18,442,820 34,025,725 37,093,731
37,462,146 _46,776,521 54,026,316 53,803.425
$60,333,398 $72,965,506 $106,287,041 $127,197,156
$176,560,354
142
40
18282
$210,829,589 $243,110,621 $274,420,092
100 141 126
231 34
331 175 160
$ 57,666,475
2,000,000
29,236,976
40,431,975
$129,335,426
$ 266,732,639
107
40
147
Includes 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.
May not add up due to rounding.
Source: Construction Industry Research Board
0 B -6
Taxable Sales .
Taxable sales in the City are shown below. Taxable sales in the City increased by 43% between
2002 and 2006. The largest taxable sales sectors in the City are automotive, other retail stores and eating
and drinking places.
TAXABLESALES
City of Newport Beach
2002 -2007
(In Thousands)
(') Figures through second quarter of 2007. .
Source: California Board ofFqualmhon
Assessed Valuation
Below is a table which indicates the secured, unsecured and total assessed valuations for the City
for the Fiscal Years 2004 -05 through 2008 -09:
Taxable Sales
Total
Fiscal Year
Secured Valuation
State Assessed
2002
2003
2004
2005
2006
2007171
Apparel
$ 103,671
$ 116,461
$ 138,308
$ 159,346
$ 168,773
$ 83,806
General Merchandise
197.341
216.676
237.968
256.604
259.294
116.519
Food Stores
69.529
75.576
76.493
82.662
86.262
41.383
Eating and Drinking Places
289.902
309.219
344.205
381,592
392,918
198.576
Home Furnishings & Appliances
68.234
82.783
81.027
99.458
96.501
46.131
Building Materials and Farm
20.264
21.369
25.548
29.130
30.566
14.100
Automotive
304.778
350.740
382.748
430.653
538.993
325.914
Service Station
52.052
61.231
74.715
89.411
105.462
56.952
Other Retail Stores
297.276
276.253
288,372
327,910
334,155
104,697
Total Retail Stores
$1,403,047
$1,510,308
$1,649,348
$1,856,766
$2,012,924
$ 987,578
All Other Outlets
395,158
402.738
475.161
501,875
559,897
303.583
Total All Outlets
$1,798,205
$1,913,046
$2,124,545
$2,358,641
$2,572,821
$1,291,161
(') Figures through second quarter of 2007. .
Source: California Board ofFqualmhon
Assessed Valuation
Below is a table which indicates the secured, unsecured and total assessed valuations for the City
for the Fiscal Years 2004 -05 through 2008 -09:
Source: County of Orange Auditor - Controller's Office.
IN
1/ /1
u
Unsecured
Total
Fiscal Year
Secured Valuation
State Assessed
Valuation
Assessed Value
2004 -05
25.193,608.944
53,310
1,484.019.033
26.677.681.287
2005 -06
28.136.554256
53.310
1.914.106.993
30.050.714.559
2006 -07
31,423,419,732
53,310
1,569,867,249
32,993,340,291
2007 -08
34,188,515,273
53,310
1,668,015,342
35,856,583,925
2008 -09
36,435,406,840
699,230
1,538,539,482
37,974,645,552
Source: County of Orange Auditor - Controller's Office.
IN
1/ /1
u
• 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 shall not be required to register the transfer 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.
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 corporate trust 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
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.
C -1
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 his or her 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.
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 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 and the Bond owners shall, upon
such payment, look only to the City for payment; providedj 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, and Los Angeles, California, 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 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 (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.
There 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
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redeem delinquent Assessment Installments or (ii) the judicial foreclosure sale of parcels pursuant to 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 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 IS 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 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 shall file a certificate of completion with the Treasurer. Any surplus in the Improvement
Fund after completion of the Improvements, but prior to December 30, 2010, shall remain in the
Improvement Fund until at least December 30, 2010, and thereafter shall be utilized or distributed in any
manner authorized by the Act.
Rebate Fund: The City shall establish and maintain a Rebate Fund (as defined in the Indenture). 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
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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 funds 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 furnish the City periodic cash transaction statements that include detail 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) and (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 •
of the two highest rating categories by a nationally recognized rating service;
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• (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 recent 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," "AaI" or "Aa2" by Moody's;
(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 (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 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 itemized herein and which at the time of
investment is a legal investment under the laws of the State of California for the moneys
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
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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 and of the owners of the Bonds 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, or (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. 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
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.
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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 District, 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
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
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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
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. •
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• 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.
•
we
APPENDIX D •
FORM OF LEGAL OPINION
Upon delivery of the Bonds, Robert E. Hessell, Esq., San Diego, California, Bond Counsel to the
City of Newport Beach, proposes to render his final approving opinion with respect to the Bonds in
substantially the following form (see "CONCLUDING INFORMATION— Tax Matters'):
City of Newport Beach
Newport Beach, California
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
LIMITED OBLIGATION IMPROVEMENT BONDS
Bond Opinion
Ladies and Gentlemen:
In my capacity as bond counsel to the City of Newport Beach, California (the "City "), I have
examined the record of the proceedings of the City Council of the City for the levy of special assessments and
authorization and issuance of the above- captioned Bonds in the aggregate principal amount of $
upon unpaid assessments, in what is designated as Assessment District No. 99 -2. The proceedings were taken
pursuant to the provisions of the Municipal Improvement Act of 1913, being Division 12 of the Streets and •
Highways Code of the State of California, with the Bonds issued pursuant to the provisions of the
Improvement Bond Act of 1915, being Division 10 of said Code. The Bonds are payable solely from the
special assessments as provided in the Bond Indenture, dated as of December 1, 2008 (the "Indenture'), by
and between the City and U.S. Bank National Association, as Paying Agent. Capitalized terms used herein not
otherwise defined herein shall have the meanings given to them in the Indenture.
As to questions of fact material to this opinion, I have relied upon the certified proceedings and other
certifications of public officials furnished to me without undertaking to verify the same by independent
investigation. I have also assumed the genuineness of the signatures appearing upon such records,
proceedings, certifications, documents and opinions.
Based upon my examination and subject to the foregoing, I am of the opinion, as.of the date
hereof, that:
1. The City is duly organized and validly existing and has duly and validly authorized all the
acts undertaken by it in connection with the authorization, execution and delivery of the Bonds.
2. The Bonds and the Indenture are legal, valid and binding obligations enforceable in
accordance with their terms and the owners of the Bonds are entitled to the benefits of the Indenture; it should
be noted, however, that the rights of the owners of the Bonds and the enforceability of the Bonds and the
Indenture may be subject to bankruptcy, insolvency, reorganization and other similar laws affecting creditors'
rights, to equitable principles relating to or limiting creditors' rights, and to limitations on remedies applicable
to governmental entities.
3. Under existing laws, regulations, rulings and judicial decisions, the interest on the Bonds is •
excluded from gross income for federal income tax purposes, is exempt from personal income taxation by
the State of California, and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed upon individuals and corporations; it should be noted, however, that for the purpose of
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• computing the alternative minimum tax imposed on corporations (as defined for federal income tax purposes),
such interest is taken into account in determining adjusted current earnings. This opinion presumes that the
City complies with all requirements of the Internal Revenue Code of 1986, as amended, that must be satisfied
subsequent to the issuance of the Bonds in order that interest thereon be, or continue to be, excluded from
gross income for federal or state income tax purposes. The City has covenanted to comply with each such
requirement. Failure to comply with such requirements may cause the inclusion of interest on the Bonds in
gross income for federal income tax purposes retroactive to the date of issuance of the Bonds. I express no
opinion regarding other federal or state tax consequences pertaining to the Bonds.
•
is
Respectfully submitted,
Robert E. Hessell, Esq.
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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 Bonds will be issued as fully- registered securities registered in the name of
Cede & Co. (DTC's partnership nominee) or such other name as may be requested by an authorized
representative of DTC. One fully- registered Bond certificate will be issued for 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.dicc.com and www.dic.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 Owner") is in turn to be recorded on the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are,
however, expected to receive written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner
entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by
entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the
event that use of the book -entry system for the Bonds is discontinued. •
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 transmission 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 MNII 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
December 1, 2008, is executed and delivered by the City of Newport Beach (the "Issuer ") 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 Repositories.
"Annual Financial Information" means annual financial information as such term is used in
paragraph (b)(5Xi) 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.
"Central Post Office" means the Disclosure USA website maintained by the Municipal Advisory
Council of Texas or any successor thereto, or any other organization or method approved by the staff or
members of the Securities and Exchange Commission as an intermediary through which issuers may, in
compliance with the Rule, make filings required by the Disclosure Agreement.
"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 Repositories 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 CUSIP® 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. •
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. "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.
"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
I5B(b)(1) of the Securities Exchange Act of 1934.
"National Repository" means any Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule. The Nationally Recognized Municipal Securities Information
Repository for purposes of the Rule are identified in the Securities and Exchange Commission website
located at sec.gov /info /municipaUnrmsir.him.
"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.
"Repository" means the MSRB, each National Repository and the State Depository (if any).
"State Depository" means any public or private depository or entity designated by the State of
California as a state information depository (if any) for the purpose of the Rule and recognized as such by
the 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 each
National Repository and the State Depository (if any) not later March 31 after the end of each fiscal year of
the Issuer, commencing with the fiscal year ending June 30, 2008; provided, however, that the first Annual
Report due on March 31, 2009, 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
F -2
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 each
National Repository or the MSRB and the State Depository (if any) in substantially the form attached as
Exhibit B.
(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 each National Repository or the MSRB and
the State Depository (if any) 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 each National Repository and the State Depository (if any).
(e) The Disclosure Dissemination Agent shall
(i) determine the name and address of each Repository each year prior to the Annual
Filing Date;
(ii) upon receipt, promptly file each Annual Report received under Section 2(a) with
each National Repository and the State Depository (if any);
(iii) upon receipt, promptly file each Audited Financial Statement received under
Section 2(d) with each National Repository and the State Depository (if any);
(iv) upon receipt, promptly file the text of each disclosure to be made with each National
Repository and the State Depository (if any), 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:
"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);
"Unscheduled draws on debt service reserves reflecting financial
difficulties," pursuant to Sections 4(c) and 4(a)(3); •
F -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 securities holders," pursuant to Sections 4(c) and
4(ax7);
S. "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);
"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 Repositories, 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 through a Central Post Office or equivalent system or entity, e.g. Electronic
Municipal Market Access (EMMA), approved by the Securities and Exchange Commission, in lieu of
filing with the Repositories.
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.
F-4
(b) Audited Financial Statements prepared in accordance with GAAP will be included in the •
Annual Report. If audited financial statements are not available, then unaudited financial statements,
prepared in accordance with generally accepted accounting principles ( "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 each of the National Repositories 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.
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 relating to the Bonds 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 Bonds;
Modifications to rights of Bond Holders;
8. Bond calls;
9. Defeasances;
10. Release, substitution or sale of property securing repayment of the Bonds;
11. Rating changes on the Bonds;
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
F -5
• 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
Dissemination Agent shall promptly file a notice of such occurrence with the State Depository (if any) and
(i) each National Repository, or (ii) the MSRB 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 CUSIP® 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 IOb -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
Repositories 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 orNotice 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
F -6
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.
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 terms hereof. The Disclosure Dissemination Agent shall have no duty or obligation to
review or verify any Information 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
F -7
• 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.
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 Florida [DISCUSS CALIFORNIA VS. FLORIDA] (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.
•
DIGITAL ASSURANCE CERTIFICATION, L.L.C.,
as Disclosure Dissemination Agent
By:
Name:
Title:
CITY OF NEWPORT BEACH, as Issuer
By:
F -8
Name:
Title:
11
EXHIBIT A
NAME AND CUSEPA NUMBERS OF BONDS
Name of Issuer: City of Newport Beach
Obligated Person(s):
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 99 -2
Limited Obligation Improvement Bonds
Date of Issuance: 2008
Date of Official Statement: 2008
CUSe Number.
CUSHO Number.
CUSe Number.
CUSIP® Number:
CUSe Number. •
CUSe Number:
CUSe Number.
CUSe Number.
CUSIP® Number.
CUSe Number.
CUSIP® Number:
CUSHA Number.
CUSe Number.
CUSe Number.
CUSBA Number.
F -9 •
• EXHIBTr B
NOTICE TO [MSRB] [REPOSITORIES] OF FAILURE TO FILE ANNUAL REPORT
Issuer: City of Newport Beach
Obligor:
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 99 -2 Limited
Limited Obligation Improvement Bonds
Date of Issuance: 2008
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 I, 2008, 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
EXHIBIT C •
EVENT NOTICE COVER SHEET
This cover sheet and material event notice will be sent to all Nationally Recognized Municipal
Securities Information Repositories, and any State Information Depository, if applicable, pursuant to
Securities and Exchange Commission Rule 15c2- 12(b)(5)(i)(C) and (D).
Issuer's and/or Other Obligated Person's Name:
Issuer's Six -Digit CUSIP® Number:
or Nine -Digit CUSIP® Number(s) of the bonds to which this material event notice relates:
Number of pages of attached:
Description of Material Event Notice (Check One):
I. _Principal and interest payment delinquencies
2. _Non- payment related defaults
3. _Unscheduled draws on debt service reserves reflecting financial difficulties
a. _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 securities holders
s. _Bond calls
v. Defeasances
10. _Release, substitution or sale of property securing repayment of the securities
>>. _Rating changes
12. _Other material event notice (specify):
Failure to provide annual financial information as required
I hereby represent that I am authorized by the issuer or its agent to distribute this information
publicly:
Signature:
Name:
Title:
Employer: Digital Assurance Certification, L.L.C.
Address:
City, State, Zip Code:
Voice Telephone Number:
F -II
CJ
APPENDIX II
LIST OF UNPAID ASSESSMENTS
•
H -1
Assessed Value (AV)
Tax Roll as of July 2008
Value
-to -Lien
Ratio for
Assessment
Confirmed
Confirmed
No.
APN
Land Value
Structure
Total Value
Assessment
Assessment
1
047- 161 -24
$2,165,573
$96,980
$2,262,553
$28,656.12
78.96:1
2
047 - 161 -23
$1,443,237
$96,403
$1,539,640
$20,573.64
74.84:1
3
047 - 161 -26
$863,993
$100,691
$964,684
$19,838.87
48.63:1
4
047 - 161 -27
$890,287
$114,520
$1,004,807
$19,838.87
50.65:1
5
047 - 161 -02
$82,295
$45,428
$127,723
$14,695.46
8.69:1
6
047 - 161 -03
$82,360
$63,008
$145,368
$14,695.46
9.89:1
7
932 -70 -024
$462,864
$209,457
$672,321
$18,369.32
36.60:1
8
932 -70 -025
$321,977
$256,787
$578,764
$18,369.32
31.51:1
9
932 -70 -031
$701,599
$228,284
$929,883
$15,430.24
60.26:1
10
932 -70 -032
$203,144
$207,953
$411,097
$15,430.24
26.64:1
11
932 -70 -033
$804,949
$175,604
$980,553
$15,430.24
63.55:1
13
047 -181-02
$100,618
$83,704
$184,322
$18,369.32
10.03:1
14
047- 181 -03
$929,232
$156,868
$1,086,100
$18,369.32
59.13:1
16
939 -85 -052
$89,056
$118,269
$207,325
$2,446.79
84.73:1
•
17
939 -85 -053
$89,054
$127,852
$216,906
$2,446.79
88.65:1
18
939 -85 -054
$89,058
$142,630
$231,688
$2,446.79
94.69:1
19
939 -85 -057
$668,643
$142,870
$811,513
$1,836.93
441.78:1
20
939- 85-058
$171,587
$127,849
$299,436
$1,836.93
163.01:1
22
047 - 152 -06
$323,803
$97,496
$421,299
$25,046.12
16.82:1
25
047- 152 -07
$439,430
$57,892
$497,322
$12,401.40
40.10:1
26
047- 153 -21
$109,816
$159,173
$268,989
$20,988.65
12.82:1
27
047 - 153 -20
$119,890
$104,807
$224,697
$15,027.68
14.95:1
28
047 - 153 -10
$941,326
$345,816
$1,287,142
$16,458.88
78.20:1
29
047- 153 -09
$1,351,277
$54,049
$1,405,326
$12,165.25
115.52:1
32
047 - 171 -03
$27,447
$3,634
$31,081
$5,724.83
5.43:1
33
047 - 171 -04
$24,743
$4,252
$28,995
$5,009.23
5.79:1
34
047- 171 -22
$24,742
$3,806
$28,548
$4,293.62
6.65:1
35
047 - 171 -16
$108,763
$57,061
$165,824
$12,165.25
13.63:1
40
047 - 171 -11
$95,615
$9,788
$105,403
$13,596.47
7.75:1
41
047 - 171 -10
$1,199,476
$34,724
$1,234,200
$13,596.47
90.77:1
42
047- 171 -09
$1,467,128
$98,062
$1,565,190
$13,596.47
115.12:1
46
047 - 172 -25
$315,866
$149,116
$464,982
$19,321.29
24.07:1
49
51
047 - 172 -03
047 - 172 -05
$52,200
$246,451
$12,627
$230,434
$64,827
$476,885
$12,880.85
$12,880.85
5.03:1
37.02:1
•
H -1
H -2
Assessed Value (AV)
Tag Roll as of July
2008
Value- to-Lien
Ratio for
Assessment
Confirmed
Confirmed
No.
APN
Land Value
Structure
Total Value
Assessment
Assessment
53
047 -172 -07
$692,784
$193,416
$886,200
$12,880.85
68.80:1
54
047 - 172 -19
$764,845
$246,252
$1,011,097
$12,880.85
78.50:1
55
047 - 172 -21
$1,383,702
$208,110
$1,591,812
$12,880.85
123.58:1
57
047 - 172 -18
$1,291,684
$132,998
$1,424,682
$16,458.88
86.56:1
59
047 - 172 -28
$1,385,565
$358,690
$1,744,255
$14,312.07
121.87:1
60
047 - 172 -29
$1,533,029
$231,195
$1,764,224
$14,312.07
123.27:1
61
047 - 172 -15
$810,703
$62,080
$872,783
$14,312.07
60.98:1
63
047 - 172 -23
$550,750
$63,582
$614,332
$14,312.07
42.92:1
65
047 - 172 -12
$89,666
$6,879
$96,545
$14,312.07
6.75:1
66
047 - 172 -26
$1,793,022
$369,016
$2,162,038
$14,312.07
151.06:1
68
047 - 172 -10
$2,788,797
$288,706
$3,077,503
$13,596.47
226.35:1
69
047 - 172 -09
$198,342
$116,841
$315,183
$15,027.68
20.97:1
71
047 - 173 -34
$61,331
$36,971
$98,302
$17,890.08
5.49:1
72
047 - 173 -33
$456,111
$56,364
$512,475
$18,605.68
27.54:1
73
047 -173 -03
$329,225
$35,080
$364,305
$17,890.08
20.36:1
75
047 - 173 -05
$253,652
$31,840
$285,492
$18,605.68
15.34:1
•
76
047 - 173 -32
$358,626
$118,502
$477,128
$17,890.08
26.67:1
77
047 - 173 -31
$244,387
$185,499
$429,886
$18,605.68
23.11:1
80
047 - 173 -23
$61,332
$53,561
$114,893
$17,890.08
6.42:1
81
047 -173 -09
$1,372,924
$94,040
$1,466,964
$17,890.08
82.00:1
85
047 - 173 -22
$295,594
$112,511
$408,105
$80,147.58
5.09:1
91
047 - 173 -27
$226,340
$92,248
$318,588
$23,614.91
13.49:1
93
932 -91 -101
$238,748
$73,210
$311,958
$7,156.03
43.59:1
94
932 -91 -102
$238,748
$73,874
$312,622
$7,156.03
43.69:1
95
932 -91 -103
$238,748
$74,762
$313,510
$7,156.03
43.81:1
98
047 - 173 -16
$720,618
$178,482
$899,100
$22,183.71
40.53:1
101
047 - 173 -14
$1,180,183
$87,851
$1,268,034
$12,880.85
98.44:1
102
047 - 201 -01
$1,519,974
$101,555
$1,621,529
$10,018.45
161.85:1
104
047 - 201 -26
$304,589
$25,251
$329,840
$20,752.50
15.89:1
108
939 -80 -002
$650,408
$108,355
$758,763
$10,018.45
75.74:1
109
047 - 201 -32
$1,760,737
$189,263
$1,950,000
$18,605.68
104.81:1
111
047 - 201 -29
$779,978
$57,812
$837,790
$18,605.68
45.03:1
112
047 - 201 -05
$269,491
$59,762
$329,253
$18,605.68
17.70:1
113
939 -80 -014
$694,424
$112,081
$806,505
$9,302.85
86.69:1
114
939 -80- 015
$437,188
$153,274
$590,462
$9,302.85
63.47:1
115
047 - 201 -36
$61,300
$41,000
$102 ,300
$18,605.68
5.50:1
•
116
047 - 201 -37
$61,300
$41,001
$102,301
$18,605.68
5.50:1
117
047 - 201 -08
$105,558
$64,229
$169,787
$18,605.68
9.13:1
H -2
Assessed Value (AV)
Tax Roll as of July 2008
0
H -3
Value -to -Lien
Ratio for
Assessment
Confirmed
Confirmed
No.
APN
Land Value
Structure
Total Value
Assessment
Assessment
118
047 - 201 -09
$431,090
$152,522
$583,612
$55,101.45
10.59:1
119
047 - 201 -23
$413,727
$6,264
$419,991
$10,734.05
39.13:1
122
047 - 201 -20
$97,916
$22,300
$120,216
$22,183.71
5.42:1
127
047- 201 -16
$3,109,541
$833,336
$3,942,877
$19,923.71
197.90:1
129
047- 201 -14
$1,550,983
$653,946
$2,204,929
$22,183.71
99.39:1
130
047- 201 -13
$97,913
$47,454
$145,367
$22,183.71
6.55:1
131
047- 201 -12
$522,607
$173,011
$695,618
$22,183.71
31.36:1
133
047- 201 -10
$486,968
$193,451
$680,419
$25,761.72
26.41:1
139
047 - 202 -05
$61,327
$64,298
$125,625
$18,605.68
6.75:1
140
047 - 202 -06
$1,545,888
$144,762
$1,690,650
$18,605.68
90.87:1
141
047 - 202 -07
$1,178,968
$172,214
$1,351,182
$18,605.68
72.62:1
142
047 - 202 -08
$156,062
$69,576
$225,638
$18,605.68
12.13:1
143
047 - 202 -09
$296,929
$60,087
$357,016
$18,605.68
19.19:1
146
047 - 202 -12
$367,335
$47,982
$415,317
$18,605.68
22.32:1
150
047 - 202 -27
$684,907
$296,777
$981,684
$22,183.71
44.25:1
151
047 - 202 -26
$192,189
$52,321
$244,510
$22,183.71
11.02:1
153
939 -80 -008
$427,781
$156,920
$584,701
$10,734.05
54.47:1
•
160
047 - 202 -18
$97,913
$24,462
$122,375
$22,183.71
5.52:1
161
047 - 202 -17
$226,341
$29,416
$255,757
$22,183.71
11.53:1
162
047 - 211 -01
$508,435
$33,979
$542,414
$18,605.68
29.15:1
163
047 - 211 -02
$1,741,826
$79,894
$1,821,720
$18,605.68
97.91:1
164
047 - 211 -03
$61,327
$36,366
$97,693
$18,605.68
5.25:1
167
047- 211 -30
$545,457
$83,244
$628,701
$18,605.68
33.79:1
168
047- 211 -29
$61,328
$43,735
$105,063
$18,605.68
5.65:1
169
047- 211 -26
$465,001
$71,310
$536,311
$29,339.73
18.28:1
170
047 - 211 -27
$225,058
$537,753
$762,811
$25,761.72
29.61:1
173
047- 211 -24
$97,913
$68,015
$165,928
$22,183.71
7.48:1
177
939 -80 -011
$1,013,343
$229,828
$1,243,171
$10,734.05
115.82:1
178
047 - 211 -20
$2,027,214
$95,202
$2,122,416
$22,183.71
95.67:1
182
047- 211 -09
$134,501
$98,307
$232,808
$35,780.17
6.51:1
183
047- 211 -10
$294,128
$71,487
$365,615
$12,240.08
29.87:1
184
047 - 211 -11
$294,128
$30,859
$324,987
$12,240.08
26.55:1
187
047- 211 -28
$1,250,870
$198,324
$1,449,194
$35,780.17
40.50:1
190
047 - 212 -06
$315,775
$35,263
$351,038
$22,899.31
15.33:1
191
047 - 212 -07
$65,862
$31,352
$97,214
$22,899.31
4.25:1
192
047- 212 -08
$358,369
$73,182
$431,551
$22,899.31
18.85:1
197
047- 212 -15
$230,870
$67,066
$297,936
$22,183.71
13.43:1
•
198
047 - 212 -14
$4,536,229
$558,671
$5,094,900
$22,183.71
229.67:1
H -3
0
•
Assessed Value (AV)
Tax Roll as of July 2008
Value -to -Lien
Ratio for
Assessment Confirmed Confirmed
No. APN Land Value Structure Total Value Assessment Assessment
199 047 - 212 -13 $558,855
$57,345
$616,200
$22,183.71
27.78:1
200 047 - 212 -12 $97,915
$27,570
$125,485
$22,183.71
5.66:1
$70,042,691
$14,183,888
$84,226,579
$1,978,487.05
42.57:1
H-4
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
LIMITED OBLIGATION IMPROVEMENT BONDS
BOND PURCHASE CONTRACT
2008
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 ofNewport Beach (the
"City') in connection with Assessment District No. 99 -2 (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. •
1. 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 ofNewport Beach, Assessment District No. 99 -2 Limited Obligation Improvement Bonds (the "Bonds "),
bearing interest (payable semiannually on March 2 and September 2 in each year, commencing March 2, 2009)
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 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
2008 (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's on
2008. 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 , 2008, 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 ofthe 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 December 1, 2008, 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 tomake abonafidepublic offeringof theBonds atthe 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 orcause 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 1 2008, 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 shall 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 CU SIP'
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 Robert E.
Hessell, Esq., 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;
(b) The City Council has duly and validly (i) taken orcaused 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
NB BM.WpNM 43
in the respective amounts shown in the report of the Assessment Engineer approved by the City Council on •
2008 (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 carry
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 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;
(c) The City is not in breach of ordefault underany applicable lawor 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 oforfilings 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;
M 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
paragraph (i) below, contain any untrue statement of a material fact or omit to state a material fact required •
NB BPA wpNMM43
• 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;
6) 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,
orthe 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 exemptfrom California personal income taxation;
(1) The Ciq-wififumish 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
NBHPA .wP&MW43
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 ofthe 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 ayearly 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 — Legal Opinion' and "— Tax Matters," and "APPENDIX E — 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 amaterial
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 Statcmcnthcretofore delivered tothc Undcrwriterhas 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 Oblisations of the Underwriter. The obligations of the Underwriter to
accept delivery of and pay forthe 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
NB BPAL. pd/MM43
• taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated thereby
and by this Purchase Contract, all such actions as, in the opinion of Robert E. Hessell, Esq., 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, 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, orinfonnat ion becoming known, which, inthejudgment
of the Underwriter, makes untrue in any materi al 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);
NB a Ak.V&MM43
(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 Exchangeorothernationalsecurities
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 ofthe 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 Robert E. Hessell, Esq., 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 Robert E. Hessell, Esq., Bond Counsel for the City, to the effect that (i) the Resolution of
Formation has been duly adopted by the City Council and this Purchase Contract and the Indenture have been
duly authorized, executed and delivered by, 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 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; (ii) the Bonds are not subject to the registration requirements of 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 information contained in the Official Statement under the headings "INTRODUCTION," "THE
BONDS ," "SECURITY FOR THE BONDS," "THE DISTRICT," "CONCLUDING INFORMATION — Legal
Opinion," and "— Tax Matters," and in Appendices C and D, is accurate insofar as it purports to summarize
certain provisions of the Act, the Bonds, the Indenture, the Resolution and the statements contained under such
captions in the Preliminary Official Statement and the Official Statement, as of their respective dates, and in
the case of the Official Statement as of the Closing Date, contained no untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to make the statements made therein,
in light of the circumstances under which they were made, not misleading in any material respect; (iv) the
Bonds are secured by Assessments to be levied for the payment of principal of, premium, if any, and interest
on the Bonds; (v) principal of, premium, if any, and interest on, the Bonds are payable out of the Redemption •
Fund; (vi) installments of Assessments are to be collected on the tax roll on which general taxes on real
NB BPAk.wpd1MV743
• property are collected; (vii) the Assessments have been duly and validly authorized in accordance with the
provisions of the Act and, when levied, the Assessments will be valid and binding obligations of the affected
property owners enforceable by the City in accordance with the provisions of the Indenture and the Act; (viii)
the legislative body of the City has a valid and binding obligation to annually fix and levy that amount of
Assessments required for the payment of principal and interest on the Bonds for the ensuing year, including
any necessary replenishment of the Reserve Account; and (ix) based upon the information provided to such
counsel in the course of their participation in the preparation of the Official Statement and (except as provided
in (iii) above) without having undertaken to determine independently the accuracy or completeness of the
statements contained in the Official Statement, such counsel has no reason to believe that the Official
Statement (except for the financial and statistical data included therein and assumptions with respect thereto,
as to which no view need be expressed) as of the date of the Official Statement omitted, or as of the Closing
Date omits, to state any 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) 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
firm 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
counsel to the City, 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
N6 BPAL.P&MM43
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 were called and held pursuant to law and with all public
notice required by law, and the resolution and the Resolution ofFormation 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 ofthe 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 anygovernmental 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) Acertificate 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,
NB BPAk.wpNMCJ743
• 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 factor 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) Acertificateof theCitydated the Closing Date ,inaformacceptabletoBond
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 lnternal 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
(17) Such additional legal opinions, certificates, instruments and otherdocuments
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 Underwriternor 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 bependingor, to theknowledge 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. Exnenses.
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 orcause
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
10
NB BPA .wpolMWQ
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 and the Bond Counsel and any
accountants, engineers or any other experts orconsultants 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 comiectionwith 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
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 Wedbush Morgan
Securities, 1600 Newport Center Drive, Suite 100, Newport Beach, California 92660.
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.
S. 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 PriorAgreements. ThisPurchase Contract supersedes and replaces all priornegotiations,
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.
•
NB BFAk.wpd/ M43
• 12. Counteparts. 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.
•
r1
Very truly yours,
WEDBUSH MORGAN SECURITIES
In
Vice President
ACCEPTED.
CITY OF NEWPORT BEACH
City Manager of the City of Newport Beach
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT]
12 NB BPA1LwPYMC'/43
Maturity Date
(September 2)
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
APPENDIX A
MATURITY SCHEDULE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 99-2
LIMITED OBLIGATION IMPROVEMENT BONDS
Principal Interest Rate Yield 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, 2009 from any source of funds including,
without limitation, the prepayment of assessments, 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, 2009 through September 2, 2013 103%
March 2, 2014 through September 2, 2014 102
March 2, 2015 through September 2, 2015 101
March 2, 2016 and thereafter 100
A-] NB BPAk..pdtM J743
0
•
•
City of Newport Beach
BUDGET AMENDMENT
2008 -09
CT ON BUDGETARY FUND BALANCE:
Increase Revenue Estimates
X Increase Expenditure Appropriations AND
Transfer Budget Appropriations
SOURCE:
from existing budget appropriations
from additional estimated revenues
X from unappropriated fund balance
EXPLANATION:
NO. BA- 09BA -021
AMOUNT: $1z,44a.o5
Increase in Budgetary Fund Balance
X Decrease in Budgetary Fund Balance
No °effect on Budgetary Fund Balance
This budget amendment is requested to provide for the following:
To increase expenditure appropriations to recognize the City's cash contribution related to the 15th Street Restroom
property included in Assessment District #99 -2.
ACCOUNTING ENTRY:
BUDGETARY FUND BALANCE
Fund Account
010 3605
RONUE ESTIMATES (3601)
Fund /Division Account
EXPENDITURE APPROPRIATIONS (3603)
Amount
Description Debit
General Fund - Fund Balance $12,448.05
Description
Description
Division Number 7013 Street
Account Number C2002030 AD 99 -2 City Property Assessment
Division Number
Account Number
Division Number
Account Number
Division Number
Account Number
Signed:
Approval:
SO:
Administrative
Signed:
Services Director
City Manager
Credit
$12,448.05
Date
Q O
Dale
City Council Approval: City Clerk Date