HomeMy WebLinkAbout19 - Sale of Bonds for Assessment District 100CITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 19
July 27, 2010
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Administrative Services Department
Tracy McCraner, Administrative Services Director
(949) 644 -3123 or tmccraner @newportbeachca.gov
Dan Matusiewicz, Deputy Administrative Services Director
(949) 644 -3126 or danm @newportbeachca.gov
SUBJECT: Sale of Bonds for Assessment District No. 100
ISSUE:
Authorize the execution and delivery of all legal documents, substantially to form,
necessary to issue bonds to finance the remaining unpaid assessments in Assessment
District 100.
RECOMMENDATION:
1) Adopt Resolution No. 2010- determining the remaining unpaid
assessments for Assessment District No. 100 (13th St./ Balboa Blvd. /Adams St.
/ Ocean Front).
2) Adopt Resolution No. 2010- authorizing the issuance and sale of limited
obligation bonds with respect to Assessment District No. 100 (13th St. / Balboa
Blvd. / Adams St. / Ocean Front); approving the form of the Bond Indenture
providing for the form, execution and issuance of said bonds, approving the form
of the Bond Purchase Contract, the Preliminary Official Statement and the
Disclosure Dissemination Agent Agreement, all pertaining to said bonds; and
authorizing related actions and execution of related documents in respect of the
issuance, sale and delivery of said bonds.
DISCUSSION:
City Council has previously provided for the formation of Assessment District 100
generally bound by 13th St / Balboa Blvd / Adams St / Ocean Front (Assessment District
100), pursuant to the provisions of the Municipal Improvement Act of 1913, and
Sale of Bonds for Assessment District 100
July 27, 2010
Page 2
indicated its intention to provide for the issuance of limited obligation improvement
bonds under and pursuant to the provisions of the Improvement Bond Act of 1915 (Act)
in a principal amount equal to the unpaid assessments of the Assessment District.
On June 8, 2010, Council adopted a resolution approving the Final Engineer's Report,
and among other things approved the undergrounding of the existing overhead and
ground -level utility facilities within the Assessment District Undergrounding Project, and
levying the assessments on the parcels determined to be specially benefited by the
Undergrounding Project, in the amounts set forth in the Final Engineer's Report.
The assessment diagram and the Notice of Assessment associated with Assessment
District 100 was then recorded in the official records of the County Recorder of the
County of Orange, thereby establishing liens upon the respective parcels upon which
the individual assessments were levied to secure payment of said assessments as
provided by the Act.
The amount of assessments levied on parcels within Assessment District 100, totaled
$4,345,000. On June 9, 2010, the assessment amounts were recorded in the official
records of the Orange County Recorder thereby establishing liens upon the respective
parcels to secure payment of said assessments as provided by the Act
On June 10, 2010, a thirty -day cash collection period was opened to afford property
owners the opportunity to prepay all or any portion of the assessment levied upon the
parcel or parcels at a 7% discount since certain prepaid financing costs could otherwise
be avoided if bond financing was not required as follows:
Bond Reserve 6.00%
Underwriter's Discount 1.00%
Total 7000%
The period of time within which property owners within the Assessment District could
prepay the assessment expired on July 12, 2010. Cash payments totaling $1,557,853
were received, representing 39% of the discounted value of the assessments. The sum
of the cash payments, together with the $117,141 assumed financing cost previously
included in the total assessment, brings the remaining amount of unpaid assessments to
$2,670,006 as depicted below.
Assessment levied — cost of improvement project and financing
$4,345,000
City received — prepaid contributions from property owners
$1,557,853
Exercised financing discount
$117,141
Remaining unpaid assessment amount
$2,670,006
Attached to the Resolution Determining Remaining Unpaid Assessments, the
Administrative Services Department has executed and submitted to Council a
Sale of Bonds for Assessment District 100
July 27, 2010
Page 3
Certificate of Unpaid Assessments, certifying to Council that the amount of unpaid
assessments is $2,670,006.
The City Clerk will cause the preparation and recording of an appropriate addendum to
the notice of assessment which was recorded on June 9, 2010, to reflect (a) the
discharge of lien respecting those parcels for which the assessment has been fully
prepaid and discharged, and (b) the reduced amount of the assessment for those
parcels for which the assessment has been partially prepaid.
The City Clerk is then also directed to transmit a certified copy of this resolution to the
Orange County Auditor, and the Orange County Auditor is requested to proceed in
accordance with Section 8682 of the California Streets and Highways Code in the
collection of installments of principal, interest and administrative costs respecting these
unpaid assessments on the secured property tax assessment roll of the County of
Orange, commencing with the 2010 -2011 tax roll.
Under the provision of the Improvement Bond Act of 1915, the City is empowered to
provide for the issuance, sale and delivery of limited obligation improvement bonds in
the principal amount equal to the amount of the remaining unpaid assessments of
$2,670,000 (rounded to the nearest $100).
If Council wishes to proceed with financing of the remaining unpaid assessments, City
Council should adopt a second resolution to authorize the issuance of bonds pursuant
to the Act, designated the "City of Newport Beach Assessment District No. 100," in a
principal amount equal to the amount of the remaining unpaid assessments, to
complete the funding for the Undergrounding Project, to fund a reserve fund and to pay
incidental costs of the Assessment District proceedings and the costs of issuance for
the Bonds.
The second resolution would also authorize the form, execution and delivery of all
documents necessary to issue and deliver the bonds including:
(1) a Bond Indenture, which sets forth the terms and provisions of which the
Bonds are to be issued and administered;
(2) a Bond Purchase Contract, under the terms of which, among other things,
the City agrees to sell and Southwest Securities, Inc. (the "Underwriter') agrees to
purchase the Bonds;
(3) a Preliminary Official Statement, which describes the Bonds, the
Assessment District, the Undergrounding Project and related matters; and
(4) a Disclosure Dissemination Agent Agreement for the purpose of making
undertakings to provide certain annual financial information and notice of certain
prescribed events, if deemed material, as required for compliance with Rule 15c2 -12 of the
United States Securities and Exchange Commission.
Sale of Bonds for Assessment District 100
July 27, 2010
Page 4
Finally, the second resolution authorizes the officers of the City to take any and all
actions necessary to execute and deliver any and all documents which they may deem
necessary or advisable in consultation with the City Attorney, Bond Counsel and
Disclosure Counsel in order to carry out the intent of this resolution in general and the
Bond Purchase Contract in particular.
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).
Fundina 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:
Dan Matusiewicz
Deputy Director
Administrative Services
Submitted by:
racy Mc ner
Director
Administrative Services Department
Attachments: District 100 Boundary Maps
Resolution Determining Remaining Unpaid Assessments
Resolution Authorizing Sale of Bonds and related documents
Bond Indenture
Bond Purchase Contract
Preliminary Official Statement
Disclosure Dissemination Agent Agreement
RESOLUTION NO. 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
NEWPORT BEACH DETERMINING REMAINING UNPAID
ASSESSMENTS FOR ASSESSMENT DISTRICT NO. 100
(13TH STBALBOA BLVD /ADAMS ST /OCEAN FRONT)
The City Council of the City of Newport Beach determines, orders and resolves as
follows:
SECTION 1. RECITALS.
a. This City Council (this "Council ") of the City of Newport Beach (the "City ") has
previously provided for (a) the formation of its Assessment District No. 100 (13th St/Balboa
Blvd/Adams St/Ocean Front) (the "Assessment District "), under and pursuant to the provisions
of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways
Code) (the "1913 Act "), and (b) the issuance of limited obligation improvement bonds (the
"Bonds ") pursuant to the provisions of the Improvement Bond Act of 1915 (Division 10 of the
Streets and Highways Code; hereafter the "1915 Act "); and
b. On June 8, 2010, this Council adopted its resolution approving the Final
Engineer's Report, dated May 26, 2010, as identified in said resolution (the "Final Engineer's
Report"), among other things approving and ordering implementation of the undergrounding of
the existing overhead utility facilities (the " Undergrounding Project ") located within the public
rights -of -way and easements and within or adjacent to the Assessment District, and levying the
assessments on the parcels determined to be specially benefited by the Undergrounding Project,
in the amounts set forth in the Final Engineer's Report; and
C. Thereafter, on June 9, 2010, the Notice of Assessment and the assessment
diagram for the Assessment District were recorded in the official records of the Orange County
Recorder, and the individual assessments thereby became a lien upon the respective individual
parcels upon which they had been levied; and
d. On June 11, 2010, a notice of assessment was mailed to the owner or owners of
each parcel assessed, advising that all or any portion of each such assessment could be paid in
cash, without interest and at a discount of seven percent (7 %) (representing avoided financing
costs respecting bond discount and bond reserve fund), with a deadline of July 12, 2010, for
receipt of such cash payments at the office of the Administrative Services Director of the City
(the "Administrative Services Director "); and
C. Based upon the completion of these steps, this Council is advised by the
Administrative Services Director that the City will be able to post an installment on account of
unpaid assessments on the 2010 -2011 property tax roll of the County of Orange, providing for
payment of the debt service on the Bonds on March 2 and September 2, 2011; and
f. Following the close of the cash payment period on July 12, 2010 the
Administrative Services Director prepared and submitted to the City Clerk of the City (the "City
Clerk ") a Certificate Respecting Paid and Unpaid Assessments, a copy of which certificate is
attached to this resolution as Exhibit A and by this reference incorporated herein, certifying that
the amount of unpaid assessments, as revised to reflect the cash payments received from property
owners wishing to prepay their respective assessments, in whole or in part, without interest, and
rounded to the nearest dollar, is $2,670,006; and
g. By this resolution, this Council wishes to establish said amount of unpaid
assessments, rounded down to the nearest $100, as the principal amount of limited obligation
improvement bonds to be authorized and issued in these proceedings upon the security of said
unpaid assessments.
SECTION 2. RECITALS TRUE AND CORRECT.
The foregoing recitals are true and correct, and this Council so finds and determines.
SECTION 3. DETERMINATION OF AMOUNT OF UNPAID ASSESSMENTS.
This Council hereby finds and determines that, as set forth in the attached certificate, and
there being no information to the contrary, the amount of assessments remaining unpaid in the
Assessment District, when rounded to the nearest dollar, is the amount set forth in said
certificate, namely $2,670,006, and by separate resolution, this Council will authorize the
issuance of the Bonds in said principal amount, rounded down to the nearest $100.
SECTION 4. RECORDATION OF ADDENDUM TO NOTICE OF ASSESSMENT.
The City Clerk is authorized and directed to cause the preparation and recording of an
appropriate addendum to the Notice of Assessment which was recorded on June 9, 2010, to
reflect (a) the discharge of lien respecting those parcels for which the assessment has been fully
prepaid and discharged and (b) the reduced amount of the assessment for those parcels for which
the assessment has been partially prepaid.
SECTION 5. TRANSMITTAL TO COUNTY AUDITOR.
The Clerk is hereby directed to transmit a certified copy of this resolution to the Orange
County Auditor, and the Orange County Auditor is requested to proceed in accordance with
Section 8682 of the California Streets and Highways Code in the collection of installments of
principal, interest and administrative costs respecting these unpaid assessments on the secured
property tax assessment roll of the County of Orange, commencing with the 2010 -2011 tax roll.
SECTION 6. EFFECTIVE DATE OF RESOLUTION.
This resolution shall take effect immediately upon its adoption.
1469509.2
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the
City of Newport Beach held on 27h day of July, 2010.
Mayor
ATTEST:
City Clerk
1469509.2 3
EXHIBIT A
CERTIFICATE RE
PAID AND UNPAID ASSESSMENTS
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST/BALBOA BLVD /ADAMS ST /OCEAN FRONT)
I HEREBY CERTIFY that the Final Engineer's Report for Assessment District
No. 100 (1P St /Balboa Blvd/Adams St/Ocean Front) (the "Assessment District "), together with
the attached list of Unpaid Assessments, correctly reflect the following:
(1) The total amount of assessments levied on parcels within the Assessment
District on June 8, 2010, and thereafter recorded in the official records of the Orange County
Recorder on June 9, 2010, is $4,345,000.
(2) The total amount of cash payments received by the City from property
owners on account of assessments levied in the Assessment District, prior to expiration of the
cash payment period on July 12, 2010, has resulted in a total reduction in the amount of unpaid
assessments of $1,674,994 (when rounded to the nearest dollar).
(3) After deducting the amount set forth in paragraph 2 above on account of
cash payments received during the cash payment period, the amount of assessments remaining
unpaid in the Assessment District is $2,670,006.
Executed at Newport Beach, California, on July 19, 2010.
-�A CUB,
Tracy Mcd er
Administra ' e Services Director
City of Newport Beach
Attach — List of Unpaid Assessments
1469509.3
1469509.2 4
City of Newport Beach
Assessment District 100
List of Unpaid Assessments
Assessment
No.
APN
Owner
Amount of
Unpaid
Assessment
2
939 -71 -011
PEARSON DARWIN
$8,860.83
3
939 -71 -012
PEARSON DARWIN K
$8,860.83
4
047 - 241 -02
CENOZ MARILUE K
$17,721.68
5
047 - 241 -03
MC ANINCH JEFF & JENIFER
$17,721.68
6
047 - 241 -04
O'NEAL HAROLD L
$17,721.68
7
047 - 241 -05
BLANCHARD OMAR LLOYD
$17,721.68
8
939 -71 -021
MILLS CRAIG A & KAREN C
$8,860.83
9
939 -71 -022
CARRINGTON HIRAM D III
$8.860.83
7,721.68
7.721.68
18
047- 241 -24
LOVELL BARBARA
$20,490.68
20
047 - 241 -21
MILLER JOHN W
$20,490.68
21
047 - 241 -20
RYAN MICHAEL J
$20,490.68
22
047 - 241 -19
CEFALIA CATHY LYNN & JAMES J
$20,490.68
24
047 - 241 -17
SALTMAN MICHAEL A
$20,490.68
26
047 - 241 -15
OBERMAN DENYS H
$20,490.68
27
047 - 241 -14
LEAR MARY L
$41,535.18
28
047 - 251 -01
MCKENZIE TERENCE JAMES
$17,721.68
29
047 - 251 -02
LEVENTHAL THEODORE MARK
$17,721.68
30
047 - 251 -03
VYN JOHN & CAROLYN
$17,721.68
32
047 - 251 -05
SISCO GEORGE WILLIAM
$17,721.68
33
047 - 251 -06
DE ROBERTIS MARY MORO & MICHELE A
$17,721.68
36
047 - 251 -08
CANCELLIERI JACK A
$34,889.54
37
047 - 251 -09
DARLING COLLEEN E
$17,721.68
38
047 - 251 -10
HSIEH TEANGTING JOHN
$17,721.68
39
047 - 251 -11
ZIERES CHARLES R JR & JEANETTE L
$17,721.68
40
047 - 251 -12
MOYER NORMAN EDWARD
$17,721.68
41
047- 251 -23
QUARRE CONSTANCE C
$20,490.68
43
047 - 251 -21
BLEVINS CAROLYN R
$20,490.68
45
047 - 251 -19
RIDDLE RICHARD ALLEN
$20,490.68
46
047 - 251 -18
CHERYL TROSKY
$20,490.68
47
047 - 251 -17
SELLIER VICTOR F $20,490.68
48
047 - 251 -16
HANLEY MARY E $20,490.68
49
047 - 251 -15
AVAKIAN JACK $20,490.68
54
047 - 252 -03
CARLSON CLARENCE A $17,721.68
55
047- 252 -04
STILES CHARLES JAMES $17,721.68
56
047- 252 -05
ALLEN MATTHEW $17,721.68
57
047 - 252 -06
CROSBY DONALD $17,721.68
58
047 - 252 -07
ENSMINGER DAVID $17,721.68
59
047 - 252 -08
ENSMINGER DAVID $34,889.54
60
047 - 252 -09
SCOUT VENTURES LLC $17,721.68
61
047 - 252 -10
SUDBECK RODNEY $17,721.68
62
047 - 252 -11
ROSTEN DAVID $17,721.68
66
047 - 252 -24
WILHELM ROBERT U
Amount of
Assessment
047- 252 -23
CORKETT THOMAS C
Unpaid
No.
APN
Owner
Assessment
63
047- 252 -12
TRAVIS WILLIAM H
$17,721.68
64
047 - 252 -13
BACA JUDY J
$3,505.57
65 _
047- 252 -14
DEWEY STEVEN R II & LISE P
$7,199.42
66
047 - 252 -24
WILHELM ROBERT U
$22,705.89
67
047- 252 -23
CORKETT THOMAS C
$22,705.89
68
047 - 252 -22
LYNCH JAMES B
$22,705.89
70
047- 252 -20
SALAM ABDUL
$22,705.89
71
047 - 252 -19
GAUGHAN JOHN
$22,705.89
72
047 - 252 -18
TAVAGLIONE JACQUELINE
$17,355.89
73
047 - 252 -17
BORDIER ERNEST P JR
$22,705.89
74
047 - 252 -16
HENN MICHAEL F
$22,705.89
76
047- 281 -01
SHAFER PATRICIA A
$17,721.68
77
047 - 281 -02
WOODWORTH FRED L
$26,582.51
78
047 - 281 -03
WINTER JANET P
$26,582.51
81
047 - 281 -06
LUFF WILLIAM E JR
$17,721.68
83
047 - 281 -25
GOLDBRUNNER PETER R
$17,721.68
84
047 - 281 -08
MOHAWK PROPERTIES
$17,721.68
85
047- 281 -09
QUILLEN CHARLES A
$17,721.68
86
047- 281 -10
VINES THERON JR & GENEIL
$17,721.68
87
047 - 281 -11
BUTLER MARILYN K
$17,721.68
88
047 - 281 -12
KLOSE JOAN L
$17,721.68
89
047 - 281 -23
SCHULER BECKY
$22,705.89
90
047- 281 -22
FRIEDMAN JERALD $22,705.89
91
047 - 281 -21
POPE WILLIAM & LINDA $22,705.89
93
047- 281 -19
REGAN SARA C $22,705.89
94
047 - 281 -18
LAINER MARK $22,705.89
95
047 - 281 -17
POWELL CYNTHIA S $21,598.28
96
047- 281 -16
SILVERMAN WILLIAM M $21,044.49
97
047- 281 -15
HEYDORFF JOHN F $20,490.68
98
047 - 281 -14
BARMAR $19,383.08
99
047 - 281 -13
MC MILLAN JACK W $18,275.48
Amount of
Assessment Unpaid
No. APN Owner Assessment
169
048 - 024 -13
KNIGHT PAULA H
$11,629.85
172
048- 024 -11
POLITISKI NOREEN S
$13,291.26
174
048 - 073 -02
REID CHARLES K
$11,629.85
181
048 - 073 -18
MONACHINO MICHAEL
$11,629.85
183
048- 073 -16
HARRIS MCCLELLAN III & KATHRYN AMSTATER
$11,629.85
186
048 - 073 -13
SCHWARY PATRICIA L
$14,398.86
188
048 - 073 -28
DEAN TIMOTHY J
$11,629.85
189
048- 073 -27
FARRELL RICHARD C
$11,629.85
195
048 - 073 -12
RICHARDSON KIMM A
$13,845.06
196
048 - 074 -01
REMLEY CHARLES A JR
$11,629.85
197
048- 074 -02
WALSH KEVIN M
$11,629.85
198
048 - 074 -03
HOOK MARGARET ANN
$11,629.85
200
048- 074 -05
GOETHALS C M
$11,629.85
201 048 - 074 -23 COOPER WILLIAM L $5,851.85
202
048- 074 -22
SORBORG ENTERPRISES
$11,629.85
203
048 - 074 -21
NEAL JEFFERY B & ERIN M
$11,629.85
204
048 - 074 -20
BEACH DAVID F
$11,629.85
208
048- 074 -16
CARLSON KENNETH E
$11,629.85
209
048 - 074 -15
SHIELD STEVEN C
$11,629.85
210
048 - 074 -14
MORRISON TED E
$17,167.88
211
048- 074 -06
GAGNE ELBRIDGE J & BERNA M
$11,629.85
214
048 - 074 -27
CLOSE RICHARD & SALLY
$11,629.85
215
048- 074 -09
GWINUP WILLIAM DUMONT GRANT
$11,629.85
216
048 - 074 -10
NELSON JOEL L
$11,629.85
221
048 - 081 -21
WINDSOR -TOWNE $23,813.50
224
048- 081 -27
BOWERS BUNNY C $13,291.26
226
048 - 081 -16
MCLAUGHLIN THOMAS G $13,291.26
227
048- 081 -19
MC LAUGHLIN THOMAS G $13,291.26
228
048 - 081 -18
KALATSCHAN JIM KARAPET $13,291.26
229
048 - 081 -06
COY JOAN D $13,291.26
LANG SHEILA I
235 048- 081 -11 HARBESON JAMES WILLIAM $13,291.26
236 048 - 081 -10 COONY EDMUND P $13.291.26
Assessment
No.
APN
Owner
Amount of
Unpaid
Assessment
239
048 - 081 -23
HAMILTON JAMES T & MARGARET SHANNON
$13,291.26
241
048- 082 -01
HANADA BOBBY & LINDA
$13,291.26
246
048 - 082 -11
HALUCK CATHERINE K
S1329126
251
048 - 082 -06
MALCOLM ROBERT PARTON
$13,291.26
255
048 - 121 -01
DOOSTMARD ESMAIEL
$34,889.54
256
048 - 121 -02
WOOD DENNIS C
$16,060.27
257
048- 121 -03
EUBANKS MICHAEL ALAN
$16,060.27
259
048 - 121 -05
HARRIMAN ANNE S
$16,060.27
261
048 - 121 -07
HORMANN SHARON LYNN & GREGORY ALLEN
$16,060.27
262
048 - 121 -20
WAH ALLEN
$5,460.50
263
048 - 121 -21
XENOS JANE J
$3,212.06
264
048 - 121 -19
GUCCIARDO JAMES F
$17,167.88
265
048 - 121 -18
LUCAS MARK M & CINDY R
$16,060.27
267
048 - 121 -15
DWYER RICHARD E
$16,060.27
268
932 -16 -029
MESSERSCHMITT JOHN A
$7,753.23
269
932 -16 -030
TILLERCO LLC
$7,753.23
270
048 - 121 -13
MARTIN ROBERT LOWELL JR & VIRGINIA LOUISE
$16,060.27
271
048- 121 -12
LUKEN BARBARA C
$16,060.27
272
048 - 121 -11
MUTH JAMES T II
$16.060.27
RESOLUTION NO. 2010-
A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF NEWPORT BEACH AUTHORIZING THE ISSUANCE
AND SALE OF LIMITED OBLIGATION IMPROVEMENT BONDS
OF THE CITY WITH RESPECT TO ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT); APPROVING
THE FORM OF THE BOND INDENTURE, PROVIDING FOR THE
FORM, EXECUTION AND ISSUANCE OF SAID BONDS; APPROVING
THE FORM OF THE BOND PURCHASE CONTRACT, THE
PRELIMINARY OFFICIAL STATEMENT, AND THE DISCLOSURE
DISSEMINATION AGENT AGREEMENT, ALL PERTAINING TO SAID
BONDS; AND AUTHORIZING RELATED ACTIONS AND EXECUTION
OF RELATED DOCUMENTS IN RESPECT OF THE ISSUANCE, SALE
AND DELIVERY OF SAID BONDS
The City Council of the City of Newport Beach determines, orders and resolves as
follows:
SECTION 1. RECITALS.
a. This City Council (this "Council ") of the City of Newport Beach (the "City"), by
proceedings duly had and taken, previously provided for the formation of itsAssessment District
No. 100 (13th St/Balboa Blvd /Adams St/Ocean Front) (the "Assessment District "), under and
pursuant to the provisions of the Municipal Improvement Act of 1913 (Division 12 of the
California Streets and Highways Code), and indicated its intention to provide for the issuance of
limited obligation improvement bonds under and pursuant to the provisions of the Improvement
Bond Act of 1915 (Division 10 of said Streets and Highways Code; hereafter the "Act ") in a
principal amount equal to the unpaid assessments of the Assessment District; and
b. On June 8, 2010, this Council adopted its resolution approving the Final
Engineer's Report, as identified in said resolution (the "Final Engineer's Report"), and among
other things approving and ordering implementation of the undergrounding of the existing
overhead and ground -level utility facilities (the " Undergrounding Project ") within the
Assessment District, and levying the assessments on the parcels determined to be specially
benefited by the Undergrounding Project, in the amounts set forth in the Final Engineer's Report;
and
C. The assessment diagram and the Notice of Assessment respecting the Assessment
District were thereafter recorded in the official records of the County Recorder of the County of
Orange, thereby establishing liens upon the respective parcels upon which the individual
assessments were levied to secure payment of said assessments as provided by the Act; and
d. The period of time within which property owners could, if they wished to do so,
prepay all or any portion of the assessment levied upon the parcel or parcels owned by such
property owners within the Assessment District expired on July 12, 2010, and the Administrative
Services Director of the City has executed and submitted to this Council at its July 27th meeting
a Certificate Respecting Paid and Unpaid Assessments, certifying to this Council that the amount
of unpaid assessments, when rounded to the nearest dollar, is $2,670,006, and this Council, by
separate resolution adopted this same date, has determined on the basis of said Certificate
Respecting Paid and Unpaid Assessments, that the amount of unpaid assessments is $2,670,006;
and
C. The City is empowered under the provisions of the Act to provide for the
issuance, sale and delivery of limited obligation improvement bonds upon the security of the
unpaid assessments and in a principal amount which as nearly as practicable is equal to the
amount of the unpaid assessments; and
f. This Council wishes by this resolution to authorize the issuance of a series of
bonds, under and pursuant to the Act, to be designated the "City of Newport Beach Assessment
District No. 100 (13th St /Balboa Blvd /Adams St/Ocean Front) Limited Obligation Improvement
Bonds" (the "Bonds "), in a principal amount equal to the amount of the unpaid assessments,
rounded down to the nearest $100, namely $2,670,000, to complete the funding for the
Undergrounding, to fund a reserve fund and to pay incidental costs of the Assessment District
proceedings and the costs of issuance for the Bonds; and
g. The City has determined that all things necessary to make the Bonds, when
authenticated and issued as provided in that certain Bond Indenture (the "Bond Indenture "),
dated as of August 1, 2010, between the City and U.S. Bank National Association, as paying
agent (the "Paying Agent'), the valid, binding and legal obligations of the City according to the
import thereof and hereof have been done and performed; and
h. In furtherance of implementing the financing, there have been filed with the City
Clerk and presented to this meeting for consideration and approval by this Council the following
documents:
(1) a Bond Indenture, under the terms and provisions of which the Bonds are
to be issued and administered;
(2) a Bond Purchase Contract, under the terms of which, among other things,
the City agrees to sell and Southwest Securities, Inc. (the "Underwriter ") agrees to
purchase the Bonds;
(3) a Preliminary Official Statement, describing the Bonds, the Assessment
District, the Undergrounding Project and related matters; and
(4) a Disclosure Dissemination Agent Agreement for the purpose of making
undertakings to provide certain annual financial information and notice of certain
prescribed events, if deemed material, as required for compliance with Rule 15c2 -12 of
the United States Securities and Exchange Commission; and
i. Being fully advised in the matter of the financing, this Council wishes to proceed
with implementation of said financing.
2
SECTION 2. ISSUANCE OF BONDS AUTHORIZED.
Pursuant to the Act, the Bonds shall be issued in the aggregate principal amount equal to
$2,670,000; provided, however, that (a) the bond discount, consisting of the net amount of
Underwriter's discount, less original issue discount, if any, plus original issue premium, if any,
shall not exceed the amount set forth in the Final Engineer's Report, as adjusted to reflect the
discounted cash payments made on account of assessments during the cash payment period,
(b) the maximum net interest rate on any maturity shall not exceed 6.50 %, and (c) the last
maturity shall not extend beyond the year 2025.
The Bonds may be issued as either (1) traditional tax- exempt Bonds or (2) direct payment
Build America Bonds ( "Direct Payment BABs "), to be structured and issued as authorized by
and pursuant to the American Reinvestment and Recovery Act of 2009 (the "Recovery Act"), or
any combination of the two, as shall be determined by the Administrative Services Director of
the City in consultation with the Underwriter to be in the best interest of the City. As used in the
foregoing paragraph, the term "net interest rate" shall mean, with respect to Direct Payment
BABs, if issued as authorized by this resolution, the interest rate payable to holders of the Bonds
less the rate at which the direct payment to the City, as issuer of the Bonds, is determined.
SECTION 3. FORM OF BOND INDENTURE APPROVED.
The form and substance of the Bond Indenture is hereby approved. The Administrative
Services Director or designee thereof (all references hereafter to the "Administrative Services
Director" shall be deemed to include any designee thereof) is hereby authorized and directed to
execute and deliver the Bond Indenture on behalf of the City in substantially said form, with
such changes therein as the Administrative Services Director may require or approve in
consultation with Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation,
Bond Counsel to the City for the Assessment District and the Bonds ( "Bond Counsel "), such
approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 4. FORM OF BOND PURCHASE CONTRACT APPROVED.
The form and substance of the Bond Purchase Contract is hereby approved. The
Administrative Services Director is hereby authorized and directed to execute and deliver the
Bond Purchase Contract on behalf of the City in substantially said form, with such changes
therein as the Administrative Services Director may require or approve in consultation with
McFarlin & Anderson LLP, Disclosure Counsel to the City for the Bonds ( "Disclosure
Counsel "), such approval to be conclusively evidenced by the execution and delivery thereof.
SECTION 5. FORM OF PRELIMINARY OFFICIAL STATEMENT APPROVED;
OTHER ACTIONS RESPECTING THE PRELIMINARY OFFICIAL STATEMENT AND
FINAL OFFICIAL STATEMENT AUTHORIZED.
a. The form and substance of the Preliminary Official Statement is hereby approved.
The Mayor or designee thereof (all references hereafter to the "Mayor" shall be deemed to
include any designee thereof, including but not limited to the Mayor Pro Tern and the
Administrative Services Director) is authorized to execute a certificate respecting the finality of
9
the Preliminary Official Statement and to execute the final Official Statement to be derived
therefrom.
b. The Mayor is authorized to approve corrections and additions to the Preliminary
Official Statement by supplement or amendment thereto, by appropriate insertions, or otherwise
as appropriate, provided that such corrections or additions shall be regarded by the Mayor in
consultation with Disclosure Counsel as necessary to cause the information contained therein to
conform to facts material to an informed investment decision respecting the Bonds or to the
proceedings of this Council or that such corrections or additions are in form rather than in
substance.
C. The Underwriter is authorized to distribute said Preliminary Official Statement and
the final Official Statement to be derived therefrom in connection with sale and delivery of the
Bonds.
SECTION 6. FORM OF DISCLOSURE DISSEMINATION AGENT AGREEMENT
APPROVED.
The form and substance of the Disclosure Dissemination Agent Agreement is hereby
approved. The Administrative Services Director is hereby authorized and directed to execute
and deliver the Disclosure Dissemination Agent Agreement on behalf of the City in substantially
said form, with such changes as may be approved by the Administrative Services Director in
consultation with Disclosure Counsel, such approval to be conclusively evidenced by such
execution and delivery.
SECTION 7. GENERAL AUTHORIZATION RESPECTING OTHER ACTIONS.
The officers of the City are hereby authorized and directed, jointly and severally, to do
any and all things, to take such actions, and to execute and deliver any and all documents,
including but not limited to agreements, certificates and opinions which they may deem
necessary or advisable in consultation with Bond Counsel and Disclosure Counsel in order to
carry out, give effect to and comply with the terms and intent of this resolution in general and the
Bond Purchase Contract in particular. Any such actions heretofore taken by such officers are
hereby ratified, confirmed and approved.
SECTION 8. EFFECTIVE DATE OF RESOLUTION.
This resolution shall be effective immediately upon adoption.
PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the
City of Newport Beach held on the 27`h day of July, 2010.
ATTEST:
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Mayor
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May12010 AssessDistdct_100_De!all.nud
BOND INDENTURE
by and between
City of Newport Beach,
California
and
U.S. Bank National Association,
as Paying Agent
Dated as of August 1, 2010
City of Newport Beach
Assessment District No. 100
(13th St/Balboa Blvd /Adams St /Ocean Front)
Limited Obligation Improvement Bonds
TABLE OF CONTENTS
Page
SECTION 1.
Authorization, Designation and Amount ............................... ...............................
1
SECTION 2.
Issuance; Unpaid Assessments; No Parity Bonds .................. ...............................
1
SECTION 3.
Alternative Procedure for Advance Payment ........................ ...............................
I
SECTION 4.
Registered Bonds; Denominations and Book -Entry Only .... ...............................
1
SECTION 5.
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
SECTION11.
Exchange of Bonds .................................................................... ..............................4
SECTION 12.
Books of Registration ............................................................... ...............................
4
SECTION 13.
Execution of Bonds ................................................................... ...............................
5
SECTION 14.
Authentication ........................................................................... ..............................5
SECTION 15.
Ownership of Bonds .................................................................. ..............................5
SECTION 16.
Mutilated, Destroyed, Stolen or Lost Bonds .......................... ...............................
5
SECTION 17.
Cancellation of Bonds ............................................................... ..............................5
SECTION 18.
Application of Bond Proceeds .................................................. ..............................6
SECTION 19.
Creation of Funds ..................................................................... ...............................
6
SECTION20.
Investments ................................................................................ ..............................8
SECTION 21.
No City Liability ........................................................................ ..............................9
SECTION 22.
Covenant for Superior Court Foreclosure .............................. ..............................9
SECTION 23.
Covenant to Maintain Tax- Exempt Status ............................. ..............................9
SECTION 24.
Order to Print and Authenticate Bonds ............................... ...............................
10
SECTION 25.
Paying Agent ........................................................................... ...............................
10
SECTION 26.
Liability of Paying Agent ....................................................... ...............................
11
SECTION 27.
Provisions Constitute Contract ............................................. ...............................
11
SECTION 28.
Unclaimed Funds .................................................................... ...............................
12
SECTION 29.
Modification or Amendment to this Indenture ................... ...............................
12
SECTION 30.
Notices to and Demands on City and Paying Agent ............ ...............................
12
SECTION 31.
Partial Invalidity .................................................................... ...............................
13
SECTION32.
Applicable Law ....................................................................... ...............................
13
SECTION33.
Conflict with Act ...................................................................... .............................13
SECTION 34.
Payment on Business Day ...................................................... ...............................
13
SECTION35.
Continuing Disclosure ............................................................ ...............................
13
SECTION36.
Defeasance ................................................................................. .............................13
SECTION37.
Counterparts ........................................................................... ...............................
15
EXHIBIT A MATURITY
SCHEDULE ................................................................... ............................A
-1
EXHIBIT B BOOK -ENTRY BONDS PROVISIONS ............................................ ............................B
-1
EXHIBIT C FORM OF BOND ............................................................................. ...............................
C -1
EXHIBIT D AUTHORIZED INVESTMENTS ...................................................... ............................D
-1
i
BOND INDENTURE
This Bond Indenture (this "Indenture "), dated as of August 1, 2010, 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. 100 (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 of the State of
California, the City does hereby authorize the issuance of a bond or bonds to represent the unpaid assessments
within the Assessment District, rounded down to the nearest $100, in an aggregate principal amount of
$ , to be designated as the "City of Newport Beach Assessment District No. 100 (13th St/Balboa
Blvd /Adams St/Ocean Front) Limited Obligation Improvement Bonds" (the "Bonds ").
SECTION 2. Issuance; Unpaid Assessments; No Parity Bonds. The City shall determine the
assessments that are unpaid and the aggregate amount thereof and issue, sell and deliver bonds therefor as
authorized by the Act. The Bonds shall be secured by, and the City does hereby pledge, (1) the unpaid
assessments within the Assessment District and (2) the amounts held in the Redemption Fund and the Reserve
Fund maintained pursuant to this Indenture and any earnings thereon (except to the extent earnings are to be
transferred to the Rebate Fund under this Indenture). Except for refunding bonds, if any, no additional bonds
or other obligations will be issued or incurred that will be secured by or payable from the assessments of the
Assessment District.
SECTION 3. Alternative Procedure for Advance Payment. The provisions of Part 11.1 of the Act,
providing an alternative procedure for the advance payment of assessments and the calling of all or a portion
of the Bonds, shall apply.
SECTION 4. Registered Bonds; Denominations and Book -Entry Only. The Bonds shall be issued only
as fully- registered Bonds in the denomination of $5,000, or any integral multiple thereof, except for one Bond
(which Bond, if a series of Bonds is issued, shall be the Bond maturing in the first year of maturity) which
shall include the amount by which the total aggregate principal amount of the Bonds exceeds the maximum
integral multiple of $5,000. Notwithstanding any provisions herein to the contrary, the Bonds shall be
initially issued in book -entry form in accordance with the terms of Exhibit B attached hereto and incorporated
herein by this reference.
SECTION 5. Date of Bonds. All of the Bonds shall be dated as of August _, 2010 (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 2nd of every year, commencing September 2, 2011, 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 2nd and
September 2nd of each year (each, an "Interest Payment Date "), commencing March 2, 2011, 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 owners' addresses as they appear on the Paying Agent's books of registration on the
15th day of the month immediately preceding said Interest Payment Date regardless of whether such day is a
business day (the "Record Date ") or by wire transfer to an account in the United States of America made on
an Interest Payment Date upon written instructions received by the Paying Agent on or before the Record
Date from an owner of $1,000,000 or more in aggregate principal amount of Bonds. Interest shall be
calculated on the basis of a three hundred sixty (360) day year composed of twelve (12) thirty (30) day
months.
Interest on any Bond shall be payable from the Interest Payment Date next preceding the date of
authentication of that Bond, unless (i) the date of authentication is an Interest Payment Date, in which event
interest shall be payable from such date of authentication, (ii) the date of authentication is after aRecord 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 8. 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, 2011, from any source of funds legally available, including, without limitation, the
prepayment of assessments and surplus funds from the Improvement Fund, if any, at the redemption prices
(expressed as a percentage of the principal amount to be redeemed) set forth below, together with accrued
interest to the date of redemption:
Redemption Date
Redemption Price
March 2, 2011 through September 2, 2015 103%
March 2, 2016 and September 2, 2016 102%
March 2, 2017 and September 2, 2017 101%
March 2, 2018 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 of a
maturity date are subject to redemption, the numbers thereof need not be specified; (b) state the date fixed for
redemption; (c) state the redemption price; (d) state the place or places where the Bonds are to be redeemed;
(e) in the case of Bonds to be redeemed only in part, state the portion of the Bond which is to be redeemed;
and (f) state the CUSIP numbers of the Bonds to be redeemed. Such notice shall further state that on the date
fixed for redemption there shall become due and payable on each Bond, or portion thereof called for
redemption, the principal thereof, together with any premium, and interest accrued to the redemption date, and
that from and after such date, interest thereon shall cease to accrue and be payable. At least 30 days but no
more than 45 days prior to the redemption date, the Paying Agent shall mail by registered or certified mail,
postage prepaid, or deliver by personal service, a copy of such notice, to the respective owners of the Bonds
to be redeemed at their addresses appearing on the bond register. The actual receipt by the owner of any
Bond of notice of such redemption shall not be a condition precedent thereto, and failure to receive such
notice shall not affect the validity of the proceedings for the redemption of such Bonds, or the cessation of
interest on the redemption date. A certificate by the Paying Agent that notice of such redemption has been
given as herein provided shall be conclusive as against all parties, and it shall not be open to any Bond owner
to show that he or she failed to receive notice of such redemption.
In addition to the notice described in the foregoing paragraph, such redemption notice shall be given by the
Paying Agent (i) by first class mail, postage prepaid, or (ii) by facsimile transmission, on the same day as the
date of the mailing required by the preceding paragraph, to Southwest Securities, Inc. (the "Underwriter") and
to The Depository Trust Company.
In addition to the foregoing notices, on the same day as the date of the mailing required by the second
paragraph preceding this paragraph, such redemption notice shall be given by the Paying Agent by (i) first -
class mail, postage prepaid, or (ii) facsimile transmission, to the Electronic Municipal Market Access website
(www.emma.msrb. org).
Neither failure to give the notice described in the two immediately preceding paragraphs nor any defect
therein shall in any manner affect the redemption of the Bonds.
(e) Partial Redemption of Bonds. Upon surrender of any Bond to be redeemed in part only, the City shall
execute and the Paying Agent shall authenticate and deliver to the Bond owner, at the expense of the City, a
new Bond or Bonds of authorized denominations equal in aggregate principal amount to the unredeemed
portion of the Bond surrendered with the same interest rate and the same maturity.
(f) Effect of Notice and Availability of Redemption Money. Notice of redemption having been duly
given, as provided in this Section 9, and the amount necessary for the redemption having been made available
for that purpose and being available therefor on the date fixed for such redemption:
(1) The Bonds, or portions thereof, designated for redemption shall, on the date fixed for
redemption, become due and payable at the redemption price thereof as provided in this Indenture, anything
in this Indenture or in the Bonds to the contrary notwithstanding;
(2) Upon presentation and surrender thereof at the Principal Office of the Paying Agent, such
Bonds shall be redeemed at the specified redemption price;
(3) From and after the redemption date, the Bonds or portions thereof so designated for
redemption shall be deemed to be no longer outstanding and such Bonds or portions thereof shall cease to
bear further interest; and
(4) From and after the date fixed for redemption, no owner of any of the Bonds or portion thereof
so designated for redemption shall be entitled to any of the benefits of this Indenture, or to any other rights,
except with respect to payment of the redemption price and interest accrued to the redemption date from the
amounts so made available.
(g) Bonds Are Subject to Refunding. The Bonds shall be subject to refunding pursuant to Division 11.5
of the Streets and Highways Code of the State of California.
(h) No Mandatory Call. There shall be no mandatory redemption of the Bonds upon an event or
detem iination 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 duty authorized attorney or legal
representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a
written instrument of transfer in a form approved by the Paying Agent and duly executed by the owner of said
Bonds.
The Paying Agent may require the payment by the Bond owner requesting such transfer of any tax or other
governmental charge required to be paid with respect to such transfer and such charges as provided for in the
system of registration for registered debt obligations.
The Paying Agent may refuse to transfer or exchange either (i) any Bond during the period established by the
Paying Agent for the selection of Bonds for prepayment, or (ii) any Bond which the Paying Agent has
selected for prepayment in whole or in part under the provisions of Section 9 of this Indenture.
Upon any registration of transfer, a new Bond or Bonds shall be authenticated and delivered by the Paying
Agent in exchange for such Bond, in the name of the transferee, in any denomination or denominations
authorized by this Indenture and in an aggregate principal amount equal to the principal amount of such Bond
or principal amount of such Bond or Bonds so surrendered. In all cases in which Bonds shall be exchanged or
transferred, the Paying Agent shall authenticate Bonds in accordance with the provisions of this Indenture.
All Bonds surrendered in such exchange or registration transfer shall forthwith be canceled.
SECTION 11. Exchange of Bonds. Bonds may be exchanged at the Principal Office of the Paying Agent
for a like aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the
payment of any tax or governmental charges, if any, upon surrender and cancellation of the Bond. Upon such
transfer and exchange, a new registered Bond or Bonds of any authorized denomination or denominations of
the same series and maturity for the same aggregate principal amount will be issued to the transferee in
exchange therefor.
The Paying Agent shall not be required to register the exchange of any Bonds during the fifteen (15) days
preceding the selection of any Bonds for redemption prior to the maturity thereof nor with respect to any
Bond which has been selected for redemption prior to the maturity thereof.
SECTION 12. Books of Registration. There shall be kept by the Paying Agent sufficient books for the
registration and transfer of the Bonds and, upon presentation for such purpose, the Paying Agent shall, under
rd
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
Administrative Services Director 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
ILZ
Authorized signatory
SECTION 15. Ownership of Bonds. The person in whose name any Bond shall be registered shall be
deemed and regarded by the Paying Agent and the City as the absolute owner thereof for all purposes and
shall not be affected by any notice to the contrary, and payment of or on account of the principal and
redemption premium, if any, of any such Bond, and the interest on any such Bond, shall be made only to or
upon the order of the registered owner thereof or the owner's legal representative shown on the books of
registration. All such payments shall be valid and effectual to satisfy and discharge the liability upon such
Bond, including the redemption premium, if any, and interest thereon, to the extent of the sum or sums so
paid.
SECTION 16. Mutilated, Destroyed, Stolen or Lost Bonds. In case any Bond secured hereby shall
become mutilated or be destroyed, stolen or lost, the City shall cause to be executed and authenticated a new
Bond of like date and tenor and principal or maturity amount in exchange and substitution for and upon the
cancellation of such mutilated Bond or in lieu of and in substitution for such Bond mutilated, destroyed,
stolen or lost, upon the Bond owner's paying the reasonable expenses and charges in connection therewith,
and, in the case of a Bond destroyed, stolen or lost, the filing by the Bond owner with the Paying Agent and
City of evidence satisfactory to them that such Bond was destroyed, stolen or lost, and of ownership thereof,
and furnishing the Paying Agent and City with indemnity satisfactory to them.
SECTION 17. Cancellation of Bonds. Any Bond paid or redeemed either at or before maturity shall be
canceled upon the payment or redemption of such Bond and shall be delivered to the Paying Agent when such
payment or redemption is made. All Bonds canceled under any of the provisions of this Indenture shall be
destroyed by the Paying Agent, and the Paying Agent shall execute a certificate describing the Bonds so
destroyed and retain said executed certificate in its permanent files for the issue.
SECTION 18. Application of Bond Proceeds. The proceeds of the sale of the Bonds, in the aggregate
amount of $ (being the par amount of the Bonds less the underwriter's discount in the amount of
$ and less /plus original issue discount /premium in the amount of shall be received
by the City and deposited as follows:
(1) S of the sale proceeds, which represents the initial Reserve Requirement (as
defined below), shall be deposited in the Reserve Fund (as defined below) established pursuant to Section 19
(b) hereof, and
(2) $ of the sale proceeds, together with the amount collected by the City as
prepaid assessments, shall be deposited into the Improvement Fund (as defined below) established pursuant
to Section 19 (c) (1) hereof.
SECTION 19. Creation of Funds. The Paying Agent and the City, as applicable, are hereby authorized and
directed to establish the following funds for purposes of collecting assessment installments, making payment
for the hereinafter designated costs and expenses and payment of principal and interest on the Bonds. The
funds to be created are designated and subject to the terms as follows:
(a) Redemption Fund: The Paying Agent is hereby authorized and directed to establish and maintain a
Redemption Fund (the "Redemption Fund ") designated by the name of the Assessment District and to deposit
therein from time to time (i) the amount of the proceeds of the Bonds which represents accrued and
capitalized interest, if any, on the Bonds, (ii) all sums received from the City representing the collection of the
assessments (other than assessments for administrative costs) and the interest thereon, and (iii) any surplus in
the Improvement Fund to the extent as provided below.
There shall be established by the Paying Agent a Prepayment Account as a subaccount within the Redemption
Fund (the "Prepayment Account "). The Paying Agent shall not be required to establish the Prepayment
Account until the time when deposits are required to be made therein. The City shall transfer to the Paying
Agent for deposit in the Prepayment Account all monies received by the City representing the prepayment of
the principal of, and interest and redemption premium on, any Bonds. Such monies shall be applied solely to
the payment of the principal of, and interest and premium on, Bonds to be redeemed prior to maturity
pursuant to the optional redemption provisions of Section 9 of this Indenture.
Except for money received with respect to assessment surcharges for administrative costs, the City shall
transfer or cause to be transferred to the Paying Agent at least five days prior to each Interest Payment Date
all sums received and not previously transferred from the collection of the assessments and any interest
thereon and all sums received for the partial or full prepayment of assessments as required by Streets and
Highways Code Section 8767. Any transfer representing the prepayment of assessments shall be
accompanied by written instructions as to the disposition of such sums to redeem Bonds prior to maturity or
to pay accrued interest on any Bonds to be redeemed.
Principal of and interest on the Bonds shall be paid by the Paying Agent to the registered owners out of the
Redemption Fund to the extent funds on deposit in said Redemption Fund are available therefor. In all
respects not recited herein, said Bonds shall be governed by this Indenture or such other direction of the City
to the Paying Agent in writing given in accordance with the provisions of the Act. The Paying Agent may
conclusively rely upon any statement or certification of the City that any such direction is given by the City in
accordance with the Act. Under no circumstances shall the Bonds or interest thereon be paid out of any other
fund except as provided herein.
(b) Reserve Fund: The City shall create and maintain a special reserve fund for the Bonds (the "Reserve
Fund ") to be designated by the name of the Assessment District. Pursuant to Section 18 of this Indenture, the
Reserve Fund shall be initially funded from a portion of the Bond proceeds in an amount equal to 6% of the
original principal amount of the Bonds, representing the original "Reserve Requirement" (as said term is
defined below). The City shall also deposit in the Reserve Fund funds which represent the proceeds of (i)
payments made to redeem delinquent assessment installments or (ii) the judicial foreclosure sale of parcels
pursuant to Section 22 below, in each case if and to the extent necessary to restore the amount on deposit to
the Reserve Requirement following any advance having been made from the Reserve Fund to the Redemption
Fund as a result of such delinquencies.
Monies in the Reserve Fund shall be applied as follows:
(1) Amounts in the Reserve Fund shall be transferred to the Paying Agent for deposit in the
Redemption Fund if there are insufficient monies in said Redemption Fund to pay principal of and interest on
the Bonds when due. Amounts so transferred shall be repaid to the Reserve Fund from proceeds from the
redemption or foreclosure of property with respect to which an assessment is unpaid and from payments of
the delinquent assessments.
(2) Interest earned on the permitted investment of monies on deposit in the Reserve Fund shall
remain in the Reserve Fund to the extent required to maintain the Reserve Fund at the Reserve Requirement.
Not later than August 30 of each fiscal year, the amount on deposit in the Reserve Fund in excess of the
Reserve Requirement shall be transferred from the Reserve Fund to the Redemption Fund and credited to the
unpaid assessment installments payable during such fiscal year. "Reserve Requirement" shall mean the least
of (i) the maximum annual debt service on the outstanding Bonds, (ii) 125% of the average annual debt
service on the outstanding Bonds, or (iii) 6% of the original principal amount of Bonds (the "Reserve
Requirement "). The City's records utilized to calculate the annual assessment installments on account of
unpaid assessments shall reflect the credits against each of the unpaid assessments in amounts equal to each
parcel's proportionate share of such transfer.
Notwithstanding the above, interest earnings on monies on deposit in the Reserve Fund in excess of the
"yield" on the Bonds, as that term is defined in the Internal Revenue Code of 1986 (the "Code "), shall be
subject to transfer and rebate to the United States Treasury.
(3) Whenever monies in the Reserve Fund, together with available funds in the Redemption
Fund, are sufficient to fully and timely pay and redeem all outstanding Bonds, plus accrued interest thereon,
the money shall be transferred to the Redemption Fund and collection of a corresponding amount of the
remaining unpaid assessments shall cease.
(4) In the event an assessment is prepaid in cash, the City shall credit the prepaid assessment with
a proportionate share of the Reserve Fund and transfer an amount equal to such credit to the Redemption
Fund to be utilized for the advance retirement of Bonds.
(c) Improvement Fund:
(1) General. The City shall create and maintain an improvement fund for the Assessment
District (the "Improvement Fund ") to be designated by the name of the Assessment District.
(2) Project Costs. The monies in the Improvement Fund, including the prescribed portion of
proceeds of sale of the Bonds and the proceeds of assessment prepayments received by the City prior to
issuance and sale of the Bonds, shall be used only for the payment of Project Costs as that term is defined
hereinafter. "Project Costs" shall mean the costs of the conversion of certain overhead electrical and
communication facilities to underground locations, together with appurtenances and appurtenant work in
connection therewith (the "Improvements "), as authorized in the assessment proceedings concluded on June
8, 2010, and any subsequent proceedings, if any, taken by the City Council of the City pursuant to Sections
10350 and following, California Streets and Highways Code, and all incidental costs related thereto, including
but not limited to the costs of issuing the Bonds, all as more particularly described in the Final Engineer's
Report for the Assessment District, dated May 26, 2010, on file in the Office of the City Clerk of the City, as
the Final Engineer's Report may be amended from time to time pursuant to the Municipal Improvement Act
of 1913.
The Administrative Services Director of the City shall be responsible for the safekeeping and investment of
the monies credited to the Improvement Fund. Investment earnings are allocated to the Improvement Fund in
accordance with its proportionate share of equity in the City's pooled cash and investment portfolio. A
negative balance in the Improvement Fund during any period will proportionally reduce the amount of future
investment earnings attributable to the Improvement Fund. Investment earnings apportioned to the
Improvement Fund shall be deemed at all times to be part of the Improvement Fund.
Upon completion of the acquisition and construction of the Improvements, the Superintendent of Streets of
the City shall file a certificate of completion (the "Certificate of Completion ") with the Administrative
Services Director. Any funds remaining in the Improvement Fund following receipt by the Administrative
Services Director of the Certificate of Completion shall constitute surplus ( "Surplus "), and in accordance with
the provisions of Section 5 of Resolution No. 2010 -34, the "Resolution of Intention" for the Assessment
District, adopted by the City Council of the City on April 13, 2010, the Surplus shall be utilized or distributed
in such manner as shall be determined by the City Council for any one or more of the purposes set forth in
Section 5 of said Resolution of Intention.
(d) Rebate Fund: The City shall establish and maintain a "Rebate Fund." Deposits shall be made to the
Rebate Fund only as may be required by and in accordance with the provisions of the Tax Certificate
pertaining to the Bonds. Amounts, if any, on deposit in the Rebate Fund shall be paid to the United States of
America. Notwithstanding any other provisions of this Indenture, all earnings on amounts on deposit in the
Rebate Fund shall remain therein until all amounts payable to the United States of America have been paid.
SECTION 20. Investments. Obligations purchased as investments of monies in any of the funds in which
investments are authorized shall be deemed at all times to be part of such funds. Subject to the restrictions set
forth herein, monies in said funds may from time to time be invested by the Paying Agent, as to money in the
Redemption Fund, at the written direction of the Administrative Services Director 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 details for all investment transactions
made by the Paying Agent hereunder.
SECTION 21. No City Liability. It is hereby further determined and declared that the City will not obligate
itself to advance any available funds from its treasury to cure any deficiency or delinquency which may occur
in the Redemption Fund by failure of property owners to pay annual special assessments. This determination
shall be clearly stated in the title of the Bonds to be issued as authorized and required by Section 8769 of the
Streets and Highways Code of the State of California.
SECTION 22. Covenant for Superior Court Foreclosure. The City will review the public records of the
County of Orange, California, in connection with the collection of the assessment installments not later than
August 1 st 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 1st of each year, and will prosecute diligently such foreclosure proceedings to judgment and
judicial foreclosure sale; provided, however, the commencement of any foreclosure action may be deferred in
the sole discretion of the City if, and only so long as, the amount in the Reserve Fund is not less than seventy
percent (70 %) of the Reserve Requirement.
Upon the redemption or sale of the real property responsible for any such delinquent assessment installment,
the City will apply the net proceeds thereof to: (a) first 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) second disburse the balance, if any, 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 Administrative Services Director is hereby
instructed to cause Bonds, in form substantially similar to Exhibit C attached hereto, to be prepared, and to
proceed to cause said Bonds to be authenticated and delivered to an authorized representative of the
Underwriter, upon payment of the purchase price as set forth in the accepted proposal for the sale of Bonds.
SECTION 25. Paying Agent. The City hereby appoints U.S. Bank National Association, and U.S. Bank
National Association hereby accepts appointment, as Paying Agent for the Bonds. The Paying Agent is
hereby authorized to and shall mail or wire transfer interest payments to the Bond owners, select Bonds for
redemption, give notice of redemption of Bonds, maintain the bond register and maintain and administer the
Redemption Fund. The Paying Agent is hereby authorized to pay the principal of and premium, if any, on the
Bonds when the same are duly presented to it for payment at maturity or on call and redemption, to provide
for the registration of transfer and exchange of Bonds presented to it for such purposes, to provide for the
cancellation of Bonds, all as provided in this Indenture, and to provide for the authentication of Bonds, and
shall perform all other duties assigned to or imposed on it as provided in this Indenture. The Paying Agent
shall keep accurate records of all funds administered by it and all Bonds paid and discharged by it. The
Paying Agent initially appointed, and any successor thereto, may be removed by the City and a successor or
successors may be appointed. So long as any Bonds are outstanding and unpaid, the Paying Agent and any
successor or successors thereto designated by the City shall continue to be Paying Agent of the City for all of
said purposes until the designation of a successor or successors as Paying Agent. The City shall compensate
the Paying Agent at its normal fees and charges pursuant to the schedule of fees and charges to be provided to
the City for the performance of its services hereunder.
The Paying Agent may rely and shall be protected in acting or refraining from acting upon any notice,
resolution, request, consent, order, certificate, report, warrant, bond or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or proper parties. The Paying Agent
may consult with counsel, who may be counsel to the City, with regard to legal questions; and the opinion of
such counsel shall be full and complete authorization and protection in respect of any action taken or suffered
by it hereunder in good faith and in accordance therewith.
Whenever in the administration of its duties under this Indenture the Paying Agent shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering any action hereunder, such matter
(unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence
or willful misconduct on the part of the Paying Agent, be deemed to be conclusively proved and established
by a certificate of the City; and such certificate shall be full warrant to the Paying Agent for any action taken
or suffered under the provisions of this Indenture or any Supplemental Indenture upon the faith thereof, but in
its discretion, the Paying Agent may, in lieu thereof, accept other evidence of such matter or may require such
additional evidence of such matter or may require such additional evidence as 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.
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The Paying Agent and any successor to the 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
Administrative Services Director of the City or is a bank or trust company having (or, if such bank or trust
company is a member of a bank holding company, its bank holding company has) combined capital
(excluding borrowed capital) and surplus of at least $50,000,000 and is subject to State or federal supervision.
Any company into which the Paying Agent may be merged or converted or with which it may be
consolidated or any company resulting from any merger, conversion or consolidation to which it shall be a
party or any company to which the Paying Agent may sell or transfer all or substantially all of its corporate
trust business, provided such company shall be eligible under this Section 25, shall succeed to the rights and
obligations of such Paying Agent without the execution or filing of any paper or further act. If 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
furnished by the City.
SECTION 27. Provisions Constitute Contract. The provisions of this Indenture and the Bonds shall
constitute a contract between the City and the Bond owners and the provisions hereof and thereof shall be
enforceable by any Bond owner for the equal benefit and protection of all Bond owners similarly 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.
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SECTION 28. Unclaimed Funds. Notwithstanding any provisions of this Indenture, subject to applicable
state escheat laws, any monies held by the Paying Agent in trust for the payment of the principal of, or
premium, if any, or interest on, any Bonds and remaining unclaimed for one year after the principal of all 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 thereupon cease and the Bond owners shall, upon such payment, look only to the City for payment;
provided, however, that before the repayment of such monies to the City as aforesaid, the Paying Agent shall
(at the written request and cost of the City) first publish at least once in a nationally recognized financial
publication published in New York, New York, a notice, in such form as may be deemed appropriate by the
Paying Agent, with respect to the provisions relating to the repayment to the City of the monies held for the
payment thereof.
SECTION 29. Modification or Amendment to this Indenture.
(a) This Indenture and the rights and obligations of the City, of the owners of the Bonds and of the
Paying Agent may be modified or amended at any time by a supplemental indenture pursuant to the
affirmative vote at a meeting of the owners, or with the written consent without a meeting, of the owners of at
least a majority in aggregate principal amount of the Bonds then outstanding. No such modification or
amendment shall (i) extend the maturity of any Bond or the time for paying interest thereon, or otherwise alter
or impair the obligation of the City to pay the principal of, and the interest and any premium on, any Bond,
without the express consent of the owner of such Bond, (ii) permit the creation of any pledge of or lien upon
the assessments superior to or on a parity with the pledge and lien created for the benefit of the Bonds, (iii)
reduce the percentage of Bonds required for the amendment hereof, or (iv) reduce the principal amount of or
redemption premium on any Bond or reduce the interest rate thereon. Notwithstanding the above, any such
amendment may not modify any of the rights or obligations of the Paying Agent without its written consent.
The Paying Agent may obtain an opinion of counsel that any such supplemental indenture entered into by the
City and the Paying Agent complies with the provisions of this Section 29 and the Paying Agent may
conclusively rely on such opinion.
(b) This Indenture and the rights and obligations of the City and the owners may also be modified or
amended at any time by a supplemental indenture, without the consent of any owners, only to the extent
permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City contained in this Indenture other
covenants and agreements thereafter to be observed, or to limit or surrender any right or power herein
reserved to or conferred upon the City;
(2) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provisions of this Indenture, or in regard to questions arising under this
Indenture 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
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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, 24`" Floor
LM- CA -T24T
Los Angeles, CA 90071
Attn: Corporate Trust Services
City: City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
Attn: Adminstrative Services Director
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 of this Indenture with
any provision of the Act as in effect on the closing date, the provision of the Act as in effect on the closing
date shall prevail over the conflicting provision of this Indenture.
SECTION 34. Payment on Business Day. In any case where the date of the payment of principal of or
interest (and premium, if any) on the Bonds or the date fixed for redemption is other than a business day (i.e.,
any day other than a Saturday or Sunday or any day the Paying Agent is authorized or obligated by law or
executive order to be closed), the payment of interest or principal (and premium, if any) need not be made on
the scheduled date but may be made on the next succeeding date which is a business day with the same force
and effect as if made on the date required, and no interest shall accrue for the period from and after the
scheduled date.
SECTION 35. Continuing Disclosure. The City hereby covenants and agrees that it will comply with and
carry out all of the provisions of that certain Disclosure Dissemination Agent Agreement, dated as of
August 1, 2010, 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
13
obligations of the City to the owner of such Bond under this Indenture shall thereupon cease, terminate and
become void and discharged and satisfied.
Any outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding
paragraph if such Bond is paid in any one or more of the following ways:
(1) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond,
as and when the same shall become due and payable;
(2) by depositing with the Paying Agent, in trust, at or before maturity, money which, together
with the amounts then on deposit in the funds established pursuant to this Indenture (exclusive of the Rebate
Fund) and available for such purpose, is fully sufficient to pay the principal of, premium, if any, and interest
on such Bond, as and when the same shall become due and payable; or
(3) by depositing with an escrow bank appointed by the City, in trust, noncallable United States
Treasury Obligations, in such amount as a certified public accountant shall determine (as set forth in a
verification report from such accountant) will be sufficient, together with the interest to accrue thereon and
monies then on deposit in the funds established under this Indenture (exclusive of the Rebate Fund) and
available for such purpose, together with the interest to accrue thereon, to pay and discharge the principal of,
premium, if any, and interest on such Bond, as and when the same shall become due and payable;
then, at the election of the City, and notwithstanding that any outstanding Bonds shall not have been
surrendered for payment, all obligations of the City under this Indenture with respect to such Bond shall cease
and terminate, except for the obligation of the Paying Agent to pay or cause to be paid to the owners of any
such Bond not so surrendered and paid, all sums due thereon and except for the covenants of the City to
preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice
of such election shall be filed with the Paying Agent not less than ten (10) days prior to the proposed
defeasance date or such shorter period of time as may be acceptable to the Paying Agent, In connection with a
defeasance under (2) or (3) above, there shall be provided to the Paying Agent a certificate of a certified
public accountant stating its opinion as to the sufficiency of the monies or securities deposited with the
Paying Agent or the escrow bank, together with the interest to accrue thereon and monies then on deposit in
the funds established under this Indenture (exclusive of the Rebate Fund) and available for such purpose,
together with the interest to accrue thereon to pay and discharge the principal of, premium, if any, and interest
on all such Bonds to be defeased in accordance with this Indenture as and when the same shall become due
and payable, and an opinion of Bond Counsel (which may rely upon the opinion of the certified public
accountant) to the effect that the Bonds being defeased have been legally defeased in accordance with this
Indenture.
[Remainder of page intentionally blank.]
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SECTION 37. Counterparts. This Bond Indenture may be executed in counterparts, each of which shall be
deemed an original.
IN WITNESS WHEREOF, the parties hereto have executed this Bond Indenture effective the date first
written hereinabove.
ATTEST:
ILN
Leilani Brown, City Clerk
APPROVED AS TO FORM:
Office of the City Attorney
ILa
Leonie Mulvihill, Assistant City Attorney
City of Newport Beach
ILa
Tracy McCraner
Director of Administrative Services
U.S. Bank National Association,
as Paying Agent, Transfer Agent, and Registrar
IM
15
Authorized Officer
Authorized Officer
EXHIBIT A
MATURITY SCHEDULE
Year Amount ($) Rate
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Total
FEW
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 of
Representations. The terms and provisions of the Letter of Representations shall govem in the event of any
inconsistency between the provisions of the Indenture and the Letter of Representations. The Letter of
Representations may be amended without Bond owner consent.
The book -entry registration system for all of the book -entry Bonds 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 owner
of book -entry Bonds for all purposes, including receipt of payments, notices and voting; provided the Paying
Agent may recognize votes by or on behalf of beneficial owners as if such votes were made by Bond owners of a
related portion of the Bonds when such votes are received as provided in the Indenture.
With respect to book -entry Bonds, the Issuer and the Paying Agent shall be entitled to treat the person in
whose name such Bond is registered as the absolute owner of such Bond for all purposes of the Indenture, and
neither the Issuer nor the Paying Agent shall have any responsibility or obligation to any beneficial owner of such
book -entry Bond. Without limiting the immediately preceding sentence, neither the Issuer nor the Paying Agent
shall have any responsibility or obligation with respect to (a) the accuracy of the records of any securities
depository or any other person with respect to any ownership interest in book -entry Bonds, (b) the delivery to any
person, other than a Bond owner, of any notice with respect to book -entry Bonds, including any notice of
redemption or refunding, (c) the selection of the particular Bonds or portions thereof to be redeemed or refunded in
the event of a partial redemption or refunding of part of the Bonds outstanding or (d) the payment to any person,
other than a Bond owner, of any amount with respect to the principal of, redemption premium, if any, or interest on
book -entry Bonds.
Gam!
No. R--
EXHIBIT C
FORM OF BOND
United States of America
State of California
City of Newport Beach
Assessment District No. 100
(13th St/Balboa Blvd/Adams St /Ocean Front)
Limited Obligation Improvement Bond
Interest Rate: Maturity Date: Bond Date:
% September 2, 20 August, 2010
REGISTERED OWNER: Cede & Co.
PRINCIPAL SUM: Dollars
S
CUSIP:
651784
Under and by virtue of the Improvement Bond Act of 1915, being Division 10 of the Streets and Highways
Code of the State of California (the "Act "), the City of Newport Beach, California (the "Issuer"), will, out of the
Redemption Fund for the payment of the Bonds issued upon the assessments in Assessment District No. 100 (13th
St/Balboa Blvd/Adams St /Ocean Front) as more fully described in the Resolution of Intention for said Assessment
District, adopted by the City Council of the Issuer on April 13, 2010, pay to the registered owner stated above, on
maturity date stated above, the principal sum stated above in lawful money of the United States of America upon
presentation at the corporate trust office or agency of U.S. Bank National Association (together with any successor
paying agent under the Bond Indenture, the "Paying Agent") in St. Paul, Minnesota (or such other office designated
by the Paying Agent, herein called the "Principal Office" of the Paying Agent), with interest thereon from the Interest
Payment Date next preceding the date on which this Bond is authenticated, unless (i) the date of authentication is an
Interest Payment Date, in which event it shall bear interest from such date of authentication, (ii) the date of
authentication is after a Record Date but prior to the immediately succeeding Interest Payment Date, in which event it
shall bear interest from that Interest Payment Date, or (iii) the date of authentication is pri or to the close of business on
the first Record Date, in which event interest shall be payable from the Bond Date set forth above; provided, however,
that if at the time of authentication of any Bond, interest is in default, interest on that Bond shall be payable from the
last Interest Payment Date to which the interest has been paid or made available for payment or from the Bond Date
set forth above if no interest has been paid or made available for payment, at the rate per annum stated above, all as is
hereinafter specified.
This Bond is one of a series of Bonds of like date, tenor and effect, but differing in amounts, interest rates and
maturities, issued by the Issuer under the Act for the purpose of providing means for paying for the work and
improvements described in said Resolution of Intention, is secured by the monies in the Redemption Fund and the
Reserve Fund and by the unpaid assessments made for the payment of said work, and is payable as to both principal
and interest exclusively out of the Redemption Fund. Further terms and conditions of the Bonds are provided for by a
Bond Indenture, by and between the Issuer and the Paying Agent, dated as of August 1, 2010 (the `Bond Indenture "),
and this reference incorporates the Bond Indenture herein, and by acceptance hereof the owner of this Bond assents to
the terms and conditions ofthe Bond Indenture. All capitalized terms used herein shall have the same meanings given
such terms in the Bond Indenture unless otherwise specified herein.
The interest on this Bond is payable semiannually on March 2 and September 2 in each year, commencing
March 2, 2011 (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 kept by the Paying
Agent on the fifteenth day of the month immediately preceding said Interest Payment Date regardless ofwhether 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
C -1
an owner of $1,000,000 or more in aggregate principal amount of Bonds. Interest shall be calculated on the basis of a
360 -day year composed of twelve 30 -day months.
This Bond will continue to accrue interest after maturity at the rate above stated, provided it is presented at
maturity and payment thereof is refused upon the sole ground that there are not sufficient monies in the Redemption
Fund with which to pay same. If this Bond is not presented at maturity, interest hereon will cease to accrue at
maturity.
The Bonds are issuable only as fully- registered Bonds in denominations of $5,000 or any integral multiple
thereof, except for one Bond maturing in the first year of maturity which shall include the amount by which the total
aggregate principal amount of the Bonds exceeds the minimum integral multiple of $5,000. This Bond is transferable
by the registered owner hereof in person or by the registered owner's attorney duly authorized in writing at the
Principal Office of the Paying Agent, subject to the payment of any tax or governmental charges, if any, upon
surrender and cancellation of this Bond. Upon such transfer a new registered Bond or Bonds of any authorized
denomination or denominations of the same maturity, for the same aggregate principal amount, will be issued to the
transferee in exchange therefor.
The Bonds are Invited obligations of the Issuer and are not a lien or charge upon the funds or property of the
Issuer, except to the extent of the funds in the Redemption Fund and the Reserve Fund. The Bonds are not a debt of
the Issuer or the State of California or any subdivision thereof, and neither the Issuer nor the State of California or any
subdivision thereof is liable for the payment of the Bonds. THE ISSUER DETERMINED AND DECLARED THAT
THE ISSUER WILL NOT OBLIGATE ITSELF TO ADVANCE AVAILABLE FUNDS FROM ITS TREASURY
TO CURE ANY DEFICIENCY WHICH MAY OCCUR IN THE REDEMPTION FUND.
This Bond or any portion of thereof may be redeemed, in whole or in part in increments of $5,000, in
advance of maturity on any Interest Payment Date, from any source of funds legally available, including, without
limitation, the prepayment of assessments and surplus funds, if any, remaining in the Improvement Fund following
completion of the authorized improvement work, at the redemption prices (expressed as a percentage of the principal
amount to be redeemed) set forth below, together with accrued interest to the date of redemption:
Redemption Date Redemption Price
March 2, 2011 through September 2, 2015
103%
March 2, 2016 and September 2, 2016
102%
March 2, 2017 and September 2, 2017
101%
March 2, 2018 and thereafter
100%
In lieu of payment at maturity or redemption as described above, monies in the Redemption Fund (other than
monies representing prepaid assessments) may be used and withdrawn by the Paying Agent upon the direction of the
Issuer for purchase of outstanding Bonds which mature on the next principal payment date, but in no event may
Bonds be purchased at a price in excess of the principal amount thereof, the premium, if any, plus interest accrued to
the date of maturity or redemption that would otherwise be payable.
Notice of redemption in advance of maturity shall be given in accordance with the provisions of the Bond
Indenture. If notice of redemption has been duly given and the amount necessary for the redemption has been made
available for that purpose on the date fixed for such redemption, then from and after the redemption date, the Bonds or
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 of the Bond Indenture, or to any other rights, except with respect to
payment of the redemption price and interest accrued to the redemption date from the amounts so made available.
This Bond is subject to refunding pursuant to the Act.
The Bond Indenture and the rights and obligations of the Issuer and of the owners of the Bonds and of the
Paying Agent may be modified or amended from time to time and at any time in the manner, to the extent, and upon
Mi
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, (ii) permit the creation of any pledge of or lien upon the assessments superior to or on a parity with the pledge
and Gen created for the benefit of the Bonds, (iii) reduce the percentage of Bonds required for the amendment, or (iv)
reduce the principal amount of or redemption premium on any Bond or reduce the interest rate thereon.
This Bond shall not be entitled to any benefit under the Act or the proceedings or become valid or obligatory for any
purpose until the Certificate of Authentication hereon endorsed shall have been dated and signed by the designated
transfer agent, registrar and paying agent.
IN WITNESS WHEREOF, the Issuer has caused this Bond to be signed by its Administrative Services Director and
its City Clerk, as of August, 2010.
Administrative Services Director
CERTIFICATE OF AUTHENTICATION
This Bond has been authenticated on 12010.
DTC LEGEND
City Clerk
U.S. Bank National Association,
as Paying Agent, Transfer Agent, and
Registrar
Authorized Officer
Unless this Bond is presented by an authorized representative of The Depository Trust Company, a New York
corporation ( "DTC'), to the Issuer or the Paying Agent for registration of transfer, exchange or payment, and any
Bond issued is registered in the name of Cede & Co. or in such other name as is requested by an authorized
representative of DTC (and any payment is made to Cede & Co. or to such other entity as is requested by an
authorized of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede &Co., has an interest
herein.
ASSIGNMENT
For value received the undersigned doles) 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:
NOTICE: Signature must be guaranteed by a qualified guarantor.
C -3
Signature
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.
EXHIBIT D
AUTHORIZED INVESTMENTS
"Authorized Investments" is defined to mean the following types of investments:
(i) (a) direct general obligations of the United States of America (including obligations issued or
held in book -entry form on the books of the Department of the Treasury of the United States
of America) or (b) obligations of any agency, department or instrumentality of the United
States of America the timely payment of principal of and interest on which are
unconditionally guaranteed by the full faith and credit of the United States of America;
(ii) interest - bearing demand or time deposits (including certificates of deposit) in federal or State
of California chartered savings and loan associations or banks (including the Paying Agent
and its affiliates), provided that (a) in the case of a savings and loan association, such
demand or time deposits shall be fully insured by the Federal Deposit Insurance Corporation,
or the unsecured obligations of such savings and loan association shall be rated in one of the
two highest rating categories by a nationally recognized rating service, and (b) in the case of
a bank, such demand or time deposits shall be fully insured by the Federal Deposit Insurance
Corporation, or the unsecured obligations of such bank (or the unsecured obligations of the
parent bank holding company of which such bank is the lead bank) shall be rated in one of
the two highest rating categories by a nationally recognized rating service;
(iii) repurchase agreements collateralized by obligations described in (i) above with a registered
broker /dealer subject to Securities Investors Protection Corporation liquidation in the event
of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such
bank shall be rated in one of the two highest rating categories by a nationally recognized
rating service, or such bank shall be the lead bank of a bank holding company whose
unsecured obligations are rated in one of the two highest rating categories by a nationally
recognized rating service; (b) the most recently reported combined capital, surplus and
undivided profits of such bank shall be not less than $100,000,000; and (c) the entity holding
such repurchase agreement shall have a perfected 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;
(vii) units of a taxable government money market portfolio (including portfolios of the Paying
Agent and its affiliates) comprised solely of obligations listed in clause (i) or clause (ii)
above;
(viii) commercial paper of "prime" quality of the highest ranking or of the highest letter and
D -1
numerical rating by Moody's or Standard & Poor's of issuing corporations that are organized
and operating within the United States and have total assets in excess of $500,000,000 and
have an "Aa," "AA" or higher rating for the issuer's debentures, other than commercial
paper, as provided by Moody's or Standard & Poor's, respectively, and provided that
purchases of eligible commercial paper may not exceed one hundred eighty (180) days'
maturity nor represent more than ten percent (10 %) of the outstanding paper of an issuing
corporation;
(ix) any general obligation of a bank or insurance company whose long -term debt obligations are
rated in one of the two highest rating categories of a nationally recognized rating service;
(x) the Local Agency Investment Fund in the State Treasury of the State of California as
permitted by the State Treasurer pursuant to Section 16429.1 of the California Government
Code; and
(xi) any other investment which, in the City's sole discretion, is consistent with or of like security
to authorized investments specifically authorized herein and at the time of investment is a
legal investment under the laws of the State of California for the monies proposed to be
invested therein. The Paying Agent shall be entitled to rely upon any written investment
direction from the City as a certification to the Paying Agent that such investment constitutes
an Authorized Investment.
1476738.2
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$
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
BOND PURCHASE CONTRACT
August _, 2010
City of Newport Beach
3300 Newport Boulevard
Newport Beach, California 92663
Ladies and Gentlemen:
The undersigned (the "Underwriter "), acting not as fiduciary or agent for you, but on behalf of
itself, offers to enter into this Bond Purchase Contract (the "Purchase Contract ") with the City of Newport
Beach (the "City ") in connection with Assessment District No. 100 (13th St/Balboa Blvd/Adams
St/Ocean Front) (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 of Newport Beach Assessment District No. 100 (13th St /Balboa Blvd/Adams St/Ocean Front)
Limited Obligation Improvement Bonds (the "Bonds "), bearing interest (payable semiannually on March
2 and September 2 in each year, commencing March 2, 2011) at the rates per annum and maturing on the
dates and in the amounts set forth in Appendix A attached hereto and incorporated herein. The purchase
price for the Bonds shall be $ (representing a price of par, less an original issue discount of
$ and less an Underwriter's discount of $ ).
The Bonds shall be substantially in the form described in, shall be issued and secured
under the provisions of, and shall be payable and subject to redemption as provided in, a Bond Indenture,
by and between the City and U.S. Bank National Association, as paying agent (the "Paying Agent "), dated
as of August 1, 2010 (the "Indenture "), approved by a resolution (the "Resolution "), adopted by the City
Council of the City sitting as the legislative body of the Assessment District (the "City Council ") on
July 27, 2010. 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 [July 28], 2010, relating to the Bonds, which, together with
the cover page and all appendices thereto, is herein called the "Preliminary Official Statement" and which,
as amended with the prior approval of the Underwriter and executed by the City, will be referred to herein
as the "Official Statement." The City hereby ratifies the use by the Underwriter of the Preliminary
Official Statement and the Official Statement and authorizes the Underwriter to use and distribute the
Indenture, the Official Statement, the Disclosure Dissemination Agent Agreement, dated as of August 1,
2010, by and between the City and Digital Assurance Certification, L.L.C. ( "DAC "), as dissemination
agent (the "Disclosure Agreement "), and other documents or contracts to which the City is a party,
including this Purchase Contract, and all information contained therein, and all other documents,
certificates and statements furnished by the City to the Underwriter in connection with the transactions
contemplated by this Purchase Contract, in connection with the offer and sale of the Bonds by the
Underwriter.
(c) The Underwriter agrees to make a bona fide public offering of the Bonds at the
initial offering price set forth in the Official Statement; however, the Underwriter reserves the right to
make concessions to dealers and to change such initial offering price as the Underwriter shall deem
necessary in connection with the marketing of the Bonds. The Underwriter agrees that, in connection with
the public offering and initial delivery of the Bonds to the purchasers thereof from the Underwriter, the
Underwriter will deliver or cause to be delivered to each purchaser a copy of the Official Statement
prepared in connection with the Bonds. The Underwriter also agrees to notify the City by phone or in
writing of the "end of the underwriting period," as defined in Rule 15c2 -12 promulgated under the
Securities Exchange Act of 1934 ( "Rule 15c2-12"), Terms defined in the Official Statement are used
herein as so defined.
(d) The City shall deliver, or cause to be delivered, to the Underwriter two (2)
executed copies of the final Official Statement prepared in connection with the Bonds, in such form as
shall be approved by the City and the Underwriter and such additional conformed copies thereof as the
Underwriter may reasonably request. The City deems the Preliminary Official Statement 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 [August 17], 2010, 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 CUSIP' numbers assigned to them printed thereon) duly executed by the officers of the City as
provided in the Indenture and with facsimile seals printed thereon, and (ii) to the Underwriter at the
offices of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, the other documents
herein mentioned, and the Underwriter shall accept such delivery and pay the purchase price of the Bonds
in same day funds (such delivery and payment being herein referred to as the "Closing "). The Bonds, as
so registered, shall be made available to the Underwriter for inspection not later than the first business day
before the Closing Date.
2. Representations, Warranties and Agreements of the City. The City represents, warrants
and covenants to and agrees with the Underwriter that:
(a) The City is duly organized and validly existing as a municipal corporation under
the laws of the State; and has, and at the Closing Date will have, as the case may be, full legal right, power
and authority (i) to execute, deliver and perform its obligations under this Purchase Contract, the
Indenture, the Resolution and the Disclosure Agreement (collectively, the "City Documents "), (ii) to
execute and deliver the Official Statement, and to carry out all transactions contemplated by each of the
City Documents, (iii) to adopt the Resolution approving the Indenture and enter into the other authorizing
N11I00 BPAi.doc /MC
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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 or caused to be taken, all
proceedings necessary under the Constitution and the laws of the State of California in order to form the
Assessment District and to confirm assessments (the "Assessments ") on the parcels located within the
Assessment District in the respective amounts shown in the report of the Assessment Engineer, approved
by the City Council on June 8, 2010 (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 or default under any applicable law or
administrative rule or regulation of the State, the United States of America, or of any department, division,
agency or instrumentality thereof, or under any applicable court or administrative decree or order, or
under any loan agreement, note, resolution, indenture, contract, agreement or other instrument to which
the City is a party or is otherwise subject or bound, a consequence of which could be to materially and
adversely affect the performance by the City of its obligations under the Bonds or the City Documents,
and compliance with the provisions of each thereof, will not conflict with or constitute a breach of or
default under any applicable law or administrative rule or regulation of the State, the United States of
America, or of any department, division, agency or instrumentality thereof, or under any applicable court
or administrative decree or order, or under any loan agreement, note, resolution, indenture, contract,
agreement or other instrument to which the City is a party or is otherwise subject or bound;
(d) Except as may be required under the "blue sky" or other securities laws of any
jurisdiction, all approvals, consents, authorizations, elections and orders of or filings or registrations with
any State governmental authority, board, agency or commission having jurisdiction which would
constitute a condition precedent to, or the absence of which would materially adversely affect, the
performance by the City of its obligations hereunder, or under the City Documents or the Bonds have
been obtained and are in full force and effect;
(e) Except as disclosed in the Official Statement, there are, to the best knowledge of
the City, no outstanding assessment liens against any of the properties within the City which are senior to
or on a parity with the Assessments;
(f) Each of the Assessments has been duly and lawfully confirmed, may be
collected in installments under the laws of the State, and constitutes a valid and legally binding lien on the
property on which it has been confirmed;
NBI00 BPAi.doc /MC
3
(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 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 famish to the Underwriter a reasonable number of copies of such supplement (as used herein,
the term "end of the underwriting period" means the later of such time as (i) the City delivers the Bonds to
the Underwriter, or (ii) the Underwriter does not retain, directly or as a member of an underwriting
syndicate, an unsold balance of the Bonds for sale to the public);
(i) If the information contained in the Official Statement is amended or
supplemented pursuant to paragraph (h) above, at the time of each supplement or amendment thereto and
(unless subsequently again supplemented or amended pursuant to such paragraph), at all times subsequent
thereto up to and including the Closing Date, the Official Statement so supplemented or amended
(including any financial and statistical data contained therein) will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or necessary to make such
information therein, in light of the circumstances under which it was presented, not misleading;
0) The Indenture creates a valid pledge of the Assessments and the moneys in the
Redemption Fund, the Improvement Fund and the Reserve Fund established pursuant to the Indenture,
including the investments thereof, subject in all cases to the provisions of the Indenture permitting the
application thereof for the purposes and on the terms and conditions set forth therein; and said pledge
constitutes a first lien on and security interest in all of the foregoing;
(k) Except as disclosed in the Official Statement, no action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court, regulatory agency, public board or
body is pending or, to the knowledge of the City, threatened against the City (i) which would materially
adversely affect the ability of the City to perform its obligations under the City Documents or the Bonds,
or (ii) seeking to restrain or to enjoin: (A) the development of any of the land within the Assessment
District, (B) the issuance, sale or delivery of the Bonds, (C) the application of the proceeds thereof in
accordance with the Indenture, or (D) the collection or application of the Assessments, or the pledge
thereof, or in any way contesting or affecting the validity or enforceability of the Bonds, the City
Documents, any tentative or final subdivision map or building permits applicable to property within the
Assessment District, any other instruments relating to the development of any of the property within the
Assessment District, or any action contemplated by any of said documents, or (iii) in any way contesting
the completeness or accuracy of the Preliminary Official Statement, or the Official Statement or the
powers or authority of the City with respect to the Bonds, the City Documents, or any action of the City
contemplated by any of said documents; nor is there any action pending or, to the knowledge of the City,
N11I00 BPAi.doc /MC
threatened against the City which alleges that interest on the Bonds is not excludable from gross income
for federal income tax purposes or is not exempt from California personal income taxation;
(1) The City will furnish such information, execute such instruments and take such
other action in cooperation with the Underwriter as the Underwriter may reasonably request in order for
the Underwriter to qualify the Bonds for offer and sale under the "blue sky" or other securities laws and
regulations of such states and other jurisdictions of the United States of America as the Underwriter may
designate; provided, however, the City shall not be required to register as a dealer or a broker of securities
or to consent to service of process in connection with any "blue sky" filing;
(m) Any certificate signed by any authorized official of the City authorized to do so
shall be deemed a representation and warranty to the Underwriter as to the statements made therein;
(n) The City will apply the proceeds of the Bonds in accordance with the Indenture
and as described in the Official Statement;
(o) Based upon projections which the City believes are reasonable, the Assessments
supporting the Bonds, when levied and collected by the City in accordance with the terms of the
Assessments formula, assuming normal and reasonable delinquency rates, will provide a yearly cash flow
at least sufficient to make timely payment of principal and interest on the Bonds;
(p) The City is not aware of any toxic waste conditions or adverse soils condition
which would impair development within the Assessment District;
(q) The City will undertake, pursuant to the Disclosure Agreement, to provide
annual reports, the City Annual Report and notice of certain events;
(r) The Official Statement (except the portions thereof entitled "CONCLUDING
INFORMATION B Legal Opinion" and " B Tax Matters," and APPENDIX E B "INFORMATION
CONCERNING THE DEPOSITORY TRUST COMPANY," as to which no view need be expressed) is,
as of the date thereof, and will be, as of the Closing Date, true, correct and complete in all material
respects; and the Official Statement (except the portions thereof mentioned above, as to which no view
need be expressed) does not, as of the date thereof, and will not, as of the Closing Date, contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made, not misleading;
and
(s) The Preliminary Official Statement heretofore delivered to the Underwriter has
been deemed final by the City as of its date, except for the omission of such information as is permitted to
be omitted in accordance with paragraph (b)(1) of Rule 15c2 -12. The City hereby covenants and agrees
that, within seven (7) business days from the date hereof, or (upon reasonable written notice from the
Underwriter) within sufficient time to accompany any confirmation requesting payment from any
customers of the Underwriter, the City shall cause a final printed form of the Official Statement to be
delivered to the Underwriter in a quantity mutually agreed upon by the Underwriter and the City so that
the Underwriter may comply with paragraph (b)(4) of Rule 15c2 -12 and Rules G -12, 6-15, G -32 and G-
36 of the Municipal Securities Rulemaking Board.
3. Conditions to the Obligations of the Underwriter. The obligations of the Underwriter to
accept delivery of and pay for the Bonds on the Closing Date shall be subject, at the option of the
Underwriter, to the accuracy in all material respects of the representations and agreements on the part of
the City contained herein, as of the date hereof and as of the Closing Date, to the accuracy in all material
N11I00 BPAi.doc /MC
5
respects of the statements of the officers and other officials of the City made in any certificates or other
documents furnished pursuant to the provisions hereof, to the performance by the City of its obligations to
be performed hereunder at or prior to the Closing Date and to the following additional conditions:
(a) At the Closing Date, the City Documents, the Resolution of Formation and any
other applicable agreements shall be in full force and effect, and shall not have been amended, modified
or supplemented, except as may have been agreed to in writing by the Underwriter, and there shall have
been taken in connection therewith, with the issuance of the Bonds and with the transactions contemplated
thereby and by this Purchase Contract, all such actions as, in the opinion of Meyers, Nave, Riback, Silver
& Wilson, a Professional Law Corporation, Bond Counsel for the City, shall be necessary and
appropriate;
(b) Between the date hereof and the Closing Date, the market price or marketability
of the Bonds at the initial offering prices set forth in the Official Statement shall not have been materially
adversely affected, in the reasonable judgment of the Underwriter (evidenced by a written notice to the
City terminating the obligation of the Underwriter to accept delivery of and pay for the Bonds), by reason
of any of the following:
(1) legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America or recommended to the Congress by the President of the United
States of America, the Department of the Treasury, the Internal Revenue Service, or any member of
Congress, or favorably reported for passage to either House of Congress by any committee of such House
to which such legislation had been referred for consideration or a decision rendered by a court established
under Article III of the Constitution of the United States of America or by the Tax Court of the United
States of America, or an order, ruling, regulation (final, temporary or proposed), press release or other
form of notice issued or made by or on behalf of the Treasury Department or the Internal Revenue Service
of the United States of America, with the purpose or effect, directly or indirectly, of imposing federal
income taxation upon the interest as would be received by the owners of the Bonds beyond the extent to
which such interest is subject to taxation as of the date hereof;
(2) legislation introduced in or enacted (or resolution passed) by the
Congress of the United States of America, or an order, decree or injunction issued by any court of
competent jurisdiction, or an order, ruling, regulation (final, temporary or proposed), press release or other
form of notice issued or made by or on behalf of the Securities and Exchange Commission, or any other
governmental agency having jurisdiction of the subject matter, to the effect that obligations of the general
character of the Bonds, or the Bonds, including any or all underlying arrangements, are not exempt from
registration under or other requirements of the Securities Act of 1933, as amended, or that the Indenture is
not exempt from qualification under or other requirements of the Trust Indenture Act of 1939, as
amended, or that the issuance, offering or sale of obligations of the general character of the Bonds, or of
the Bonds, including any or all underwriting arrangements, as contemplated hereby or by the Official
Statement or otherwise is or would be in violation of the federal securities laws, rules or regulations as
amended and then in effect;
(3) any amendment to the federal or State Constitution or action by any
federal or State court, legislative body, regulatory body or other authority materially adversely affecting
the tax status of the City, its property, income, securities (or interest thereon), the validity or
enforceability of the Assessments or the ability of the City to construct or acquire the improvements as
contemplated by the City Documents, the Resolution of Formation and the Official Statement;
(4) any event occurring, or information becoming known, which, in the
judgment of the Underwriter, makes untrue in any material respect any statement or information contained
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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);
(6) The declaration of a general banking moratorium by federal, New York
or California authorities or the general suspension of trading on any national securities exchange; or
(7) The imposition by the New York Stock Exchange or other national
securities exchange, or any governmental authority, of any material restrictions not now in force with
respect to the Bonds or obligations of the general character of the Bonds or securities generally or the
material increase of any such restrictions now in force, including those relating to the extension of credit
by, or the charge to the net capital requirement of, the Underwriter.
(c) On the Closing Date, the Underwriter shall have received counterpart originals
or certified copies of the following documents, in each case satisfactory in form and substance to the
Underwriter:
(1) The City Documents and the Resolution of Formation together with a
certificate dated as of the Closing Date of the City Clerk of the City, as applicable, to the effect that each
such document is a true, correct and complete copy of the one duly adopted by the City Council and that it
has not been amended, modified or rescinded since its adoption (except as may have been agreed to by the
Underwriter) and is in full force and effect as of the Closing Date;
(2) The Official Statement duly executed;
(3) An unqualified approving opinion, dated the Closing Date and
addressed to the City, of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond
Counsel for the City, in customary form for such transactions, to the effect that the Bonds are legal, valid
and binding obligations of the City, the City has the full right, power and authority to levy and pledge the
Assessments to the payment of the Bonds, interest on the Bonds is excluded from gross income for federal
income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax,
and is exempt from State personal income taxation, and an unqualified opinion of such counsel, dated the
Closing Date and addressed to the Underwriter, to the effect that such opinion addressed to the City may
be relied upon by the Underwriter to the same extent as if such opinion were addressed to it;
(4) A supplemental opinion, dated the Closing Date and addressed to the
Underwriter, of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel
for the City, to the effect that (i) the statements contained in the Official Statement on the cover and under
the captions "INTRODUCTION," "THE BONDS," "SECURITY FOR THE BONDS," "THE
DISTRICT — Assessments," "CONCLUDING INFORMATION — Legal Opinion" and "CONCLUDING
INFORMATION — Tax Matters," APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE
INDENTURE" and APPENDIX D — "FORM OF LEGAL OPINION," insofar as such statements purport
to summarize certain provisions of the Indenture, Bond Counsel's final approving legal opinion with
respect to the Bonds, and federal and State tax law, present an accurate summary of such provisions; (ii)
the Bonds are exempt from registration under the Securities Act of 1933, as amended, and the Indenture is
exempt from qualification under the Trust Indenture Act of 1939, as amended; (iii) the Resolution, which
N11I00 BPAi.doc /MC
authorized issuance of the Bonds and approved the form and substance of the Indenture, the Purchase
Contract and the Disclosure Dissemination Agent Agreement, has been duly adopted by the City Council
of the City; and (iv) the Indenture, the Purchase Contract and the Disclosure Dissemination Agent
Agreement have been duly authorized, executed and delivered by the City and, assuming due
authorization, execution and delivery by the other parties thereto, constitute legal, valid and binding
agreements of the City enforceable in accordance with their respective terms, subject to laws relating to
bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally and the
application of equitable principles if equitable remedies are sought;
(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
the City Attorney, to the effect that (i) to the best of his or her knowledge, except as described in the
Official Statement, no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by
any court, regulatory agency, public board or body is pending or threatened in any way affecting the
existence of the City or the titles of its officers to their respective offices, or seeking to restrain or to
enjoin the development of property within the Assessment District, 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
N11I00 BPAi.doc /MC
0
of Formation, the 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 the 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 resolutions and the Resolution of Formation are now in full force and
effect and have not been amended; (v) the City has duly authorized, executed and delivered the Purchase
Contract, the Indenture and the Bonds and has duly authorized the preparation and delivery of the Official
Statement; and (vi) the Purchase Contract, the Bonds and the Indenture constitute legal, valid and binding
agreements of the City, enforceable in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights in
general and to the application of equitable principles if equitable remedies are sought;
(8) One counterpart original or copy certified by the Clerk of the City of a
transcript of all proceedings relating to the authorization, issuance, sale and delivery of the Bonds;
(9) The Certificate of the Paying Agent, dated the Closing Date, to the
effect that (i) the Paying Agent is duly organized and existing as a national association under the laws of
the State having the full power and authority to perform its duties under the Indenture; (ii) the Paying
Agent is duly authorized to accept the obligations created by the Indenture and to authenticate the Bonds
pursuant to the terms of the Indenture; (iii) no consent, approval, authorization or other action by any
governmental or regulatory authority having jurisdiction over the Paying Agent that has not been obtained
is or will be required for the authentication of the Bonds or the consummation by the Paying Agent of the
other transactions contemplated to be performed by the Paying Agent in connection with the
authentication of the Bonds and the acceptance and performance of the obligations created by the
Indenture; and (iv) compliance with the terms of the Indenture will not conflict with, or result in a
violation or breach of, or constitute a default under, any loan agreement, indenture, bond, note, resolution
or any other agreement or instrument to which the Paying Agent is a party or by which it is bound, or any
law or any rule, regulation, order or decree of any court or governmental agency or body having
jurisdiction over the Paying Agent or any of its activities or properties;
(10) A certified copy of the general resolution of the Paying Agent
authorizing the execution and delivery of any City Documents to which the Paying Agent is a party;
(11) An opinion, dated the Closing Date and addressed to the Underwriter
and the City, of counsel to the Paying Agent in form and substance acceptable to the Underwriter;
(12) The Disclosure Agreement;
(13) A certificate of Harris & Associates, dated the Closing Date, to the
effect that (i) the statements contained in the Official Statement relating to the size and location of the
Assessment District, the amounts of the Assessments and the Engineer's Report and all other information
furnished by it therein do not contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading and (ii) in the opinion of Harris & Associates, the
N11I00 BPAi.doc /MC
assessments, as set forth in the Engineer's Report, have been spread in conformance with the requirements
of the Municipal Improvement Act of 1913 (Division 12 of the California Streets and Highways Code);
(14) A certificate of the City, dated the Closing Date, in a form acceptable to
Bond Counsel, that the Bonds are not arbitrage bonds within the meaning of Section 148 of the Internal
Revenue Code of 1986, as amended;
(15) A copy of Internal Revenue Service Form 8038 -G, executed by an
authorized officer of the City;
(16) Evidence satisfactory to the Underwriter that, other than as disclosed in
the Official Statement, there are no ad valorem taxes, special taxes or assessments applicable to the
property within the Assessment District that are delinquent; and
(17) Such additional legal opinions, certificates, instruments and other
documents as the Underwriter or Bond Counsel may reasonably request to evidence the truth and
accuracy, as of the date hereof and as of the Closing Date, of the statements and information contained in
the Preliminary Official Statement and the Official Statement, of the City's representations and warranties
contained herein, and the due performance or satisfaction by the City and the Paying Agent at or prior to
the Closing of all agreements then to be performed and all conditions then to be satisfied by either of them
in connection with the transactions contemplated hereby by the City Documents and by the Official
Statement.
If the City shall be unable to satisfy the conditions to the obligations of the Underwriter to
purchase, accept delivery of and pay for the Bonds contained in this Purchase Contract, or if the
obligations of the Underwriter to purchase, accept delivery of and pay for the Bonds shall be terminated
for any reason permitted by this Purchase Contract, this Purchase Contract shall terminate and neither the
Underwriter nor the City shall be under any further obligation hereunder, except that the respective
obligations of the City and the Underwriter set forth in Section 4 and Section 5 hereof shall continue in
full force and effect.
4. Conditions of the City's Obligations. The City's obligations hereunder are subject to the
Underwriter's performance of their obligations hereunder, and are also subject to the following
conditions:
(a) As of the Closing Date, no litigation shall be pending or, to the knowledge of
the duly authorized officer of the City executing the certificate referred to in Section 3 hereof, threatened,
to restrain or enjoin the issuance or sale of the Bonds or in any way affecting any authority for or the
validity of the Bonds or the City Documents or the existence or powers of the City; and
(b) As of the Closing Date, the City shall receive the approving opinions of Bond
Counsel and Disclosure Counsel referred to in Section 3 hereof, dated as of the Closing Date.
5. Expenses.
Whether or not the Bonds are delivered to the Underwriter set forth herein:
(a) The Underwriter shall be under no obligation to pay, and the City shall pay or
cause to be paid (out of any legally available funds of the City) all expenses incident to the performance
of the City's obligations hereunder, including, but not limited to, the cost of printing and delivering the
Bonds to DTC, the cost of printing, distribution and delivery of the Indenture, the Preliminary Official
N11I00 BPAi.doc /MC
10
Statement, the Official Statement and all other agreements and documents contemplated hereby (and
drafts of any thereof) in such reasonable quantities as requested by the Underwriter; the cost of the
overlapping debt statement and the fees and disbursements of the Paying Agent for the Bonds, Disclosure
Counsel and Bond Counsel and any accountants, engineers or any other experts or consultants the City
have retained in connection with the Bonds; and
(b) The City shall be under no obligation to pay, and the Underwriter shall pay,
CUSIP' Bureau and CDIAC fees; the cost of preparation of any "blue sky" or legal investment
memoranda; expenses to qualify the Bonds for sale under any "blue sky" or other state securities laws;
and all other expenses incurred by the Underwriter in connection with its public offering and distribution
of the Bonds (except those specifically enumerated in paragraph (a) of this Section), including the fees
and disbursements of its counsel and any advertising expenses.
6. Notices. Any notice or other communication to be given to the City under this Purchase
Contract may be given by delivering the same in writing to the City of Newport Beach, 3300 Newport
Boulevard, Newport Beach, California 92663; any notice or other communication to be given to the
Underwriter under this Purchase Contract may be given by delivering the same in writing to Southwest
Securities, Inc., 15760 Ventura Boulevard, Suite 1740, Encino, California 91436.
7. Parties in Interest. This Purchase Contract is made solely for the benefit of the City and
the Underwriter (including their successors or assigns), and no other person shall acquire or have any right
hereunder or by virtue hereof. This Purchase Contract shall not be assigned by the City or the
Underwriter.
8. Survival of Representations. Warranties and Agreements. The representations,
warranties and agreements of the City set forth in or made pursuant to this Purchase Contract shall not be
deemed to have been discharged, satisfied or otherwise rendered void by reason of the Closing or
termination of this Purchase Contract and regardless of any investigations made by or on behalf of the
Underwriter (or statements as to the results of such investigations) concerning such representations and
statements of the City and regardless of delivery of and payment for the Bonds.
9. Effective. This Purchase Contract shall become effective and binding upon the
respective parties hereto upon the execution of the acceptance hereof by the City and shall be valid and
enforceable as of the time of such acceptance. This Purchase Contract may be signed in counterparts by
each party.
10. No Prior Agreements. This Purchase Contract supersedes and replaces all prior
negotiations, agreements and understandings between the parties hereto in relation to the sale of Bonds by
the City and represents the entire agreement of the parties as to the subject matter herein.
11. Governing Law. This Purchase Contract shall be governed by the laws of the State of
California.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK;
EXECUTION PAGE FOLLOWS]
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12. Counterparts. This Purchase Contract may be executed simultaneously in several
counterparts, each of which shall be an original and all of which shall constitute one and the same
instrument.
Very truly yours,
SOUTHWEST SECURITIES, INC
By:
Vice President
By:
Authorized Officer
ACCEPTED:
CITY OF NEWPORT BEACH
By:
Tracy McCraner, Director of
Administrative Services
ATTEST:
Leilani Brown, City Clerk
APPROVED AS TO FORM:
Office of the City Attorney
By:
Leonie Mulvihill, Assistant City Attorney
[EXECUTION PAGE OF BOND PURCHASE CONTRACT]
NB 100 aPAW.WC
12
NB 100 BPAi.d.?MC
13
APPENDIX A
MATURITY SCHEDULE
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
Maturity Date Principal Interest Yield Price
(September 2) Rate
2011 $ % % %
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
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, 2011, from
any source of funds legally available, including, without limitation, the prepayment of
assessments and surplus funds from the Improvement Fund, if any, at the redemption prices
(expressed as percentages of the principal amount to be redeemed) set forth below, together with
accrued interest to the date of redemption:
Redemption Date
Redemption Price
March 2, 2011 through September 2, 2015
100%
March 2, 2016 through September 2, 2016
102
March 2, 2017 through September 2, 2017
101
March 2, 2018 and thereafter
100
NB 100 BPAi.doc/MC
A-I
PRELIMINARY OFFICIAL STATEMENT DATED [JULY 281, 2010
NEW ISSUE— BOOK -ENTRY ONLY RATINGS: (S &Pj:
In the opinion of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel, based upon an analysis of existing
laws, regulations, rulings and court decisions, and assuming; among other things, the accuracy of certain representations and compliance with certain
covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of
1986 and is exempt from State of California personal income taxes. In the further opinion of Bond Counsel, interest on the Bonds is not a specific
preference item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such interest is
included in adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel expresses no opinion regarding
any other tax consequences related to the ownership or disposition of or the accrual or receipt of interest on, the Bonds. See "CONCLUDING
INFORMATION— Tax Matters. "
$2,670,000"
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
Dated: Date of Delivery
Due: September 2, as shown below
The City of Newport Beach Assessment District No. 100 (13th St/Balboa Blvd/Adams St/Ocean Front) Limited Obligation Improvement Bonds (the
"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. 100 (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 August 1, 2010 (the
"Indenture "), by and between the City and U.S. Bank National Association, as Paying Agent (the "Paying Agent ").
The Bonds are being . issued in book -entry form and, when issued, will be registered in the name of Cede & Co., as 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 S5,000 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, 2011, and semiannually thereafter on each March 2 and September 2. Principal of and interest on the
Bonds will be paid by the Paying Agent to Cede & Co., and such payments are expected to be disbursed to the beneficial owners of the Bonds through their nominees.
The Bonds are subject to redemption prior to maturity as described under "THE BONDS — Redemption" herein.
Under the provisions of the Improvement Bond Act of 1915, installments of principal and interest sufficient to meet annual debt service on the Bonds will be
billed by the County of Orange (the "County") to owners of property within the District against which there are unpaid assessments. Upon receipt by the Paying Agent
from the City, these annual installments are to be paid into the Redemption Fund to be held by the Paying Agent and used to pay debt service on the Bonds as it
becomes due.
Unpaid assessments constitute fixed 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. It is not a summary of this issue. Investors must read the entire Offcial Statement,
including, without limitation, "BOND OWNERS' RISKS. " to obtain information essential to the making oil informed investment decision.
The Bonds are offered when, as and if issued subject to the approval of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Oakland,
California, Bond Counsel. Certain matters will be passed upon for the City by the City Attorney and by McFarlin & Anderson LIP, 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 August 17, 2010.
Dated: August , 2010
' Preliminary, subject to change.
SOUTHWEST SECURITIES, INC.
The following language to be inserted by the printer, in red, at the top of the POSfront cover:
PRELIMINARY OFFICIAL STATEMENT DATED [JULY 28], 2010
The following language to be inserted by the printer, in red, vertically along the left margin of the POSfront cover:
This Preliminary Official Statement and the information contained herein are subject to completion or amendment.
Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or a solicitation of an
offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale
would be unlawful.
MATURITY SCHEDULE
$2,670,000
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
CUSS®
Yield Price No.f
Preliminary, subject to change.
f CUSIP A registered trademark of the American Bankers Association. Copyright C 1999 -2010 Standard &
Poor's, a Division of The McGraw -Hill Companies, Inc. CUSIP data herein is provided by Standard & Poor's
CUSIP® Service Bureau. This data is notititended to create a database and does not serve in any way as a substitute
for the CUSIP Service Bureau. CUSIP numbers have been assigned by an independent company not affiliated
with the City and are included solely for the convenience of the registered owners of the Bonds. The City is not
responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness
on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after
the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding, in
whole or in part, or as a result of the procurement of secondary market portfolio insurance or other similar
enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
Base CUSIP *No.
t
Maturity Principal
Interest CUSIP® Maturity
Principal Interest
September 2 Amount
Rate Yield Price No. September 2
Amount Rate
2011 $
% % % 2019
S %
2012
2020
2013
2021
2014
2022
2015
2023
2016
2024
2017
2025
2018
CUSS®
Yield Price No.f
Preliminary, subject to change.
f CUSIP A registered trademark of the American Bankers Association. Copyright C 1999 -2010 Standard &
Poor's, a Division of The McGraw -Hill Companies, Inc. CUSIP data herein is provided by Standard & Poor's
CUSIP® Service Bureau. This data is notititended to create a database and does not serve in any way as a substitute
for the CUSIP Service Bureau. CUSIP numbers have been assigned by an independent company not affiliated
with the City and are included solely for the convenience of the registered owners of the Bonds. The City is not
responsible for the selection or uses of these CUSIP numbers, and no representation is made as to their correctness
on the Bonds or as included herein. The CUSIP number for a specific maturity is subject to being changed after
the issuance of the Bonds as a result of various subsequent actions including, but not limited to, a refunding, in
whole or in part, or as a result of the procurement of secondary market portfolio insurance or other similar
enhancement by investors that is applicable to all or a portion of certain maturities of the Bonds.
[a 11ytol W0 i VATA 019,4 6.3 xTa :1
MAYOR AND CITY COUNCIL
Keith D. Curry, Mayor, District 7
Michael F. Henn, Mayor Pro Tem, District
Steven Rosansky, District 2
Don Webb, District 3
Leslie Daigle, District 4
Edward D. Selich, District 5
Nancy Gardner, District 6
CITY STAFF
David Kiff, City Manager
David R. Hunt, Esq., City Attorney
Leilani Brown, City Clerk
Tracy McCraner, Director of Administrative Services
Dan Matusiewicz, Deputy Director of Administrative Services
Stephen Badum, Public Works Director
David Webb, City Engineer
BOND COUNSEL
Meyers, Nave, Riback, Silver & Wilson,
a Professional Law Corporation
Oakland, California
FINANCIAL ADVISOR
Fieldman, Rolapp & Associates
Irvine, California
ASSESSMENT ENGINEER
Harris & Associates
Irvine, California
PAYING AGENT
U.S. Bank National Association
Los Angeles, California
DISCLOSURE COUNSEL
McFarlin & Anderson LLP
Lake Forest, California
UNDERWRITER
Southwest Securities, Inc.
Encino, California
DISSEMINATION AGENT
Digital Assurance Certification, L.L.C.
Orlando, Florida
GENERAL INFORMATION ABOUT THE OFFICIAL STATEMENT
Use of Offlicial 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.
TABLE OF CONTENTS
PAGE
INTRODUCTION............................................................................................................ ..............................1
THE FINANCING PLAN ................................................................................................ ..............................1
Purposeof the Bonds ................................................................................................. ............................... l
Sources and Uses of Funds ......................................................................................... ..............................2
THEBONDS .................................................................................................................... ..............................2
Authorityfor Issuance ................................................................................................ ..............................2
Descriptionof the Bonds ............................................................................................ ..............................2
Redemption................................................................................................................ ..............................3
ImprovementFund ..................................................................................................... ..............................4
RedemptionFund ....................................................................................................... ..............................5
ReserveFund .............................................................................................................. ..............................5
RebateFund ................................................................................................................ ..............................6
Investments................................................................................................................ ...............................
6
AnnualDebt Service .................................................................................................. ..............................7
SECURITY FOR THE BONDS ....................................................................................... ..............................7
General...................................................................................................................... ...............................
7
ReserveFund .............................................................................................................. ..............................8
Covenant for Superior Court Foreclosure .................................................................. ..............................8
Covenant to Maintain Tax - Exempt Status ................................................................ .............................10
AssessmentsCreate a Lien ........................................................................................ .............................10
Limited City Obligation Upon Delinquency ............................................................. .............................10
THEDISTRICT ............................................................................................................... .............................10
Description................................................................................................................ .............................10
TheImprovement Project .......................................................................................... .............................10
Assessments............................................................................................................... .............................12
TeeterPlan ................................................................................................................. .............................12
Estimated Direct and Overlapping Indebtedness .......................................................... .............................12
AssessedValue -to -Lien Ratios .................................................................................. .............................14
TopTen Property Owners ......................................................................................... .............................16
Historical Property Tax Collections and Delinquencies ............................................ .............................16
BOND OWNERS' RISKS ............................................................................................... .............................18
General...................................................................................................................... .............................18
Risks of Real Estate Secured Investments Generall y ................................................ .............................18
ForeclosureShortfall .................................................................................................... .............................18
PropertyTax Delinquencies ...................................................................................... .............................19
Delinquency Resulting in Ultimate or Temporary Loss on Bonds ............................ .............................19
Concentrationof Ownership ...................................................................................... .............................19
Non -Cash Payments of Assessments ......................................................................... .............................19
LandValues ............................................................................................................... .............................19
Limited City Obligation Upon Delinquency ............................................................. .............................20
Collection of the Assessments ................................................................................... .............................20
Availability of Funds to Pay Delinquent Assessment Installments ........................... .............................21
Owner Not Obligated to Pay Assessments ................................................................ .............................21
-i-
TABLE OF CONTENTS
PAGE
Parity Taxes and Special Assessments; Future Indebtedness .................................... .............................21
Bankruptcy and Foreclosure ...................................................................................... .............................22
FDIC/Federal Government Interests in Parcels ......................................................... .............................22
NaturalDisasters ....................................................................................................... .............................23
HazardousSubstances ............................................................................................... .............................23
NoAcceleration ......................................................................................................... .............................23
Lossof Tax Exemption ............................................................................................. .............................24
IRS Audit of Tax - Exempt Bond Issues ..................................................................... .............................24
LimitedSecondary Market ........................................................................................ .............................24
Ballot Initiatives and Legislative Measures .............................................................. .............................24
Constitutional Amendment — Articles XIIIC and XIIID ........................................... .............................25
CONCLUDING INFORMATION .................................................................................. .............................25
ContinuingDiscl osure ............................................................................................... .............................25
LegalOpinion .......................................................................................................... ...............................
26
TaxMatters ................................................................................................................ .............................26
NoLitigation ............................................................................................................. .............................28
Rating.............................................................................................................:.......... .............................28
FinancialInterests .................................................................................................... ...............................
28
Underwriting............................................................................................................. .............................28
FinancialAdvisor ...................................................................................................... .............................29
Miscellaneous.......................................................................................................... ...............................
29
APPENDIX A— ASSESSMENT DIAGRAM ........................................................ ...............................
A -1
APPENDIX B — INFORMATION ABOUT THE NEWPORT BEACH AREA .. ...............................
B -1
APPENDIX C — SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE .......................
C -1
APPENDIX D —FORM OF LEGAL OPINION .................................................... ...............................
D -I
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- l
-ii-
[INSERT CITY OF NEWPORT BEACH AND VICINITY MAP]
SUMMARY STATEMENT
Purpose Proceeds of the $2,670,000` principal amount of the City of
Newport Beach Assessment District No. 100 (13th St /Balboa Blvd/Adams
St/Ocean Front) Limited Obligation Improvement Bonds (the `Bonds "), together
with certain investment earnings and certain other moneys, will be used to
finance the costs of relocation of certain overhead electrical and communication
facilities to underground locations, together with appurtenances and appurtenant
work in connection therewith (the "Improvement Project'). See "THE DISTRICT
— The Improvement Project' herein. Bond proceeds will also be used to establish
a debt service reserve fund and to pay the costs of issuance of the Bonds.
The District The City of Newport Beach Assessment District No. 100 ( "the District')
consists of approximately 19.8 acres located in Newport Beach, California (the
"City "). The District is bordered by 13`n Street, Balboa Boulevard, Adams
Street and Ocean Front. The District was formed by the City on June 8, 2010.
The amount of assessments levied in the District was $4,345,000, and
prepayments have been made with respect to $1,674,993.62 of assessments.
There are currently 171 parcels in the District with unpaid assessments in the
amount of $2,670,006.38.
Security for the Bonds The Bonds are issued upon and secured by a pledge of revenues received by the
City in each fiscal year from the collection of annual installments of unpaid
assessments, including penalties and interest and proceeds from the sale of
property for delinquent assessments, on parcels within the District but excluding
amounts collected by the City for the payment of administration costs
( "Assessment Revenues "). See "SECURITY FOR THE BONDS — Reserve
Fund — No Additional Bonds Except for Refunding Bonds" herein. The unpaid
assessments represent fixed liens on the assessed parcels. They do not, however,
constitute a personal indebtedness of the owners of such parcels.
Pursuant to the Improvement Bond Act of 1915, installments of principal of
assessments and interest thereon sufficient to meet annual debt service on the
Bonds will be billed by the County of Orange (the "County ") to owners of
parcels within the District against which there are unpaid assessments (the
"Assessment Installments "). Upon receipt by the Paying Agent from the City,
these Assessment Installments are to be deposited into the Redemption Fund,
which will be held by the Paying Agent and used to pay Bond principal and
interest as they become due. The Assessment Installments billed against each
parcel each fiscal year represent pro rata shares of the total principal and
interest coming due in the ensuing calendar year, based on the percentage
which the unpaid assessment against that parcel bears to the total of unpaid
assessments levied to repay the Bonds.
The City will deposit $ 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
Preliminary, subject to change.
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, 2011, from any source of funds legally available,
including, without limitation, the prepayment of assessments and surplus funds
from the Improvement Fund, if any, together with accrued interest to the date
of redemption at the redemption prices shown on the table under "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."
$2,670,000
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
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. 100 (13th
St/Balboa Blvd/Adams St/Ocean Front) Limited Obligation Improvement Bonds (the "Bonds ").
Assessment District No. 100 (the "District") was formed by the City of Newport Beach (the "City ") on June
8, 2010, to underground power and communication facilities, together with appurtenances and appurtenant
work 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 August 1, 2010 (the "Indenture "), by and between the City and U.S. Bank
National Association, as paying agent (the "Paying Agent ").
Unpaid assessments represent liens on the parcels in the District on which they have been
confirmed; they do not, however, constitute a personal indebtedness of the owners of the parcels.
Installments of principal of assessments and interest thereon sufficient to meet annual debt service on the
Bonds will be billed by the County of Orange (the "County") to owners of parcels within the District against
which there are unpaid assessments (the "Assessment Installments "). Unpaid assessments and all moneys
and securities from time to time held by the City or by the Paying Agent in certain specified funds and
accounts under the Indenture are pledged to the payment of the principal of and interest on the Bonds.
The Bonds do not constitute a debt of the City, and the City will not be 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 August 1, 2010, by and between the City and Digital Assurance Certification,
L.L.C. ( "DAC') (the "Disclosure Agreement ") and certain other matters are set forth below. Such
descriptions do not purport to be comprehensive or definitive. All references herein to any of the aforesaid
documents are qualified in their entirety by reference to the forms thereof, which are available for inspection
at the office of the Paying Agent in Los Angeles, California, and at the office of the City Clerk in Newport
Beach, California. Capitalized terms not defined herein have the respective meanings ascribed to them in
the Indenture.
THE FINANCING PLAN
Purpose of the Bonds
Proceeds from the sale of the Bonds will be used to finance the cost of undergrounding power and
communication facilities, together with appurtenances and appurtenant work (the "Improvement Project ")
that serve the property within the District, as further described in the section herein entitled "THE
. Preliminary, subject to change.
1
DISTRICT — The Improvement Project." The estimated costs of the Improvement Project are $3,666,290
(excluding financing and incidental costs). The total amount of assessments levied in the District was
$4,345,000, and prepayments have been made with respect to $1,674,993.62 of assessments. There are
currently 171 parcels in the District with unpaid assessments in the amount of $2,670,006.38 See Table 2
under the caption "THE DISTRICT — The Improvement Project" for a more detailed statement of all costs
and expenses relating to the Improvement Project.
Sources and Uses of Funds
The Paying Agent will receive the proceeds from the sale of the Bonds upon delivery of such Bonds
to the purchasers thereof. The proceeds of the Bonds will be applied as set forth in the following table:
SOURCES AND USES OF FUNDS
SOURCES:
Par Amount of Bonds
Premium/Net Original Issue Discount ( )
Less Underwriter's Discount ( )
Total Sources $
USES:
Improvement Fund
Reserve Fund
Costs of Issuance(l)
Total Uses
Costs of issuance include expenses incidental to forming the District and issuing the Bonds, legal fees,
printing costs, Paying Agent fees and other miscellaneous issuance costs.
See Table 2 under the caption "THE DISTRICT — The Improvement Project" for more detailed
information regarding costs and expenses relating to the Improvement Project.
THE BONDS
Authority for Issuance
The proceedings for the District were conducted pursuant to the Municipal Improvement Act of 1913
(Division 12 of the California Streets and Highways Code) (the "1913 Act "). The Bonds, which represent the
unpaid assessments levied against the property in the District, are issued pursuant to the provisions of the 1915
Act and the Indenture. Pursuant to the 1913 Act and Proposition 218, which added Article XIIID to the
California Constitution, the City held a public hearing on May 19, 2010, in the proposed District. The City
received a favorable response from the landowners casting assessment ballots prior to the conclusion of the
public hearing.
Description of the Bonds
The $2,670,000µ 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
µ Preliminary, subject to change.
inside cover, commencing on March 2, 2011, 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 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 September 2,
2010, from any source of funds legally available, including, without limitation, the prepayment of assessments
and surplus funds from the Improvement Fund, if any, at the redemption prices (expressed as a percentage of
the principal amount to be redeemed) set forth below, together with accrued interest to the date of
redemption:
Redemption Date
Redemption Price
March 2, 2011 through September 2, 2015
103%
March 2, 2016 and September 2, 2016
102%
March 2, 2017 and September 2, 2017
101%
March 2, 2018 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
3
numbers of the Bonds selected for redemption, except that where all the Bonds are subject to redemption
or all the Bonds of a maturity date are subject to redemption, the numbers thereof need not be specified;
(b) state the date fixed for redemption; (c) state the redemption price; (d) state the place or places where the
Bonds are to be redeemed; (e) in the case of Bonds to be redeemed only in part, state the portion of the Bond
which is to be redeemed; and (f) state the CUSIP® numbers of the Bonds to be redeemed. Such notice shall
farther 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 ( "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 (as defined in the Indenture) will be used only for the Improvement
Project, as authorized in the assessment proceedings and all incidental costs related thereto, including the
costs of issuing the Bonds, all as more particularly described in the Assessment Engineer's Report for the
District on file in the Office of the City Clerk of the City, as the report may be amended from time to time
pursuant to the 1913 Act. Upon completion of the acquisition and construction of the Improvements, the
Superintendent of Streets of the City will file a certificate of completion (the "Certificate of Completion ")
with the Administrative Services Director. Any funds remaining in the Improvement Fund following
receipt by the Administrative Services Director of the Certificate of Completion shall constitute surplus
k
( "Surplus "), and in accordance with the provisions of the Resolution of Intention (as defined in the
Indenture), the Surplus shall be utilized or distributed in such manner as shall be determined by the Newport
Beach City Council (the "City Council ") for any one or more purposes set forth in said Resolution of
Intention.
Redemption Fund
The Paying Agent will establish and maintain a Redemption Fund (as defined in the Indenture)
designated by the name of the District and deposit therein from time to time (i) the amount of the proceeds of
the Bonds which represents accrued and capitalized interest, if any, on the Bonds, (ii) all sums received
from the City representing the collection of the assessments (other than assessments for administrative costs)
and the interest thereon and (iii) any surplus in the Improvement Fund to the extent provided in the
Indenture.
Prepayment Account. There will be established by the Paying Agent a prepayment subaccount
within the Redemption Fund (the "Prepayment Account'). The Paying Agent will not be required to
establish the Prepayment Account until the time when deposits are required to be made therein. The City will
transfer to the Paying Agent for deposit in the Prepayment Account all moneys received by the City
representing the prepayment of the principal of, and interest and redemption premium on, any Bonds. Such
moneys will be applied solely to the payment of the principal of, and interest and premium on, Bonds to be
redeemed prior to maturity pursuant to the optional redemption provisions of the Indenture.
Except for money received with respect to assessment surcharges for administrative costs, the City
will transfer or cause to be transferred to the Paying Agent at least five days prior to each Interest
Payment Date all sums received and not previously transferred from the collection of the assessments and any
interest thereon and all sums received for the partial or full prepayment of assessments as required by Streets
and Highways Code Section 8767. Any transfer representing the prepayment of assessments will be
accompanied by written instructions as to the disposition of such sums to redeem Bonds prior to maturity
or to pay accrued interest on any Bonds to be redeemed.
Principal of and interest on the Bonds will be paid by the Paying Agent to the registered owners
out of the Redemption Fund to the extent funds on deposit in the Redemption Fund are available therefor.
Reserve Fund
The City will create and maintain the Reserve Fund to be designated by the name of the District. The
Reserve Fund will be initially funded from a portion of the Bond proceeds in an amount equal to 6% of the
original principal amount of the Bonds. The City will also deposit in the Reserve Fund funds which represent
the proceeds of (i) payments made to redeem delinquent Assessment 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 transferred to the Paying Agent for deposit in the
Redemption Fund if there are insufficient moneys in said Redemption Fund to pay principal of and interest
on the Bonds when due. Amounts so transferred will be repaid to the Reserve Fund from proceeds from
the redemption or foreclosure of property with respect to which an assessment is unpaid and from payments of
delinquent assessments.
(2) Interest earned on the permitted investment of moneys on deposit in the Reserve Fund will
remain in the Reserve Fund to the extent required to maintain the Reserve Fund at the Reserve Requirement
(as defined herein). Not later than August 30 of each fiscal year, the amount on deposit in the Reserve Fund in
excess of the Reserve Requirement will be transferred from the Reserve Fund to the Redemption Fund and
credited to the unpaid Assessment Installments payable during such fiscal year. "Reserve Requirement" shall
mean the least of (i) the maximum annual debt service on the outstanding Bonds, (ii) 125% of the average
annual debt service on the outstanding Bonds or (iii) 6% of the original principal amount of Bonds (the
"Reserve Requirement "). The City's records utilized to calculate the annual assessment installments on
account of unpaid assessments shall reflect the credits against each of the unpaid assessment in amounts
equal to each parcel's proportionate share of such transfer.
Notwithstanding the above, interest earnings on moneys on deposit in the Reserve Fund in excess of
the "yield" on the Bonds, as that term is defined in the Internal Revenue Code of 1986 (the "Code "), will be
subject to transfer and rebate to the United States Treasury.
(3) Whenever moneys in the Reserve Fund, together with available funds in the Redemption
Fund, are sufficient to fully and timely pay and redeem all outstanding Bonds, plus accrued interest thereon,
the money will be transferred to the Redemption Fund and collection of a corresponding amount of the
remaining unpaid assessments will cease.
(4) In the event an assessment is to be prepaid in cash, the City will credit the prepaid assessment
with a proportionate share of the Reserve Fund and transfer an amount equal to such credit to the Redemption
Fund to be utilized for the advance retirement of Bonds.
Rebate Fund
The City will establish and maintain a Rebate Fund (as defined in the Indenture). Deposits shall
be made to the Rebate Fund only as may be required by and in accordance with the provisions of the Tax
Certificate (as defined in the Indenture) pertaining to the Bonds. Amounts, if any, on deposit in the Rebate
Fund will be paid to the United States of America. All earnings on amounts on deposit in the Rebate Fund
will remain therein until all amounts payable to the United States of America have been paid.
Investments
Obligations purchased as investments of moneys in any of the funds in which investments are
authorized will be deemed at all rimes 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 Administrative Services Director 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. hi 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 each fund separately.
G
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.
Year Ending
September 2
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
Totals
General
TABLE 1
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
ANNUAL DEBT SERVICE
Principal Interest Total
$ $ $
SECURITY FOR THE BONDS
The Bonds are issued upon and secured by a pledge of Assessment Revenues. The Bonds are
secured by the moneys in the Redemption Fund and the Reserve Fund and any earnings thereon (except to the
extent earnings must be transferred to the Rebate Fund under the Indenture) and by the unpaid assessments.
Principal of and interest on the Bonds are payable exclusively out of the Redemption Fund.
The payment of the amount of each Assessment Installment, interest and any penalties and collection
costs is secured by an assessment lien upon the applicable property in the District. Such lien is co -equal
with the latest lien thereon to secure the payment of general ad valorem property taxes, is not subject to
extinguishment by the sale of any property on account of the non - payment of general property taxes, and
is prior and superior to all 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
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 maybe 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 1915 Act provides that the court in a foreclosure
proceeding has the power to order property securing delinquent Assessment Installments to be sold for an
amount not less than all Assessment Installments, interest, penalties, costs, fees and other charges that are
delinquent at the time the foreclosure action is ordered and certain other fees and amounts as provided
therein (the "Minimum Price "). The court may also include subsequent delinquent Assessment Installments
and all other delinquent amounts.
The City may, at its discretion but is not required to, become the purchaser of any property sold in a
foreclosure proceeding. If the City becomes the purchaser, it shall pay into the Redemption Fund an amount
necessary to satisfy the judgment, less any advances by the City to cover delinquent Assessment Installments,
plus simple interest on such net amount at the interest rates borne 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 judgment debtor fails to redeem, and if the purchaser at the sale is the
judgment creditor (e.g., the City), an action may be commenced by the delinquent property owner within
90 days after the date of sale to set aside such sale. The constitutionality of the repeal of the one year
redemption period has not been tested; and there can be no assurance that, if tested, such legislation will be
upheld.
In the event such superior court foreclosure or foreclosures are necessary, there may be a delay
in payments to Bond Owners pending prosecution of the foreclosure proceedings and receipt by the
City of the proceeds of the foreclosure sale; it is also possible that no bid for the purchase of the
applicable property would be received at the foreclosure sale. See the section herein entitled "BOND
OWNERS' RISKS."
9
Covenant to Maintain Tax - Exempt Status
The City covenants that it will not make any use of the proceeds of the Bonds issued under the
Indenture which would cause the Bonds to become "arbitrage bonds" subject to federal income taxation
pursuant to the provisions of Section 148(k) of the Code, or to become "federally- guaranteed obligations"
pursuant to the provisions of Section 149(b) of the Code, or to become "private activity bonds" pursuant to
the provisions of Section 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.
Assessments Create a Lien
The Assessment Installments and any interest and penalties thereon constitute a lien against the
parcels on which they were imposed until the same is paid. Each lien is subordinate to all fixed special
assessment liens previously imposed upon the same property but has priority over all private liens and over
all fixed special assessment liens which may thereafter be created against the property. Each lien is also co-
equal to and independent of the lien for general and special taxes.
Limited City Obligation Upon Delinquency
The City's obligation to advance moneys to pay debt service on the Bonds in the event of delinquent
Assessment Installments is limited to the balance in the Reserve Fund.
Neither the faith and credit nor the taxing power of the City, the State of California or any
political subdivision thereof is pledged to the payment of the Bonds.
THE DISTRICT
Description
The District consists of approximately 19.8 acres located in the City. The District is bordered by
13" Street, Balboa Boulevard, Adams Street and Ocean Front. The District was formed by the City on June 8,
2010. The amount of assessments levied in the District was $4,345,000, and prepayments have been made
with respect to $1,674,993.62 of assessments. There are currently 171 parcels in the District with unpaid
assessments in the amount of $2,670,006.38.
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. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
ENGINEER'S ESTIMATE OF COSTS AND EXPENSES
DESIGN & CONSTRUCTION COSTS*
Electrical Costs (Southern California Edison)
Electrical Construction Costs
$2,032,695
Construction Contingency (-10 %)
203,270
Edison Design Engineering
77,35
$2,313,315
Telephone Costs (AT &T)
Telephone Construction Costs
$592,256
Construction Contingency ( -10 %)
59,226
AT &T Design Engineering
50,425
$701,907
Street / Alley Rehabilitation
$1,000,000
Construction Contingency ( -7.5 %)
75.000
$1,075,000
Estimated Utility Contribution for Equivalent Overhead System
-$423,93
Total Design & Construction Costs:
$3,666,290
INCIDENTAL EXPENSES(')
Total Incidental Expenses:
$374,710
Total Construction and Incidental Expenses:
$4,041,000
FINANCING COSTS(2)
Total Financing Costs (3):
$304,000
TOTAL AMOUNT TO ASSESSMENT: $4,345,000
Time Warner Cable is required to pay for undergrounding through the Franchise Agreement with the City.
ou Includes costs for inspection, engineering, administration, printing, consultants and legal fees.
c) Includes Reserve Requirement and Underwriter's discount. The actual Reserve Requirement represents 6% of the principal amount of the
Bonds.
at Amount shown does not include savings due to payments received during the cash collection period. Total Financing Costs amounted to
approximately $[186,900] due to these savings.
Source: Harris & Associates.
11
Assessments
The City Council has taken proceedings under the 1913 Act for the formation of the District and has
confirmed an assessment, which assessment and a related diagram were recorded in the office of the City
Engineer, acting as the Superintendent of Streets, and with the County Recorder of the County of Orange.
A notice of assessment, as prescribed in Section 3114 of the Streets and Highways Code, has been recorded
with the County Recorder of the County of Orange, whereupon the assessment attached as a lien upon the
property assessed within the District as provided in Section 3115 of the Streets and Highways Code. On
June 8, 2010, 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 Administrative Services Director pursuant to Section 8620 of the 1915 Act.
During the 30 -day cash collection period, prepayments have been made with respect to $1,674,993.62 of
assessments, and the Administrative Services Director has listed all unpaid assessments in the aggregate
amount of $2,670,006.38. The amounts to be assessed against the parcels of property to pay the costs and
expenses of the acquisition and construction of the improvements have been based on the estimated benefits
to be derived by the various properties within the District.
Teeter Plan
A Teeter Plan is an alternative method for the distribution of secured property taxes to local
agencies. Teeter Plan provisions are set forth in Sections 4701 to 4717 of the California Revenue and
Taxation Code. If a Teeter Plan is adopted and implemented by a County Board of Supervisors, local agencies
for which a county acts as "bank" and certain other public agencies and taxing areas located in that county
receive annually the full amount of their share of property taxes on the secured rolls, including delinquent
property taxes which have yet to be collected.
No Teeter Plan applies to the District.
Estimated Direct and Overlapping Indebtedness
Within the District's boundaries are numerous overlapping local agencies providing public
services. Some of these local agencies have outstanding bonds which are secured by taxes and assessments
on the parcels within the District and others have authorized but unissued bonds which, if issued, will be
secured by taxes and assessments levied on parcels within the District. The approximate amount of the
direct and overlapping debt secured by such taxes and assessment on the parcels within the District for
Fiscal Year [2009 -10] is shown in Table 3 below (the "Debt Report").
The Debt Report has been derived from data assembled and reported to the District by California
Municipal Statistics, Inc. Neither the District nor the City have independently verified the information in the
Debt Report and do not guarantee its completeness or accuracy.
12
TABLE 3
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
DIRECT AND OVERLAPPING DEBT
(Excludes Parcels with Prepaid Assessments)
2009 -10 Local Secured Assessed Valuation: $166,977,058
DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT:
%Applicable
Debt 7/15/10
Metropolitan Water District
0.009%
$ 23,780
Coast Community College District
0.169
565,675
Newport Mesa Unified School District
0.342
559,404
City of Newport Beach Assessment District No. 100
100.
2,670,000
(1)
TOTAL DIRECT AND OVERLAPPING TAX AND ASSESSMENT DEBT
$3,818,859
OVERLAPPING GENERAL FUND DEBT:
Orange County General Fund Obligations
0.044%
$149,361
Orange County Pension Obligations
0.044
25,007
Orange County Board of Education Certificates of Participation
0.044
8,461
Municipal Water District of Orange County Water Facilities Corporation
0.052
7,342
City of Newport Beach Certificates of Participation
0.437
17,436
TOTAL GROSS OVERLAPPING GENERAL FUND DEBT
$207,607
Less: MWDOC Water Facilities Corporation (100% self - supporting)
7.342
TOTAL NET OVERLAPPING GENERAL FUND DEBT
$200,265
GROSS COMBINED TOTAL DEBT
$4,026,466
(2)
NET COMBINED TOTAL DEBT
$4,019,124
(1) 1915 Act bonds to be sold.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and tax allocation bonds and
non- bonded capital lease obligations.
Ratios to 2009 -10 Assessed Valuation
Direct Debt ($2, 670, 000 ) ............................ ..........................1.62%
Total Direct and Overlapping Tax and Assessment Debt...... 2.31%
Gross Combined Total Debt ........................ ..........................2.44%
Net Combined Total Debt ............................ ..........................2.43%
STATE SCHOOL BUILDING AID REPAYABLE AS OF 6/30/10: $0
Source. California Municipal Statistics, Inc.
13
Assessed Value -to -Lien Ratios
As of July, 2010, the assessed value of the parcels with unpaid assessments based on the Fiscal Year
2009 -10 is $166,977,058. The total amount of unpaid assessments is $2,670,006.38. The total overall
value -to -lien ratio for parcels with unpaid assessments is 62.25 -to -1.
The numbers provided in the following Tables 4, 5 and 6 exclude parcels that paid all of the
assessment assigned to such parcels prior to issuance of the Bonds. Assessed values for Fiscal Year
2010 -11 are not available from the County Assessor as of July _, 2010. Article XIIIA of the California
Constitution provides that the full cash value base of real property used in determining taxable value may
be adjusted from year to year to reflect the inflation rate, absent a change in ownership, not to exceed a
two percent (2 %) increase for any given year; or may be reduced to reflect a reduction in the consumer
price index or deflation, comparable local data or any reduction in the event of declining property value
caused by damage, destruction or other factors (as described above). Such adjustment is computed on a
calendar year basis. Since Article XIIIA was approved, the annual adjustment for inflation has fallen
below the 2% limitation five times: 1% in Fiscal Year 1983 -84; 1.19% in Fiscal Year 1995 -96; 1.11% in
Fiscal Year 1996 -97; 1.85% in Fiscal Year 1999 -00; and 1.867% in Fiscal Year 2004 -05. For the first
time since Article XIIIA was approved, the State Board of Equalization has announced that there will be
deflation (negative inflation) of - 0.237% in Fiscal Year 2010 -11.
Table 4 provides information breaking down the overall value -to -lien ratio of parcels into groups of
parcels having a value -to -lien ratio within the specified range.
TABLE 4
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
ASSESSED VALUE -TO -LIEN RATIOS
Source: Harris & Associates
14
Fiscal Year 2009 -10 Assessed Value
Value -to -Lien
Number
Value -to-
Assessment
%of
Ratio
of Parcels
Land
Structure
Total
Lien Ratio
Lien
Lien
Greater than 100:1
36
$84,464,119
$9,845,157
$94,309,276
195.97:
1
$481,254.19
18.02%
50:1 to 99.99:1
39
34,637,788
8,880,462
43,518,250
70.48:
1
617,489.29
23.13%
25:1 to 49.99:1
31
13,487,693
3,589,351
17,077,044
34.49
:1
482,727.40
18.08%
10:1 to 24.99:1
31
5,501,313
3,014,893
8,516,206
16.51:
1
515,903.82
19.32%
3:1 to 9.99:1
34
2,586,794
969,488
3,556,282
6.21:
1
572,631.68
21.45%
Less than 2.99:1
0
0
0
0
0.00:
1
0
0.00%
Totals
171
$140,677,707
$26,299,351
$166,977,058
62.25:1
$2,670,006.00
100.00%
Source: Harris & Associates
14
Table 5 provides information breaking down the overall value -to -lien ratio of parcels by land use
within the District.
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
ASSESSED VALUE -TO -LIEN RATIOS BY PERMITTED LAND USE
Fiscal Year 2009 -10 Assessed Value
15
Number
of
Assessment
Land Use
Parcels
Land
Structure
Total
Lien
% of Lien
Single - Family Res.
114
$109,474,484
$19,828,703
$129,303,187
$1,834,695.15
68.72%
Multi- Family Res.
45
26,023,571
4,537,004
30,560,575
721,599.04
27.03%
Condominium
9
4,007,652
1,826,501
5,834,153
77,532.27
2.90%
Commercial
1
428,615
107,143
535,758
13,291.26
0.50%
Vacant
2
743,385
0
743,385
22,888.66
0.86%
Totals
171
$140,677,707
$26,299,351
$166,977,058
$2,670,006.00
100.00%
Source. Harris & Associates.
15
Top Ten Property Owners
Table 6 shows the ten property owners (as reflected in County records available as of June 30, 2010)
within the District with the largest unpaid assessments and the percentage of the assessments attributable to
each 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. 100
(13TH ST/BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
TOP TEN PROPERTY OWNERS WITH UNPAID ASSESSMENTS
All Other Properties: 156 $130,722,454 $24,543,428 $155,265,882 $2,326,095.11 87.12%
Total: 171 $140,677,707 $26,299,351 $166,977,058 $2,670,006.38 100.00%
County records may not reflect recent ownership changes., if any.
Source.' Harris & Associates.
Historical Property Tax Collections and Delinquencies
As of June 30, 2010, $104,464.99 of the property taxes levied in Fiscal Year 2009 -10 on the parcels
with unpaid assessments was delinquent. Property Taxes for Fiscal Year 2010 -I1 are not yet due. The level
of delinquencies relating to property taxes in Fiscal Year 2009 -10 and prior fiscal years reflects payment on
or before June 30, 2010, of delinquent property taxes and may not be indicative of future delinquencies for
the Assessment Installments.
IR
Fiscal Year 2009 -10 Assessed Value
Number
of
Assessment
% of
Owner Name M
Parcels
Land
Structure
Total
Lien
Lien
Ensminger, David Total
2
$860,883
$51,189
$912,072
$52,611.22
1.97%
Lear, Mary L. Total
1
205,584
39,802
245,386
41,535.18
1.56%
Bruder, Frank J. Total
2
336,945
51,496
388,441
35,443.36
1.33%
Doble One LLC Total
2
137,036
77,135
214,171
35,443.36
1.33%
Cancellieri, Jack A. Total
1
2,739,734
182,832
2,922,566
34,889.54
1.31%
Doostmard, Esmaiel Total
1
2,066,334
212,740
2,279,074
34,889.54
1.31%
Mc Aninch, Jeffrey & Jennifer Total
2
3,142,474
1,035,026
4,177,500
29,351.53
1.10%
Mc Laughlin, Thomas G. Total
2
112,416
59,694
172,110
26,582.52
1.00%
Winter Janet P. Total
1
268,158
31,536
299,694
26,582.51
1.00%
Woodworth Fred L. Total
1
85,689
14,473
100,162
26 582.51
1.00%
Subtotal Top 10 Owners:
15
$9,955,253
$1,755,923
$11,711,176
$343,911,27
12.88%
All Other Properties: 156 $130,722,454 $24,543,428 $155,265,882 $2,326,095.11 87.12%
Total: 171 $140,677,707 $26,299,351 $166,977,058 $2,670,006.38 100.00%
County records may not reflect recent ownership changes., if any.
Source.' Harris & Associates.
Historical Property Tax Collections and Delinquencies
As of June 30, 2010, $104,464.99 of the property taxes levied in Fiscal Year 2009 -10 on the parcels
with unpaid assessments was delinquent. Property Taxes for Fiscal Year 2010 -I1 are not yet due. The level
of delinquencies relating to property taxes in Fiscal Year 2009 -10 and prior fiscal years reflects payment on
or before June 30, 2010, of delinquent property taxes and may not be indicative of future delinquencies for
the Assessment Installments.
IR
Table 7 sets forth ad valorem property tax collections and delinquencies for properties in the District for Fiscal Years 2006 -07 through 2009 -10.
The six delinquent parcels listed below represent approximately 2.59% of the total unpaid assessment of $2,670,006.38.
TABLE 7
CITY OF NEWPORT BEACH
ASSESSMENT DISTRICT NO. 100
(13TH ST /BALBOA BLVD /ADAMS ST /OCEAN FRONT)
LIMITED OBLIGATION IMPROVEMENT BONDS
PROPERTY TAX DELINQUENCIES
FISCAL YEARS 2006 -07 THROUGH 2009 -10
Delinquencies — as of June 30, 20101'1
Fiscal Fiscal Fiscal Fiscal
Aggregate
Tax Roll as
Tax Roll as
Tax Roll as of
% of Total
Asmt Year Year Year Year
Delinquency
of Jul -09
of Jul -09
Jul -09
Confirmed
Assessment of
No. APN 2006 -07 2007 -08 2008 -09 2009 -101"
Anal"'
Land Value
Imp Value
Total Value
Assessment
$2,670,006.38
8 939 - 710 -21 — — — $11,727.76
$11,727.76
$742.,287
$260,891
$1,003,178
$8,860.83
0.33%
63 047 - 252 -12 $1,769.20 $1,634.02 $1,481.72 1,322.00
6,206.94
68,515
22,148
90,663
17,721.68
0.66%
118 047 - 282 -20 — — 22,186.45 39,006.42
61,192.87
3,311,295
54,705
3,366,000
11,629.85
0.44%
126 047 - 282 -15 — — — 38,833.42
38,833.42
3,344,929
30,071
3,375,000
11,629.85
0.44%
197 048- 074 -02 — — — 8,797.83
8,797.83
1,302,909
210,591
1,513,500
11,629.85
0.44%
269 932 - 160 -30 — — — 4,777.56
4,777.56
478,707
166,316
645,023
7,75123
0.29%
$1,769.20 $1,634.02 $23,668.17 $104,464.99
$131,536.38
$9,248,642
$744,722
$9,993,364
$69,225.69
2.59%
01 Represents the amount levied in the indicated fiscal year together, with penalties and interest accrued through June 30, 2010. Excludes penalties and interest accrued after June 30, 2010.
Other parcels were delinquent during Fiscal Year 2009 -10 or earlier fiscal years but
paid the amounts due prior to June 30, 2010.
1z1 The City does not have information regarding the aggregate Fiscal Year 2009 -10 tax levies for the parcels included within the District.
Other parcels were delinquent during
Fiscal Year
2009 -10 but paid the amounts due prior to June 30, 2010.
(3) The June 30, 2010, delinquencies of $131,536.38 represent approximately 1.3% of
the assessed value
of the delinquent
parcels. Excludes penalties and interest accrued
after June 30,
2010.
Source: Harris & Associates; County Treasurer -Tax Collector.
17
.BOND OWNERS' RISKS
In addition to the other information contained in this Ojfzcial 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. To the extent available, the Reserve Fund will be used to pay
delinquent Assessment Installments should they occur. The assessments are secured by a lien on the parcels of
land located in the District and the City may institute foreclosure proceedings to sell land with delinquent
Assessment Installments for the amount of such delinquent installments in order to obtain funds to pay
debt service on the Bonds.
Failure by owners of the parcels to pay Assessment Installments when due, depletion of the
Reserve Fund or the inability of the City to sell parcels which have been subject to foreclosure proceedings for
amounts sufficient to cover the delinquent Assessment Installments for such parcels may result in the
inability of the City to make full or punctual payments of debt service on the Bonds, and Bond Owners
would therefore be adversely affected.
Risks of Real Estate Secured Investments Generally
The Bond Owners will be subject to the risks generally incident to an investment secured by real estate,
including, without limitation, (i) adverse changes in local market conditions, such as changes in the market value of
real property in the vicinity of the District, the supply of or demand for comparable properties in such area and the
market value of residential or commercial property in the event of sale or foreclosure; (ii) changes in real estate tax
rate and other operating expenses, governmental Hiles (including, without limitation, zoning laws and laws relating
to endangered species and hazardous materials) and fiscal policies; and (iii) natural disasters (including, without
limitation, earthquakes, tsunamis, fires and floods), which may result in uninsured losses.
Unpaid Assessment Installments do not constitute a personal indebtedness of the owners of the parcels
within the District. There is no assurance the owners will be able to pay the Assessment Installments or
that they will pay such instalhnents 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."
EFi
Property Tax Delinquencies
As of June 30, 2010, six parcels within the Assessment District remained delinquent in payment
of taxes and assessments levied in Fiscal Year 2009 -10. The six parcels represent approximately 2.59% of
the unpaid assessments of $2,670,006.38 levied on the parcels that did not pay the assessments during the
cash collection period. Property taxes for Fiscal Year 2010 -11 are not yet due. The delinquency rate
relating to property taxes reflects payment on or before June 30, 2010 of delinquency property taxes and 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 principal and interest
due on Bonds that have then matured, past due interest or the principal and interest on Bonds coming due
during the current year, but it does not appear to the Administrative Services Director that there will be an
ultimate loss to the Bond Owners, the Administrative Services Director 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 Administrative Services Director that there is a danger of an ultimate loss
accruing to the Bond Owners for any reason, he or she is required pursuant to the 1915 Act to withhold
payment on all matured Bonds and interest on all Bonds and report the facts to the City Council so that the
City Council may take proper action to equitably protect all Bond Owners.
Concentration of Ownership
Ownership of the parcels is concentrated among approximately 171 property owners. See "THE
DISTRICT — Top Ten Property Owners." The timely payment of the Assessment Installment will depend
upon the willingness and ability of the owners of the parcels to pay such installments when due. The City
has not undertaken to assess the financial condition of the owners of the parcels or the likelihood that they
will pay or will be able to pay the Assessment Installments when due and expresses no view concerning
these matters.
Non -Cash Payments of Assessments
The 1915 Act may permit the owner of a parcel that is subject to an unpaid Assessment Installment to
tender any bond secured by such assessment in payment or partial payment of any installment of the
assessment or interest or penalties thereon which may be due or payable. A bond so tendered is to be
accepted at the par amount thereof and credit is to be given for any interest thereon accrued to the date of
the tender. Thus, if Bonds can be purchased at a discount, it may be to the advantage of a property owner to
pay amounts due with respect to an assessment by tendering a Bond. Such a practice would decrease
the cash flow available to the City to make payments with respect to other Bonds then outstanding and could
result in a default in payment on the Bonds.
Land Values
The value of the property within the District is a critical factor in determining the investment quality
of the Bonds. If a property owner is delinquent in the payment of Assessment Installments, the District's only
remedy is to commence foreclosure proceedings against the delinquent parcel in an attempt to obtain funds to
pay the delinquent Assessment Installments. Reductions in property values due to a downturn in the economy,
physical events, such as earthquakes, tsunamis, fires or floods, stricter land use regulations, delays in
development or other events will adversely impact the security underlying the assessments. See "THE
DISTRICT— Assessed Value -to -Lien Ratios" herein.
19
The assessed values of the property within the District contained herein do not represent market values
arrived at through an appraisal process and generally reflect only the sales price of a parcel when acquired by
its current owner, adjusted annually by an amount determined by the County Assessor not to exceed an
increase of more than 2% per fiscal year. No assurance can be given that a parcel could actually be sold for its
assessed value. No assurance can be given that the values of the property within the District will not decline in
the future if one or more events, such as natural disasters or adverse economic conditions, occur.
No assurance can be given that any bid will be received for a parcel with delinquent Assessment
Installments offered for sale at foreclosure or, if a bid is received, that such bid will be sufficient to pay all
delinquent Assessment Installments. See "SECURITY FOR THE BONDS — Covenant for Superior Court
Foreclosure."
Limited City Obligation Upon Delinquency
Pursuant to the 1915 Act, the City has elected not to be obligated to advance funds from the treasury
of the City for delinquent Assessment Installments. The only obligation of the City with respect to such
delinquencies and the consequent deficiencies in the Redemption Fund is to advance money to the
Redemption Fund from the Reserve Fund. The City has no obligation to replenish the Reserve Fund
except to the extent that delinquent Assessment Installments are paid or proceeds from foreclosure sales are
realized. There is no assurance that the balance in the Reserve Fund will always be adequate to pay all
delinquent Assessment Installments and if during the period of delinquency there are insufficient funds in the
Reserve Fund, a delay may occur in payments to the Bond Owners.
Collection of the Assessments
The Assessment Installments are to be collected in the same manner as ordinary ad valorem real
property taxes are collected and, except as provided in the special covenant for foreclosure in the Indenture, are
to be subject to the same penalties and the same procedure, sale and lien priority in case of delinquency as is
provided for ad valorem real property taxes. Pursuant to these procedures, if taxes are unpaid for a period
of five years or more, the property may be deeded to the State and then is subject to sale by the County.
Pursuant to the 1915 Act, in the event any delinquency in the payment of an Assessment Installment
occurs, the City may commence an action in superior court to foreclose the lien therefor within the specified
time limits. In such an action, the real property subject to the unpaid amount may be sold at judicial
foreclosure sale. Such judicial foreclosure action is not mandatory. Amendments to the 1915 Act enacted in
1988 and effective January 1, 1989, provide that under certain circumstances property may be sold upon
foreclosure at a lesser Minimum Price or without a Minimum Price. The court may authorize a sale at less
than the Minimum Price if the court deternrines that sale at less than Minimum Price will not result in an
ultimate loss to the Bond Owners or, under certain circumstances, if owners of 75% or more of the
outstanding Bonds consent to such sale. See "SECURITY FOR THE BONDS — Covenant for Superior
Court Foreclosure — Judicial Foreclosure Proceeding."
There can be no assurance that foreclosure proceedings will occur in a timely manner so as to avoid a
delay in payments of debt service on the Bonds. The City has covenanted that the City will commence
foreclosure upon the occurrence of a delinquency as provided in the Indenture and thereafter diligently
prosecute an action in the superior court to foreclose the lien of the delinquent Assessment Installments
against parcels of land in the District for which such installment has been billed but has not been paid and will
diligently prosecute and pursue such foreclosure proceedings to judgment and sale, all as provided in the
Indenture. See "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure." In the event
that sales or foreclosures of property are necessary, there could be a delay in payments on the Bonds
pending such sales or the prosecution of foreclosure proceedings and receipt by the City of the proceeds of
sale.
20
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 will be administered by
the Paying Agent in accordance with and pursuant to the provisions of the Indenture. If a deficiency
occurs in the Redemption Fund for payment of interest on or principal of the Bonds, the Paying Agent will
transfer into such fund an amount out of the Reserve Fund needed to pay debt service on the Bonds. There
is no assurance that the balance in the Reserve Fund will always be adequate to pay the debt service on the
Bonds in the event of delinquent Assessment Installments.
If, during the period of delinquency, there are insufficient funds in the Reserve Fund to pay the
principal of and interest on the Bonds as they become due, a delay may occur in payment of principal and/or
interest to the owners of the Bonds.
Owner Not Obligated to Pay Assessments
Unpaid assessments do not constitute a personal indebtedness of the owner of parcels within the
District, and the property owners have made no commitment to pay the principal of or interest on the Bonds
or to support payment of the Bonds in any manner. There is no assurance that the property owners have
the ability to pay the Assessment Installments or that, even if they have the ability, they will choose to pay
such Assessment Installments. An owner may elect not to pay the assessments when due and cannot be legally
compelled to do so. If an owner decides it is not economically feasible to develop or to continue owning its
property encumbered by the lien of the assessment, or decides that for any other reason it does not want to
retain title to the property, such owner may choose not to pay assessments and to allow the property to be
foreclosed. Such a choice may be made due to a decrease in the market value of the property. A
foreclosure of the property will result in such owner's interest in the property being transferred to another
party. Neither the City nor any Bond Owner will have the ability at any time to seek payment directly
from any owner of property within the District of any assessment or any principal or interest due on the Bonds
or the ability to control who becomes a subsequent owner of any property within the District.
Parity Taxes and Special Assessments; Future Indebtedness
The ability or willingness of a property owner in the District to pay the Assessment Installments
could be affected by the existence of other taxes and assessments imposed upon the property. The
assessments and any penalties thereon constitute 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 has not prohibited itself from establishing assessment districts, community facilities
districts or other districts which might impose assessments or taxes against property in the District. The
imposition of additional liens on a parity with the assessments could reduce the ability or willingness of
the owners of parcels in the District to pay the assessments and increases the possibility that foreclosure
21
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."
Except for assessments securing the Bonds and direct and overlapping tax and assessment debt
referenced in Table 3, the City is not aware of any assessment liens on the property in the District.
Bankruptcy and Foreclosure
The payment of the assessments and the ability of the City to foreclose the lien of a delinquent unpaid
assessment, as discussed in "SECURITY FOR THE BONDS — Covenant for Superior Court Foreclosure,"
may be limited by bankruptcy, insolvency or other laws generally affecting creditors' rights or by the laws
of the State of California relating to judicial foreclosure. In addition, the prosecution of a foreclosure
action could be delayed due to crowded local court calendars, delays in the legal process and procedural
delaying tactics.
The various legal opinions to be delivered concurrently with the delivery of the Bonds (including
Bond Counsel's approving legal opinion) will be qualified as to the enforceability of the various legal
instruments by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors'
rights, by the application of equitable principles and by the exercise of judicial discretion in appropriate cases.
Although bankruptcy proceedings would not cause the assessments to become extinguished,
bankruptcy of a property owner or of a partner or other equity owner of a property owner could result in a
stay in the enforcement of the lien for the assessment, a delay in prosecuting superior court foreclosure
proceedings or adversely affect the ability or willingness of a property owner to pay the Assessment
Installments and could result in delinquent Assessment Installments not being paid in full. In addition, the
amount of any lien on property securing the payment of delinquent Assessment Installments could be
reduced if the value of the property were determined by the bankruptcy court to have become less than the
amount of the lien and the amount of the delinquent Assessment Installments in excess of the reduced lien
could then be treated as an unsecured claim by the court. Any such stay of the enforcement of the lien, or
any such delay or nonpayment, would increase the likelihood of a delay or default in payment of the
principal of and interest on the Bonds and the possibility of delinquent Assessment Installments not being
paid in full. Where property is encumbered by liens securing mortgage loans, it is highly probable that
bankruptcy of a property owner would delay foreclosure for an extended period of time. Such a delay would
increase the likelihood of a delay or default in payment of the principal and interest on the Bonds.
FDIC /Federal Government Interests in Parcels
The ability of the City to collect interest and penalties specified by the 1915 Act and to foreclose the
lien of delinquent Assessment Installments may be limited in certain respects with regard to parcels in
which the Federal Deposit Insurance Corporation (the "FDIC "), the Internal Revenue Service, the Drug
Enforcement Agency or other similar federal government agencies has or obtains an interest.
Specifically, with respect to the FDIC, in the event that any financial institution making a loan
which is secured by parcels is taken over by the FDIC and the applicable Assessment Installment is not paid,
the remedies available to the City may be constrained. The FDIC's policy statement regarding the payment of
state and local real property taxes (the "Policy Statement ") provides that taxes other than ad valorem taxes
which are secured by a valid lien in effect before the FDIC acquired an interest in a property will be paid
unless the FDIC determines that abandonment of its interests is appropriate. The Policy Statement
provides that the FDIC generally will not pay installments of non -ad valorem taxes, such as the
Assessment Installments, which are levied after the time the FDIC acquires its fee interest, nor will the
FDIC recognize the validity of any hen 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
22
lien to be foreclosed 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 at a judicial foreclosure sale would prevent or delay
the foreclosure sale.
Natural Disasters
Property within the District may be subject to unpredictable seismic activity, fires, floods or other
natural disasters. Southern California is a seismically active area. Seismic activity represents a potential
risk for damage to buildings, roads and property within the District. In addition, land susceptible to
seismic activity may be subject to liquefaction during the occurrence of such event.
Homes within the District near the shore of the Pacific Ocean are susceptible to flooding as a result
of high tides from the Pacific Ocean. The City currently uses a "tidal valve" system to prevent flooding and
to protect the homes. No assurances can be given that such system will always protect homes in the District
near the shore of the Pacific Ocean from high tides and flooding. Should such homes be damaged or
destroyed as a result of flooding, owners of such homes may be unable or unwilling to pay the Assessment
Installments when due.
In the event of a severe earthquake, tsunami, fire, flood or other natural disaster, there may be
significant damage to both property and infrastructure in the District. As a result, a substantial portion of
the property owners may be unable or unwilling to pay the Assessment Installments when due. In addition,
the value of land in the District could be diminished in the aftermath of such a natural disaster, reducing
the resulting proceeds of foreclosure sales in the event of delinquencies in the payment of the Assessment
Installments.
Hazardous Substances
While government taxes, assessments and charges are a common claim against the value of a parcel,
other less common claims may also be relevant. The value of a parcel may be reduced as a result of a claim
with regard to a hazardous substance. In general, the owners and operators of a parcel may be required by
law to remedy conditions relating to releases or threatened releases of hazardous substances. The federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980, sometimes referred to as
"CERCLA" or the "Super Fund Act," is the most well known and widely applicable of these laws, but
California laws with regard to hazardous substances are also stringent and similar in effect. Under many
of these laws, the owner (or operator) is obligated to remedy a hazardous substance condition of a parcel
whether or not the owner (or operator) had anything to do with creating or handling the hazardous
substance. The effect, therefore, should any of the parcels within the District be affected by a hazardous
substance, is to reduce the marketability and value by the costs of remedying the condition because the
prospective purchaser of such a parcel will, upon becoming the owner of such parcel, become obligated to
remedy the condition just as the seller of such a parcel is so obligated.
No Acceleration
The Bonds do not contain a provision allowing for the acceleration of the Bonds in the event of a
payment default or other default under the terms of the Bonds or the Indenture. There is no provision in
the Act or the Indenture for acceleration of the Assessment Installments in the event of a payment default
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
23
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 100 of the
Internal Revenue Code of 1986, as amended. Should such an event of taxability occur, the Bonds are not
subject to early redemption and will remain outstanding to maturity or until redeemed under the optional
redemption provisions of the Indenture. See "THE BONDS — Redemption."
Future legislative proposals, if enacted into law, clarification of the Code or court decisions may
cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject
to or exempted from state income taxation, or otherwise prevent beneficial owners from realizing the full
current benefit of the tax status of such interest. The introduction or enactment of any such future
legislative proposals, clarification of the Code or court decisions may also affect the market price for, or
marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisors
regarding any pending or proposed federal or state tax legislation, regulations or litigation, as to which
Bond Counsel expresses no opinion.
IRS Audit of Tax - Exempt Bond Issues
The Internal Revenue Service has initiated an expanded program for the auditing of tax - exempt
bond issues, including both random and targeted audits. It is possible that the Bonds will be selected for
audit by the Internal Revenue Service. It is also possible that the market value of the Bonds might be
affected as a result of such an audit of the Bonds (or by an audit of similar bonds).
Limited Secondary Market
There can be no guarantee that there will be a secondary market for the Bonds or, if a secondary
market exists, that such Bonds can be sold for any particular price. Although the City has committed to
provide certain statutorily - required financial and operating information, there can be no assurance that such
information will be available to Bond Owners on a timely basis. The failure to provide the required annual
financial information does not give rise to monetary damages but merely an action for specific performance.
Occasionally, because of general market conditions, lack of current information, the absence of a credit
rating for the Bonds or because of adverse history or economic prospects connected with a particular issue,
secondary marketing practices in connection with a particular issue are suspended or terminated.
Additionally, prices of issues for which a market is being made will depend upon then prevailing
circumstances. Such prices could be substantially different from the original purchase price.
Ballot Initiatives and Legislative Measures
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.
24
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 XIIIC ( "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 June 8, 2010, 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 XIBC 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 2010-
11, in amounts equal to the principal of and interest on the Bonds coming due in the succeeding calendar year,
plus certain administrative costs. Although the matter is not free from doubt, it is unlikely that a court would
hold that the initiative power can be used to reduce or repeal the unpaid assessments which are pledged as
security for payment of the Bonds or to otherwise interfere with performance of the mandatory, statutory
duty of the City and the County Auditor with respect to the unpaid assessments which are pledged as
security for payment of the Bonds.
The interpretation and application of the Initiative will ultimately be determined by the courts
with respect to a number of the matters discussed above, and it is not possible at this time to predict with
certainty the outcome of such determination.
CONCLUDING INFORMATION
Continuing Disclosure
The City has agreed to execute a Disclosure Dissemination Agent Agreement (the "Disclosure
Agreement ") prior to delivery of the Bonds for the benefit of the Underwriter, holders and beneficial owners
of the Bonds to provide certain financial information and operating data relating the District not later than
March 31 after the end of the City's fiscal year (the "Annual Report") and to provide notices of the
occurrence of certain enumerated events (the "Listed Events "). Each Annual Report will be filed on
behalf of the City by the Dissemination Agent with the Municipal Securities Rulemaking Bond (the
"MSRB ") through the Electronic Municipal Market Access system (the "EMMA System ") in an
electronic format and accompanied by identifying information as prescribed by the MSRB, with a copy to
the Paying Agent and the Underwriter. Any Notice Event (as defined in the Disclosure Dissemination
Agent Agreement) will be filed by the City or the Dissemination Agent on behalf of the City, with the
MSRB through the EMMA System. The specific nature of the information to be included in the Annual
Report and the notices of Notice Events is set forth in APPENDIX F — "DISCLOSURE DISSEMINATION
AGENT AGREEMENT." The City has agreed to execute the Disclosure Agreement in order to assist the
25
Underwriter in complying with Securities and Exchange Commission Rule 15c2- 12(b)(5) (the
"Rule "). See APPENDIX F —"DISCLOSURE DISSEMINATION AGENT AGREEMENT."
It should be noted that the City is required to file certain financial statements with the Annual Report.
This requirement has been included in the Disclosure Agreement solely to satisfy the provisions of the Rule.
The inclusion of this information does not mean that the Bonds are secured by any resources or property of
the City other than as described hereinabove. See "BOND OWNERS' RISKS — Limited City Obligation
Upon Delinquency." It should also be noted that the list of significant events which the City has agreed to
report includes one item which has absolutely no application to the Bonds. These items have been included in
the list solely to satisfy the requirements of the Rule. Any implication from the inclusion of these items in
the list, to the contrary notwithstanding, the Bonds have not been assigned a credit rating.
The City has never failed to comply in all material respects with any previous undertakings with
regard to the Rule to provide annual reports or notices of material events.
Legal Opinion
All proceedings in connection with the issuance of the Bonds are subject to the approval of Meyers,
Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond Counsel ( "Bond Counsel "). The
opinion of Bond Counsel attesting to the validity of the Bonds will be delivered with each Bond. A form of
the opinion to be delivered by Bond Counsel is set forth in Appendix D hereto.
The descriptions of the Bonds and statements of law and legal conclusions set forth in this Official
Statement under the headings "THE BONDS," "SECURITY FOR THE BONDS," "CONCLUDING
INFORMATION — Tax Matters" and Appendices C and D herein have been reviewed by Bond Counsel.
Bond Counsel's engagement is limited to a review of the legal procedures required for the authorization of the
Bonds and the exemption of interest on the Bonds from income taxation. See "CONCLUDING
INFORMATION — Tax Matters" herein. The opinion of Bond Counsel will not consider or extend to any
documents, agreements, representations, offering circulars or other material of any kind concerning the Bonds,
including the Official Statement, not mentioned in this paragraph.
Tax Matters
In the opinion of Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation, Bond
Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming,
among other things, the accuracy of certain representations and compliance with certain covenants,
interest on the Bonds is excluded from gross income for federal income tax purposes under Section 100 of
the Code and is exempt from State of California personal income taxes. In the further opinion of Bond
Counsel, interest on the Bonds is not a specific preference item for purposes of the federal individual or
corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in
adjusted current earnings when calculating corporate alternative minimum taxable income. Bond Counsel
expresses no opinion regarding any other tax consequences related to the ownership or disposition of, or
the accrual or receipt of interest on, the Bonds. A complete copy of the proposed form of opinion of
Bond Counsel is set forth in Appendix D hereto.
To the extent the issue price of any maturity of the Bonds is less than the amount to be paid at
maturity of such Bonds (excluding amounts stated to be interest and payable at least annually over the
term of such Bonds), the difference constitutes "original issue discount," the accrual of which, to the
extent properly allocable to each beneficial owner thereof, is treated as interest on the Bonds which is
excluded from gross income for federal income tax purposes and State of California personal income
taxes. For this purpose, the issue price of a particular maturity of the Bonds is the first price at which a
substantial amount of such maturity of the Bonds is sold to the public (excluding bond houses, brokers or
M
similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers).
The original issue discount with respect to any maturity of the Bonds accrues daily over the term to
maturity of such Bonds on the basis of a constant interest rate compounded semiannually (with straight -
line interpolations between compounding dates). The accruing original issue discount is added to the
adjusted basis of such Bonds to determine taxable gain or loss upon disposition (including sale,
redemption or payment on maturity) of such Bonds. Beneficial owners of the Bonds should consult their
own tax advisors with respect to the tax consequences of ownership of such Bonds with original issue
discount, including the treatment of beneficial owners who do not purchase such Bonds in the original
offering to the public at the first price at which a substantial amount of such Bonds is sold to the public.
Bonds purchased, whether at original issuance or otherwise, for an amount higher than their
principal amount payable at maturity (or, in some cases, at their earlier call date) ( "Premium Bonds ") will
be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond
premium in the case of Bonds, like the Premium Bonds, the interest on which is excluded from gross
income for federal income tax purposes. However, the amount of tax- exempt interest received, and a
beneficial owner's basis in a Premium Bond, will be reduced by the amount of amortizable bond premium
properly allocable to such beneficial owner. Beneficial owners of Premium Bonds should consult their
own tax advisors with respect to the property treatment of amortizable bond premium in their particular
circumstances.
The Code imposes various restrictions, conditions and requirements relating to the exclusion from
gross income for federal income tax purposes of interest on obligations such as the Bonds. The City, as
issuer of the Bonds, has made certain representations and covenanted to comply with certain restrictions,
conditions and requirements designed to ensure that interest on the Bonds will not be included in federal
gross income. Inaccuracy of these representations or failure to comply with these covenants may result in
interest on the Bonds being included in gross income for federal income tax purposes, possibly from the
date of original issuance of the Bonds. The opinion of Bond Counsel assumes the accuracy of these
representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or
to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or
any other matters coming to Bond Counsel's attention after the date of issuance of the Bonds may
adversely affect the value of, or the tax status of interest on, the Bonds.
Certain requirements and procedures contained or referred to in the Indenture, the Tax Certificate
and other relevant documents may be changed and certain actions (including, without limitation,
defeasance of the Bonds) may be taken or omitted under the circumstances and subject to the terms and
conditions set forth in such documents. Bond Counsel expresses no opinion as to any Bond or the interest
thereon if any such change occurs or action is taken or omitted upon the advice or approval of any person
other than Meyers, Nave, Riback, Silver & Wilson, a Professional Law Corporation.
Although Bond Counsel is of the opinion that interest on the Bonds is excluded from gross
income for federal income tax purposes and is exempt from State of California personal income taxes, the
ownership or disposition of, or the accrual or receipt of interest on, the Bonds may otherwise affect a
beneficial owner's federal, state or local tax liability. The nature and extent of these other tax
consequences depends upon the particular tax status of the beneficial owner or the beneficial owner's
other items of income or deduction. Bond Counsel expresses no opinion regarding any such other tax
consequences.
Future legislation, if enacted into law, or clarification of the Code, may cause interest on the
Bonds to be subject, directly or indirectly, to federal income taxation, or otherwise prevent beneficial
owners from realizing the full current benefit of the tax status of such interest. The introduction or
enactment of any such future legislation or clarification of the Code may also affect the market price for,
or marketability of, the Bonds. Prospective purchasers of the Bonds should consult their own tax advisers
27
regarding any pending or proposed federal tax legislation, as to which Bond Counsel expresses no
opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not
directly addressed by such authorities, and represents Bond Counsel's judgment as to the proper treatment
of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (the
"IRS ") or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance
about the future activities of the City or about the effect of future changes in the Code, the applicable
regulations, the interpretation thereof or the enforcement thereof by the IRS. The City has covenanted,
however, to comply with the requirements of the Code.
Bond Counsel's engagement with respect to the Bonds ends with the issuance and delivery of the
Bonds, and, unless separately engaged, Bond Counsel is not obligated to defend the City or the beneficial
owners regarding the tax- exempt status of the Bonds in the event of an audit examination by the IRS.
Under current procedures, parties other than the City and its appointed counsel, including the beneficial
owners, would have little, if any, right to participate in the audit examination process. Moreover, because
achieving judicial review in connection with an audit examination of tax - exempt bonds is difficult,
obtaining an independent review of IRS positions with which the City legitimately disagrees may not be
practicable. Any action of the IRS, including but not limited to selection of the Bonds to audit, or the
course or result of such audit, or the audit of bonds representing similar tax issues may affect the market
price for, or the marketability of, the Bonds, and may cause the City or the beneficial owners to incur
significant expense.
No Litigation
There is no action, suit or proceeding known by the City to be pending at the present time
restraining or enjoining the delivery of the Bonds or in any way contesting or affecting the validity of the
Bonds or any proceedings of the City taken with respect to the execution or delivery thereof. A no
litigation certificate executed by the City will be required to be delivered to the Underwriter simultaneously
with the delivery of the Bonds.
Rating
Standard & Poor`s Ratings Group ( "S &P ") has assigned its municipal rating of "" to the Bonds.
The rating reflects only the views of S &P and any explanation of the significance of the rating should be
obtained from Standard & Poor's Ratings Group, 55 Water Street, New York, New York 10041
(212) 438 -1000. There is no assurance that the rating will continue for any given period of time or that it will
not be revised or withdrawn entirely by S &P if, in the judgment of S &P, circumstances so warrant. Any such
downward revision or withdrawal of the rating may have an adverse effect on the market price of the Bonds.
The City has no obligation to maintain any 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.
Underwriting
The Bonds were sold to Southwest Securities, Inc. (the "Underwriter ") at a negotiated sale. The
Underwriter has agreed to purchase the Bonds at a price of $ ($ par value, less an
Underwriter's discount of $ and less a net original issue 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
lJ
such purchase contract, the approval of certain legal matters by Bond Counsel and certain other
conditions.
The Underwriter may offer and sell Bonds to certain dealers and others at prices lower than the
offering prices stated on the inside cover page hereof. The offering prices may be changed from time to time
by the Underwriter.
Financial Advisor
Fieldman, Rolapp & Associates, Irvine, California, served as financial advisor to the City with
respect to the sale of the Bonds. Fieldman, Rolapp & Associates will receive compensation contingent upon
the sale and delivery of the Bonds.
Miscellaneous
All quotations from, and summaries and explanations of, the Indenture and other statutes and
documents contained herein do not purport to be complete, and reference is made to said documents, the
Indenture and statutes for full and complete statements of their provisions.
This Official Statement is submitted only in connection with the sale of the Bonds by the City. All
estimates, assumptions, statistical information and other statements contained herein, while taken from sources
considered reliable, are not guaranteed by the City. The information contained herein should not be
construed as representing all conditions affecting the City or the Bonds.
29
The execution and delivery of this Official Statement have been authorized by the City.
CITY OF NEWPORT BEACH
am
Mayor
SC
APPENDIX A
ASSESSMENT DIAGRAM
A -1
APPENDIX B
INFORMATION ABOUT THE NEWPORT BEACH AREA
This appendix sets forth general information about the Newport Beach area. This information is
included only for general background purposes. It is not intended to suggest that the Bonds are payable
from any source other than the assessments and certain funds and accounts created by the Indenture.
General Description
The City of Newport Beach (the "City ") was incorporated September 1, 1906. The Council-
Manager form of government was established by Municipal Charter on January 7, 1955. The City is located
in Orange County, California, and is 75 miles north of San Diego, 15 miles south of Long Beach and 50 miles
south of Los Angeles. The tourist population is high throughout the year. lts harbor, recreation and special
attractions draw many to the City.
Climate & Topography
The City's climate is moderate. Because the City is a beach city, temperatures are generally
cooler in the summer and warmer in the winter than other Southern California areas. While much of the
City is just above sea level, the City does rise inland. The total area of the City in square miles is: Land 25.0,
Bay -2.5 and Ocean -23.0, for a total of 50.5 square miles.
Population
The table below shows the recent population of the City and County of Orange (the "County ").
POPULATION GROWTH, 2005 -2010
City of Newport Beach and the County of Orange
Source: California State Department of Finance, E -4 Population Estimates for Cities, Counties and the State, 2001 -2010 with 2000
DRUBenchmark.
City of
County of
Year
Newport Beach
Orange
2005
82,778
3,044,980
2006
83,160
3,063,159
2007
84,631
3,080,383
2008
84,231
3,107,500
2009
86,252
3,139,017
2010
86,738
3,166,461
Source: California State Department of Finance, E -4 Population Estimates for Cities, Counties and the State, 2001 -2010 with 2000
DRUBenchmark.
Employment
The following table summarizes wage and salary employment in the County from 2005 through
April 2010. The total wage and salary employment in the County decreased by -8.9% between 2005
and Apri12010. "Service Providing" is the largest employment sector in the County.
ANNUAL AVERAGE INDUSTRY EMPLOYMENV)
Orange County Primary PMSA
M
2005
2006
2007
2008
2009
2010*
Total Farm
5,600
5,300
5,000
4,600
3,900
4,600
Total Nonfarm
1,491,000
1,518,900
1,515,500
1,481,600
1,371,400
1,359,400
Total Private
1,335,600
1,362,200
1,356,200
1,320,900
1,214,200
1,201,100
Goods Producing
283,500
289,900
284,000
265,900
228,600
216,400
Natural Resources and Mining
700
600
600
600
500
500
Construction
99,900
106,600
100,100
91,200
73,600
63,900
Manufacturing
182,900
182,700
180,400
174,100
154,500
152,000
Service Providing
1,207,400
1,229,000
1,231,500
1,215,700
1,142,800
1,143,000
Trade, Transportation and Utilities
269,800
272,800
277,000
271,600
250,000
245,400
Wholesale Trade
83,000
83,700
86,900
86,700
80,100
78,300
Retail Trade
158,100
160,800
161,200
155,600
141,900
139,500
Transportation, Warehousing and Utilities
28,700
28,200
28,900
29,300
27,900
27,600
Information
32,800
31,900
31,200
30,100
27,400
25,200
Financial Activities
138,400
138,200
127,700
113,100
105,600
104,500
Professional and Business Services
264,300
274,500
273,300
266,600
239,000
237,900
Educational and Health Services
133,500
137,700
142,600
150,700
151,100
154,300
Government
155.300
156.700
159.400
160.800
157.300
158.300
Total, All Industries
1,496,500
1,524,300
1,520,500
1,486,200
1,375,400
1,364,000
Note: The "Total All Industries" data is not directly comparable to the employment data
found herein.
* 2010 data through April 2010.
o 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: State of California, Employment Development Department,
Orange PMSA
Industry Employment & Labor Force by Annual
Average, March 2009 Benchmark.
M
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 2005 to 2010.
CIVILIAN LABOR FORCE, EMPLOYMENT AND UNEMPLOYMENT
City of Newport Beach, County of Orange, State of California
and United
States of America
Annual
Averages, 2005 -2010
Civilian
Civilian Labor
Civilian
Civilian
Unemployment
Year and Area
Force
Employments')
Unemployment(2)
Rate(3)
2005
Newport Beach
45,200
44,200
1,100
2.3%
Orange County
1,602,262
1,541,800
60,400
3.8
California
17,544,800
16,592,200
952,600
5.4
United States (4)
149,320,000
141,730,000
7,591,000
5.1
2006
Newport Beach
45,900
44,900
1,000
2.1%
Orange County
1,623,700
1,568,300
55,400
3.4
California
17,718,500
16,851,600
866,900
4.9
United States t4)
151,428,000
144,427,000
7,001,000
4.6
2007
Newport Beach
46,000
44,900
1,100
2.4%
Orange County
1,633,100
1,568,800
64,300
19
California
17,970,800
17,011,000
959,800
5.3
United States (4)
153,124,000
146,047,000
7,078,000
4.6
2008
Newport Beach
45,600
44,100
1,500
3.3%
Orange County
1,625,7300
1,539,800
85,500
5.3
California
18,251,600
16,938,300
1,313,200
7.2
United States (4)
154,287,000
145,362,000
8,924,000
5.8
2009
Newport Beach
44,000
41,500
2,500
5.7%
Orange County
1,594,200
1,451,000
143,200
9.0
California
18,250,200
16,163,900
2,086,200
11.4
United States (4)
154,142,000
139,877,000
14,265,000
9.3
2010*
Newport Beach
44,200
41,500
2,600
5.8%
Orange County
1,602,400
1,450,800
151,600
9.2
California
18,314,600
16,014,600
2,300,000
11.9
United States (4)
153,911,000
139,302,000
14,609,000
9.3
(1) Includes persons involved in labor- management trade disputes.
(2) Includes all persons withoutjobs who are actively seeking work.
(3) The unemployment rate is computed from unrounded data; therefore, it
may differ from rates computed from rounded
figures in this table.
t4j Not strictly comparable with data for prior years.
* 2010 data through May 2010.
Source: State of California, Employment Development Department, based on March 2009 benchmark and U.S. Department of
Labor, Bureau of Labor Statistics, Orange County, Employment Development Department, based on March 2009
benchmark.
M
Median Household Income
The following table summarizes the median household income for the City and the County, from
2006 to 2008.
MEDIAN HOUSEHOLD INCOME
City of Newport Beach
2006 2007 2008
Newport Beach 100,068 107,493 123,958
County of Orange 70,232 73,107 74,862*
*As of January 21, 2010.
Source: U.S. Census Bureau and Newport Beach Chamber of Commerce.
Major Employers
The principal employers in the City as presented in the City's June 30, 2009 Comprehensive
Annual Financial Report, are as follows:
Name
Hoag Memorial Hospital
Pacific Life Insurance
Glidewell Dental
City of Newport Beach
Pacific Investment Management Co.
Resort at Pelican Hill
Jazz Semiconductor
The Island Hotel(')
Fletcher Jones Motor Cars Inc.
Newport Beach Marriott & Tennis Club
PRINCIPAL EMPLOYERS o>
City of Newport Beach
Type of Business or Entitv
Number Employed
Hospital and health care
4,116
Life insurance, investment
1,096
Dental
902
City government
832
Investment company
762
Hotel, resort
735
Semiconductor networking solutions
586
Hotel, resort
424
Automobile Sales
420
Hotel, resort
363
<p Figures reflect number of employees of each employer at the time the information was collected for the City's Comprehensive
Annual Financial Report, and do not reflect current number of employees for each employer.
cr> The Island Hotel was formerly the Four Seasons Hotel.
Source: City of Newport Beach June 30, 2009 Comprehensive Annual Financial Report.
Ii
The largest major employers within the County reported as of December 31, 2009:
MAJOR EMPLOYERSo)
County of Orange
Number
Name
Tvue of Business or Entity
Employed
Walt Disney Co.
Entertainment
19,800
University of California, hvine
Higher education and health care
19,279
St. Joseph Health System
Health care
10,929
Boeing Co.
Aerospace and communications
8,477
Yum! Brands Inc.
Fast food restaurants
7,000
Target Corp.
Retail
6,226
Supervalu Inc.
Grocery retailer
5,923
Kaiser Pemtanente
Health care
5,598
Memorial Health Services Inc.
Health care
5,533
Bank of America Corp.
Banking
5,450
Home Depot htc.
Retail
5,000
California State University, Fullerton
Higher education
4,952
The Kroger Co.
Grocery retailer
4,500
Wells Fargo & Co.
Banking
4,455
AT &T Inc.
Telephone service
4,300
Hoag Memorial Hospital Presbyterian
Hospital and health care
4,241
Wal -Mart Stores Inc.
Retail
4,000
Cedar Fair LP
Entertainment
3,900
United Health Group Inc.
Health care
3,800
Tenet Healthcare Corp.
Health care
3,795
Costco Wholesale
Discount retailer
3,663
CVS Caremark Corp.
Pharmacy
3,650
Edison International
Utilities and investments
3,500
Automobile Club of Southern California
Information systems, insurance and automotive assistance
3,300
Stater Bros, Holdings. Inc.
Grocery retailer
3,115
Includes corporations, hospitals and universities.
Excludes government entities and school and community
college districts.
Franchise operations are considered separately
from their corporate chains.
Source: Orange County Business Journal
— 2010 Book of Lists.
Construction Activity
The following table shows building permit valuations and new housing units in Newport Beach for
years 2005 through 2009.
City of Newport Beach
Building Permit Valuation and New Housing Units
(Dollar Amounts Are Stated Fully)
Non- Residential
New Commercial
2005
2006
2007
2008
2009
Residential
0
0
2,000,000
0
0
Single - Family
$ 73,381,227
$ 82,967,310
$ 68,054,930
$ 82,504,056
$44,246,031
Multi- Family
7,658,741
7,450,000
11,283,560
9,791,756
3,287,177
Alteration/Additions
53,783,612
56,805,626
58,058,723
49,507,192
38,080,919
Total
$136,823,580
$147,222,936
$137,397,213
$140,803,004
$85,614,127
Non- Residential
New Commercial
$ 18,235,000
$ 36,300,000
$ 57,666,475
$ 17,000,000
$22,177,120
New Industry
0
0
2,000,000
0
0
Other(l)
34,025,725
37,093,731
29,236,976
32,513,364
9,866,091
Alteration /Additions
54,026,316
53,803,425
40,431,975
62,653,046
40,201,278
Total
$106,287,041
$127,197,156
$129,335,426
$112,166,410
$72,244,489
Total All Industry i2) $243,110,621 $274,420,092 $266,732,639 $252,969,414 $157,858,616
New Housing Units
Single - Family Units 141 126 107 90 66
Multi - Family Units 34 34 40 38 6
Total 175 160 147 128 72
Includes churches and religious buildings, hospitals and institutional buildings, schools and educational buildings, residential garages, public
works and utilities buildings and non - residential alterations and additions.
m May not add up due to rounding.
Source.: Construction Industry Research Board.
Taxable Sales
Taxable sales in the City are shown below. Taxable sales in the City increased by 13.2% between
2004 and 2008. The largest taxable sales sectors in the City are automotive, eating and drinking places
and general merchandise.
TAXABLESALES
City of Newport Beach
2004 -2008
(In Thousands)
* Thmugh2ralQuarterof2009.
Sowce. Cali BoardofEquolaaftoa
Assessed Valuation
Below is a table which indicates the secured, unsecured and total assessed valuations for the City
for the Fiscal Years 2005 -06 through 2009 -10:
Fiscal Year
Secured Valuation
State Assessed
Taxable Sales
Total
Assessed Value
2005 -06
$28,136,554,256
53,310
2004
2005
2006
2007
2008
2009*
Apparel
$138,308
$159,346
$168,773
$172,604
$154,951
$224,622
General Merchandise
237,968
256,604
259,294
247,316
215,698
20,596
Food Stores
76,493
82,662
86;262
88,522
88,880
20,893
Eating and Drinking Places
344,205
381,592
392,918
403,373
390,435
44,059
Home Furnishings & Appliances
81,027
99,458
96,501
94,043
61,173
43,031
Budding Materials
25,548
29,130
30,566
29,774
26,934
72,913
Automotive
382,748
430,653
538,993
647,238
517,940
72,115
Service Stations
74,715
89,411
105,462
116,143
128,087
175,371
Other Retail Stores
288,372
327,910
334,155
217,538
198,233
73,064
Total Retail Stores
$1,649,348
$1,856,766
$2,012,924
$2,016,551
$1,782,332
$746,664
All Other Outlets
475,161
501,875
559,897
631,800
622,532
267,646
Total All Outlets
$2,124,545
$2,358,641
$2,572,821
$2,648,351
$2,404,864
$1,014,310
* Thmugh2ralQuarterof2009.
Sowce. Cali BoardofEquolaaftoa
Assessed Valuation
Below is a table which indicates the secured, unsecured and total assessed valuations for the City
for the Fiscal Years 2005 -06 through 2009 -10:
Fiscal Year
Secured Valuation
State Assessed
Unsecured
Valuation
Total
Assessed Value
2005 -06
$28,136,554,256
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
2009 -10
37,077,896,580
699,230
1,564,808,312
38,643,404,122
Source: County of Orange Auditor - Controller's Office.
APPENDIX C
SUMMARY OF CERTAIN PROVISIONS OF THE INDENTURE
The following is a summary of certain provisions of the Indenture not otherwise summarized
in the text of this Official Statement. This summary does not purport to be complete or definitive and is
qualified in its entirety by reference to the full terms of the Indenture. Purchasers of the bonds are
referred to the complete text of the Indenture, copies of which are available upon written request from
the Paying Agent. Capitalized terms not otherwise defined herein shall have the meanings given
such terms in the body of the Official Statement.
TRANSFER OF REGISTERED BONDS. Any Bond may, in accordance with its terms, be transferred
upon the books of registration required to be kept by the Paying Agent pursuant to the provisions of the
Indenture by the owner in whose name it is registered, or by his or her duly authorized attorney or legal
representative, upon surrender of such Bond for registration of such transfer, accompanied by delivery of a
written instrument of transfer in a form approved by the Paying Agent and duly executed by the owner of said
Bonds.
The Paying Agent may require the payment by the Bond owner requesting such transfer of any tax or
other governmental charge required to be paid with respect to such transfer and such charges as provided for in
the system of registration for registered debt obligations.
The Paying Agent may refuse to transfer or exchange either (i) any Bond during the period established by
the Paying Agent for the selection of Bonds for prepayment, or (ii) any Bond which the Paying Agent has
selected for prepayment in whole or in part under the provisions of the Indenture.
Upon any registration of transfer, a new Bond or Bonds shall be authenticated and delivered by the
Paying Agent in exchange for such Bond, in the name of the transferee, in any denomination or denominations
authorized by the Indenture and in an aggregate principal amount equal to the principal amount of such Bond or
principal amount of such Bond or Bonds so surrendered.
EXCHANGE OF BONDS. Bonds may be exchanged at the Principal Office of the Paying Agent for a like
aggregate principal amount of Bonds of the same series, interest rate and maturity, subject to the payment of
any tax or governmental charges, if any, upon surrender and cancellation of the Bond. Upon such transfer and
exchange, a new registered Bond or Bonds of any authorized denomination or denominations of the same
series and maturity for the same aggregate principal amount will be issued to the transferee in exchange therefor.
The Paying Agent shall not be required to register the exchange of any Bonds during the fifteen
(15) days preceding the selection of any Bonds for redemption prior to the maturity thereof, nor with respect to
any Bond which has been selected for redemption prior to the maturity thereof.
MUTILATED, DESTROYED, STOLEN OR LOST BONDS. In case any Bond shall become mutilated or be
destroyed, stolen or lost, the City shall cause to be executed and authenticated a new Bond of like date and tenor
and principal or maturity amount in exchange and substitution for and upon the cancellation of such mutilated
Bond or in lieu of and in substitution for such Bond mutilated, destroyed, stolen or lost, upon the Bond owner's
paying reasonable expenses and charges in connection therewith, and, in the case of a Bond destroyed,
stolen or lost, the filing by the Bond owner with the Paying Agent and the City of evidence satisfactory to them
that such Bond was destroyed, stolen or lost, and of ownership thereof, and furnishing the Paying Agent and the
City with indemnity satisfactory to them.
OWNERSHIP OF BONDS. The person in whose name any Bond shall be registered shall be deemed
and regarded by the Paying Agent and the City as the absolute owner thereof for all purposes and shall
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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.
UNCLAIMED FUNDS. Notwithstanding any provisions of the Indenture, subject to applicable state escheat laws,
any moneys held by the Paying Agent in trust for the payment of the principal of, or premium, if any, or interest on,
any Bonds and remaining unclaimed for one year after the principal of all of the Bonds has become due and payable
(whether at maturity or upon call for redemption or by declaration as provided in the Indenture), if such moneys
were held at such date, or one year after the date of deposit of such moneys if deposited after said date when all of
the Bonds became due and payable, shall be repaid to the City free from the lien created by the Indenture, and all
liability of the Paying Agent with respect to such moneys shall thereupon cease and the Bond owners shall, upon
such payment, look only to the City for payment; provided, however, that before the repayment of such moneys to
the City as aforesaid, the Paying Agent shall (at the written request and cost of the City) first publish at least once in
a nationally recognized financial publication published in New York, New York, a notice, in such form as may be
deemed appropriate by the Paying Agent, with respect to the provisions relating to the repayment to the City of the
moneys held for the payment thereof.
FUNDS AND ACCOUNTS. The Paying Agent and the City, as applicable, are authorized and directed to
establish the following funds for purposes of collecting Assessment Installments, making payment for the
designated costs and expenses and payment of principal and interest on the Bonds pursuant to the Indenture.
Redemption Fund: The Paying Agent is authorized and directed to establish and maintain a Redemption Fund (as
defined in the Indenture) designated by the name of the District and to deposit therein from time to time (i) the
amount of the proceeds of the Bonds which represents accrued and capitalized interest, if any, on the Bonds,
(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 in the 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 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 Fun(Y").
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 (i) payments made to redeem delinquent Assessment Installments or (ii) the judicial foreclosure
C -2
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 15 of each fiscal year, the amount on deposit in the Reserve Fund in excess of the Reserve
Requirement shall be transferred from the Reserve Fund to the Redemption Fund and credited to the unpaid
Assessment Installments payable during such fiscal year.
Notwithstanding anything in the Indenture, 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 (as defined in the Indenture), including the
prescribed portion of proceeds of sale of the Bonds and the proceeds of assessment prepayments received by
the City prior to issuance and sale of the Bonds, shall be used only for the payment of Project Costs as that
term is defined in the Indenture. "Project Costs" shall mean the costs of the conversion of certain overhead
electrical and communication facilities to underground locations, together with appurtenances and
appurtenant work in connection therewith (the "Improvements ") as authorized in the assessment
proceedings and all incidental costs related thereto, including the costs of issuing the Bonds, all as more
particularly described in the Assessment Engineer's Report.
Interest earned on the investment of the moneys held in the Improvement Fund shall be deemed at all
times to be part of the Improvement Fund.
Upon completion of the acquisition and construction of the Improvements, the Superintendent of
Streets of the City will file a certificate of completion (the "Certificate of Completion") with the
Administrative Services Director. Any funds remaining in the Improvement Fund following receipt by the
Administrative Services Director of the Certificate of Completion shall constitute surplus ( "Surplus "), and in
accordance with the provisions of the Resolution of Intention (as defined in the Indenture), the Surplus shall
be utilized or distributed in such manner as shall be determined by the City Council for any one or more
purposes set forth in said Resolution of Intention.
Rebate Fund: The City shall establish and maintain a Rebate Fund (as defined in the Indenture). Deposits shall
be made to the Rebate Fund only as may be required by and in accordance with the provisions of the Tax
C -3
Certificate (as defined in the Indenture) pertaining to the Bonds. Amounts, if any, on deposit in the Rebate Fund
shall be paid to the United States of America.
INVESTMENTS. Obligations purchased as investments of moneys in any of the funds in which investments are
authorized shall be deemed at all times to be part of such funds. Subject to the restrictions set forth in the
Indenture, moneys in the Redemption Fund may from time to time be invested by the Paying Agent, at the
written direction of the Administrative Services Director of the City, which written direction shall contain a
certification to the Paying Agent that such investments are Authorized Investments (as defined below). 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 famish the City periodic cash transaction statements that include details for all investment transactions
made by the Paying Agent.
"Authorized Investments" is defined to mean the following types of investments:
(i) (a) direct general obligations of the United States of America (including obligations
issued or held in book -entry form on the books of the Department of the Treasury of the
United States of America) or (b) obligations of any agency, department or instrumentality of
the United States of America the timely payment of principal of and interest on which are
unconditionally guaranteed by the full faith and credit of the United States of America;
(ii) interest - bearing demand or time deposits (including certificates of deposit) in federal or State
of California chartered savings and loan associations or banks (including the Paying Agent
and its affiliates), provided that (a) in the case of a savings and loan association, such demand
or time deposits shall be fully insured by the Federal Deposit Insurance Corporation, or the
".E
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;
(iii) repurchase agreements collateralized by obligations described in (i) above with a registered
broker /dealer subject to Securities Investors Protection Corporation liquidation in the event
of insolvency, or any commercial bank provided that: (a) the unsecured obligations of such
bank shall be rated in one of the two highest rating categories by a nationally recognized
rating service, or such bank shall be the lead bank of a bank holding company whose
unsecured obligations are rated in one of the two highest rating categories by a nationally
recognized rating service; (b) the most recently reported combined capital, surplus and
undivided profits of such bank shall be not less than $100,000,000; and (c) the entity holding
such repurchase agreement shall have a perfected fast security interest in the collateral
securities for the benefit of the City under the California Commercial Code or pursuant to
the book -entry procedures prescribed at 31 C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq.;
(iv) bankers acceptances endorsed and guaranteed by banks described in clause (iii) above;
(v) obligations, the interest on which is exempt from federal income taxation under Section 103
of the Code and which are rated in one of the two highest rating categories by a nationally
recognized rating service;
(vi) money market funds registered under the Federal Investment Company Act of 1940,
whose shares are registered under the Federal Securities Act of 1933, and having a
rating by Standard & Poor's of "AAAm -G," "AAA -m" or "AA -m" and, if rated by
Moody's, rated "Aaa," "Aal" or "Aa2;"
(vii) units of a taxable government money market portfolio (including portfolios of the Paying
Agent and its affiliates) comprised solely of obligations listed in clause (i) or clause (ii)
above;
(viii) commercial paper of "prime" quality of the highest ranking or of the highest letter and
numerical rating by Moody's or Standard & Poor's of issuing corporations that are
organized and operating within the United States of America and have total assets in
excess of $500,000,000 and have an "Aa," "AA" or higher rating for the issuer's
debentures, other than commercial paper, as provided by Moody's or Standard & Poor's,
respectively, and provided that purchases of eligible commercial paper may not exceed one
hundred eighty (180) days' maturity nor represent more than ten percent (10 %) of the
outstanding paper of an issuing corporation;
(ix) any general obligation of a bank or insurance company whose long -term debt 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 at the time of
C -5
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 similarly situated by
mandamus, accounting, mandatory injunction or any other suit, action or proceeding at law or in equity that is
now or may hereafter be authorized under the laws of the State of California in any court of competent
jurisdiction. Such contract is made under and is to be construed in accordance with the laws of the State of
California.
After the issuance and delivery of the Bonds, the Indenture shall not be subject to rescission, but shall
be subject to modification to the extent and in the manner provided in the Indenture but to no greater extent
and in no other manner.
MODIFICATION OR AMENDMENT TO THE INDENTURE.
A. The Indenture and the rights and obligations of the City, of the owners of the Bonds and of the
Paying Agent may be modified or amended at any time by a supplemental indenture pursuant to the
affirmative vote at a meeting of the owners, or with the written consent without a meeting, of the
owners of at least a majority in aggregate principal amount of the Bonds then outstanding. No such
modification or amendment shall (i) extend the maturity of any Bond or the time for paying interest
thereon, or otherwise alter or impair the obligation of the City to pay the principal of, and the
interest and any premium on, any Bond, without the express consent of the owner of such Bond,
(ii) permit the creation of any pledge of or lien upon the assessments superior to or on a panty with
the pledge and lien created for the benefit of the Bonds, (iii) reduce the percentage of Bonds required
for the amendment of the Indenture, or (iv) reduce the principal amount of or redemption premium on
any Bond or reduce the interest rate thereon. Notwithstanding the above, any such amendment may
not modify any of the rights or obligations of the Paying Agent without its written consent. The
Paying Agent may obtain an opinion of counsel that any such supplemental indenture entered into
by the City and the Paying Agent complies with the provisions of the Indenture and the Paying
Agent may conclusively rely on such opinion.
B. The Indenture and the rights and obligations of the City and the owners may also be modified or
amended at any time by a supplemental indenture, without the consent of any owners, only to the extent
permitted by law and only for any one or more of the following purposes:
(1) to add to the covenants and agreements of the City contained in the Indenture, other covenants
and agreements thereafter to be observed, or to limit or surrender any right or power therein
reserved to or conferred upon the City;
(2) to make such provisions for the purpose of curing any ambiguity, or of curing, correcting or
supplementing any defective provisions of the Indenture, or in regard to questions arising under
the Indenture, as the City and the Paying Agent may deem necessary or desirable and not
inconsistent with the Indenture, and which shall not materially adversely affect the rights
of the owners; or
(3) to make such additions, deletions or modifications as may be necessary or desirable to assure
compliance with Section 148 of the Code relating to required rebate of excess earnings to the
United States of America or otherwise as may be necessary to assure exclusion from gross
MA
income for federal income tax purposes of interest on the Bonds or to conform with the federal
tax regulations.
DEFEASANCE. If the City shall pay or cause to be paid, or there shall otherwise be paid, to the Owner of an
outstanding Bond the interest due thereon and the principal thereof at the times and in the manner stipulated in
the Indenture, other than as set forth below, all covenants, agreements and other obligations of the City to the
Owner of such Bond under the Indenture shall thereupon cease, terminate and become void and discharged and
satisfied.
Any outstanding Bond shall be deemed to have been paid within the meaning expressed in the preceding
paragraph if such Bond is paid in any one or more of the following ways:
(1) by paying or causing to be paid the principal of, premium, if any, and interest on such Bond,
as and when the same shall become due and payable;
(2) by depositing with the Paying Agent, in trust, at or before maturity, money which, together
with the amounts then on deposit in the funds established pursuant to the Indenture (exclusive
of the Rebate Fund) and available for such purpose, is fully sufficient to pay the principal of
premium, if any, and interest on such Bond, as and when the same shall become due and
payable; or
(3) by depositing with an escrow bank appointed by the City, in trust, noncallable United States
Treasury Obligations, in such amount as a certified public accountant shall determine (as set
forth in a verification report from such accountant) will be sufficient, together with the
interest to accrue thereon and moneys then on deposit in the funds established under the Indenture
(exclusive of the Rebate Fund) and available for such purpose, together with the interest to
accrue thereon, to pay and discharge the principal of, premium, if any, and interest on such
Bond, as and when the same shall become due and payable;
then, at the election of the City, and notwithstanding that any outstanding Bonds shall not have been
surrendered for payment, all obligations of the City under the Indenture with respect to such Bond shall
cease and terminate, except for the obligation of the Paying Agent to pay or cause to be paid to the Owners of
any such Bond not so surrendered and paid, all sums due thereon and except for the covenants of the City to
preserve the exclusion of the interest on the Bonds from gross income for federal income tax purposes. Notice
of such election shall be filed with the Paying Agent not less than ten (10) days prior to the proposed
defeasance date, or such shorter period of time as may be acceptable to the Paying Agent. In connection with a
defeasance under (2) or (3) above, there shall be provided to the Paying Agent a certificate of a certified
public accountant stating its opinion as to the sufficiency of the moneys or securities deposited with the Paying
Agent or the escrow bank, together with the interest to accrue thereon and moneys then on deposit in the
funds established under the Indenture (exclusive of the Rebate Fund) and available for such purpose, together
with the interest to accrue thereon to pay and discharge the principal of, premium, if any, and interest on all such
Bonds to be defeased in accordance with the Indenture as and when the same shall become due and payable,
and an opinion of Bond Counsel (which may rely upon the opinion of the certified public accountant) to the
effect that the Bonds being defeased have been legally defeased in accordance with the Indenture.
PAYING AGENT. The City appoints U.S. Bank National Association, as Paying Agent for the Bonds.
The Paying Agent is authorized to and shall mail or wire transfer interest payments to the Bond owners,
select Bonds for redemption, give notice of redemption of Bonds, maintain the bond register and maintain
and administer the Redemption Fund. The Paying Agent is authorized to pay the principal of and
premium, if any, on the Bonds when the same are duly presented to it for payment at maturity or on call
and redemption, to provide for the registration of transfer and exchange of Bonds presented to it for such
purposes, to provide for the cancellation of Bonds and to provide for the authentication of Bonds. The
Paying Agent shall keep accurate records of all funds administered by it and all Bonds paid and
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discharged by it. The Paying Agent initially appointed, and any successor thereto, may be removed by
the City and a successor or successors may be appointed. So long as any Bonds are outstanding and
unpaid, the Paying Agent and any successor or successors thereto designated by the City shall continue to
be Paying Agent of the City for all of said purposes until the designation of a successor or successors as
Paying Agent.
The Paying Agent may rely and shall be protected in acting or refraining from acting upon any
notice, resolution, request, consent, order, certificate, report, warrant, bond or other paper or document
believed by it to be genuine and to have been signed or presented by the proper party or proper parties.
The Paying Agent may consult with counsel, who may be counsel to the City, with regard to legal
questions, and the opinion of such counsel shall be full and complete authorization and protection in
respect of any action taken or suffered by it under the Indenture in good faith and in accordance
therewith.
Whenever the Paying Agent shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action under the Indenture, such matter (unless other evidence
in respect thereof be therein specifically prescribed) may, in the absence of negligence or willful
misconduct on the part of the Paying Agent, be deemed to be conclusively proved and established by a
certificate of the City, and such certificate shall be full warrant to the Paying Agent for any action taken
or suffered under the provisions of the Indenture or any Supplemental Indenture upon the faith thereof,
but in its discretion, the Paying Agent may, in lieu thereof, accept other evidence of such matter or may
require such additional evidence of such matter or may require such additional evidence as 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 Administrative Services
Director 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
',m..i
Agent. No implied duties or obligations shall be read into the Indenture against the Paying Agent. The
Paying Agent shall be under no responsibility or duty with respect to the issuance of the Bonds for value.
The Paying Agent shall not be liable in connection with the performance of its duties under the Indenture,
except for its own negligence or willful misconduct. The Paying Agent shall be protected in acting on
any notice, resolution, request, consent, certificate or other document believed by it to be genuine and to
have been signed or presented by the proper party.
The Paying Agent assumes no responsibility or liability for any information, statement or recital
in any offering memorandum or other disclosure material prepared or distributed with respect to the
issuance of the Bonds. The Paying Agent shall not be liable for any error of judgment made in good faith
by a responsible officer of the Paying Agent unless it shall be proved that the Paying Agent was negligent
in ascertaining the pertinent facts. No provision of the Indenture shall require the Paying Agent to expend
or risk its own funds or otherwise incur any financial liability in the performance of any of its duties
thereunder or in the exercise of any of its rights or powers. All indemnification and releases from liability
granted to the Paying Agent shall extend to the officers and employees of the Paying Agent.
The Paying Agent shall not be chargeable with taking any actions under the Indenture in
accordance with the Act but shall solely be charged with taking action in accordance with the Indenture
and any other written direction furnished by the City.
A„
APPENDIX D
FORM OF LEGAL OPINION
Upon delivery of the Bonds, Meyers, Nave, Riback, Silver & Wilson, a Professional Law
Corporation, Oakland, California, Bond Counsel to the City of Newport Beach, proposes to render its
final approving opinion with respect to the Bonds in substantially the following form (see
"CONCLUDING INFORMATION— Tax Matters" in the Ojftcial Statement):
12010
City Council
City of Newport Beach
3300 Newport Boulevard
Newport Beach, CA 92663
City of Newport Beach
Assessment District No. 100
(13th St/Balboa Blvd/Adams St /Ocean Front
Limited Obligation Improvement Bonds
(Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the City of Newport Beach (the "Issuer ") in connection
with the issuance by the Issuer of $ aggregate principal amount of the City of Newport
Beach Assessment District No. 100 (13th St/Balboa Blvd/Adams St/Ocean Front) Limited Obligation
Improvement Bonds (the "Bonds ") pursuant to the provisions of the Municipal Improvement Act of 1913
and the Improvement Bond Act of 1915 and the Bond Indenture, dated as of August 1, 2010 (the
"Indenture "), between the Issuer and U.S. Bank National Association, as Paying Agent, approved by
Resolution No. 2010 -, passed and adopted by the City Council on [Iuly 271, 2010 (the "Resolution ").
Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Indenture.
In such connection, we have reviewed the Resolution, the Indenture, the Tax Certificate
of the Issuer, dated the date hereof (the "Tax Certificate "), an opinion of the City Attorney as general
legal counsel to the Issuer, certifications of the Issuer and others and such other documents, opinions and
matters to the extent we deemed necessary to render the opinions set forth herein.
Certain agreements, requirements and procedures contained or referred to in the
Resolution, the Indenture, the Tax Certificate and other relevant documents may be changed and certain
actions (including, without limitation, defeasance of the Bonds) may be taken or omitted under the
circumstances and subject to the terms and conditions set forth in such documents. No opinion is
expressed herein as to any Bond or the interest thereon if any such change occurs or action is taken or
omitted upon the advice or approval of counsel other than ourselves.
The opinions expressed herein are based on an analysis of existing laws, regulations,
rulings and court decisions and cover certain matters not directly addressed by such authorities. Such
opinions may be affected by actions taken or omitted or events occurring after the date hereof. We have
not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or
events do occur. Our engagement with respect to the Bonds has concluded with their issuance, and we
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disclaim any obligation to update this opinion. We have assumed the genuineness of all documents and
signatures presented to us (whether as originals or copies) and the due and legal execution and delivery
thereof by, and validity against, any parties other than the Issuer. We have not undertaken to verify
independently, and have assumed, the accuracy of the factual matters represented, warranted or certified
in the documents, and of the legal conclusions contained in the opinion, referred to in the second
paragraph hereof.
Furthermore, we have assumed compliance with all covenants and agreements contained
in the Resolution, the Indenture and the Tax Certificate, including (without limitation) covenants and
agreements compliance with which is necessary to assure that future actions, omissions or events will not
cause interest on the Bonds to be included in gross income for federal income tax purposes. In addition,
we call attention to the fact that the rights and obligations under the Bonds, the Resolution, the Indenture
and the Tax Certificate may be subject to bankruptcy, insolvency, reorganization, arrangement, fraudulent
conveyance, moratorium and other similar laws relating to or affecting creditors' rights, to the application
of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on
legal remedies against cities in the State of California.
We express no opinion on the plans, specifications, maps and other engineering details of
the proceedings, or upon the validity of the individual separate assessments securing the Bonds which
validity depends, in addition to the legal steps required, upon the accuracy of certain of the engineering
details. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official
Statement or other offering material relating to the Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we
are of the following opinions:
1. The Bonds constitute valid and binding special assessment obligations of the
Issuer, payable solely from and secured by the unpaid assessments and certain funds held under the
Indenture.
2. The Resolution and the Indenture have been duly adopted and constitute valid
and binding obligations of the Issuer.
3. Interest on the Bonds is excluded from gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986 and is exempt from State of California
personal income taxes. Interest on the Bonds is not a specific preference item for purposes of the federal
individual or corporate alternative minimum taxes, although we observe that it is included in adjusted
current earnings in calculating corporate alternative minimum taxable income. We express no opinion
regarding other tax consequences related to the ownership or disposition of, or the accrual or receipt of
interest on, the Bonds.
Faithfully yours,
MEYERS, NAVE, RIBACK, SILVER & WILSON
Imi
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 of principal, premium, if any, accreted value
and interest on the Bonds to DTC Participants or Beneficial Owners, confirmation and transfers of beneficial
ownership interests in the Bonds and other related transactions by and between DTC, the DTC Participants
and the Beneficial Owners is based solely on information provided by DTC.
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.dtcc.com and www.dtc.org.
Purchases of Bonds under the DTC system must be made by or through Direct Participants, which
will receive a credit for the Bonds on DTC's records. The ownership interest of each actual purchaser of
each Bond ( "Beneficial 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 MMI Procedures. Under its
usual procedures, DTC mails an Omnibus Proxy to the District as soon as possible after the record date.
The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those Direct Participants to whose
accounts Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
Principal, redemption price and interest payments on the Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC's practice is to credit
Direct Participants' accounts upon DTC's receipt of funds and corresponding detail information from the
District or the Paying Agent, on payable date in accordance with their respective holdings shown on DTC's
records. Payments by Participants to Beneficial Owners will be governed by standing instructions and
customary practices, as is the case with securities held for the accounts of customers in bearer form or
registered in "street name," and will be the responsibility of such Participant and not of DTC, the Paying
Agent, or the District, subject to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal, redemption price and interest payments to Cede & Co. (or such other nominee as
may be requested by an authorized representative of DTC) is the responsibility of the District or the Paying
Agent, disbursement of such payments to Direct Participants will be the responsibility of DTC, and
disbursement of such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at any time by
giving reasonable notice to the District or the Paying Agent. Under such circumstances, in the event that a
successor depository is not obtained, Bond certificates are required to be printed and delivered.
The District may decide to discontinue use of the system of book -entry-only transfers through
DTC (or a successor securities depository). In that event, Bond certificates will be printed and delivered
to DTC.
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APPENDIX F
DISCLOSURE DISSEMINATION AGENT AGREEMENT
This Disclosure Dissemination Agent Agreement (the "Disclosure Agreement "), dated as of
August 1, 2010, 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 terns shall have the following meanings:
"Annual Filing Date" means the date, set in Sections 2(a) and 2(f), by which the Annual Report is
to be filed with the MSRB.
"Annual Financial Information" means annual financial information as such term is used in
paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement
"Annual Report" means an Annual Report described in and consistent with Section 3 of
this Disclosure Agreement.
"Audited Financial Statements" means the financial statements (if any) of the Issuer for the prior fiscal
year, certified by an independent auditor as prepared in accordance with generally accepted accounting
principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b)
of this Disclosure Agreement.
"Bonds" means the bonds as listed on the attached Exhibit A, with the 9 -digit CUSIP® numbers
relating thereto.
"Certification" means a written certification of compliance signed by the Disclosure Representative
stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice
delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements,
Voluntary Report or Notice Event notice required to be submitted to the MSRB under this Disclosure
Agreement. A Certification shall accompany each such document submitted to the Disclosure
Dissemination Agent by the Issuer and include the full name of the Bonds and the 9 -digit 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.
"Disclosure Representative" means the Deputy Director of Administrative Services of the Issuer,
or such other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from
time to time as the person responsible for providing Information to the Disclosure Dissemination Agent.
"EMMA System" means the Electronic Municipal Market Access system of the MSRB or such
other electronic system designated by the MSRB or the SEC for compliance with SEC Rule 15c2-
12(b).
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"Holder" means any person (a) having the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees,
depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax
purposes.
"Information" means the Annual Financial Information, the Audited Financial Statements (if any), the
Notice Event notices and the Voluntary Reports.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section
1513(b)(1) of the Securities Exchange Act of 1934.
"Notice Event" means an event listed in Section 4(a) of this Disclosure Agreement.
"Official Statement" means that Official Statement prepared by the Issuer in connection with the
Bonds, as listed on Exhibit A.
"Paying Agent" means the institution identified as such in the document under which the Bonds
were issued.
"SEC" means Securities and Exchange Commission.
"Underwriter" shall mean any underwriter of the Bonds required to comply with the Rule in
connection with the offering of the Bonds.
"Voluntary Report" means the information provided to the Disclosure Dissemination Agent by
the Issuer pursuant to Section 7.
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification
to the Disclosure Dissemination Agent, together with a copy for the Paying Agent and the Underwriter, not
later than 30 days prior to the Annual Filing Date. Upon receipt of an electronic copy of the Annual Report
and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB
through the EMMA System in an electronic format and accompanied by identifying information as
prescribed by the MSRB, not later March 31 after the end of each fiscal year of the Issuer, commencing
with the fiscal year ending June 30, 2010; 1poovided, however, that the first Annual Report due on
March 31, 2011, shall consist solely of a copy of the Official Statement, together with a copy of the
audited Financial Statements if the Issuer]. Such date and each anniversary thereof is the Annual Filing
Date. The Annual Report may be submitted as a single document or as separate documents comprising a
package and may cross reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination
Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent
shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to
remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Promptly upon
such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with
an electronic copy of the Annual Report and the Certification (no later than two (2) business days prior to the
Annual Filing Date), or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be
able to file the Annual Report within the time required under this Disclosure Agreement, state the date by
which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent
that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to the
MSRB through the EMMA System in substantially the form attached as Exhibit B.
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(c) If the Disclosure Dissemination Agent has not received an Annual Report and
Certification by 12:00 noon on the fast business day following the Annual Filing Date for the Annual
Report, a Notice Event described in Section 4(a)(12) shall have occurred and the Issuer irrevocably directs the
Disclosure Dissemination Agent to immediately send a notice to the MSRB through the EMMA System in
substantially the form attached as Exhibit B.
(d) If Audited Financial Statements of the Issuer are prepared but not available prior to the
Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely
manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, together
with a copy for the Paying Agent for filing with the MSRB through the EMMA System.
(e) The Disclosure Dissemination Agent shall
(i) determine the electronic filing requirements of the MSRB each year prior to the
Annual Filing Date;
(ii) upon receipt, promptly file each Annual Report received under Section 2(a) with
the MSRB through the EMMA System;
(iii) upon receipt, promptly file each Audited Financial Statement received under
Section 2(d) with the MSRB through the EMMA System;
(iv) upon receipt, promptly file the text of each disclosure to be made with the MSRB
through the EMMA System, together with information regarding the event as required by the
MSRB as described below when filing pursuant to the Section of this Disclosure Agreement
indicated:
1. "Principal and interest payment delinquencies," pursuant to Sections 4(c)
and 4(a)(1);
2. "Non- payment related defaults," pursuant to Sections 4(c) and 4(a)(2);
3. "Unscheduled draws on debt service reserves reflecting financial
difficulties," pursuant to Sections 4(c) and 4(a)(3);
4. "Unscheduled draws on credit enhancements reflecting financial
difficulties," pursuant to Sections 4(c) and 4(a)(4);
5. "Substitution of credit or liquidity providers, or their failure to
perform," pursuant to Sections 4(c) and 4(a)(5);
6. "Adverse tax opinions or events affecting the tax- exempt status of the
security," pursuant to Sections 4(c) and 4(a)(6);
7. "Modifications to rights of security holders," pursuant to Sections 4(c) and
4(a)(7);
8. "Bond calls," pursuant to Sections 4(c) and 4(a)(8);
9. "De£easances," pursuant to Sections 4(c) and 4(a)(9);
10. "Release, substitution or sale of property securing repayment of the
securities," pursuant to Sections 4(c) and 4(a)(10);
F -3
11. "Ratings changes," pursuant to Sections 4(c) and 4(a)(11); or
12. "Other material event notice (specify)," pursuant to Section 7 of this
Disclosure 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); and
(v) provide the Issuer evidence of the filings of each of the above when made,
which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination
Agent under this Disclosure Agreement.
(f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by
providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination
Agent, Paying Agent (if any) and the MSRB through the EMMA System, provided that the period between the
existing Annual Filing Date and new Annual Filing Date shall not exceed one year.
Notwithstanding any other provisions of this Disclosure Agreement, any of the required filings
hereunder may be made with the MSRB through the EMMA System, approved by the Securities and
Exchange Commission.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer,
including (1) the audited financial statements of the City; (2) the principal amount of Bonds outstanding;
(3) the status of the public improvements which have been financed by the City with proceeds of the
Bonds; (4) a table setting forth the percentage of delinquent Assessment Installments as of June 30 of each
fiscal year and a description of the status of any foreclosure actions being pursued by the City with respect to
delinquent Assessment Installments; (5) the Reserve Fund balance; (6) an update of the table entitled "Top Ten
Property Owners" in the Official Statement; and (7) the total assessed value of property within the District.
(b) Audited Financial Statements prepared in accordance with generally accepted accounting
principles ( "GAAP ") will be included in the Annual Report. If audited financial statements are not
available, then unaudited financial statements, prepared in accordance with GAAP, will be included in the
Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference from other documents,
including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined
by the Rule), which have been previously filed with the MSRB through the EMMA System or the Securities
and Exchange Commission. If the document incorporated by reference is a final official statement, it
must be available from the MSRB. The Issuer will clearly identify each such document so incorporated by
reference.
Any annual financial information containing modified operating data or financial information is
required to explain, in narrative form, the reasons for the modification and the impact of the change in the type
of operating data or financial information being provided.
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SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events, if material, with respect to the Bonds
constitutes a Notice Event:
Principal and interest payment delinquencies;
2. Non - payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax - exempt status of the security;
7. Modifications to rights of security holders;
8. Bond calls;
9. Defeasances;
10. Release, substitution or sale of property securing repayment of the securities;
11. Rating changes; or
12. Other material event notice (e.g., failure to provide annual financial information
as required).
The Issuer shall promptly notify the Disclosure Dissemination Agent in writing upon the occurrence
of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence
pursuant to subsection (c). Such notice shall be accompanied with the text of the disclosure that the Issuer
desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to
disseminate such information and the date the Issuer desires for the Disclosure Dissemination Agent to
disseminate the information.
(b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the
Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure
Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will, within five
business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has
not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure
Dissemination Agent is to report the occurrence pursuant to subsection (c), together with the text of the
disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure
Dissemination Agent to disseminate such information and the date the Issuer desires for the Disclosure
Dissemination Agent to disseminate the information.
(c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in
subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure
F -5
Dissemination Agent shall promptly file a notice of such occurrence with the MSRB through the EMMA
System in accordance with Section 2 (e)(iv) hereof.
SECTION 5. CUSIP® Numbers. Whenever providing information to the Disclosure Dissemination
Agent, including but not limited to Annual Reports, documents incorporated by reference to the Annual
Reports, Audited Financial Statements, notices of Notice Events and Voluntary Reports filed pursuant to
Section 7(a), the Issuer shall indicate the full name of the Bonds and the 9 -digit CUSW' 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 106 -5
promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the failure of the
Disclosure Dissemination Agent to so advise the Issuer shall not constitute a breach by the Disclosure
Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The Issuer
acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to
execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.
SECTION 7. Voluntary Reports.
(a) The Issuer may instruct the Disclosure Dissemination Agent to file information with the
MSRB through the EMMA System from time to time pursuant to a Certification of the Disclosure
Representative accompanying such information (a "Voluntary Report").
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from
disseminating any other information through the Disclosure Dissemination Agent using the means of
dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report,
Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this
Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Annual
Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically
required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to
update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary
Report or Notice Event notice.
SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the
Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds
upon the legal defeasance, prior redemption or payment in full of all of the Bonds when the Issuer is no
longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to
the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that
continuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance
Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The
Issuer may, upon thirty days' written notice to the Disclosure Dissemination Agent and the Paying Agent,
replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as
Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a
successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure
Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds.
Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in
full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure
Dissemination Agent may resign at any time by providing thirty days' prior written notice to the Issuer.
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
F -6
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.
(c) All documents, reports, notices, statements, information and other materials provided to
the MSRB under this Disclosure Agreement shall be provided in an electronic format and accompanied
by identifying information prescribed by the MSRB.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any
provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an
opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure
Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of
Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such
amendment or waiver had been effective on the date hereof but taking into account any subsequent change
in or official interpretation of the Rule; provided neither the Issuer nor the Disclosure Dissemination Agent
shall be obligated to agree to any amendment modifying their respective duties or obligations without their
consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the
right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and
interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from
time to time by giving not less than 20 days' written notice of the intent to do so together with a copy of
the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall,
within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in
writing that it objects to such amendment.
F -7
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the Issuer, the Paying Agent of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the
Holders from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws
of the State of California (other than with respect to conflicts of laws).
SECTION 15. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
IM.
The Disclosure Dissemination Agent and the Issuer have caused this Disclosure Agreement to be
executed, on the date first written above, by their respective officers duly authorized.
ATTEST:
IM
Leilani Brown, City Clerk
APPROVED AS TO FORM:
By:
Name:
Title:
DIGITAL ASSURANCE CERTIFICATION, L.L.C.,
as Disclosure Dissemination Agent
LA
Name:
Title:
By:
Name:
Title:
CITY OF NEWPORT BEACH,
as Issuer
By:
City Manager
F -9
EXIIIBIT A
NAME AND CUSW NUMBERS OF BONDS
Name of Issuer: City of Newport Beach
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 100
(13th St/Balboa Blvd /Adams St /Ocean Front)
Limited Obligation Improvement Bonds
Date of Issuance: August _, 2010
Date of Official Statement: August _, 2010
Maturity
(September 2) CUSIP® No.
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
F -10
EXHIBIT B
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: City of Newport Beach
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 100
(13th St /Balboa Blvd /Adams St/Ocean Front)
Limited Obligation Improvement Bonds
Date of Issuance: August _, 2010
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 August 1, 2010, 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
Digital Assurance Certification, L.L.C., as Disclosure
Dissemination Agent, on behalf of the Issuer
F -11
APPENDIX G
FINAL ENGINEER'S REPORT
APPENDIX H
LIST OF UNPAID ASSESSMENTS
Assessed Value (AV)
Tax Roll as of Julv 2009
Assess-
ment
Structure
Existing
Confirmed
No.
APN
Land Value
Value
Total Value Liens
Assessment
2
939 -71 -011
$640,584
$362,416
$1,003,000
$8,860.83
3
939 -71 -012
$204,391
$291,663
$496,054
$8,860.83
4
047 - 241 -02
$68,518
$7,017
$75,535
$17,721.68
5
047 - 241 -03
$1,995,458
$517,042
$2,512,500
$17,721.68
6
047 - 241 -04
$221,763
$217,889
$439,652
$17,721.68
7
047 - 241 -05
$561,693
$69,980
$631,673
$17,721.68
8
939 -71 -021
$742,287
$260,891
$1,003,178
$8,860.83
9
939 -71 -022
$429,383
$224,511
$653,894
$8,860.83
11
047 - 241 -08
$68,514
$29,039
$97,553
$17,721.68
12
047- 241 -09
$268,431
$22,457
$290,888
$17,721.68
13
047- 241 -10
$68,518
$38,601
$107,119
$17,721.68
14
047 - 241 -11
$68,518
$38,534
$107,052
$17,721.68
15
047- 241 -12
$474,504
$38,824
$513,328
$17,721.68
16.
939 -71 -017
$419,722.
$188,284
$608,006
$8.,860.83
18
047- 241 -24
$102,858
$55,701
$158,559
$20,490.68
20
047 - 241 -21
$102,858
$49,233
$152,091
$20,490.68
21
047 - 241 -20
$1,081,371
$434,991
$1,516,362
$20,490.68
22
047 - 241 -19
$102,862
$24,878
$127,740
$20,490.68
24
047- 241 -17
$2,357,139
$262,962
$2,620,101
$20,490.68
26
047- 241 -15
$100,841
$78,065
$178,906
$20,490.68
27
047 - 241 -14
$205,584
$39,802
$245,386
$41,535.18
28
047 - 251 -01
$490,239
$504,239
$994,478
$17,721.68
29
047 - 251 -02
$784,270
$107,953
$892,223
$17,721.68
30
047 - 251 -03
$68,523
$14,678
$83,201
$17,721.68
32
047 - 251 -05
$553,497
$185,131
$738,628
$17,721.68
33
047- 251 -06
$542,921
$105,137
$648,058
$17,721.68
36.
047- 251 -08
$2,739,734
$182,832
$2,922,566
$34,889.54
37
047- 251 -09
$358,251
$52,773
$411,024
$17,721.68
38
047- 251 -10
$423,003
$45,047
$468,050
$17,721.68
39
047 - 251 -11
$313,691
$67,304
$380,995
$17,721.68
40
047- 251 -12
$68,517
$31,498
$100,015
$17,721.68
41
047- 251 -23
$251,130
$60,430
$311,560
$20,490.68
43
047- 251 -21
$930,489
$95,659
$1,026,148
$20,490.68
45
047- 251 -19
$1,124,502
$524,237
$1,648,739
$20,490.68
46
047- 251 -18
$2,626,946
$146,912
$2,773,858
$20,490.68
47
047 - 251 -17
$4,787,344
$516,571
$5,303,915
$20,490.68
H -1
Value -to -Lien
Ratio for
Confirmed
Assessment
113.19 : 1
55.98 : 1
4.26 : 1
141.78 : 1
24.81 : 1
35.64 : 1
113.21 : 1
73.80 : 1
5.50: 1
16.41 : 1
6.04 : 1
6.04: 1
28.97 : 1
68.62: 1
7.74: 1
7.42 : 1
74.00: 1
6.23 : 1
127.87: 1
8.73: 1
5.91 : 1
56.12 : 1
50.35 : 1
4.69 : 1
41.68 : 1
36.57 : 1
83.77: 1
23.19 : 1
26.41 : 1
21.50 : 1
5.64: 1
15.20: 1
50.08: 1
80.46: 1
135.37 : 1
258.85 : 1
H -2
Assessed Value (AV)
Tax
Roll as of July
2009
Value-to -Lien
Assess-
Ratio
for
ment
Structure
Existing
Confirmed
Confirmed
No.
APN
Land Value
Value
Total Value Liens
Assessment
Assessment
48
047 - 251 -16
$102,854
$139,155
$242,009
$20,490.68
11.81
:1
49
047- 251 -15
$2,282,566
$104,499
$2,387,065
$20,490.68
116.50
:1
54
047- 252 -03
$68,516
$24,607
$93,123
$17,721.68
5.25
:1
55
047- 252 -04
$457,422
$29,537
$486,959
$17,721.68
27.48
:1
56
047- 252 -05
$419,852
$170,585
$590,437
$17,721.68
33.32
:1
57
047- 252 -06
$352,599
$157,511
$510,110
$17,721.68
28.78
:1
58
047 - 252 -07
$286,956
$0
$286,956
$17,721.68
16.19
:1
59
047 - 252 -08
$573,927
$51,189
$625,116
$34,889.54
17.92
:1
60
047- 252 -09
$927,689
$54,942
$982,631
$17,721.68
55.45
:1
61
047- 252 -10
$1,071,549
$100,451
$1,172,000
$17,721.68
66.13
:1
62
047- 252 -11
$366,846
$194,114
$560,960
$17,721.68
31.65
:1
63
047 - 252 -12
$68,515
$22,148
$90,663
$17,721.68
5.12
:1
64
047- 252 -13
$408,355
$33,222
$441,577
$3,505.57
125.96
:1
65
047- 252 -14
$1,582,535
$267,465
$1,850,000
$7,199.42
256.97
:1
66
047- 252 -24
$1,426,850
$571,895
$1,998,745
$22,705.89
88.03
:1
67
047- 252 -23
$630,975
$270,036
$901,011
$22,705.89
39.68
:1
68
047 - 252 -22
$839,405
$111,658
$951,063
$22,705.89
41.89
:1
70
047- 252 -20
$918,788
$408,174
$1,326,962
$22,705.89
58.44
:1
71
047- 252 -19
$5,126,400
$1,173,600
$6,300,000
$22,705.89
277.46
:1
72
047 - 252 -18
$1,488,766
$91,201
$1,579,967
$17,355.89
91.03
:1
73
047- 252 -17
$106,655
$123,385
$230,040
$22,705.89
10.13
:1
74
047- 252 -16
$1,464,939
$600,696
$2,065,635
$22,705.89
90.97
:1
76
047- 281 -01
$68,519
$56,936
$125,455
$17,721.68
7.08
:1
77
047 - 281 -02
$85,689
$14,473
$100,162
$26,58151
3.77
:1
78
047 - 281 -03
$268,158
$31,536
$299,694
$26,582.51
11.27
:1
81
047- 281 -06
$118,964
$134,440
$253,404
$17,721.68
14.30
:1
83
047- 281 -25
$388,665
$110,250
$498,915
$17,721.68
28.15
:1
84
047- 281 -08
$116,641
$70,267
$186,908
$17,721.68
10.55
:1
85
047- 281 -09
$68,515
$78,644
$147,159
$17,721.68
8.30
:1
86
047- 281 -10
$594,745
$85,566
$680,311
$17,721.68
38.39
:1
87
047- 281 -11
$232,504
$181,352
$413,856
$17,721.68
23.35
:1
88
047- 281 -12
$773,744
$109,396
$883,140
$17,721.68
49.83
:1
89
047- 281 -23
$1,301,960
$643,413
$1,945,373
$22,705.89
85.68
:1
90
047- 281 -22
$5,215,000
$285,000
$5,500,000
$22,705.89
242.23
:1
91
047- 281 -21
$5,265,688
$873,812
$6,139,500
$22,705.89
270.39
:1
93
047 - 281 -19
$774,457
$211,628
$986,085
$22,705.89
43.43
:1
94
047- 281 -18
$2,149,529
$37,082
$2,186,611
$22,705.89
96.30
:1
95
047- 281 -17
$257,929
$47,044
$304,973
$21,598.28
14.12
:1
H -2
H -3
Assessed Value (AV)
Tax Roll as of July
2009
Value -to -Lien
Assess
Ratio
for
ment
Structure
Existing
Confirmed
Confirmed
No.
APN
Land Value
Value
Total Value Liens
Assessment
Assessment
96
047- 281 -16
$4,451,027
$272,473
$4,723,500
$21,044.49
224.45
:1
97
047- 281 -15
$258,484
$97,121
$355,605
$20,490.68
1735
:1
98
047 - 281 -14
$489,067
$38,677
$527,744
$19,383.08
2723
:1
99
047- 281 -13
$583,411
$356,761
$940,172
$18,275.48
51.44
:1
100
047 - 282 -01
$456,429
$0
$456,429
$5,166.98
88.34
:1
102
047 - 282 -03
$68,873
$53,244
$122,117
$18,829.27
6.49
:1
103
936 -08 -007
$276,048
$67,771
$343,819
$8,860.83
38.80
:1
104
936 -08 -008
$276,049
$95,604
$371,653
$8,860.83
41.94
:1
105
047 - 282 -05
$68,517
$14,758
$83,275
$17,167.88
4.85
:1
106
047 - 282 -06
$412,042
$25,132
$437,174
$16,614.07
26.31
:1
107
047 - 282 -07
$68,520
$15,531
$84,051
$16,060.27
5.23
:1
109
047 - 282 -09
$68,171
$9,618
$77,789
$14,398.86
5.40
:1
116
047- 282 -27
$825,499
$77,102
$902,601
$11,629.85
77.61
:1
117
047- 282 -21
$683,275
$45,059
$728,334
$11,629.85
62.63
:1
118
047- 282 -20
$3,311,295
$54,705
$3,366,000
$11,629.85
289.43
:1
121
047- 282 -17
$89,486
$31,373
$120,859
$11,629.85
10.39
:1
122
047 - 282-12
$1,643,072
$21,568
$1,664,640
$5,909.07
281.71
:1
123
047 - 282 -13
$54,305
$225,455
$279,760
$11,629.85
24.06
:1
124
047- 282 -14
$54,309
$71,816
$126,125
$11,629.85
10.84
:1
126
047- 282 -15
$3,344,929
$30,071
$3,375,000
$11,629.85
290.20
:1
127
048- 023 -01
$471,568
$125,124
$596,692
$6,274.58
95.10
:1
131
048- 023 -23
$290,501
$154,106
$444,607
$12,183.65
36.49
:1
132
048 - 023 -22
$58,952
$13,487
$72,439
$12,183.65
5.95
:1
133
048 - 023 -21
$646,560
$167,940
$814,500
$12,183.65
66.85
:1
134
048 - 023 -20
$58,949
$8,781
$67,730
$11,629.85
5.82
:1
136
048 - 023 -18
$1,147,016
$517,984
$1,665,000
$11,629.85
143.17
:1
138
048- 023 -16
$722,576
$1,400
$723,976
$11,629.85
62.25
:1
141
048- 023 -07
$563,640
$251,946
$815,586
$11,629.85
70.13
:1
143
048 - 023 -09
$2,721,231
$38,970
$2,760,201
$17,721.68
155.75
:1
144
048 - 023 -10
$178,984
$381,587
$560,571
$23,259.70
24.10
:1
146
048 - 023 -14
$58,948
$22,216
$81,164
$11,629.85
6.98
:1
147
048- 023 -13
$58,109
$121,336
$179,445
$9,968.44
18.00
:1
148
048- 023 -11
$3,195,780
$54,220
$3,250,000
$9,968.44
326.03
:1
149
048- 023 -12
$747,516
$19,898
$767,414
$14,952.66
51.32
:1
156
048 - 024 -24
$327,032
$26,517
$353,549
$11,629.85
30.40
:1
157
048 - 024 -17
$290,923
$19,242
$310,165
$11,629.85
26.67
:1
158
048 - 024 -16
$379,007
$13,571
$392,578
$11,629.85
33.76
:1
160
048 - 024 -26
$1,525,434
$156,566
$1,682,000
$11,629.85
144.63
:1
165
048- 024 -08
$2,632,818
$19,182
$2,652,000
$11,629.85
228.03
:1
H -3
Assessed Value (AV)
Tax
Roll as of July
2009
Value -to -Lien
Assess-
Ratio
for
ment
Structure
Existing
Confirmed
Confirmed
No.
APN
Land Value
Value
Total Value Liens
Assessment
Assessment
167
048- 024 -22
$1,518,549
$209,073
$1,727,622
$11,629.85
148.55
:1
168
048- 024 -14
$342,104
$267,872
$609,976
$3,876.62
157.35
:l
169
048 - 024 -13
$58,950
$117,955
$176,905
$11,629.85
15.21
:1
172
048 - 024 -11
$92,364
$292,000
$384,364
$13,291.26
28.92
:1
174
048 - 073 -02
$268,958
$13,486
$282,444
$11,629.85
24.29
:1
181
048 - 073 -18
$384,320
$221,801
$606,121
$11,629.85
52.12
:1
183
048- 073 -16
$712,993
$203,638
$916,631
$11,629.85
78.82
:l
186
048- 073 -13
$305,751
$101,799
$407,550
$14,398.86
28.30
:1
188
048 - 073 -28
$3,862,375
$447,125
$4,309,500
$11,629.85
370.56
:1
189
048 - 073 -27
$1,474,975
$351,128
$1,826,103
.$11,629.85
157.02
:1
195
048- 073 -12
$759,229
$135,950
$895,179
$13,845.06
64.66
:1
196
048- 074 -01
$55,152.
$11,517
$66,669
$11,629.85
5.73.
:1
197
048- 074 -02
$1,302,909
$210,591
$1,513,500
$11,629.85
130.14
:1
198
048 - 074 -03
$55,149
$7,857
$63,006
$11,629.85
5.42
:I
200
048 - 074 -05
$89,487
$28,266
$117,753
.$11,629.85
10.13
:1
201
048- 074 -23
$55,152
$25,194
$80,346
$5,851.85
13.73
:1
202
048- 074 -22
$55,150
$51,267
$106,417
$11,629.85
9.15
:1
203
048 - 074 -21
$672,070
$25,237
$697,307
$11,629.85
59.96
:1
204
048 - 074 -20
$78,367
$123,465
$201,832
$11,629.85
17.35
:1
208
048- 074 -16
$55,150
$11,793
$66,943
$11,629.85
5.76
:l
209
048 - 074 -15
$722,805
$207,447
$930,252
$11,629.85
79.99
:1
210
048 - 074 -14
$69,507
$13,770
$83,277
$17,167.88
4.85
:1
211
048 - 074 -06
$401,884
$21,578
$423,462
$11,629.85
36.41
:1
214
048 - 074 -27
$2,785,793
$250,428
$3,036,221
$11,629.85
261.07
:1
215
048- 074 -09
$89,489
$70,605
$160,094
$11,629.85
13.77
:l
216
048- 074 -10
$1,013,336
$180,163
$1,193,499
$11,629.85
102.62
:1
221
048 - 081 -21
$578,116
$50,927
$629,043
$23,813.50
26.42
:1
224
048 - 081 -27
$1,611,950
$624,050
$2,236,000
$13,291.26
168.23
:1
226
048 - 081 -16
$56,207
$31,149
$87,356
$13,29126
6.57
:1
227
048- 081 -19
$56,209
$28,545
$84,754
$13,291.26
6.38
:1
228
048 - 081 -18
$56,207
$30,654
$86,861
$13,291.26
6.54
:l
229
048- 081 -06
$56,206
$83,633
$139,839
$13,291.26
10.52
:1
232
932 -94 -106
$1,145,801
$127,648
$1,273,449
$6,645.62
191.62
:1
233
932-94 -107
$1,518,027
$179,905
$1,697,932
$6,645.62
255.50
:1
235
048- 081 -11
$97.,092
$19,959
$117,051
$13,291.26
8.81
:1
236
048- 081 -10
$97,089
$592,034
$689,123
$13,291.26
51.85
:1
239
048- 081 -23
$1,393,328
$391,853
$1,785,181
$13,291.26
134.31
:1
241
048- 082 -01
$428,615
$107,143
$535,758
$13,291.26
40.31
:I
H -5
Assessed Value (AV)
Tax
Roll as of July
2009
Value -to -Lien
Assess-
Ratio
for
ment
Structure
Existing
Confirmed
Confirmed
No.
APN
Land Value
Value
Total Value
Liens
Assessment
Assessment
246
048- 082 -11
$241,218
$60,371
$301,589
$13,291.26
22.69:
1
247
048- 082 -10
$97,089
$12,926
$110,015
$13,291.26
8.28
:l
248
048 - 082 -09
$3,342,842
$288,839
$3,631,681
$13,291.26
273.24
:l
249
048 - 082 -08
$1,693,011
$50,261
$1,743,272
$13,291.26
131.16
:1
251
048 - 082 -06
$97,087
$8,562
$105,649
$13,291.26
7.95
:1
255
048 - 121 -01
$2,066,334
$212,740
$2,279,074
$34,889.54
65.32
:1
256
048 - 121 -02
$186,525
$98,583
$285,108
$16,060.27
17.75
:l
257
048 - 121 -03
$194,884
$365,353
5560,237
$16,060.27
34.88
:l
259
048 - 121 -05
$105,458
$118,743
$224,201
$16,060.27
13.96
:1
261
048 - 121 -07
$944,084
$55,516
$999,600
$16,060.27
62.24
:l
262
048- 121 -20
$316,520
$172,433
$488,953
$6,834
$5,460.50
39.77
:1
263
048 - 121 -21
$274,562
$143,098
$417,660
$5,522
$3,212.06
47.82
:1
264
048 - 121 -19
$968,205
$193,300
$1,161,505
$17,167.88
67.66
:l
265
048 - 121 -18
$942,524
$147,569
$1,090,093
$16,060.27
67.88
:I
267
048 - 121 -15
$694,302
$442,416
$1,136,718
$16,060.27
70.78
:1
268
932 -16 -029
$540,481
$169,045
$709,526
$7,753.23
91.51
:1
269
932 -16 -030
$478,707
$166,316
$645,023
$7,753.23
83.19
1
270
048 - 121 -13
$1,763,138
$120,722
$1,883,860
$16,060.27
117.30
:1
271
048 - 121 -12
$99,972
$146,683
$246,655
$16,060.27
15.36
:1
272
048 - 121 -11
$2,693,077
$175,368
$2,868,445
$16,060.27
178.61
:1
$140,677,707
$26,299,351
$166,977,058
$12, 356
$2,670,006.38
62.25
:1
H -5
DISCLOSURE DISSEMINATION AGENT AGREEMENT
This Disclosure Dissemination Agent Agreement (the "Disclosure Agreement "), dated as of
August 1, 2010, 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 MSRB.
"Annual Financial Information" means annual financial information as such term is used in
paragraph (b)(5)(i) of the Rule and specified in Section 3(a) of this Disclosure Agreement.
"Annual Report" means an Annual Report described in and consistent with Section 3 of
this Disclosure Agreement.
"Audited Financial Statements" means the financial statements (if any) of the Issuer for the prior fiscal
year, certified by an independent auditor as prepared in accordance with generally accepted accounting
principles or otherwise, as such term is used in paragraph (b)(5)(i) of the Rule and specified in Section 3(b)
of this Disclosure Agreement.
"Bonds" means the bonds as listed on the attached Exhibit A, with the 9 -digit CUSIP® numbers
relating thereto.
"Certification" means a written certification of compliance signed by the Disclosure Representative
stating that the Annual Report, Audited Financial Statements, Voluntary Report or Notice Event notice
delivered to the Disclosure Dissemination Agent is the Annual Report, Audited Financial Statements,
Voluntary Report or Notice Event notice required to be submitted to the MSRB under this Disclosure
Agreement. A Certification shall accompany each such document submitted to the Disclosure
Dissemination Agent by the Issuer and include the full name of the Bonds and the 9 -digit 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.
"Disclosure Representative" means the Administrative Services Director of the Issuer, or such
other person as the Issuer shall designate in writing to the Disclosure Dissemination Agent from time to
time as the person responsible for providing Information to the Disclosure Dissemination Agent.
"EMMA System" means the Electronic Municipal Market Access system of the MSRB or such
other electronic system designated by the MSRB or the SEC for compliance with SEC Rule 15c2-
12(b).
"Holder" means any person (a) having the power, directly or indirectly, to vote or consent with
respect to, or to dispose of ownership of, any Bonds (including persons holding Bonds through nominees,
depositories or other intermediaries) or (b) treated as the owner of any Bonds for federal income tax
purposes.
"Information" means the Annual Financial Information, the Audited Financial Statements (if any), the
Notice Event notices and the Voluntary Reports.
"MSRB" means the Municipal Securities Rulemaking Board established pursuant to Section
1513(b)(1) of the Securities Exchange Act of 1934.
"Notice Event" means an event listed in Section 4(a) of this Disclosure Agreement.
"Official Statement" means that Official Statement prepared by the Issuer in connection with the
Bonds, as listed on Exhibit A.
"Paying Agent" means the institution identified as such in the document under which the Bonds
were issued.
"SEC" means Securities and Exchange Commission.
"Underwriter" shall mean any underwriter of the Bonds required to comply with the Rule in
connection with the offering of the Bonds.
"Voluntary Report" means the information provided to the Disclosure Dissemination Agent by
the Issuer pursuant to Section 7.
SECTION 2. Provision of Annual Reports.
(a) The Issuer shall provide, annually, an electronic copy of the Annual Report and Certification
to the Disclosure Dissemination Agent, together with a copy for the Paying Agent and the Underwriter, not
later than 30 days prior to the Annual Filing Date. Upon receipt of an electronic copy of the Annual Report
and the Certification, the Disclosure Dissemination Agent shall provide an Annual Report to the MSRB
through the EMMA System in an electronic format and accompanied by identifying information as
prescribed by the MSRB, not later March 31 after the end of each fiscal year of the Issuer, commencing
with the fiscal year ending June 30, 2010; provided, however, that the first Annual Report due on
March 31, 20111, shall consist solely of a copy of the Official Statement together with a copy of the
audited Financial Statements of the Issuer. Such date and each anniversary thereof is the Annual Filing
Date. The Annual Report may be submitted as a single document or as separate documents comprising a
package and may cross reference other information as provided in Section 3 of this Disclosure Agreement.
(b) If on the fifteenth (15th) day prior to the Annual Filing Date, the Disclosure Dissemination
Agent has not received a copy of the Annual Report and Certification, the Disclosure Dissemination Agent
shall contact the Disclosure Representative by telephone and in writing (which may be by e-mail) to
remind the Issuer of its undertaking to provide the Annual Report pursuant to Section 2(a). Promptly upon
such reminder, the Disclosure Representative shall either (i) provide the Disclosure Dissemination Agent with
an electronic copy of the Annual Report and the Certification (no later than two (2) business days prior to the
Annual Filing Date), or (ii) instruct the Disclosure Dissemination Agent in writing that the Issuer will not be
able to file the Annual Report within the time required under this Disclosure Agreement, state the date by
which the Annual Report for such year will be provided and instruct the Disclosure Dissemination Agent
that a Notice Event as described in Section 4(a)(12) has occurred and to immediately send a notice to the
MSRB through the EMMA System in substantially the form attached as Exhibit B.
(c) if the Disclosure Dissemination Agent has not received an Annual Report and
Certification by 12:00 noon on the first business day following the Annual Filing Date for the Annual
Report, a Notice Event described in Section 4(a)(12) shall have occurred and the Issuer irrevocably directs the
Disclosure Dissemination Agent to immediately send a notice to the MSRB through the EMMA System in
substantially the form attached as Exhibit B.
(d) If Audited Financial Statements of the Issuer are prepared but not available prior to the
Annual Filing Date, the Issuer shall, when the Audited Financial Statements are available, provide in a timely
manner an electronic copy to the Disclosure Dissemination Agent, accompanied by a Certificate, together
with a copy for the Paying Agent for filing with the MSRB through the EMMA System.
(e) The Disclosure Dissemination Agent shall
(i) determine the electronic filing requirements of the MSRB each year prior to the
Annual Filing Date;
(ii) upon receipt, promptly file each Annual Report received under Section 2(a) with
the MSRB through the EMMA System;
(iii) upon receipt, promptly file each Audited Financial Statement received under
Section 2(d) with the MSRB through the EMMA System;
(iv) upon receipt, promptly file the text of each disclosure to be made with the MSRB
through the EMMA System, together with information regarding the event as required by the
MSRB as described below when filing pursuant to the Section of this Disclosure Agreement
indicated:
1. "Principal and interest payment delinquencies," pursuant to Sections 4(c)
and 4(a)(1);
2. "Non- payment related defaults," pursuant to Sections 4(c) and 4(a)(2);
3. "Unscheduled draws on debt service reserves reflecting financial
difficulties," pursuant to Sections 4(c) and 4(a)(3);
4. "Unscheduled draws on credit enhancements reflecting financial
difficulties," pursuant to Sections 4(c) and 4(a)(4);
5. "Substitution of credit or liquidity providers, or their failure to
perform," pursuant to Sections 4(c) and 4(a)(5);
6. "Adverse tax opinions or events affecting the tax- exempt status of the
security, pursuant to Sections 4(c) and 4(a)(6);
7. "Modifications to rights of security holders," pursuant to Sections 4(c) and
4(a)(7);
8. "Bond calls," pursuant to Sections 4(c) and 4(a)(8);
9. "De£easances," pursuant to Sections 4(c) and 4(a)(9);
10. "Release, substitution or sale of property securing repayment of the
securities, pursuant to Sections 4(c) and 4(a)(10);
3
11. "Ratings changes," pursuant to Sections 4(c) and 4(a)(11); or
12. "Other material event notice (specify)," pursuant to Section 7 of this
Agreement, together with the summary description provided by the
Disclosure Representative (e.g., "Failure to provide annual financial
information as required," pursuant to Section 2(b)(ii) or Section 2(c),
together with a completed copy of Exhibit B to this Disclosure
Agreement);
(v) provide the Issuer evidence of the filings of each of the above when made,
which shall be by means of the DAC system, for so long as DAC is the Disclosure Dissemination
Agent under this Disclosure Agreement.
(f) The Issuer may adjust the Annual Filing Date upon change of its fiscal year by
providing written notice of such change and the new Annual Filing Date to the Disclosure Dissemination
Agent, Paying Agent (if any) and the MSRB through the EMMA System, provided that the period between the
existing Annual Filing Date and new Annual Filing Date shall not exceed one year.
Notwithstanding any other provisions of this Disclosure Agreement, any of the required filings
hereunder may be made with the MSRB through the Electronic Municipal Market Access (EMMA),
approved by the Securities and Exchange Commission.
SECTION 3. Content of Annual Reports.
(a) Each Annual Report shall contain Annual Financial Information with respect to the Issuer,
including (1) the audited financial statements of the City; (2) the principal amount of Bonds outstanding;
(3) the status of the public improvements which have been financed by the City with proceeds of the
Bonds; (4) a table setting forth the percentage of delinquent Assessment Installments as of June 30 of each
fiscal year and a description of the status of any foreclosure actions being pursued by the City with respect to
delinquent Assessment Installments; (5) the Reserve Fund balance; (6) an update of the table entitled "Top Ten
Property Owners" in the Official Statement and (7) the total assessed value of property within the District.
(b) Audited Financial Statements prepared in accordance with generally accepted accounting
principles ( "GAAP ") will be included in the Annual Report. If audited financial statements are not
available, then unaudited financial statements, prepared in accordance with GAAP, will be included in the
Annual Report. Audited Financial Statements (if any) will be provided pursuant to Section 2(d).
Any or all of the items listed above may be included by specific reference from other documents,
including official statements of debt issues with respect to which the Issuer is an "obligated person" (as defined
by the Rule), which have been previously filed with the MSRB through the EMMA System or the Securities
and Exchange Commission. If the document incorporated by reference is a final official statement, it
must be available from the MSRB. The Issuer will clearly identify each such document so incorporated by
reference.
Any annual financial information containing modified operating data or financial information is
required to explain, in narrative form, the reasons for the modification and the impact of the change in the type
of operating data or financial information being provided.
SECTION 4. Reporting of Notice Events.
(a) The occurrence of any of the following events, if material, with respect to the Bonds
constitutes a Notice Event
rd
1. Principal and interest payment delinquencies;
2. Non - payment related defaults;
3. Unscheduled draws on debt service reserves reflecting financial difficulties;
4. Unscheduled draws on credit enhancements reflecting financial difficulties;
5. Substitution of credit or liquidity providers, or their failure to perform;
6. Adverse tax opinions or events affecting the tax - exempt status of the security;
7. Modifications to rights of security holders;
8. Bond calls;
9. Defeasances;
10. Release, substitution or sale of property securing repayment of the securities;
11. Rating changes; or
12. Other material event notice (e.g., failure to provide annual financial information
as required).
The Issuer shall promptly notify the Disclosure Dissemination Agent in writing upon the occurrence
of a Notice Event. Such notice shall instruct the Disclosure Dissemination Agent to report the occurrence
pursuant to subsection (c). Such notice shall be accompanied with the text of the disclosure that the Issuer
desires to make, the written authorization of the Issuer for the Disclosure Dissemination Agent to
disseminate such information and the date the Issuer desires for the Disclosure Dissemination Agent to
disseminate the information.
(b) The Disclosure Dissemination Agent is under no obligation to notify the Issuer or the
Disclosure Representative of an event that may constitute a Notice Event. In the event the Disclosure
Dissemination Agent so notifies the Disclosure Representative, the Disclosure Representative will, within five
business days of receipt of such notice, instruct the Disclosure Dissemination Agent that (i) a Notice Event has
not occurred and no filing is to be made or (ii) a Notice Event has occurred and the Disclosure
Dissemination Agent is to report the occurrence pursuant to subsection (c), together with the text of the
disclosure that the Issuer desires to make, the written authorization of the Issuer for the Disclosure
Dissemination Agent to disseminate such information and the date the Issuer desires for the Disclosure
Dissemination Agent to disseminate the information.
(c) If the Disclosure Dissemination Agent has been instructed by the Issuer as prescribed in
subsection (a) or (b)(ii) of this Section 4 to report the occurrence of a Notice Event, the Disclosure
Dissemination Agent shall promptly file a notice of such occurrence with the MSRB through the EMMA
System in accordance with Section 2 (e)(iv) hereof.
SECTION 5. CUSIPx 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 CUSte numbers for the
Bonds as to which the provided information relates.
SECTION 6. Additional Disclosure Obligations. The Issuer acknowledges and understands
that other state and federal laws, including but not limited to the Securities Act of 1933 and Rule lOb -5
promulgated under the Securities Exchange Act of 1934, may apply to the Issuer, and that the failure of the
Disclosure Dissemination Agent to so advise the Issuer shall not constitute a breach by the Disclosure
Dissemination Agent of any of its duties and responsibilities under this Disclosure Agreement. The Issuer
acknowledges and understands that the duties of the Disclosure Dissemination Agent relate exclusively to
execution of the mechanical tasks of disseminating information as described in this Disclosure Agreement.
SECTION 7. Voluntary Reports.
(a) The Issuer may instruct the Disclosure Dissemination Agent to file information with the
MSRB through the EMMA System from time to time pursuant to a Certification of the Disclosure
Representative accompanying such information (a "Voluntary Report").
(b) Nothing in this Disclosure Agreement shall be deemed to prevent the Issuer from
disseminating any other information through the Disclosure Dissemination Agent using the means of
dissemination set forth in this Disclosure Agreement or including any other information in any Annual Report,
Annual Financial Statement, Voluntary Report or Notice Event notice, in addition to that required by this
Disclosure Agreement. If the Issuer chooses to include any information in any Annual Report, Annual
Financial Statement, Voluntary Report or Notice Event notice in addition to that which is specifically
required by this Disclosure Agreement, the Issuer shall have no obligation under this Disclosure Agreement to
update such information or include it in any future Annual Report, Annual Financial Statement, Voluntary
Report or Notice Event notice.
SECTION 8. Termination of Reporting Obligation. The obligations of the Issuer and the
Disclosure Dissemination Agent under this Disclosure Agreement shall terminate with respect to the Bonds
upon the legal defeasance, prior redemption or payment in full of all of the Bonds when the Issuer is no
longer an obligated person with respect to the Bonds, or upon delivery by the Disclosure Representative to
the Disclosure Dissemination Agent of an opinion of nationally recognized bond counsel to the effect that
continuing disclosure is no longer required.
SECTION 9. Disclosure Dissemination Agent. The Issuer has appointed Digital Assurance
Certification, L.L.C. as exclusive Disclosure Dissemination Agent under this Disclosure Agreement. The
Issuer may, upon thirty days written notice to the Disclosure Dissemination Agent and the Paying Agent,
replace or appoint a successor Disclosure Dissemination Agent. Upon termination of DAC's services as
Disclosure Dissemination Agent, whether by notice of the Issuer or DAC, the Issuer agrees to appoint a
successor Disclosure Dissemination Agent or, alternately, agrees to assume all responsibilities of Disclosure
Dissemination Agent under this Disclosure Agreement for the benefit of the Holders of the Bonds.
Notwithstanding any replacement or appointment of a successor, the Issuer shall remain liable until payment in
full for any and all sums owed and payable to the Disclosure Dissemination Agent. The Disclosure
Dissemination Agent may resign at any time by providing thirty days' prior written notice to the Issuer.
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, humanities and Liabilities of Disclosure Dissemination Age .
(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.
(c) All documents, reports, notices, statements, information and other materials provided to
the MSRB under this Disclosure Agreement shall be provided in an electronic format and accompanied
by identifying information prescribed by the MSRB.
SECTION 12. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Agreement, the Issuer and the Disclosure Dissemination Agent may amend this Disclosure Agreement and any
provision of this Disclosure Agreement may be waived, if such amendment or waiver is supported by an
opinion of counsel expert in federal securities laws acceptable to both the Issuer and the Disclosure
Dissemination Agent to the effect that such amendment or waiver does not materially impair the interests of
Holders of the Bonds and would not, in and of itself, cause the undertakings herein to violate the Rule if such
amendment or waiver had been effective on the date hereof but taking into account any subsequent change
in or official interpretation of the Rule; provided neither the Issuer nor the Disclosure Dissemination Agent
shall be obligated to agree to any amendment modifying their respective duties or obligations without their
consent thereto.
Notwithstanding the preceding paragraph, the Disclosure Dissemination Agent shall have the
right to adopt amendments to this Disclosure Agreement necessary to comply with modifications to and
interpretations of the provisions of the Rule as announced by the Securities and Exchange Commission from
time to time by giving not less than 20 days' written notice of the intent to do so together with a copy of
the proposed amendment to the Issuer. No such amendment shall become effective if the Issuer shall,
within 10 days following the giving of such notice, send a notice to the Disclosure Dissemination Agent in
writing that it objects to such amendment.
SECTION 13. Beneficiaries. This Disclosure Agreement shall inure solely to the benefit
of the Issuer, the Paying Agent of the Bonds, the Disclosure Dissemination Agent, the underwriter, and the
Holders from time to time of the Bonds, and shall create no rights in any other person or entity.
SECTION 14. Governing Law. This Disclosure Agreement shall be governed by the laws
of the State of California (other than with respect to conflicts of laws).
SECTION 15. Counterparts. This Disclosure Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall constitute but one and the same
instrument.
The Disclosure Dissemination Agent and the Issuer have caused this Disclosure Agreement to be
executed, on the date first written above, by their respective officers duly authorized.
ATTEST:
EN
Leilani Brown, City Clerk
APPROVED AS TO FORM:
MCFARLIN & ANDERSON LLP
LON
Name: James F. Anderson, Esq.
Title: Partner
DIGITAL ASSURANCE CERTIFICATION, L.L.C.,
as Disclosure Dissemination Agent
IM
Name:
Title:
By:
Name:
Title:
CITY OF NEWPORT BEACH,
as Issuer
By:
City Manager
La
EXIIIBIT A
NAME AND CUSW NUMBERS OF BONDS
Name of Issuer: City of Newport Beach
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 100
(13`h Street/Balboa Boulevard/Adams Street/Ocean Front)
Limited Obligation Improvement Bonds
Date of Issuance: August 17, 2010
Date of Official Statement: July 28, 2010
Maturity
(September 2) CUSIP® No.
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
20
A -1
EXHIBIT B
NOTICE TO MSRB OF FAILURE TO FILE ANNUAL REPORT
Issuer: City of Newport Beach
Name of Bond Issue: $ City of Newport Beach
Assessment District No. 100
(13`h Street/Balboa Boulevard/Adams Street/Ocean Front)
Limited Obligation Improvement Bonds
Date of Issuance: August 17, 2010
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 August 1, 2010, 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
Digital Assurance Certification, L.L.C., as Disclosure
Dissemination Agent, on behalf of the Issuer
RM