HomeMy WebLinkAboutAgenda Report - March 2, 2022 G-03 PHww:5'• CITY OF LODI AGENDA ITEM
,. COUNCIL COMMUNICATION
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AGENDA TITLE: Adopt Resolutions and Authorize Documents and Actions Regarding the Financing
for the Acquisition, Design and Construction of Capital Improvements
(a) Hold a Noticed Public Hearing.
(b) Adopt Resolution of the City Council of the City of Lodi Making Findings and
Approving Documents and Official Actions Relating to the Proposed Issuance
by the Lodi Public Financing Authority of Lease Revenue Bonds to Refinance
Outstanding Lease Revenue Bonds and Provide Financing for Acquisition and
Construction of Capital Improvements, Including an Animal Shelter and Parks
and Playground Improvements and Upgrades, and
(c) Adopt Resolution of Board of Directors of the Lodi Public Financing Authority
Authorizing the Issuance and Sale of Lease Revenue Bonds to Refinance
Outstanding Lease Revenue Bonds and Provide Financing for Acquisition and
Construction of Capital Improvements, Including an Animal Shelter and Parks
and Playground Improvements and Upgrades, and Approving Related
Documents and Official Action
MEETING DATE: March 2, 2022
PREPARED BY: Deputy City Manager and City Attorney
RECOMMENDED ACTION: Adopt Resolutions and Authorize Documents and Actions
Regarding the Financing for the Acquisition, Design and
Construction of Capital Improvements.
a. Hold a Noticed Public Hearing.
b. Adopt Resolution of the City Council of the City of Lodi Making Findings and Approving
Documents and Official Actions Relating to the Proposed Issuance by the Lodi Public Financing
Authority of Lease Revenue Bonds to Refinance Outstanding Lease Revenue Bonds and Provide
Financing for Acquisition and Construction of Capital Improvements, Including an Animal Shelter
and Parks and Playground Improvements and Upgrades, and
C. Adopt Resolution of Board of Directors of the Lodi Public Financing Authority Authorizing the
Issuance and Sale of Lease Revenue Bonds to Refinance Outstanding Lease Revenue Bonds
and Provide Financing for Acquisition and Construction of Capital Improvements, Including an
Animal Shelter and Parks and Playground Improvements and Upgrades, and Approving Related
Documents and Official Action.
Adopt Resolutions and Authorize Documents and Actions Regarding the Financing for the Acquisition, Design and Construction
of Capital Improvements
March 2, 2022
BACKGROUND INFORMATION: The Lodi Public Financing Authority ("PFA") issued its $19,080,000
Lodi Public Financing Authority 2012 Refunding Lease Revenue
Bonds (the "2012 Bonds") for the purpose of refinancing outstanding
certificates of participation that were executed and delivered to finance various municipal facilities of the
City. In connection with the issuance of the 2012 Bonds, the City and the PFA entered into a Site Lease
and a Lease Agreement, each dated September 1, 2012, pursuant to which, respectively, the City leased
to the PFA the land and improvements constituting the City's police building and Carnegie Forum, and
the PFA sub -leased the assets back to the City.
In order to take advantage of prevailing bond market conditions, the City is proposing to refund the 2012
Bonds. The City wishes to leverage the savings achieved by refinancing the 2012 Bonds to finance the
acquisition and construction of capital improvements, including a new animal shelter and parks and
playground improvements and upgrades (the "Project"). In order to provide funds for the refunding of the
2012 Bonds and the financing of the Project, staff is proposing that the PFA issue lease revenue bonds
(the "2022 Lease Revenue Bonds"). In connection with the issuance of the 2022 Lease Revenue Bonds,
the City and the PFA will enter into a Site Lease and a Lease Agreement, pursuant to which,
respectively, the City will lease to the PFA the land and improvements constituting the City's police
building and the City's Fire Station #2, and the PFA will sub -lease the assets back to the City.
Government Code Section 6586.5 requires the City to hold a public hearing on the proposed issuance of
the 2022 Lease Revenue Bonds to finance the Project, and to make certain findings. As required by
Section 6586.5, the City has caused publication of a notice of a public hearing once at least five days
prior to the date hereof in a newspaper of general circulation in the City.
SUMMARY OF DOCUMENTS: In order to complete the proposed financing, the City and the PFA are
required to adopt resolutions and approve and execute several key legal documents. The resolutions and
the key documents are summarized below.
Resolutions: The Resolutions of the City and the PFA approve the issuance of the proposed 2022
Lease Revenue Bonds, the execution of the proposed legal documents, and the distribution of the Official
Statement to investors. While the documents are in near -to -final form, the Resolutions authorize certain
officers of the City and the PFA to make amendments, as necessary. The Resolutions specify the maximum
principal amount for the 2022 Lease Revenue Bonds, maximum interest rate, and maximum underwriter's
discount.
The City, Council Resolution includes the findings required to be made by the City Council after holding the
public hearing.
Official Statement: The Preliminary Official Statement, approved and signed by the City and
PFA, most importantly describes (i) the refunding of the outstanding 2012 Bonds; (ii) the financing of the
Project; (iii) the City's lease payment obligation, which is the source of repayment for the 2022 Lease
Revenue Bonds; (iv) potential risks to prospective investors in the 2022 Lease Revenue Bonds
(described in the section entitled "RISK FACTORS"); (v) tax status of interest on the 2022 Lease
Revenue Bonds (described in the section entitled "TAX MATTERS"); and (vi) the economic and
demographic characteristics of the City (set forth in Appendix A). The Preliminary Official Statement
(often referred to as the "POS") is distributed by the underwriter to prospective investors prior to the bond
sale so that investors can make informed purchase decisions. The POS is the equivalent of a prospectus
in the private sector. The Final Official Statement is sent to purchasers after the terms of the sale are
finalized.
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Adopt Resolutions and Authorize Documents and Actions Regarding the Financing for the Acquisition, Design and Construction
of Capital Improvements
March 2, 2022
The distribution of a POS is subject to federal securities laws, including the Securities Act of 1933 and
the Securities Exchange Act of 1934. These laws require the POS to include all facts that would be
material to an investor considering a purchase of the 2022 Lease Revenue Bonds. Material information is
information that there is a substantial likelihood that a reasonable investor would consider important in
deciding whether to buy or sell bonds. Materiality is determined in the context of all facts and
circumstances.
The Securities and Exchange Commission (the "SEC"), the agency with regulatory authority over the City
and the PFA's compliance with the federal securities laws, has issued guidance as to the duties of the
City Council and the PFA's Board of Directors with respect to their approval of the POS. In its "Report of
Investigation in the Matter of County of Orange, California as it Relates to the Conduct of the Members of
the Board of Supervisors" (Release No. 36761 / January 24, 1996) (the "Release"), the SEC stated that,
if a member of the City Council/Board of Directors has knowledge of any facts or circumstances that an
investor would want to know about prior to investing in the bonds, whether relating to their repayment,
tax-exempt status, undisclosed conflicts of interest with interested parties, or otherwise, he or she should
endeavor to discover whether such facts are adequately disclosed in the POS. In the Release, the SEC
stated that the steps that a member of the City Council/Board of Directors could take include becoming
familiar with the POS and questioning staff and consultants about the disclosure of such facts.
Continuing Disclosure Certificate: The Continuing Disclosure Certificate, attached as
Appendix E to the Official Statement, obligates the City to provide updated information to the bond
markets on an ongoing basis. Disclosure is required annually, and on an exceptional basis for any
significant listed events.
Band Purchase A„^ rq eement: The Bond Purchase Agreement is executed among the City, the
PFA and the Underwriter (Piper Sandler & Co.) on the day of the bond sale. It specifies the actual
principal amounts, interest rates, and prices at which the 2022 Lease Revenue Bonds will be sold. Within
the Bond Purchase Agreement, the Underwriter commits to purchase the 2022 Lease Revenue Bonds at
closing and the PFA commits to sell the 2022 Lease Revenue Bonds at the agreed upon prices and
amounts subject to certain closing conditions. Closing conditions generally relate to the execution and
validity of all the required documents and the absence of material changes in the nature of the security,
etc.
Site Lease: The Site Lease is executed by the City, as lessor, and the PFA, as lessee. The City
will lease the land and improvements constituting the City police building and the City's Fire Station #2
("Leased Property"), in consideration of the payment by the Authority of an upfront rental payment (the
"Site Lease Payment") that is sufficient to provide funds for the refunding of the 2012 Bonds and the
financing of the Project. The PFA has authorized the issuance of the 2022 Lease Revenue Bonds under
an Indenture of Trust (the "Indenture") between the PFA and U.S. Bank Trust Company, National
Association, as trustee (the "Trustee"), for the purpose of providing the funds to enable the PFA to pay
the Site Lease Payment to the City.
Lease Agreement: The Lease Agreement is executed by the PFA, as lessor, and the City, as
lessee. In order to provide revenues which are sufficient to enable the PFA to pay debt service on the
2022 Revenue Bonds, the PFA will sub -lease the Leased Property back to the City under the Lease
Agreement and the City will pay semiannual lease payments as the rental for Leased Property. The
lease payments made by the City under the Lease Agreement will be assigned by the PFA to the Trustee
for the security of the 2022 Lease Revenue Bonds under an Assignment Agreement (described below),
between the PFA, as assignor, and the Trustee, as assignee.
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Adopt Resolutions and Authorize Documents and Actions Regarding the Financing for the Acquisition, Design and Construction
of Capital Improvements
March 2, 2022
Assignment Agreement: The Assignment Agreement is executed by the PFA and the Trustee.
Under the Assignment Agreement, the PFA will assign certain of its rights under the Lease Agreement to
the Trustee for the benefit of the 2022 Lease Revenue Bond owners.
The Site Lease, the Lease Agreement, and the Assignment Agreement will be concurrently recorded in
the real property records of San Joaquin County Recorder.
Indenture of Trust: The Indenture of Trust is the legal document between the PFA and the
Trustee that lays out the terms of the 2022 Lease Revenue Bonds. It will specify:
■ the payment dates and maturities of the 2022 Lease Revenue Bonds;
• the Authority's right to redeem (or prepay) 2022 Lease Revenue Bonds prior to their
scheduled maturity date (which the City/Authority would typically exercise to take advantage
of lower interest rates);
• the pledge of revenues for payment of the 2022 Lease Revenue Bonds;
• the default and remedy provisions (in the event the City failed to make the lease payments
under the Lease Agreement);
■ the obligations of the Trustee; and
■ the conditions for defeasance of the 2022 Lease Revenue Bonds (discharge of the indenture).
Irrevocable Refunding Instructions: The Irrevocable Refunding Instructions will be given by the
PFA to the trustee for the 2012 Bonds (U.S. Bank Trust Company, National Association) for the purpose
of providing the 2012 Bond Trustee with irrevocable instructions as to the use of the proceeds of the
2022 Lease Revenue Bonds and other available money to redeem the 2012 Bonds.
FISCAL IMPACT: An increase at current City debt of $15 million but no net increase in total
debt service costs over the life of the new financing.
FUNDING AVAILABLE: Refinanced debt service costs paid in interest savings.
n rew Keys anice D Magdich
Deputy City Manager orney
JDM/Ist
Attachments: Draft City Council Resolution and Appendicies
Draft Lodi Public Financing Authority Resolution and Appendicies
Draft Preliminary Official Statement and Appendices
Bond Purchase Agreement
Draft Site Lease
Draft Lease Agreement
Assignment Agreement
Indenture of Trust
Irrevocable Refunding Instructions
4
I.��Y�A���[�7►1►i;�1� � •
A RESOLUTION OF THE LODI CITY COUNCIL MAKING FINDINGS AND
APPROVING DOCUMENTS AND ACTIONS RELATING TO THE PROPOSED
ISSUANCE BY THE LODI PUBLIC FINANCING AUTHORITY OF LEASE REVENUE
BONDS TO REFINANCE OUTSTANDING LEASE REVENUE BONDS AND
PROVIDE FINANCING FOR ACQUISITION AND CONSTRUCTION OF CAPITAL
IMPROVEMENTS, INCLUDING AN ANIMAL SHELTER AND PARKS AND
PLAYGROUND IMPROVEMENTS AND UPGRADES
WHEREAS, the Lodi Public Financing Authority (the "Authority") previously issued its
$19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Revenue Bonds (the "2012
Bonds") for the purpose of refinancing outstanding certificates of participation that were executed
and delivered to finance various municipal facilities of the City of Lodi (the "City"); and
WHEREAS, in connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of September 1,
2012, pursuant to which, respectively, the City leased to the Authority and subleased from the
Authority the land and improvements constituting the City's police building and Carnegie Forum;
and
WHEREAS, in order to take advantage of prevailing bond market conditions, the City
Council wishes to authorize the refinancing of the 2012 Bonds; and
WHEREAS, the City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of capital improvements, including, among
other things, a new animal shelter and park and playground improvements and upgrades (the
"Project"); and
WHEREAS, to that end, the City has proposed to lease the land and improvements
constituting the City's police building and its Fire Station #2 (the "Leased Property") to the
Authority under a Site Lease, the form of which is on file with the City Clerk, in consideration of
the payment by the Authority of an upfront rental payment which is sufficient to provide funds to
refinance the 2012 Bonds and finance the acquisition and construction of the Project; and
WHEREAS, in order to raise funds for the upfront rental payment, the Authority proposes
to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue Bonds (2012 Refunding;
Capital Projects Financing) (the "Bonds") under Article 4 of Chapter 5, Division 7, Title 1 of the
Government Code of the State of California, commencing with Section 6584 of said Code (the
"Bond Law"); and
WHEREAS, in order to secure the payments of principal of and interest on the Bonds, the
Authority proposes to lease the Leased Property back to the City under a Lease Agreement (the
"Lease Agreement"), the form of which is on file with the City Clerk, under which the City is
obligated to pay semiannual lease payments as rental for the Leased Property, and the Authority
will assign substantially all of its rights under the Lease Agreement to U.S. Bank Trust Company,
National Association, as trustee for the Bonds; and
WHEREAS, there has been submitted to the City Council a form of preliminary Official
Statement in connection with the marketing of the Bonds and the City Council, with the aid of its
staff, has reviewed the preliminary Official Statement to assure proper disclosure of all material
facts relating to the Bonds that are in the personal knowledge of the members of the City Council
and the City staff; and
WHEREAS, the Authority and the City propose to sell the Bonds to Piper Sandler & Co.
(the "Underwriter") pursuant to a Bond Purchase Agreement (the "Bond Purchase Agreement"),
the form of which is on file with the City Clerk; and
WHEREAS, in order to assist the Underwriter in complying with Rule 15c2-12 of the
Securities and Exchange Commission, the City will undertake certain continuing disclosure
obligations with respect to the Bonds pursuant to a continuing disclosure certificate to be executed
by the City (the "Continuing Disclosure Certificate"), the form of which is on file with the City Clerk;
and
WHEREAS, as a condition precedent to the issuance by the Authority of the Bonds to
provide financing for the Project, Section 6586.5 of the Bond Law requires that the City approve
the proposed lease financing by the Authority and that the City make certain findings with respect
to such financing, and Section 6586.5 further requires that such approval be given and findings
be made only after a noticed public hearing; and
WHEREAS, as required by Section 6586.5 of the Bond Law, the City has caused
publication of a notice of a public hearing on the financing of the Project once at least five days
prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the City Council held a public hearing at which all interested persons were
provided the opportunity to speak on the subject of financing the Project; and
WHEREAS, in accordance with Government Code Section 5852.1, the City Council has
obtained and wishes to disclose the information set forth in Appendix A hereto; and
WHEREAS, the City Council wishes at this time to approve all proceedings to which it is
a party relating to the issuance and sale of the Bonds, the refinancing of the 2012 Bonds and the
financing of the Project.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as follows:
SECTION 1. Issuance of Bonds. The City Council hereby approves the issuance of the
Bonds by the Authority under the Bond Law in the maximum principal amount of $30,000,000, for
the purpose of providing funds to refinance the 2012 Bonds and finance the Project.
Pursuant to the Bond Law, and based on the information provided to the City Council by
City staff and consultants, all as set forth in the proceedings and documents providing for the
issuance and delivery of the Bonds, the City Council hereby finds and determines that the
issuance of the Bonds and the transactions related thereto will result in significant public benefits
within the contemplation of Section 6586 of the Bond Law, namely, demonstrable savings in bond
preparation, bond underwriting and bond issuance costs.
SECTION 2. Approval of Related Financing Agreements. The City Council hereby
approves each of the following agreements required for the issuance and sale of the Bonds, the
refinancing of the 2012 Bonds and the financing of the Project, in substantially the respective
forms on file with the City Clerk together with any changes therein or additions thereto deemed
advisable by the City Manager, the Deputy City Manager or the City Attorney (each, an
"Authorized Officer"), whose execution thereof shall be conclusive evidence of the approval of
any such changes or additions. An Authorized Officer is hereby authorized and directed for and
-2-
on behalf of the City to execute, and the City Clerk is hereby authorized and directed to attest,
the final form of each such agreement, as follows:
• Site Lease, between the City as lessor and the Authority as lessee, under
which the City leases the Leased Property to the Authority in consideration of
the payment of an amount which will be applied by the City to refinance the
2012 Bonds and finance the Project.
• Lease Agreement, between the Authority as lessor and the City as lessee,
under which the Authority leases the Leased Property back to the City and the
City agrees to pay semiannual lease payments which are sufficient to provide
revenues with which to pay principal of and interest on the Bonds when due.
• Irrevocable Refunding Instructions, to be given by the Authority to the trustee
for the 2012 Bonds, and to be consented to by the City, providing for the
deposit, investment and application of funds to defease and redeem the 2012
Bonds.
• Bond Purchase Agreement, among the City, the Authority and the Underwriter,
which establishes the terms under which the Underwriter will purchase the
Bonds from the Authority.
• Continuing Disclosure Certificate, to be executed by the City.
SECTION 3. Negotiated Sale of Bonds. The City Council hereby approves the negotiated
sale of the Bonds by the Authority to the Underwriter. The Bonds shall be sold pursuant to the
terms and provisions of the Bond Purchase Agreement. The Bonds shall be sold at a true interest
cost not to exceed 4.0 percent. The Underwriter's discount shall not exceed 1.0 percent.
SECTION 4. Official Statement. The City Council hereby approves the preliminary Official
Statement describing the Bonds in substantially the form on file with the City Clerk. An Authorized
Officer is hereby authorized and directed to approve any changes in or additions to said
preliminary Official Statement and to execute an appropriate certificate stating the Authorized
Officer's determination that the preliminary Official Statement (together with any changes therein
or additions thereto) has been deemed nearly final within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934. Distribution of the preliminary Official Statement by the
Underwriter is hereby approved. An Authorized Officer is hereby authorized and directed to
approve any changes in or additions to a final form of said Official Statement, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such changes
and additions. The City Council hereby authorizes the distribution of the final Official Statement
by the Underwriter. The final Official Statement shall be executed on behalf of the City by an
Authorized Officer.
SECTION 5. Official Actions. The Mayor, the City Manager, the Deputy City Manager
and the City Attorney and all other officers of the City are each authorized and directed on behalf
of the City to make any and all leases, assignments, certificates, requisitions, agreements
(including an escrow deposit and trust agreement, if needed), notices, consents, instruments of
conveyance or termination, warrants and other documents, which they or any of them deem
necessary or appropriate in order to consummate any of the transactions contemplated by the
agreements and documents approved under this Resolution, and the City Manager may direct
the City Clerk to execute and deliver such other documents as the City Manager determines are
necessary or appropriate in order to consummate any of the transactions contemplated by the
agreements and documents approved under this Resolution. An Authorized Officer may revise
-3-
the identity of the Leased Property as necessary in order to accomplish the purposes of this
Resolution. An Authorized Officer may approve the purchase of municipal bond insurance or a
debt service reserve fund policy if the Authorized Officer, in consultation with the City's municipal
advisor, concludes such purchase would be economically beneficial for the City. Whenever in this
Resolution any officer of the City is authorized to execute or countersign any document or take
any action, such execution, countersigning or action may be taken on behalf of such officer by
any person designated by such officer to act on his or her behalf in the case such officer is absent
or unavailable.
SECTION 6. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
Dated: March 2, 2022
I hereby certify that Resolution No. 2022-61 was passed and adopted by the City Council
of the City of Lodi in a regular meeting held March 2, 2022 by the following votes:
AYES: COUNCIL MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and
Mayor Chandler
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN: COUNCIL MEMBERS — None
jw&.,,d6�
MARK CHANDLER
Mayor
PAMELA M. FARRIS
Assistant City Clerk
2022-61
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APPENDIX A
Government Code Section 5852.1 Disclosure
The good faith estimates set forth herein are provided with respect to the Bonds in
accordance with California Government Code Section 5852.1. Such good faith estimates have
been provided to the City and the Authority by the Underwriter of the Bonds.
Principal Amount. The Underwriter has informed the City and the Authority that, based on
the financing plan and current market conditions, its good faith estimate of the aggregate principal
amount of the Bonds to be sold is $26,475,000 (the "Estimated Principal Amount"), which
excludes net premium that might be generated in the sale under current market conditions.
True Interest Cost of the Bonds. The Underwriter has informed the City and the Authority
that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
true interest cost of the Bonds, which means the rate necessary to discount the amounts payable
on the respective principal and interest payment dates to the purchase price received for the
Bonds, is 3.34%.
Finance Charge of the Bonds. The Underwriter has informed the City and the Authority
that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on market
interest rates prevailing at the time of preparation of such estimate, its good faith estimate of the
finance charge for the Bonds, which means the sum of all fees and charges paid to third parties
(or costs associated with the Bonds), is $611,071. Such fees and charges include fees for bond
and disclosure counsel, municipal advisor, special tax consultant, fiscal agent, rating agencies,
City and Authority expenses, City Attorney and staff time related to bond issuance, printing, and
underwriting.
Amount of Proceeds to be Received. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith estimate
of the amount of proceeds expected to be received for sale of the Bonds, less the finance charge
of the Bonds, as estimated above, and any reserves or capitalized interest paid or funded with
proceeds of the Bonds, is $28,330,255.
Total Payment Amount. The Underwriter has informed the City and the Authority that,
assuming that the Estimated Principal Amount of the Bonds is sold, and based on market interest
rates prevailing at the time of preparation of such estimate, its good faith estimate of the total
payment amount, which means the sum total of all payments that the Authority will make to pay
debt service on the Bonds, plus the finance charge for the Bonds, as described above, not paid
with the proceeds of the Bonds, calculated to the final maturity of the Bonds, is $44,134,950.
-5-
The foregoing estimates constitute good faith estimates only. The actual principal amount
of the Bonds issued and sold, the true interest cost thereof, the finance charges thereof, the
amount of proceeds received therefrom and total payment amount with respect thereto may differ
from such good faith estimates due to (a) the actual date of the sale of the Bonds being different
than the date assumed for purposes of such estimates, (b) the actual principal amount of Bonds
sold being different from the Estimated Principal Amount, (c) the actual amortization of the Bonds
being different than the amortization assumed for purposes of such estimates, (d) the actual
market interest rates at the time of sale of the Bonds being different than those estimated for
purposes of such estimates, (e) other market conditions, or (f) alterations in the financing plan,
delays in the financing, or a combination of such factors. The actual date of sale of the Bonds and
the actual principal amount of Bonds sold will be determined by the City based on the timing of
the need for proceeds of the Bonds and other factors. The actual interest rates borne by the
Bonds will depend on market interest rates at the time of sale thereof. The actual amortization of
the Bonds will also depend, in part, on market interest rates at the time of sale thereof. Market
interest rates are affected by economic and other factors beyond the control of the City.
10
RESOLUTION NO. LPFA2022-03
A RESOLUTION OF THE LODI PUBLIC FINANCING AUTHORITY
AUTHORIZING THE ISSUANCE AND SALE OF LEASE REVENUE BONDS TO
REFINANCE OUTSTANDING LEASE REVENUE BONDS AND PROVIDE
FINANCING FOR ACQUISITION AND CONSTRUCTION OF CAPITAL
IMPROVEMENTS, INCLUDING AN ANIMAL SHELTER AND PARKS AND
PLAYGROUND IMPROVEMENTS AND UPGRADES, AND APPROVING
RELATED DOCUMENTS AND OFFICIAL ACTIONS
WHEREAS, the Lodi Public Financing Authority (the "Authority") previously issued its
$19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Revenue Bonds (the "2012
Bonds") for the purpose of refinancing outstanding certificates of participation that were executed
and delivered to finance various municipal facilities of the City of Lodi (the "City"); and
WHEREAS, in connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of September 1,
2012, pursuant to which, respectively, the City leased to the Authority and subleased from the
Authority the land and improvements constituting the City's police building and Carnegie Forum;
and
WHEREAS, in order to take advantage of prevailing bond market conditions, the City
wishes to authorize the refinancing of the 2012 Bonds; and
WHEREAS, the City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of capital improvements, including a new
animal shelter and park and playground improvements and upgrades (the "Project"); and
WHEREAS, to that end, the City has proposed to lease the land and improvements
constituting the City's police building and its Fire Station #2 (the "Leased Property") to the
Authority under a Site Lease, the form of which is on file with the Secretary, in consideration of
the payment by the Authority of an upfront rental payment which is sufficient to provide funds to
refinance the 2012 Bonds and finance the acquisition and construction of the Project; and
WHEREAS, in order to raise funds for the upfront rental payment, the Authority proposes
to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue Bonds (2012 Refunding;
Capital Projects Financing) (the "Bonds") under Article 4 of Chapter 5, Division 7, Title 1 of the
Government Code of the State of California, commencing with Section 6584 of said Code (the
"Bond Law"); and
WHEREAS, in order to secure the payments of principal of and interest on the Bonds, the
Authority proposes to lease the Leased Property back to the City under a Lease Agreement (the
"Lease Agreement"), the form of which is on file with the Secretary, under which the City is
obligated to pay semiannual lease payments as rental for the Leased Property, and the Authority
will assign substantially all of its rights under the Lease Agreement to U.S. Bank Trust Company,
National Association, as trustee for the Bonds; and
WHEREAS, there has been submitted to the Board of Directors a form of preliminary
Official Statement in connection with the marketing of the Bonds and the Board of Directors, with
the aid of its staff, has reviewed the preliminary Official Statement to assure proper disclosure of
all material facts relating to the Bonds that are in the personal knowledge of the members of the
Board of Directors; and
WHEREAS, the Authority and the City propose to sell the Bonds to Piper Sandler & Co.
(the "Underwriter") pursuant to a Bond Purchase Agreement (the "Bond Purchase Agreement"),
the form of which is on file with the Secretary; and
WHEREAS, as a condition precedent to the issuance by the Authority of the Bonds to
provide financing for the Project, Section 6586.5 of the Bond Law requires that the City approve
the proposed lease financing by the Authority and that the City make certain findings with respect
to such financing, and Section 6586.5 further requires that such approval be given and findings
be made only after a noticed public hearing; and
WHEREAS, as required by Section 6586.5 of the Bond Law, the City has caused
publication of a notice of a public hearing on the financing of the Project once at least five days
prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the City Council held a public hearing at which all interested persons were
provided the opportunity to speak on the subject of financing the Project; and
WHEREAS, in accordance with Government Code Section 5852. 1, the Board of Directors
has obtained and wishes to disclose the information set forth in Appendix A hereto; and
WHEREAS, the Board of Directors wishes at this time to approve all proceedings to which
it is a party relating to the issuance and sale of the Bonds, the refinancing of the 2012 Bonds and
the financing of the Project;
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Lodi Public
Financing Authority as follows:
SECTION 1. Issuance of Bonds. The Board of Directors hereby authorizes the issuance
of the Bonds under the Bond Law in the maximum principal amount of $30,000,000, for the
purpose of providing funds to refinance the 2012 Bonds and finance the Project. The Bonds shall
be issued under the Bond Law and the Indenture of Trust that is approved below.
SECTION 2. Approval of Related Financing Agreements. The Board of Directors hereby
approves each of the following agreements required for the issuance and sale of the Bonds, the
refinancing of the 2012 Bonds and the financing of the Project, in substantially the respective
forms on file with the Secretary together with any changes therein or additions thereto deemed
advisable by the Executive Director, the Treasurer or the General Counsel (each, an "Authorized
Officer"), whose execution thereof shall be conclusive evidence of the approval of any such
changes or additions. An Authorized Officer is hereby authorized and directed for and on behalf
of the Authority to execute, and the Secretary is hereby authorized and directed to attest, the final
form of each such agreement, as follows:
• Indenture of Trust, between the Authority and U.S. Bank National Association,
as trustee (the "Trustee"), setting forth the terms and provisions relating to the
Bonds.
• Site Lease, between the City as lessor and the Authority as lessee, under
which the City leases the Leased Property to the Authority in consideration of
-2-
the payment of an amount which will be applied by the City to refinance the
2012 Bonds and finance the Project.
• Lease Agreement, between the Authority as lessor and the City as lessee,
under which the Authority leases the Leased Property back to the City and the
City agrees to pay semiannual lease payments which are sufficient to provide
revenues with which to pay principal of and interest on the Bonds when due.
• Assignment Agreement, between the Authority and the Trustee, whereby the
Authority assigns certain of its rights under the Lease Agreement to the Trustee
for the benefit of the Refunding Bond owners.
• Bond Purchase Agreement, among the City, the Authority and the Underwriter,
which establishes the terms under which the Underwriter will purchase the
Bonds from the Authority.
• Irrevocable Refunding Instructions, to be given by the Authority to the trustee
for the 2012 Bonds, and to be consented to by the City, providing for the
deposit, investment and application of funds to defease and redeem the 2012
Bonds.
SECTION 3. Negotiated Sale of Bonds. The Board of Directors hereby authorizes and
directs the negotiated sale of the Bonds to the Underwriter. The Bonds shall be sold at a true
interest cost not to exceed 4.0 percent. The Underwriter's discount shall not exceed 1.0 percent.
SECTION 4. Official Statement. The Board of Directors hereby approves the preliminary
Official Statement describing the Bonds in substantially the form on file with the Secretary. An
Authorized Officer is hereby authorized and directed to approve any changes in or additions to
said preliminary Official Statement and to execute an appropriate certificate stating the Authorized
Officer's determination that the preliminary Official Statement (together with any changes therein
or additions thereto) has been deemed nearly final within the meaning of Rule 15c2-12 of the
Securities Exchange Act of 1934. Distribution of the preliminary Official Statement by the
Underwriter is hereby approved. An Authorized Officer is hereby authorized and directed to
approve any changes in or additions to a final form of said Official Statement, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such changes
and additions. The Board of Directors hereby authorizes the distribution of the final Official
Statement by the Underwriter. The final Official Statement shall be executed on behalf of the
Authority by an Adthorized Officer.
SECTION 5. Official Actions. The Chair, the Executive Director, the Treasurer, the
General Counsel and all other officers of the Authority are each authorized and directed on behalf
of the Authority to make any and all assignments, certificates, requisitions, agreements (including
an escrow deposit and trust agreement, if needed), notices, consents, instruments of conveyance
and other documents, which they or any of them deem necessary or appropriate in order to
consummate any of the transactions contemplated by the agreements and documents approved
under this Resolution, and the Executive Director may direct the Secretary to execute and deliver
such other documents as the Executive Director determines are necessary or appropriate in order
to consummate any of the transactions contemplated by the agreements and documents
approved under this Resolution. An Authorized Officer may revise the identity of the Leased
-3-
Property as necessary in order to accomplish the purposes of this Resolution. An Authorized
Officer may approve the purchase of municipal bond insurance or a debt service reserve fund
policy if the Authorized Officer, in consultation with the City's municipal advisor, concludes such
purchase would be economically beneficial for the City. Whenever in this resolution any officer of
the Authority is authorized to execute or countersign any document or take any action, such
execution, countersigning or action may be taken on behalf of such officer by any person
designated by such officer to act on his or her behalf if such officer is absent or unavailable.
SECTION 6. Effective Date. This Resolution shall take effect immediately upon its
passage and adoption.
Dated: March 2, 2022
I hereby certify that Resolution No. 2022-03 was passed and adopted by the City Council
of the City of Lodi in a regular meeting held March 2, 2022 by the following votes:
AYES BOARD MEMBERS — Hothi, Khan, Kuehne, Nakanishi, and
Chairperson Chandler
NOES: BOARD MEMBERS — None
ABSENT: BOARD MEMBERS — None
ABSTAIN: BOARD MEMBERS — None
MARK CHANDLER
Chairperson
PAMELA M. FARRIS
Secretary
LPFA2022-03
-4-
APPENDIX A
Government Code Section 5852.1 Disclosure
The good faith estimates set forth herein are provided with respect to the Bonds
in accordance with California Government Code Section 5852.1. Such good faith
estimates have been provided to the City and the Authority by the Underwriter of the
Bonds.
Principal Amount. The Underwriter has informed the City and the Authority that,
based on the financing plan and current market conditions, its good faith estimate of the
aggregate principal amount of the Bonds to be sold is $26,475,000 (the "Estimated
Principal Amount"), which excludes net premium that might be generated in the sale
under current market conditions.
True Interest Cost of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the true interest cost of the Bonds, which means the rate
necessary to discount the amounts payable on the respective principal and interest
payment dates to the purchase price received for the Bonds, is 3.34%.
Finance Charge of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the finance charge for the Bonds, which means the sum of all fees
and charges paid to third parties (or costs associated with the Bonds), is $611,071.
Such fees and charges include fees for bond and disclosure counsel, municipal advisor,
special tax consultant, fiscal agent, rating agencies, City and Authority expenses, City
Attorney and staff time related to bond issuance, printing, and underwriting.
Amount of Proceeds to be Received. The Underwriter has informed the City and
the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold,
and based on market interest rates prevailing at the time of preparation of such estimate,
its good faith estimate of the amount of proceeds expected to be received for sale of the
Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or
capitalized interest paid or funded with proceeds of the Bonds, is $28,330,255.
Total Payment Amount. The Underwriter has informed the City and the Authority
that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith
estimate of the total payment amount, which means the sum total of all payments that
the Authority will make to pay debt service on the Bonds, plus the finance charge for the
Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the
final maturity of the Bonds, is $44,134,950.
The foregoing estimates constitute good faith estimates only. The actual principal
amount of the Bonds issued and sold, the true interest cost thereof, the finance charges
thereof, the amount of proceeds received therefrom and total payment amount with
respect thereto may differ from such good faith estimates due to (a) the actual date of
the sale of the Bonds being different than the date assumed for purposes of such
estimates, (b) the actual principal amount of Bonds sold being different from the
Estimated Principal Amount, (c) the actual amortization of the Bonds being different than
the amortization assumed for purposes of such estimates, (d) the actual market interest
rates at the time of sale of the Bonds being different than those estimated for purposes
of such estimates, (e) other market conditions, or (f) alterations in the financing plan,
delays in the financing, or a combination of such factors. The actual date of sale of the
Bonds and the actual principal amount of Bonds sold will be determined by the City
based on the timing of the need for proceeds of the Bonds and other factors. The actual
interest rates borne by the Bonds will depend on market interest rates at the time of sale
thereof. The actual amortization of the Bonds will also depend, in part, on market interest
rates at the time of sale thereof. Market interest rates are affected by economic and
other factors beyond the control of the City.
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PRELIMINARY OFFICIAL STATEMENT DATED , 2022
NEW ISSUE - FULL BOOK -ENTRY RATING: Standard & Poor's: " "
See "RATING" herein.
In the opinion of Jones Hall, A Professional Law Corporation, San Francisco, California, Bond Counsel, subject, however to certain
qualifications described herein, under existing law, the interest on the Bonds is excluded from gross income for federal income tax purposes
and such interest is not an item of tax preference for purposes of the federal alternative minimum tax. In the further opinion of Bond Counsel,
such interest is exempt from California personal income taxes. See "TAX MATTERS. "
Dated: Date of Delivery
P
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS
(2012 Refunding; Capital Projects Financing)
Due: October 1, as shown on inside cover
Authority for Issuance. The bonds captioned above (the "Bonds") are being issued by the Lodi Public Financing Authority (the
"Authority") under a resolution adopted by the Board of Directors of the Authority on March 2, 2022 by the Board of Directors of the Authority
and an Indenture of Trust dated as of March 1, 2022 (the "Indenture") by and between the Authority and U.S. Bank Trust Company, National
Association, as trustee for the Bonds (the "Trustee"). See "THE BONDS — Authority for Issuance."
Purpose. The Bonds are being issued primarily to (i) refund the outstanding amount of the Authority's $19,080,000 original principal
amount of 2012 Refunding Lease Revenue Bonds and the City's related lease payment obligation and (ii) finance the acquisition and
construction of capital improvements of the City, including a new animal shelter and parks and playground improvements and upgrades. In
addition, the proceeds of the Bonds will be used to [(i) fund a reserve fund for the Bonds, including, if elected by the Authority, to pay the
premium for a debt service reserve policy, (ii) if elected by the Authority, pay the premium for a municipal bond insurance policy, and] (iii) pay
the costs of issuing the Bonds. See "FINANCING PLAN."
Security. Under the Indenture, the Bonds will be payable solely from and secured by Revenues and certain funds and accounts held
under the Indenture. Revenues consist primarily of lease payments ("Lease Payments") to be made by the City pursuant to a Lease
Agreement, dated as of March 1, 2022 (the "Lease"), by and between the Authority and the City, for the leasing of certain real property. Under
the Lease, the City covenants to take such actions as necessary to include the Lease Payments in its annual budgets and to make all
necessary appropriations for such Lease Payments (subject to abatement under certain circumstances as described in this Official
Statement). The Authority is considering the use of a municipal bond insurance policy that guarantees the scheduled payment of principal of
and interest on all or a portion of the Bonds when due and a debt service reserve policy guaranteeing certain payments. The Authority will
decide whether or not to utilize a municipal bond insurance policy or a debt service reserve policy depending on market conditions at the time
of sale of the Bonds. See "SECURITY FOR THE BONDS."
Book -Entry Only. The Bonds will be issued in book -entry form only, and will be initially issued and registered in the name of Cede & Co.
as nominee of The Depository Trust Company, New York, New York ("DTC"). The Bonds are issuable as fully registered securities in
denominations of $5,000 or any integral multiple of $5,000. Purchasers of the Bonds (the "Beneficial Owners") will not receive physical
certificates representing their interest in the Bonds. See "THE BONDS" and "APPENDIX F - DTC AND THE BOOK -ENTRY ONLY SYSTEM."
Payments. Interest on the Bonds accrues from the date of delivery and is payable semiannually on April 1 and October 1 of each year,
commencing October 1, 2022. Payments of principal and interest on the Bonds will be paid by the Trustee to DTC for subsequent
disbursement to DTC Participants, which will remit such payments to the Beneficial Owners of the Bonds. See "THE BONDS - General
Provisions."
Redemption. The Bonds are subject to optional redemption, mandatory sinking fund payment redemption and special mandatory
redemption from insurance or condemnation proceeds prior to maturity. See "THE BONDS — Redemption."
NEITHER THE BONDS, NOR THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL OF OR INTEREST THEREON, NOR THE
OBLIGATION OF THE CITY TO MAKE THE LEASE PAYMENTS, CONSTITUTE A DEBT OR A LIABILITY OF THE AUTHORITY, THE CITY,
THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF ANY CONSTITUTIONAL
LIMITATION ON INDEBTEDNESS, OR A PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED
SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE INDENTURE. THE BONDS ARE NOT SECURED
BY A PLEDGE OF THE TAXING POWER OF THE CITY.
MATURITY SCHEDULE
(see inside cover)
Cover Page. This cover page contains certain information for general reference only. It is not a summary of all the provisions of the
Bonds. Prospective investors must read the entire Official Statement to obtain information essential to making an informed investment
decision.
The Bonds are offered when, as and if issued and accepted by the Underwriter, subject to approval as to their legality by Jones Hall, A
Professional Law Corporation, San Francisco, California, Bond Counsel, and subject to certain other conditions. Certain legal matters will also
be passed upon for the Authority and the City by Jones Hall, A Professional Law Corporation, as Disclosure Counsel. Certain legal matters
will be passed upon for the City by the City Attorney. Kutak Rock LLP, Irvine, California, is serving as counsel to the Underwriter. It is
anticipated that the Bonds will be delivered in book -entry form through the facilities of DTC on or about April- 2022.
[Piper Sandler Logo]
The date of this Official Statement is: , 2022.
Preliminary; subject to change.
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS
(2012 Refunding; Capital Projects Financing)
MATURITY SCHEDULE*
(Base CUSIP:t )
$ Serial Bonds
Maturity Date Principal Interest
(October 1) Amount Rate Yield
$ _% Term Bond Due October 1, , Yield _%, Price
% Term Bond Due October 1, , Yield %, Price
Price CUSIPt
%, CUSIPt:
%, CUSIPt:
* Preliminary; subject to change.
t CUSIP Copyright 2022, CUSIP Global Services, and a registered trademark of American Bankers Association. CUSIP data herein
is provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S&P Capital IQ. None of
the Authority, the City nor the Underwriter takes any responsibility for the accuracy of the CUSIP data.
LODI PUBLIC FINANCING AUTHORITY
CITY OF LODI
AUTHORITY BOARD/CITY COUNCIL
Mark Chandler, Mayor/Member
Mikey Hothi, Mayor Pro Tem/Member
Alan Nakanishi, Council Member/Member
Doug Kuehne, Councilmember/Member
Shak Khan, Councilmember/ Member
AUTHORITY/CITY OFFICIALS
Stephen Schwabauer, City Manager/Executive Director
Andrew Keys, Deputy City Manager/Treasurer
Janice D. Magdich, City Attorney/Authority Counsel
Charles Swimley, Public Works Director
BOND COUNSEL
Jones Hall, A Professional Law Corporation
San Francisco, California
MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc.
Irvine, California
TRUSTEE
U.S. Bank Trust Company, National Association
San Francisco, California
GENERAL INFORMATION ABOUT THIS OFFICIAL STATEMENT
No Offering May Be Made Except by this Official Statement. No dealer, broker, salesperson or other person
has been authorized to give any information or to make any representations with respect to the 2022 Bonds other
than as contained in this Official Statement, and if given or made, such other information or representation must not
be relied upon as having been authorized.
No Unlawful Offers or Solicitations. This Official Statement does not constitute an offer to sell or the
solicitation of an offer to buy in any state in which such offer or solicitation is not authorized or in which the person
making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such offer or
solicitation.
Effective Date. This Official Statement speaks only as of its date, and the information and expressions of
opinion contained in this Official Statement are subject to change without notice. Neither the delivery of this Official
Statement nor any sale of the 2022 Bonds will, under any circumstances, create any implication that there has been
no change in the affairs of the City, the Authority, or any other parties described in this Official Statement.
Use of this Official Statement. This Official Statement is submitted in connection with the sale of the 2022
Bonds referred to in this Official Statement and may not be reproduced or used, in whole or in part, for any other
purpose. This Official Statement is not a contract with the purchasers of the 2022 Bonds.
Preparation of this Official Statement. The information contained in this Official Statement has been obtained
from sources that are believed to be reliable, but this information is not guaranteed as to accuracy or completeness.
The Underwriter has provided the following sentence for inclusion in this Official Statement: The Underwriter has
reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors
under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriter
does not guarantee the accuracy or completeness of such information.
Document References and Summaries. All references to and summaries of the Indenture, the Lease, the Site
Lease, or other documents contained in this Official Statement are subject to the provisions of those documents and
do not purport to be complete statements of those documents.
Bonds are Exempt from Securities Laws Registration. The issuance and sale of the Bonds have not been
registered under the Securities Act of 1933, as amended (the "Securities Act'), or the Securities Exchange Act of
1934, as amended (the "Securities Exchange Act'), in reliance upon exemptions for the issuance and sale of
municipal securities provided under Section 3(a)(2) of the Securities Act and Section 3(a)(12) of the Securities
Exchange Act.
Stabilization of Prices. In connection with this offering, the Underwriter may overallot 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 2022 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.
Estimates and Projections. Certain statements included or incorporated by reference in this Official Statement
constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995,
Section 21E of the Securities Exchange Act and Section 27A of the Securities Act. Such statements are generally
identifiable by the terminology used such as "plan," "expect," "estimate," "budget' or other similar words.
THE ACHIEVEMENT OF CERTAIN RESULTS OR OTHER EXPECTATIONS CONTAINED IN SUCH
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER
FACTORS WHICH MAY CAUSE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS DESCRIBED TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS EXPRESSED
OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS. NEITHER THE CITY NOR THE AUTHORITY PLAN
TO ISSUE ANY UPDATES OR REVISIONS TO THOSE FORWARD-LOOKING STATEMENTS IF OR WHEN THEIR
EXPECTATIONS, OR EVENTS, CONDITIONS OR CIRCUMSTANCES ON WHICH SUCH STATEMENTS ARE
BASED OCCUR.
Website. The City maintains a website; however, the information presented on the website is not a part of
this Official Statement and should not be relied upon in making an investment decision with respect to the 2022
Bonds.
TABLE OF CONTENTS
INTRODUCTION Error! Bookmark not defined. Estimated Direct and Overlapping
THE REFINANCING PLANError! Bookmark not defined. Debt ..... Error! Bookmark not defined.
Refunding of 2012 BondsError! Bookmark not dMNCff..ITUTIONAL AND STATUTORY
The ProjectError! Bookmark not defined. LIMITATIONS ON TAXES AND
Estimated Sources and Uses APPROPRIATIONSErrod Bookmark not defined.
of Funds Error! Bookmark not defined. Article XIIIA of the State Constitution Error! Bookmark ni
THE LEASED PROPERTYError! Bookmark not defined. Legislation Implementing Article XIIIAError! Bookmark r
Description Error! Bookmark not defined. Articles XIIB of the State Constitution Error! Bookmark n
Modifications of Leased PropertyError! Bookmark not dAfiiu& XIIIC and XIIID of the State
SubstitutionError! Bookmark not defined. Constitution Error! Bookmark not defined.
Release of Leased PropertyError! Bookmark not defineftoposition 62Error! Bookmark not defined.
THE BONDS Proposition 1A; Proposition 22Error! Bookmark not defi
Authority for IssuanceError! Bookmark not defined. Possible Future Initiatives Error! Bookmark not defined.
General Provisions Error! Bookmark not definedRISK FACTORS Error! Bookmark not defined.
Transfer, Registration and ExchangeError! Bookmark nWdefM&hligations of the AuthorityError! Bookmark not
RedemptionError! Bookmark not defined. No Pledge of TaxesError! Bookmark not defined.
Book -Entry Only SystemsError! Bookmark not defined.Limitations on Taxes and FeesError! Bookmark not def
SECURITY FOR THE BONDSError! Bookmark not defined. Additional Obligations of the CityError! Bookmark not d
Pledge of RevenuesError! Bookmark not defined. Default... Error! Bookmark not defined.
Lease Payments; Covenant to AbatementError! Bookmark not defined.
AppropriateError! Bookmark not defined. Natural CalamitiesError! Bookmark not defined.
AbatementError! Bookmark not defined. Public Health Emergencies Error! Bookmark not define
Insurance; Condemnation Error! Bookmark not defined.Limitations on Remedies Available to
RemediesError! Bookmark not defined. Bond OwnersError! Bookmark not defined.
THE AUTHORITYError! Bookmark not defined. Loss of Tax ExemptionError! Bookmark not defined.
THE CITY CybersecurityError! Bookmark not defined.
General..Error! Bookmark not defined. IRS Audit of Tax -Exempt Bond
Governance and ManagementError! Bookmark not defilisedes.... Error! Bookmark not defined.
Public Health Emergency - Secondary Market for BondsError! Bookmark not defin
COVID 19Error! Bookmark not defined. TAX MATTERS.. Error! Bookmark not defined.
CITY FINANCIAL INFORMATIONErrod Bookmark not (W1hT3dLN LEGAL MATTERSError! Bookmark not defined.
City BudgetError! Bookmark not defined. LITIGATION ....... Error! Bookmark not defined.
Financial Policies SummaryError! Bookmark noIFkMhh6tkL STATEMENTS Error! Bookmark not defined.
Financial Statements Error! Bookmark not defirMdTING ............. Error! Bookmark not defined.
Major Tax RevenuesError! Bookmark not defin@@NTINUING DISCLOSUREError! Bookmark not defined.
Outstanding General Fund Debt and MUNICIPAL ADVISORError! Bookmark not defined.
Lease ObligationsError! Bookmark not definedUNDERWRITINGError! Bookmark not defined.
Employee RelationsError! Bookmark not definVROFESSIONAL SERVICESError! Bookmark not defined.
Retirement System Error! Bookmark not defined.
Other Post -Employment BenefitsError! BookmaWy"t&bQ4d:---Error! Bookmark not defined.
City InvestmentsError! Bookmark not defined.
APPENDIX A — GENERAL INFORMATION ABOUT THE CITY OF LODI AND SAN JOAQUIN
COUNTY....................................................................................................................................................A-1
APPENDIX B — AUDITED FINANCIAL STATEMENTS OF THE CITY FOR THE FISCAL YEAR
ENDED JUNE 30, 2021................................................................................................B-1
APPENDIX C — SUMMARY OF PRINCIPAL LEGAL DOCUMENTS....................................................... C-1
APPENDIX D — FORM OF OPINION OF BOND COUNSEL................................................................... D-1
APPENDIX E — FORM OF CONTINUING DISCLOSURE CERTIFICATE................................................E-1
APPENDIX F — DTC AND THE BOOK -ENTRY ONLY SYSTEM..............................................................F-1
OFFICIAL STATEMENT
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS
(2012 Refunding; Capital Projects Financing)
INTRODUCTION
This introduction is not a summary of this Official Statement. It is only a brief description
of and guide to, and is qualified by, more complete and detailed information contained in the
entire Official Statement, including the cover page and appendices, and the documents
summarized or described in this Official Statement. A full review should be made of the entire
Official Statement. The offering to potential investors is made only by means of the entire
Official Statement.
Capitalized terms used but not defined in this Official Statement have the meanings set
forth in the Indenture (as defined below). See "APPENDIX C — Summary of Principal Legal
Documents."
Authority for Issuance. The Lodi Public Financing Authority (the "Authority") is issuing
its 2022 Lease Revenue Bonds (2012 Refunding; Capital Projects Financing) (the "Bonds")
under the following legal authority:
(a) Article 4 of Chapter 5 of Division 7 of Title 1 of the Government Code of
the State of California, commencing with Section 6584 (the "Bond Law"),
(b) a resolution adopted by the Board of Directors (the "Board") of the
Authority on March 2, 2022 (the "Authority Resolution"), and a resolution adopted by the
City Council (the "City Council") of the City of Lodi (the "City") on March 2, 2022 (the
"City Resolution"), and
(c) an Indenture of Trust (the "Indenture"), dated as of March 1, 2022, by and
between the Authority and U.S. Bank Trust Company, National Association, as trustee
(the "Trustee").
Form of Bonds; Book -Entry Only. The Bonds will be issued in fully registered form,
registered in the name of The Depository Trust Company, New York, New York ("DTC"), or its
nominee, which will act as securities depository for the Bonds. Purchasers of the Bonds will not
receive certificates representing the Bonds that are purchased. See "THE BONDS - Book -Entry
Only System" and "APPENDIX F — DTC AND THE BOOK -ENTRY ONLY SYSTEM."
Purpose of the Bonds. The Bonds are being issued to provide funds to (i) refund the
$13,315,000 outstanding principal amount of the Authority's 2012 Refunding Lease Revenue
Bonds (the "2012 Bonds") and the City's related lease payment obligation; (ii) finance the
acquisition and construction of capital improvements of the City, including a new animal shelter
and parks and playground improvements and upgrades (the "Project"); [(iii) fund a reserve fund
for the Bonds, including, if elected by the Authority, to pay the premium for a debt service
* Preliminary; subject to change.
reserve policy guaranteeing certain payments, (iv) if elected by the Authority, pay the premium
for a municipal bond insurance policy; and] (v) pay the costs of issuing the Bonds.
Security for the Bonds and Pledge of Revenues. The Bonds will be payable solely
from and secured by Revenues and certain funds and accounts held under the Indenture.
Revenues consist primarily of Lease Payments to be made by the City pursuant to a Lease
Agreement, dated as of March 1, 2022, between the City and the Authority (the "Lease"). See
"THE LEASED PROPERTY." Under the Lease, the City covenants to take such action as
necessary to include the Lease Payments in its annual budgets and to make all necessary
appropriations for such Lease Payments (subject to abatement under certain circumstances
described in the Lease). See "SECURITY FOR THE BONDS."
The scheduled Lease Payments payable by the City under the Lease are calculated to
be sufficient to permit the Authority to pay the principal of, and interest on, the Bonds when due.
However, in the event of any damage or destruction such that there is substantial interference
with the use and occupancy of all or any portion of the Leased Property, or a temporary taking
of the Leased Property or a permanent taking of a portion of the Leased Property, Lease
Payments may be abated under the Lease without constituting a default. See "SECURITY FOR
THE BONDS — Abatement" and "RISK FACTORS — Abatement." However, proceeds of
insurance may be available to pay Lease Payments in the event of insured damage, destruction
or condemnation with respect to the Leased Premises.
Pursuant to an Assignment Agreement, dated as of March 1, 2022 (the "Assignment
Agreement"), by and between the Authority and the Trustee, the Authority has assigned to the
Trustee for the benefit of the Owners of the Bonds, certain of the Authority's rights under the
Lease, including its rights to receive Lease Payments and to enforce remedies in the event of a
default by the City for the purpose of securing the payment of debt service on the Bonds.
Potential Bond Insurance; Potential Reserve Fund. The Authority is considering the
use of a municipal bond insurance policy that guarantees the scheduled payment of principal of
and interest on all or a portion of the Bonds when due. The Authority will decide whether or not
to utilize a municipal bond insurance policy depending on market conditions at the time of sale
of the Bonds. The Authority is also considering the use of a reserve fund policy that guarantees
certain payments, subject to the terms and conditions to be set forth therein. The Authority will
decide whether or not to utilize a reserve fund policy depending on market conditions at the time
of sale of the Bonds.
No Additional Parity Obligations. Under the Indenture, the Authority covenants that
no additional bonds, notes or other indebtedness shall be issued or incurred which are payable
out of the Revenues in whole or in part. The Lease does not prohibit the City from entering into
other obligations payable from the General Fund of the City.
Redemption. The Bonds are subject to redemption prior to their stated maturity dates.
See "THE BONDS - Redemption."
Abatement. The Lease provides that the obligation of the City to pay Lease Payments
will be subject to abatement by reason of (i) any damage or destruction such that there is
substantial interference with the use and occupancy of all or any portion of the Leased Property,
(ii) prior to the issuance of a certificate of occupancy for the project, if it constitutes all or a
portion of the Leased Property, there is substantial interference with the use and occupancy by
the City of the Leased Property or any portion thereof, provided that there will be no such
2
abatement to the extent that any capitalized interest is available to pay Lease Payments which
would otherwise be abated, or (iii) a temporary taking of the Leased Property or a permanent
taking of a portion of the Leased Property. However, to the extent proceeds of rental
interruption insurance are available with respect to the Bonds (as described below), Lease
Payments (or a portion thereof) may be made from that source. See "SECURITY FOR THE
BONDS - Abatement" and "RISK FACTORS - Abatement."
Risks of Investment. The Bonds are repayable primarily from Lease Payments and
other amounts payable by the City under the Lease. For a discussion of some of the risks
associated with the purchase of the Bonds, see "RISK FACTORS."
NEITHER THE BONDS, THE OBLIGATION OF THE AUTHORITY TO PAY PRINCIPAL
OF OR INTEREST ON THE BONDS, NOR THE OBLIGATION OF THE CITY TO MAKE THE
LEASE PAYMENTS, CONSTITUTES A DEBT OR A LIABILITY OF THE AUTHORITY, THE
CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN
THE MEANING OF ANY CONSTITUTIONAL LIMITATION ON INDEBTEDNESS, OR A
PLEDGE OF THE FULL FAITH AND CREDIT OF THE CITY. THE BONDS ARE SECURED
SOLELY BY THE PLEDGE OF REVENUES AND CERTAIN FUNDS HELD UNDER THE
INDENTURE. THE BONDS ARE NOT SECURED BY A PLEDGE OF THE TAXING POWER
OF THE CITY. THE AUTHORITY HAS NO TAXING POWER.
THE FINANCING PLAN
Refunding of 2012 Bonds
A portion of the proceeds of the Bonds are being issued to provide funds to refund the
2012 Bonds and the City's related lease payment obligation. The Authority issued the 2012
Bonds pursuant to an Indenture of Trust, dated as of September 1, 2012 (the "2012 Indenture"),
by and between the Authority and U.S. Bank Trust Company, National Association, as
successor to U.S. Bank National Association, as trustee (the "2012 Trustee"), for the purpose of
refinancing outstanding certificates of participation that were executed and delivered to finance
various municipal facilities of the City.
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The currently outstanding 2012 Bonds consist of the following:
2012 Refunding Lease Revenue Bonds
Base CUSIPt Number: 540259
Maturity Date
Principal
CUSIP
(October 1)
Amount
Numbers
Redemption Date
2022
$1,065,000
AG3
_/_2022
2023
1,120,000
AH 1
_/_2022
2026
3,720,000
AK4
_/_2022
2031
7,410,000
AJ7
/2022
Upon the issuance of the Bonds, pursuant to Irrevocable Refunding Instructions given by
the Authority to the 2012 Trustee, a portion of the proceeds of the Bonds and other available
moneys with respect to the 2012 Bonds shall be transferred to the 2012 Trustee for deposit in
the redemption fund established and held by the 2012 Trustee under the 2012 Indenture (the
"Redemption Fund"). The 2012 Trustee will use the funds available in the Redemption Fund to
pay accrued interest on the 2012 Bonds to April , 2022 (the "Redemption Date") and
redeem the remaining outstanding 2012 Bonds on the Redemption Date, without premium.
The amounts held in the Redemption Fund are pledged solely to the payment of the
2012 Bonds. Neither the funds deposited in the Redemption Fund nor any interest thereon will
be available for the payment of debt service on the Bonds.
The Project
A portion of the proceeds of the Bonds is expected to be used to finance the costs of
acquisition and construction of a new animal shelter for the City, parks and playground
improvements and upgrades, and other capital improvements of the City. The City began
planning and design work for the new animal shelter in early 2022 and expects to commence
construction in summer 2023.
I CUSIP Copyright 2022, CUSIP Global Services, and a registered trademark of American Bankers Association. CUSIP data
herein is provided by CUSIP Global Services, which is managed on behalf of American Bankers Association by S&P Capital IQ.
None of the Authority, the City nor the Underwriter takes any responsibility for the accuracy of the CUSIP data.
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Estimated Sources and Uses of Funds
The estimated sources and uses of funds relating to the Bonds and available money
relating to the 2012 Bonds are as follows:
Sources of Funds:
Principal Amount of Bonds
Plus: [Net] Original Issue Premium
Plus: Available Money Relating to the 2012 Bonds
TOTAL SOURCES
Uses of Funds:
Redemption of 2012 Bonds
Deposit to Project Fund
Costs of Issuance 0)
Underwriter's Discount
TOTAL USES $
(1) Represents funds to be used to pay Costs of Issuance, which include legal fees, printing costs, Municipal Advisor
fees, rating agency fees, premiums for any municipal bond insurance policy or debt service reserve policy, if
obtained, and other costs of issuing the Bonds.
THE LEASED PROPERTY
Lease Payments will be made by the City under the Lease for the use and occupancy of
the Leased Property, which is described in greater detail below.
Description
The Property being leased under the Lease (the "Leased Property") consists of (i) the
real property and facilities comprising the Police Building and (ii) the real property and facilities
comprising Fire Station #2. The Police Building, located at 215 West Elm Street, houses the
Police department, the Lodi City jail and 7,648 square feet of space rented by the State of
California for a Superior Court branch. Completed in 2003, the 52,500 square foot building sits
on property that is approximately 1.01 acres and is part of the larger complex of buildings that
comprise the downtown campus, including City Hall, the old public safety building and Carnegie
Forum. The Police Building has an insured value of approximately $22 million. Fire Station #2,
located at 2 South Cherokee Lane, is an approximately 2,100 square foot building built in 2015
with a replacement value of approximately $3.05 million.
Modifications of Leased Property
Under the Lease, the City will have the right during the term of the Lease to make
additions, modifications and improvements to the Leased Property or any portion thereof. Such
additions, modifications and improvements may not in any way damage the Leased Property, or
cause the Leased Property to be used for purposes other than those authorized under the
provisions of state and federal law; and the Leased Property, upon completion of any additions,
modifications and improvements, must be of a value which is not substantially less than the
value thereof immediately prior to the making of such additions, modifications and
improvements.
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Substitution
Under the Lease, the City has the option at any time and from time to time, to substitute
other real property (the "Substitute Property") for the Leased Property or any portion thereof (the
"Former Property"), upon satisfaction of all of the requirements set forth in the Lease, which
includes (among others) the following:
No Event of Default under the Lease has occurred and is continuing.
The City has obtained a CLTA policy of title insurance insuring the City's
leasehold estate under the Lease in the Substitute Property, subject only to
Permitted Encumbrances (as defined in the Lease), in an amount at least equal
to the estimated value thereof.
The City has certified in writing to the Authority and the Trustee that the
Substitute Property serves the municipal purposes of the City and constitutes
property which the City is permitted to lease under the laws of the State of
California, and has been determined to be essential to the proper, efficient and
economic operation of the City and to serve an essential governmental function
of the City.
The Substitute Property does not cause the City to violate any of its covenants,
representations and warranties made herein.
The City has filed with the Authority and the Trustee a written certificate of the
City or other written evidencing stating that the useful life of the Substitute
Property at least extends to the final maturity date of the Bonds, that the
estimated value of the Leased Property, after substitution of the Substitute
Property and release of the Former Property, is at least equal to the aggregate
Outstanding principal amount of the Bonds, and the fair rental value of the
Leased Property, after substitution of the Substitute Property and release of the
Former Property, is at least equal to the Lease Payments thereafter coming due
and payable under the Lease.
The City has mailed written notice of the substitution to each rating agency that
then maintains a rating on the Bonds.
See "APPENDIX C — Summary of Principal Legal Documents."
After a substitution, the Former Property will be released from the leasehold, as
appropriate. The Authority and the City will also make any amendments needed to be made to
the Lease, Site Lease and Assignment Agreement, and will enter into any necessary site or
ground leases in connection with such substitution. Such amendments may be made without
the consent of Bondowners. The City is not entitled to any reduction, diminution, extension or
other modification of the Lease Payments as a result of a substitution.
Release of Leased Property
Under the Lease, the City has the option at any time and from time to time during the
term of the Lease to release from the Lease any portion of the Leased Property; provided that
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the City satisfies all of the requirements under the Lease that are conditions precedent to such
removal, which include (among others) the following:
No Event of Default under the Lease has occurred and is continuing.
The City has certified in writing to the Authority and the Trustee that the value of
the property which remains subject to the Lease following such release is at least
equal to the aggregate Outstanding principal amount of the Bonds, and the fair
rental value of the property which remains subject to the Lease following such
release is at least equal to the Lease Payments thereafter coming due and
payable.
See "APPENDIX C - Summary of Principal Legal Documents."
THE BONDS
Authority for Issuance
The Bonds are being issued under the Bond Law, the Authority Resolution (which was
adopted by the Board of Directors of the Authority on March 2, 2022), the City Resolution (which
was adopted by the City Council on March 2, 2022), and the Indenture.
General Provisions
Bond Terms. The Bonds will be dated their date of delivery and issued in fully
registered form without coupons in integral multiples of $5,000. The Bonds will mature in the
amounts and on the dates, and bear interest at the annual rates, set forth on the inside cover
page of this Official Statement.
Payments of Principal and Interest. Interest on the Bonds will be payable on April 1
and October 1 in each year, beginning October 1, 2022 (each an "Interest Payment Date").
Principal on the Bonds will be payable on October 1 in the amounts and in the years set forth on
the inside front cover of this Official Statement.
While the Bonds are subject to the book -entry system, the principal, interest and any
prepayment premium with respect to the Bonds will be paid by the Trustee to DTC for
subsequent disbursement to beneficial owners of the Bonds. See APPENDIX F — "DTC AND
THE BOOK -ENTRY ONLY SYSTEM."
Interest on the Bonds is payable from the Interest Payment Date next preceding the date
of authentication thereof unless:
a Bond is authenticated on or before an Interest Payment Date and after the
close of business on the preceding Record Date, in which event it will bear
interest from such Interest Payment Date,
a Bond is authenticated on or before the first Record Date, in which event
interest thereon will be payable from the Closing Date, or
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• interest on any Bond is in default as of the date of authentication thereof, in
which event interest thereon will be payable from the date to which interest has
been paid in full, payable on each Interest Payment Date.
Principal and premium, if any, with respect to each Bond is payable upon surrender of
such Bond at the Office of the Trustee in St. Paul, Minnesota, upon maturity or the earlier
redemption thereof. The principal of, premium, if any, and interest on the Bonds will be payable
in lawful money of the United States of America. Interest with respect to the Bonds will be
computed on the basis of a 360 day year composed of twelve 30 -day months.
Transfer, Registration and Exchange
See "APPENDIX C - Summary of Principal Legal Documents" for a description of the
provisions of the Indenture relating to the transfer, registration and exchange of the Bonds.
Redemption'
Optional Redemption. The Bonds maturing on or before October 1, 20 are not
subject to optional redemption prior to their stated maturity. The Bonds maturing on or after
October 1, 20 are subject to redemption, as a whole or in part at the election of the Authority
among maturities on such basis as designated by the Authority and by lot within a maturity, at
the option of the Authority, on April 1, 20 and on any date thereafter, at a redemption price
equal to 100% of the principal amount of Bonds to be redeemed, together with accrued interest
thereon to the date fixed for redemption, without premium.
Special Mandatory Redemption From Insurance or Condemnation Proceeds. The
Bonds are subject to redemption as a whole, or in part on a pro rata basis among maturities, on
any date, from any Net Proceeds of insurance or an eminent domain award with respect to the
Leased Property which are not applied to repair, rebuild or replace the Leased Property as
provided in the Indenture, at a redemption price equal to 100% of the principal amount to be
redeemed plus interest accrued thereon to the date fixed for redemption, without premium.
Mandatory Sinking Fund Redemption. The Term Bonds are subject to mandatory
redemption in part by lot, at a redemption price equal to 100% of the principal amount thereof to
be redeemed, without premium, in the aggregate respective principal amounts and on October 1
in the respective years as set forth in the following tables; provided, however, that if some but
not all of the Term Bonds have been redeemed pursuant to an optional redemption or special
mandatory redemption from insurance or condemnation proceeds, the total amount of all future
sinking fund payments shall be reduced by the aggregate principal amount of the Term Bonds
so redeemed, to be allocated among such sinking fund payments on a pro rata basis in integral
multiples of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).
* Preliminary; subject to change.
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Mandatory Sinking Fund Redemption of
Term Bonds Maturina October 1. 20
Sinking Fund
Redemption Date
(October 1 )
Principal Amount
To Be Redeemed
Mandatory Sinking Fund Redemption of
Term Bonds Maturina October 1. 20
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
Notice of Redemption. Notice of redemption will be mailed by the Trustee, first class,
postage prepaid, not more than 60 and not less than 20 days before any redemption date, to the
respective registered Owners of any Bonds designated for redemption at their addresses
appearing on the registration books maintained by the Trustee and to one or more Securities
Depositories and the Municipal Securities Rulemaking Board. Neither the failure to receive any
notice nor any defect therein will affect the proceedings for such redemption.
Selection of Bonds for Redemption. Whenever provision is made in the Indenture for
the redemption of less than all of the Bonds of a single maturity, the Trustee will select the
Bonds to be redeemed from all Bonds of that maturity to be redeemed by lot in any manner
which the Trustee in its sole discretion deems appropriate. For purposes of such selection,
Bonds will be deemed to be comprised of $5,000 portions and each portion will be subject to
redemption as if such portion were a separate Bond.
Effect of Redemption. If notice of redemption has been duly given and money for the
payment of the redemption price of the Bonds called for redemption has been duly provided,
such Bonds so called will cease to be entitled to any benefit under the Indenture other than the
right to receive payment of the redemption price, and no interest will accrue thereon from and
after the redemption date specified in such notice.
Rescission of Redemption. Any notice of optional redemption of the Bonds may
provide that the redemption shall be conditional upon the receipt of sufficient funds to
accomplish the redemption. The Authority has the right to rescind any notice of optional
redemption of Bonds by written notice to the Trustee on or prior to the date fixed for redemption.
Any notice of redemption shall be cancelled and annulled if for any reason funds will not be or
are not available on the date fixed for redemption for the payment in full of the Bonds then
called for redemption, and such cancellation shall not constitute an Event of Default. The
Authority and the Trustee have no liability to the Bond Owners or any other party related to or
9
arising from such rescission of redemption. The Trustee shall mail notice of such rescission of
redemption in the same manner as the original notice of redemption was sent under the
Indenture.
Book -Entry Only System
The Bonds will be issued as fully registered bonds in book -entry only form, registered in
the name of Cede & Co. as nominee of DTC, and will be available to ultimate purchasers in
integral multiples of $5,000, under the book -entry system maintained by DTC. While the Bonds
are subject to the book -entry system, the principal, interest and any prepayment premium with
respect to a Bond will be paid by the Trustee to DTC, which in turn is obligated to remit such
payment to its DTC Participants for subsequent disbursement to Beneficial Owners of the
Bonds. Purchasers of the Bonds will not receive certificates representing their interests therein,
which will be held at DTC.
See "APPENDIX F — DTC AND THE BOOK -ENTRY ONLY SYSTEM" for further
information regarding DTC and the book -entry system.
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DEBT SERVICE SCHEDULE
The table below shows annual debt service payments on the Bonds, assuming no
optional or extraordinary redemption.
Year Ending
October 1 Principal Interest Debt Service
Total $ $ $
SECURITY FOR THE BONDS
The principal of and interest on the Bonds are not a debt of the Authority (except to the
limited extent described in this Official Statement) or the City, nor a legal or equitable pledge,
charge, lien or encumbrance, upon any of their respective property, or upon any of their income,
receipts, or revenues except the Revenues and other amounts pledged under the Indenture.
This section provides summaries of the security for the Bonds and certain provisions of
the Indenture and the Lease. See "APPENDIX C — Summary of Principal Legal Documents" for
a more complete summary of the Indenture and the Lease. Capitalized terms used but not
defined in this section have the meanings given in APPENDIX C.
Pledge of Revenues
The Bonds are payable from and secured by a pledge of Revenues and certain funds
and accounts established and held by the Trustee under the Indenture. Revenues, as defined
in the Indenture, mean:
(a) all amounts received by the Authority or the Trustee under or with respect
to the Lease, including, without limiting the generality of the foregoing, all of the Lease
Payments (including both timely and delinquent payments, any late charges, and
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whether paid from any source), but excluding (i) any amounts described in the provisions
of the Lease relating to permitted amendments that provide for additional rental to be
pledged or assigned for the payment of bonds issued to finance or refinance projects for
which the City is authorized to expend its funds, and (ii) any Additional Rental Payments
(consisting of certain administrative costs due to the Authority and the Trustee under the
Lease), and
(b) all interest, profits or other income derived from the investment of
amounts in any fund or account established under the Indenture.
Pursuant to the Assignment Agreement, the Authority has assigned to the Trustee for
the benefit of the Owners of the Bonds, certain of its rights under the Lease, including its right to
receive Lease Payments for the purpose of securing the payment of debt service on the Bonds
and the right to pursue remedies in the event the City defaults under the lease.
THE BONDS ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY
FROM AND SECURED BY A PLEDGE OF REVENUES AND CERTAIN FUNDS AND
ACCOUNTS HELD UNDER THE INDENTURE. THE AUTHORITY HAS NO TAXING POWER.
THE OBLIGATION OF THE CITY TO MAKE LEASE PAYMENTS UNDER THE LEASE DOES
NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED
TO LEVY OR PLEDGE ANY FORM OF TAXATION OR FOR WHICH THE CITY HAS LEVIED
OR PLEDGED ANY FORM OF TAXATION. NEITHER THE BONDS NOR THE OBLIGATION
OF THE CITY TO MAKE LEASE PAYMENTS UNDER THE LEASE CONSTITUTES AN
INDEBTEDNESS OF THE CITY, THE COUNTY, THE STATE OF CALIFORNIA (THE "STATE")
OR ANY OF ITS POLITICAL SUBDIVISIONS (INCLUDING ANY MEMBER OF THE
AUTHORITY) IN CONTRAVENTION OF ANY CONSTITUTIONAL OR STATUTORY DEBT
LIMITATIONS.
Lease Payments; Covenant to Appropriate
The City covenants, under the Lease, to make Lease Payments as rental for the right to
use and occupy the Leased Property under the Lease. Amounts of the scheduled Lease
Payments are calculated to be sufficient to pay debt service on the Bonds when due. Lease
Payments will be paid by the City semiannually to the Trustee on the Business Day immediately
preceding each Interest Payment Date. Upon receipt, the Trustee will deposit the Lease
Payments in the Bond Fund for the purposes of paying principal of and interest on the Bonds.
The City covenants under the Lease to take such action as may be necessary to include all
Lease Payments and Additional Rent in its annual budgets and to make the necessary annual
appropriations for all such rental payments.
Under certain circumstances described in the Lease, however, Lease Payments are
subject to abatement during periods of substantial interference with the City's use and
occupancy of all or a portion of the Leased Property, as described in " — Abatement" below.
Abatement
The Lease provides that the obligation of the City to pay Lease Payments will be subject
to abatement by reason of (i) any damage or destruction such that there is substantial
interference with the use and occupancy of all or any portion of the Leased Property, (ii) or prior
to the issuance of a certificate of occupancy for the project, if it constitutes all or a portion of the
Leased Property, there is substantial interference with the use and occupancy by the City of the
12
Leased Property or any portion thereof, provided that there will be no such abatement to the
extent that any capitalized interest is available to pay Lease Payments which would otherwise
be abated, or (iii) a temporary taking of the Leased Property or a permanent taking of a portion
of the Leased Property. Such abatement will be in an amount determined by the City, such that
the resulting unabated portion of the Lease Payments will represent fair consideration for the
use and occupancy of the remaining usable portions of the Leased Property. Such abatement
will continue for the period commencing with such damage or destruction or non -completion of
the Project and ending, respectively, with the substantial completion of the work of repair or
reconstruction or substantial completion of the Project.
Notwithstanding the foregoing, under the Lease, the Lease Payments will not be subject
to abatement to the extent that proceeds from rental interruption insurance are available to pay
the portion of the Lease Payments which would otherwise be abated.
Insurance; Condemnation
In the event of an abatement of Lease Payments, debt service on the Bonds may, to a
certain extent, be covered by insurance proceeds. The City is required to procure and maintain
rental interruption or use and occupancy insurance to cover loss, total or partial, of the use of
any portion of the Leased Property constituting buildings or other improvements as a result of
certain hazards pursuant to the Lease. Such insurance will be in an amount at least equal to
the maximum amount of Lease Payments coming due and payable during any consecutive two
Fiscal Years. The Net Proceeds of such insurance, if any, will be paid to the Trustee and
deposited in the Bond Fund, for application as a credit towards the payment of the Lease
Payments allocable to the insured improvements as the same become due and payable.
The Lease also requires the City to maintain title insurance, standard commercial
general liability insurance and casualty insurance with respect to the Leased Property. Any Net
Proceeds under such title insurance policy will be deposited with the Trustee in the Bond Fund,
to be credited towards the prepayment of the remaining Lease Payments under the Lease. The
required casualty insurance will have a coverage amount at least equal to the lesser of (a)
100% of the replacement value of the insured buildings, or (b) 100% of the aggregate principal
amount of the Bonds, and may be subject to such deductibles as the City deems adequate and
prudent.
See Appendix C — "SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" for a description
of provisions of the Lease and the Indenture relating to the application of proceeds from the
casualty insurance or condemnation awards.
See "RISK FACTORS —Abatement."
Remedies
If the City defaults in performance of its obligations under the Lease, the Authority or the
Trustee, as assignee of the Authority, may either terminate the Lease and re-enter and re -let all
or a portion of the Leased Property or may retain the Lease and hold the City liable for all
payments on an annual basis and still have the right to re-enter and re -let the Leased Property
without effecting a surrender of the Lease. Additionally, the Trustee may pursue remedies at
law or in equity to enforce the Lease.
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Although the Lease and the Indenture provide that the Trustee, as assignee of the
Authority, may take possession of the Leased Property if there is a default by the City, and the
Lease provides that the Trustee may have such rights of access to the Leased Property as may
be necessary to exercise any remedies, portions of the Leased Property may not be easily
recoverable and, even if recovered, could be of little value to others. There can be no
assurance that the Leased Property can be re -let for an amount equal to all outstanding Lease
Payments. Due to the essential nature of the governmental functions of the Leased Property, it
is not certain whether a court would permit the exercise of the remedies of repossession and re-
letting with respect thereto. In addition, the remedy of repossession and re -letting may prove to
be unavailable or not economically viable with respect to all or portions of the Leased Property
because the Authority has only a leasehold or other possessory right to some of the Leased
Property. Therefore, repossession of the Leased Property in such instances may not be an
available remedy. In addition, assuming the Leased Property could be repossessed, it may
prove functionally impossible to relet.
In addition, approximately 7,600 square feet of the Police Building have been leased to
the State Judicial Council, Administrative Office of the Courts ("AOC"), for use as trial court
facilities, pursuant to a lease agreement originally executed in 2006. The rights of the Trustee
under the Lease, including the right to relet, would be subordinate to the AOC's rights under its
lease.
THE AUTHORITY
The Authority was created in July 2010 by a joint exercise of powers agreement, which
was entered into between the City and Industrial Development Authority of the City of Lodi
("IDA"), pursuant to the provisions of the Act. Under the Joint Exercise of Powers Agreement,
the Authority is a public entity, separate from the City and the IDA. The debts, liabilities and
obligations of the Authority are not debts, liabilities and obligations of either the City or the IDA.
The Authority is administered by a governing board consisting of the members of the Lodi City
Council.
THE CITY
General
The City is a general law city in the State of California incorporated in 1906. The City is
located in the San Joaquin Valley of California, 35 miles south of the State capital of
Sacramento, and 90 miles east of San Francisco.
The City operates under a City Council -Manager form of government and provides the
following services: public safety (police, fire and graffiti abatement), public utilities services
(electric, water and sewer), transportation services (streets, flood control and transit), leisure,
cultural and social services (parks and recreation, library, and community center), and general
government services (management, human resources administration, financial administration,
building maintenance and equipment maintenance).
As of January 1, 2021, the City had an estimated population of 68,751.
14
See "APPENDIX A — GENERAL INFORMATION ABOUT THE CITY OF LODI AND SAN
JOAQUIN COUNTY."
Governance and Management
The City is governed by a five -member City Council elected by district. Each council
member is elected for four years with staggered terms.
The current City Council members and the expiration dates of their terms are set forth
below.
Council Member
Title
Expiration of Term
Mark Chandler
Mayor
November 2022
Mikey Hothi
Mayor Pro Tem
November 2024
Alan Nakanishi
Councilmember
November 2022
Doug Kuehne
Councilmember
November 2022
Shak Khan
Councilmember
November 2024
Stephen Schwabauer, City Manager, was appointed to the position by the City Council
on June 5, 2014 after serving five -months as the Interim Manager. He had been City Attorney
from 2004 to 2014, and Deputy City Attorney from 2000 to 2004. During his tenure as City
Attorney, Schwabauer negotiated the resolution of a multimillion dollar groundwater
contamination action and associated financing scheme. Schwabauer also led labor negotiations
for much of his tenure as City Attorney and developed significant experience with budget
operations and employee relations. Schwabauer earned his Bachelor of Arts degree from U.C.
Davis in 1990 and his law degree from U.C. Berkeley in 1994.
Andrew Keys, Deputy City Manager/Internal Services Director, has been the City's
Deputy City Manager/Internal Services Director since March 27, 2017. As the City's
administrative second -in -command, Keys oversees the City's Finance, Budget and Treasury,
Information Systems and Human Resources functions. Keys came to the City after a 9 -year
career with the City of Elk Grove, California. In Elk Grove, he served in various roles within the
finance department, including Analyst, Accounting Manager and Budget Manager, as well as
within administration serving as Assistant to the City Manager and Deputy City Manager. Keys
began his career in the municipal finance sector with KNN Public Finance where he served for a
year as an Analyst after receiving his Bachelor of Arts degree in International Relations from
U.C. Davis in 2006. He later received his Master's degree in Business Administration from U.C.
Davis in 2013.
Charles Swimley, Public Works Director, began his tenure with the City in 2001 as
Senior Civil Engineer, was promoted to Water Services Manager in 2006, then Deputy Director
of Utilities in 2010 where he oversaw wastewater collection and treatment, water production and
distribution and street maintenance. In 2012, Swimley was promoted to City Engineer until his
appointment to Public Works Director in April 2016. Swimley, a registered civil engineer since
1994, earned his Bachelor of Science degree from California State University, Sacramento.
Public Health Emergency — COVID-19
General. The spread of the novel strains of coronavirus that causes the disease known
as COVID-19 ("COVID-19") and local, state and federal actions in response to COVID-19, is
15
having a significant impact on the economy and on the City's operations and finances. On
February 11, 2020, the World Health Organization ("WHO") announced the official name for the
outbreak of COVID-19, an upper respiratory tract illness. COVID-19 has since spread across
the globe. The COVID-19 pandemic has had an adverse effect on, among other things, the
world economy, global supply chain, international travel and a number of travel -related
industries. The temporary and permanent business closures caused by the COVID-19
pandemic have led to a stark increase in unemployment across the County and the nation.
Depending on the length and the breadth of the impacts of the COVID-19 pandemic, the
economic costs may be very significant for the City and the region's economy. On June 8, 2020,
the National Bureau of Economic Research announced that the United States of America
officially entered into a recession in February 2020. In addition, capital markets in the United
States and globally have been volatile.
In mid-March 2020, based on guidance and directives from the State and public health
agencies, including the County, California implemented and has since revised Shelter -in -Place
("Shelter -in -Place") emergency orders or directives, which directed individuals to stay home,
except for limited travel for the conduct of essential services. Most retail establishments
(including restaurants, bars and nightclubs, entertainment venues and gyms) were closed in
response to the Shelter -in -Place orders or directives.
In December 2020, two vaccines were approved for emergency use in the United States
and vaccinations began in California. A third vaccine was approved for emergency use in
February 2021.
On June 15, 2021, California fully reopened its economy ending capacity limits, physical
distancing and certain mask requirements for individuals who are fully vaccinated in accordance
with guidance from the Centers for Disease Control and Prevention (the "CDC"). Masks are still
required on public transportation, in hospitals and jails, in schools and in other child care centers
pending updated guidance from the CDC. Public health measures currently remain for events
with 5,000 or more people indoors or 10,000 attendees or more outdoors, with vaccine
verification recommended. Certain public health measures, including but not limited to mask,
testing and/or vaccination requirements, remain in certain business settings and for certain
industries.
Financial Impact on City. Overall, COVID-19 had a minimal impact on City
revenues. Throughout the pandemic, City revenue continued to increase. General Fund
revenue for Fiscal Year 2020-21 was approximately $71.3 million when excluding
reimbursements for COVID-19-related activities provided by the Federal Emergency
Management Agency (FEMA). This is an increase of approximately $17.1 million, or 31.4%,
from Fiscal Year 2018-19, the last full year before the COVID-19 pandemic. A large portion of
such increase is from Measure L, the City's transaction and use tax that was approved by voters
in November 2018. Fiscal Year 2018-19 only includes one quarter of Measure L revenue,
whereas Fiscal Year 2020-21 includes a full year. Excluding Measure L, General Fund revenues
still increased approximately $10.1 million, or 19.1% from Fiscal Year 2018-19 through Fiscal
Year 2020-21.
On March 27, 2020, the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act
(the "CARES Act") was enacted which provides, among other measures, $150 billion in financial
assistance to states, tribal governments and local governments to provide emergency
assistance to those most significantly impacted by the COVID-19 pandemic. Under the CARES
Act, local governments are eligible for reimbursement of certain costs which are expended to
ME
address the impacts of the pandemic. The City received approximately $2.2 million in Fiscal
Year 2019-20 (of which approximately $839,000 was allocated to the General Fund) and $2.9
million in Fiscal Year 2020-21 (of which approximately $839,000 was allocated to the General
Fund) from the State from its share of funding under the CARES Act. Funds received by the City
under the CARES Act are not available for payment of debt service on the Bonds and cannot be
used to backfill City revenue losses related to the COVID-19 pandemic.
On March 11, 2021, the President of the United States signed the American Rescue
Plan, a $1.9 trillion economic stimulus package designed to help the United States' economy
recover from the adverse impacts of the COVID-19 pandemic. The American Rescue Plan
includes $350 billion in unrestricted economic relief to states, counties, and local governments.
On May 10, 2021, the U.S. Treasury Department released interim guidance for use of the
American Rescue Plan funds, and specifically authorized, among other things, the use of funds
to help offset revenue shortfalls caused by the pandemic. As of the date of this Official
Statement, the City estimates it will receive a total of approximately $15.7 million in funding
under the American Rescue Plan. To date, the City has received approximately $7.8 million of
such funds and anticipates receiving a second installment in 2022. The City has not yet
allocated such funding for specific purposes pending the release of final guidance from the
United States government.
The COVID-19 pandemic is ongoing, and its dynamic nature leads to uncertainties.
There are many variables that will continue to contribute to the economic impact of the COVID-
19 pandemic and the recovery therefrom, including the length of time social distancing
measures are in place, the effectiveness of State and Federal governments' relief programs and
the timing for the containment and treatment of COVID-19. Certain of the information in this
Official Statement is dated prior to the onset of the COVID-19 pandemic, which has had a
significant adverse impact on the nation, State and local economy, including, but not limited to,
a dramatic increase in unemployment levels. Accordingly, such information is not necessarily
indicative of the current financial condition or future prospects of the City and the region. The
ultimate impact of COVID-19 on the City's operations and finances is not fully known, and it may
be some time before the full impact of the COVID-19 pandemic is known. See "RISK FACTORS
— Public Health Emergencies."
CITY FINANCIAL INFORMATION
City Budget
Budget Procedure. The fiscal year of the City begins on the first day of July of each
year and ends on the thirtieth day of June of the following year. Each annual budgetary cycle
begins with departments submitting revenue and expenditure estimates in March for the
upcoming fiscal year. Budget division staff assembles the data and meets with the departments
and City Manager to refine the estimates and develop a draft budget. Public meetings are held
with the City Council during the month of May and all issues related to each budget unit are
discussed. A draft budget is typically released to the Council and publicly posted in mid-May.
The City Council adopts a balanced budget in June for the fiscal year that starts the following
July 1. In January or February, staff brings forward a mid -year review of the entire budget for
the City and the City Council adopts any changes necessary based upon the projected financial
conditions of the time. Throughout the year, adjustments to the budget are brought to the City
Council as needed.
17
The City's 2021-22 Financial Plan and Budget (the "2021-22 Budget") was approved by
the City Council on June 2, 2021. The following table sets forth the original and final budget for
Fiscal Year 2020-21, audited actual revenues and expenditures for Fiscal Year 2020-21, as well
as the adopted budget for Fiscal Year 2021-22.
Budget Summary. The 2021-22 Budget totals $245 million from all funding sources.
The 2021-22 Budget for the General Fund is approximately $61 million. The City's General
Fund tax revenues are comprised primarily of property taxes and sales taxes. The General
Fund sum of expenditures and net transfers out are approximately $60 million, the net result
being a balanced General Fund budget for Fiscal Year 2021-22. The 2021-22 Budget
includes various municipal improvements, contracted labor cost increases, and the addition
of six positions.
The table below presents a comparison of the City's General Fund budget for Fiscal
Year 2020-21, along with the budget for Fiscal Year 2021-22.
18
Table 1
Statement of Revenues, Expenditures and Changes in Fund Balances
Budget and Actual
General Fund
Budget
Revenues
Taxes
Sales and Use Tax
Licenses and Permits
Intergovernmental Revenues
Charges for Services
Fines, Forfeits and Penalties
Investment and Rental Income
Miscellaneous Revenue
Total Revenues
Expenditures
Current:
City Manager
City Clerk
City Attorney
Internal Services Admin
Human Resources
Information Systems
Financial Services
Revenue Services
Budget and Treasury
Non Departmental
Total General Government
Public Protection
Police
Fire
Total Public Protection
Public Works
Library
Total Expenditures
Excess (Deficiency) of Revenues Over (Under)
Expenditures
Other Financing Sources (Uses)
Transfers In
Transfers Out
Gain on Sale of Property
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance, Beginning of Year
Fund Balance, End of Year
Basis Adjustment:
Cumulative Pension Set Aside
Fund Balance (Budgetary Basis)
387,970 (5,073,315) 13,533,392 18,606,707 1,027,270
4,697,816
4,697,816
4,697,816 -
8,038,130
Fiscal Year
(5,458,817)
Fiscal Year 2020-21
(9,188,300)
2021-22
1,000
14,666 13,666
1,000
Variance
(760,001)
(746,335) 13,666
(1,149,170)
Audited
with Final
Adopted
Original
Final
Actual
Budget
Budget
$29,443,740
$29,443,740
$31,697,986
$2,254,246
$32,652,850
17,535,870
19,958,000
24,302,433
4,344,433
21,775,960
91,550
91,550
69,004
(22,546)
155,800
1,166,920
11,640,910
15,116,622
3,475,712
1,326,050
1,783,570
1,974,570
2,598,283
623,713
1,890,860
1,300,100
300,700
217,097
(83,603)
868,100
1,858,390
1,858,390
4,640,812
2,782,422
1,785,050
296,280
296,280
494,747
198,467
287,260
53,476,420
65,564,140
79,136,984
13,572,844
60,741,930
956,510
1,021,010
983,634
37,376
1,338,780
770,040
770,040
556,367
213,673
704,500
615,140
646,620
588,955
57,665
706,690
241,130
241,130
238,076
3,054
253,220
695,240
695,240
664,156
31,084
748,410
1,693,020
1,693,020
1,586,133
106,887
1,816,720
1,039,770
1,039,770
1,031,848
7,922
1,129,110
1,296,610
1,296,610
1,257,070
39,540
1,426,800
338,580
357,037
357,897
(860)
425,080
1,452,430
18,367,987
16,565,014
1,802,973
2,670,400
9,098,470
26,128,464
23,829,150
2,299,314
11,219,710
24,921,930
25,061,761
23,894,807
1,166,954
27,157,950
14,461,600
14,751,320
14,111,112
640,208
16,392,350
39,383,530
39,813,081
38,005,919
1,807,162
43,550,300
2,891,680
2,941,680
2,743,906
197,774
3,175,320
1,714,770
1,754,230
1,024,617
729,613
1,769,330
53,088,450
70,637,455
65,603,592
5,033,863
59,714,660
387,970 (5,073,315) 13,533,392 18,606,707 1,027,270
4,697,816
4,697,816
4,697,816 -
8,038,130
(5,458,817)
(5,458,817)
(5,458,817) -
(9,188,300)
1,000
1,000
14,666 13,666
1,000
(760,001)
(760,001)
(746,335) 13,666
(1,149,170)
(372,031)
(5,833,316)
12,787,057 $18,620,374
(121,900)
27, 903, 041
27, 903, 041
27, 903, 041
$27,531,010
$22,069,725
$40,690,098
(15,641,640)
$25,048,458
(1) Transfers out is composed primarily of General Fund operating support to the City's Library, Parks, Recreation and
Cultural Services, and Community Development departments, among other operating transfers. The increase
between Fiscal Year 2020-21 and Fiscal Year 2021-22 is due to full operations of the Library and Parks, Recreation
19
and Cultural Services departments, which were closed or partially closed during Fiscal Year 2020-21 as a result of
the COVID-19 pandemic.
Source: City of Lodi.
State Budget and Its Impact on the City. Information about the Fiscal Year 2021-22
adopted State budget and other State budgets is regularly available at various State -
maintained websites. An impartial analysis of the budget is posted by the Legislative
Analyst Office at www.lao.ca.gov. In addition, various State official statements, many of
which contain a summary of the current and past State budgets, may be found at the
website of the State Treasurer, www.treasurer.ca.gov. The information referred to in this
paragraph is prepared by the respective State agency maintaining each website and not by
the City or the Underwriter, and the City and the Underwriter take no responsibility for the
continued accuracy of the Internet addresses or for the accuracy or timeliness of information
posted there, and such information is not incorporated in this Official Statement by these
references.
The City cannot predict what actions will be taken in future years by the State
Legislature and the Governor to address a State budget deficit. Future State budgets will be
affected by national and state economic conditions and other factors over which the City has
no control. To the extent that the State budget process results in reduced revenues to the
City, the City will be required to make adjustments to its budget.
Financial Policies Summary
General. The City Council has adopted a comprehensive set of financial management
policies to provide for: (i) establishing targeted general fund reserves; (ii) the prudent investment
of City funds; and (iii) establishing parameters for issuing and managing debt supported by the
general fund and enterprise funds.
General Fund reserves include (i) a Catastrophic Reserve, which is intended for use in
times of emergency and is set at a minimum of 8% of General Fund revenues, including
operating transfers and (ii) an Economic Reserve, which is intended to maintain the City's
economic viability and to meet seasonal cash flow needs and is set at a minimum of 8% of
General Fund revenues, including operating transfers. The City has also adopted a Pension
Stabilization Funding Policy, under which the City Treasurer is required to invest all fund
balances in excess of 16% of General Fund revenues in the City's Internal Revenue Code
Section 115 Trust (the "Pension Stabilization Fund") with Public Agency Retirement Solutions
("PARS"). The Pension Stabilization Funding Policy was suspended in Fiscal Year 2020-21, so
as to apply excess reserves as a buffer against impacts of the COVID-19 pandemic, but
reinstated with the 2021-22 Budget. For additional information on the Pension Stabilization
Fund, see "— Retirement System — Pension Stabilization Fund and Pension Funding Policy."
The City's investment policy guides the investment of public funds in a manner which will
provide a sound investment return with maximum security while meeting the daily cash flow
demands of the entity and conforming to all state and local statues governing the investment of
public funds. See "— City Investments." The City's debt management policy outlines the
purposes for which debt may be issued, which includes long-term debt for the construction,
acquisition, and rehabilitation of capital improvements and facilities, the types of debt the City
may issue, policy goals, and internal control procedures related to the issuance and
management of debt.
20
Financial Statements
All governmental funds are accounted for using the modified accrual basis of accounting.
The City's revenues are recognized when they become measurable and available as net current
assets.
Expenditures are generally recognized under the modified accrual basis of accounting
when the related fund liability is incurred. The exception to this general rule is principal and
interest on general long-term debt, which is recognized when due. Some debts and obligations
may be payable from self-supporting enterprises or revenue sources other than property
taxation. Special assessment bonds are not included in the tabulation; lease revenue
obligations payable from the General Fund or equivalent sources are included.
All proprietary funds are accounted for using the accrual basis for accounting. Revenues
are recognized when they are earned, and expenses are recognized when they are incurred.
Receivables are recorded and determined at the time of consumption, and unbilled receivables
are not recorded.
The City's most recent audited financial statements are included in the Annual
Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021, which is attached as
APPENDIX B to this Official Statement. The financial statements were prepared by the City and
audited by The Pun Group LLP (the "Auditor").
The Financial Statements should be read in their entirety. The City has neither
requested nor obtained permission from the Auditor to include the audited financial statements
as an appendix to this Official Statement. Accordingly, the Auditor has not performed any post -
audit review of the financial condition or operations of the City or General Fund. In addition, the
Auditor has not reviewed this Official Statement.
Set forth on the following pages are (i) a general fund balance sheet for Fiscal Years
2016-17 through 2020-21 and (ii) a statement of revenues, expenditures and changes in fund
balances for the City's general fund for the same period.
21
Table 2
General Fund Balance Sheet
Assets:
Cash and investments
Accounts receivables, net
Property taxes receivable
Interest receivable
Due from other funds
Due from other governmental agencies
Prepaid
Restricted cash and investments
Total assets
Liabilities:
Accounts payable and other liabilities
Accrued salaries and wages
Advances from other funds
Unearned revenue
Total liabilities
Deferred inflows of resources:
Unavailable revenue
Total Deferred Inflows of Resources
Fund Balance:
Nonspendable: prepaid
Restricted: pension
Committed:
Pension
Video -related capital projects
Unassigned
Total fund balance
Total liabilities, deferred inflows of resources
and fund balance
Audited Audited Audited Audited Audited
2016-17 2017-18 2018-19 2019-20 2020-21
$15,550,701
$10,247,211
$13,497,734
$16,459,714
$15,180,526
5,253,103
4,137,816
5,255,725
6,278,463
7,190,261
41,462
67,665
80,324
87,960
92,539
12,861
12,597
18,298
12,308
4,218
-
-
-
237,449
-
-
-
-
-
10,651,086
-
-
-
-
53,739
-
8,573,950
10,716,555
12,671,440
15,641,640
20,858,127
23,039,239
29,568,636
35,747,334
48,814,009
$4,716,588
$3,797,974
$5,717,668 $7,269,460 $7,302,047
827,017
63,751
640,070 - 107,840
78,632
409,609
66,883 - -
5,622,237
4,271,334
6,424,621 7,269,460 7,409,887
267,533 - 691,603 574,833 714,024
267,533 - 691,603 574,833 714,024
- - - - 53,739
- - 10,716,555 12,671,440 15,641,640
2,941,844
8,573,949 - - -
578,528
457,170 563,374 711,621 557,686
11,447,985
9,736,786 11,172,483 14,519,980 24,437,033
14,968,357
18,767,905 22,452,412 27,903,041 40,690,098
20,858,127 23,039,239 29,568,636 35,747,334 48,814,009
Source: City of Lodi Annual Comprehensive Financial Reports for Fiscal Years indicated.
22
Table 3
Statement of General Fund Revenues, Expenditures
and Changes in Fund Balance
23
Audited
Audited
Audited
Audited
Audited
2016-17
2017-18
2018-19
2019-20
2020-21
Revenues:
Taxes
$26,490,919
$27,422,477
$28,422,573
$30,223,587
$31,697,986
Sales and use tax '>
-
-
14,286,516
20,083,861
24,302,433
Licenses and permits
86,844
67,757
65,639
74,843
69,004
Intergovernmental revenues (1)(2)
12,830,329
12,377,159
1,186,022
939,172
15,116,622
Charges for services
1,852,855
1,934,180
1,772,088
1,992,262
2,598,283
Fines forfeits, and penalties
906,563
1,396,137
1,274,624
1,053,364
217,097
Investment and rental income
1,734,773
1,747,857
2,195,924
2,906,797
4,640,812
Miscellaneous revenues
319,373
342,549
221,949
438,325
494,747
Total revenues
44,221,656
45,288,116
49,425,335
57,712,211
79,136,984
Expenditures:
Current:
General government (2)
6,926,368
6,980,564
7,136,809
10,411,249
23,829,150
Public protection
29,969,781
30,576,759
31,743,158
36,865,475
38,005,919
Public works
1,698,518
1,852,852
2,180,840
2,512,089
2,743,906
Library
1,152, 721
1,058,133
1,165,499
1,181,184
1,024,617
Total expenditures
39,747,388
40,468,308
42,226,306
50,969,997
65,603,592
Excess (deficiency) of revenues over
expenditures
4,474,268
4,819,808
7,199,029
6,742,214
13,533,392
Other financing sources (uses):
Transfers in
3,952,000
5,949,190
4,233,780
4,393,660
4,697,816
Transfers out
(6,705,104)
(6,969,450)
(7,749,000)
(5,685,590)
(5,458,817)
Proceeds from sale of property
698
345
14,666
Total other financing sources (uses)
(2,753,104)
(1,020,260)
(3,514,522)
(1,291,585)
(746,335)
Net change in fund balances before special
items
1,721,164
3,799,548
3,684,507
5,450,629
12,787,057
Fund balance - July 1
13,247,193
14,968,357
18,767,905
22,452,412
27,903,041
Fund balance - June 30
14,968,357
18,767,905
22,452,412
27,903,041
40,690,098
(1) Prior to Fiscal Year 2018-19, sales and use taxes were accounted for
in Intergovernmental Revenues. The
increase in sales and use taxes is
also due to the imposition of Measure L, a 1/2 cent sales tax that began
being
levied on April 1, 2019.
(2) Increase in intergovernmental revenues and general
government expenditures between
Fiscal Year 2019-20 and
Fiscal Year 2020-21 primarily due
to receipt and expenditure of funds
from FEMA and
other governmental
entities related to the COVID-19 pandemic.
Source: City of Lodi Annual Comprehensive Financial Reports for Fiscal Years indicated.
23
Major Tax Revenues
Tax revenues by source for the City's General Fund are presented in the table below.
Property Taxes
Sales and use Tax
Transient Occupancy Tax
Franchise
Documentary Transfer
Motor Vehicle In Lieu
Public Protection
Business License
In Lieu Franchise
Total
Table 4
General Fund Tax Revenues by Source
(Dollar amounts in thousands)
Fiscal Year Fiscal Year Fiscal Year Fiscal Year Fiscal Year
2016-17
2017-18
2018-19
2019-20
2020-21
$9,744
$10,043
$11,050
$11,980
$13,050
11,750
11,333
14,286
20,084
24,302
849
867
735
987
899
1,915
2,059
2,128
2,338
2,207
240
281
230
(25)
86
4,904
5,176
5,399
5,760
6,073
378
401
441
462
527
1,736
1,822
1,887
1,884
2,092
7,131
7,159
7,197
7,274
7,375
$38,647
$39,141
$43,353
$50,744
$56,611
(1) In the City's audited financial reports, sales and use tax is included in the intergovernmental revenues
category prior to Fiscal Year 2018-19.
Source: City of Lodi Annual Comprehensive Financial Report for the Year Ended June 30, 2021.
Sales and Use Taxes.
Sales taxes represent the largest source of tax revenue to the City at approximately 31 %
in Fiscal Year 2020-21 of General Fund total revenues. The City has received approximately
$24.3 million in Sales tax revenue for Fiscal Year 2020-21 (21% growth over prior year). The
revenue growth is attributable a growing retail and distribution base in the City and increasing
online sales deliveries in the City that provide a significant boost to Measure L revenue. The
City continues to be successful in attracting large distribution centers to its industrial parks
which not only increase the City's base tax, but add to the City's half -cent local Sales Tax
revenue (Measure L).
The City has two revenue streams for Sales Tax; Bradley Burns, the State's Sales Tax
and Measure L, the City's local Sales Tax. The City receives a portion of the statewide Sales
Tax, 1 cent per dollar transaction. In addition, the residents of the City approved an additional
'/2 cent Sales Tax in 2018 known as Measure L, which began being levied on April 1, 2019.
This section describes the current system for levying, collecting and distributing sales
and use tax revenues in the State of California.
Sales Tax Rates. The City collects a percentage of taxable sales in the City (minus
certain administrative costs imposed by the State) pursuant to the Bradley -Burns Uniform Local
Sales and Use Tax (the "Sales Tax Law"), as shown below.
24
Local taxes are included in the statewide sales and use tax rate of 7.25%. Additional
local taxes approved by voters (also referred to as district taxes or "transaction taxes") are
applied to purchases where the goods are delivered or placed into use in the City.
Currently, taxable transactions in the City are subject to the following sales and use tax,
of which the City's share is only a portion. The State collects and administers the tax, and
makes distributions on taxes collected within the City, as follows:
Table 5
Sales Tax Rates
Fiscal Year 2021-22
Component Rate
State and County Sales Tax Rate 7.25%
District (Local) Sales Tax Rates
Lodi Measure L 0.50%
San Joaquin Transportation Authority (K) (SJTA) 0.50
Total 1.00%
Total Sales Tax Rate 8.25%
Source: City of Lodi.
Sales and use taxes are complementary taxes; when one applies, the other does not. In
general, the statewide sales tax applies to gross receipts of retailers from the sale of tangible
personal property in the State of California. The use tax is imposed on the purchase, for
storage, use or other consumption in the State of tangible personal property from any retailer.
The use tax generally applies to purchases of personal property from a retailer outside the State
of California where the use will occur within the State of California. The Sales Tax is imposed
upon the same transactions and items as the statewide sales tax and the statewide use tax.
Certain transactions are exempt from the State sales tax, including sales of the following
products:
• food products for home consumption;
• prescription medicine;
• newspapers and periodicals;
• edible livestock and their feed;
• seed and fertilizer used in raising food for human consumption; and
• gas, electricity and water when delivered to consumers through mains,
lines and pipes.
This is not an exhaustive list of exempt transactions. A comprehensive list can be found
in the State Board of Equalization's Publication No. 61 entitled "Sales and Use Taxes:
Exemptions and Exclusions," which can be found on the California Department of Tax and Fee
Administration (CDTFA) website at www.cdtfa.ca.gov. The reference to this Internet website is
provided for reference and convenience only. The information contained within the website may
25
not be current, has not been reviewed by the City and is not incorporated in this Official
Statement by reference.
Sales Tax Collection Procedures. Collection of the sales and use tax is administered by
the California Department of Tax and Fee Administration ("CDTFA") Retailers engaged in
business in California must register with the CDTFA and pay the state's sales tax, which applies
to all retail sales of goods and merchandise except those sales specifically exempted by law.
The use tax generally applies to the storage, use, or other consumption in California of goods
purchased from retailers in transactions not subject to the sales tax. Use tax may also apply to
purchases shipped to a California consumer from another state, including purchases made by
mail order, telephone, or Internet. The sales and use tax rate in a specific California location has
three parts: the state tax rate, the local tax rate, and any district tax rate that may be in effect.
These transmittals are required to be made at least twice in each calendar quarter.
Under its procedures, CDTFA projects receipts of the sales and use tax on a quarterly
basis and remits an advance of the receipts of the sales and use tax to the City on a monthly
basis. The amount of each monthly advance is based upon CDTFA's quarterly projection.
During the last month of each quarter, CDTFA adjusts the amount remitted to reflect the actual
receipts of the sales and use tax for the previous quarter.
According to CDTFA, it distributes quarterly tax revenues to cities, counties and special
districts using the following method:
CDTFA distributes sales tax revenue to each jurisdiction monthly on an advance basis
and trues up to actual receipts once each quarter. CDTFA distributes to each jurisdiction a
percentage of the statewide prepayments received in the current month to each jurisdiction
based on that jurisdiction's pro rata share of statewide sales tax allocations in the prior year's
like quarter. In addition, any money collected in the current month specific to each jurisdiction is
distributed to that jurisdiction. One advance payment is made each month, and the quarterly
reconciliation payment (clean-up) is distributed with the third payment. This clean-up payment
simply makes the jurisdiction whole based on actual receipts of sales tax revenue for that
jurisdiction in the quarter versus the advances made. Clean-up payments may be additive or
subtractive to the advances previously made based on actual activity. Statements showing total
collections, administrative costs, prior advances and the current advance are provided with each
quarterly clean-up payment.
CDTFA receives an administrative fee based on the cost of services provided by CDTFA
to the City in administering the City's sales tax, which is deducted from revenue generated by
the sales and use tax before it is distributed to the City.
Property Taxes.
General. This section describes property tax levy and collection procedures and certain
information regarding historical assessed values and major property tax payers in the City.
Property taxes represent one of the largest source of tax revenue to the City at approximately
16% in Fiscal Year 2020-21 of General Fund total revenues. The City has received
approximately $13.1 million in property tax revenue for Fiscal Year 2020-21 (9% growth over
prior year). The revenue growth is attributable to the 2% statutory inflationary increase on
Assessed Valuation related to Proposition 13, as well as a steady increase in home sales and
new construction that is expected to continue for several years. See " — Assessed Valuation"
below.
M,
Property taxes have historically been the primary revenue source affected by voter
initiatives and legislative actions. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS
ON TAXES AND APPROPRIATIONS" and "RISK FACTORS — Limitations on Taxes and Fees."
ERAF Shift Legislation. Certain property taxes have been shifted from local government
agencies to schools by the State Legislature for deposit in the Education Revenue
Augmentation Fund ("ERAF"), a shift that has resulted in diversion of City property taxes since
Fiscal Year 1992-93.
Levy and Collection. Property taxes are levied for each Fiscal Year on taxable real and
personal property as of the preceding January 1. For assessment and collection purposes,
property is classified either as "secured" or "unsecured" and is listed accordingly on separate
parts of the assessment roll. The "secured roll" is that part of the assessment roll containing
State -assessed public utilities property and real property the taxes on which are a lien sufficient,
in the opinion of the County Assessor, to secure payment of the taxes. Other property is
assessed on the "unsecured roll."
Property taxes on the secured roll are due in two installments, on November 1 and
February 1 of each Fiscal Year, and become delinquent on December 10 and April 10,
respectively. A penalty of 10% attaches immediately to all delinquent payments. Property on
the secured roll with respect to which taxes are delinquent become tax defaulted on or about
June 30 of the Fiscal Year. Such property may thereafter be redeemed by payment of a penalty
of 1.5% per month to the time of redemption, plus costs and a redemption fee. If taxes are
unpaid for a period of five years or more, the property may be sold at public auction.
Property taxes on the unsecured roll are due as of the January 1 lien dates and become
delinquent on August 31. A 10% penalty attaches to delinquent unsecured taxes. If unsecured
taxes are unpaid at 5:00 p.m. on October 31, an additional penalty of 1.5% attaches to them on
the first day of each month until paid. The County has four ways of collecting delinquent
unsecured personal property taxes: (1) a civil action against the taxpayer; (2) filing a judgment
in the office of the County Clerk specifying certain facts in order to obtain a lien on certain
property of the taxpayer; (3) filing a certificate of delinquency for record in the County
Recorder's office in order to obtain a lien on certain property of the taxpayer; and (4) seizure
and sale of personal property, improvements or possessory interests belonging or assessed to
the assessee.
Assessed Valuation. All property is assessed using full cash value as defined by Article
XIIIA of the State Constitution. State law provides exemptions from ad valorem property
taxation for certain classes of property such as churches, colleges, non-profit hospitals, and
charitable institutions. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES
AND APPROPRIATIONS."
Future assessed valuation growth allowed under Article XIIIA of the State Constitution
(new construction, certain changes of ownership, 2% inflation) will be allocated on the basis of
"situs" among the jurisdictions that serve the tax rate area within which the growth occurs. Local
agencies and schools will share the growth of "base" revenues from the tax rate area. Each
year's growth allocation becomes part of each agency's allocation in the following year.
27
Assessed Valuation History. The following table shows a ten-year history of the City's
assessed valuation.
Table 6
Assessed Value of Taxable Property
Fiscal Years 2011-12 through 2020-21
(Dollar amounts in thousands)
Fiscal
Year
Secured Roll
Utility Roll
Unsecured
Roll
Total
Less
Exemptions
Net
Assessed
Value
2011-12
$4,738,823
$2,382
$226,651
$4,967,856
$314,448
$4,653,408
2012-13
4,737,807
2,382
233,398
4,973,587
327,783
4,645,804
2013-14
4,895,091
3,490
230,827
5,129,408
324,439
4,804,969
2014-15
5,156,704
3,490
257,856
5,418,050
326,833
5,091,217
2015-16
5,394,659
3,490
250,160
5,648,309
331,562
5,316,747
2016-17
5,603,023
2,299
254,946
5,860,268
334,485
5,525,783
2017-18
5,903,144
2,299
266,956
6,172,399
339,542
5,832,857
2018-19
6,174,155
2,299
258,682
6,435,136
345,178
6,089,958
2019-20
6,566,183
1,901
247,608
6,815,692
338,170
6,477,522
2020-21
6,962,679
2,047
231,423
7,196,149
353,561
6,842,588
Source: City of Lodi Annual Comprehensive Financial Report for the Year Ended June 30, 2021.
Proposition 13 and Proposition 8 Property Value Adjustments. Proposition 13, adopted
in 1978, established the base year value concept for property tax assessments. Under
Proposition 13, the 1975-76 Fiscal Year serves as the original base year used in determining
the assessment for real property. Thereafter, annual increases to the base year value are
limited to the inflation rate, as measured by the California Consumer Price Index, or 2%,
whichever is less. A new base year value, however, is generally established whenever a
property, or portion thereof, has had a change in ownership or has been newly constructed.
Proposition 8, enacted in 1978, allows for a temporary reduction in assessed value when
a property suffers a "decline -in -value." As of January 1st (lien date) each year, the Assessor
must enroll either a property's Proposition 13 value (adjusted annually for inflation by no more
than 2%) or its current market value, whichever is less. When the current market value replaces
the higher Proposition 13 value, the lower value is commonly referred to as a "Proposition 8
Value." "Proposition 8 values" are temporary and, once enrolled, must be reviewed annually by
the assessor until the Proposition 13 adjusted base year value is enrolled.
28
Ten Largest Locally Secured Taxpayers. The following table shows ten largest locally
secured taxpayers of the City for the Fiscal Year ended June 30, 2021, the most recent year for
which such information is available, based on total taxable assessed valuation.
Table 7
Principal Property Tax Payers
(Dollar amounts in thousands)
Source: City of Lodi Annual Comprehensive Financial Report for the Year Ended June 30, 2021.
Teeter Plan. The Board of Supervisors of the County has approved the implementation
of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale
Proceeds (the "Teeter Plan"), as provided for in Section 4701 et seq. of the California Revenue
and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on
an accrual basis when due (irrespective of actual collections) to local political subdivisions,
including the City, for which the County acts as the tax -levying or tax -collecting agency. As a
result, the City currently receives 100% of such levy and is not impacted by delinquencies in
payment.
The Teeter Plan is applicable to all tax levies on secured property for which the County
acts as the tax -levying or tax -collecting agency, or for which the County treasury is the legal
depository of the tax collections.
The Teeter Plan is to remain in effect unless the Board of Supervisors of the County
orders its discontinuance or unless, prior to the commencement of any fiscal year of the County
(which commences on July 1), the Board of Supervisors receives a petition for its
discontinuance joined in by resolutions adopted by at least two-thirds of the participating
revenue districts in the County, in which event the Board of Supervisors is to order
discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year.
If the Teeter Plan is discontinued subsequent to its implementation, only those secured property
taxes actually collected would be allocated to political subdivisions (including the City) for which
the County acts as the tax -levying or tax -collecting agency.
29
Percentage
of Total City
Taxable
Taxable
Assessed
Assessed
Taxpayer
Value
Rank
Value
Pacific Coast Producers
$112,642
1
1.650%
Calif Physicians Service Corp
54,565
2
0.800
Reynolds Ranch Sr Development Company LP
41,631
3
0.610
Big Box Property Owner E LLC
39,130
4
0.570
Cal -Purina Associates LP
34,545
5
0.510
Wal Mart Real Est Business Trust
32,665
6
0.480
Cepheid
32,217
7
0.470
Cottage Bakery Inc Et al
30,274
8
0.440
Winterfell Vintage CA Owner LP
30,134
9
0.410
Sandpiper Pennebaker Group LLC
28,272
10
0.300
TOP TEN TOTAL
$436,075
6.240%
Source: City of Lodi Annual Comprehensive Financial Report for the Year Ended June 30, 2021.
Teeter Plan. The Board of Supervisors of the County has approved the implementation
of the Alternative Method of Distribution of Tax Levies and Collections and of Tax Sale
Proceeds (the "Teeter Plan"), as provided for in Section 4701 et seq. of the California Revenue
and Taxation Code. Under the Teeter Plan, the County apportions secured property taxes on
an accrual basis when due (irrespective of actual collections) to local political subdivisions,
including the City, for which the County acts as the tax -levying or tax -collecting agency. As a
result, the City currently receives 100% of such levy and is not impacted by delinquencies in
payment.
The Teeter Plan is applicable to all tax levies on secured property for which the County
acts as the tax -levying or tax -collecting agency, or for which the County treasury is the legal
depository of the tax collections.
The Teeter Plan is to remain in effect unless the Board of Supervisors of the County
orders its discontinuance or unless, prior to the commencement of any fiscal year of the County
(which commences on July 1), the Board of Supervisors receives a petition for its
discontinuance joined in by resolutions adopted by at least two-thirds of the participating
revenue districts in the County, in which event the Board of Supervisors is to order
discontinuance of the Teeter Plan effective at the commencement of the subsequent fiscal year.
If the Teeter Plan is discontinued subsequent to its implementation, only those secured property
taxes actually collected would be allocated to political subdivisions (including the City) for which
the County acts as the tax -levying or tax -collecting agency.
29
In Lieu Franchise. Starting in 2007 the City's Electric Utility has made an annual
payment to the City's General Fund as a payment in lieu of taxes ("PILOT"). The City Council
established a formula in 2007 for the preexisting PILOT by Resolution 2007-25. The formula is
based upon the net amount of the PILOT in 2006-07 budget year as adjusted by the annual
percentage increase in the number of accounts. As expressly intended and anticipated by
Resolution 2007-25, the new formula has effectively reduced the PILOT as a percentage of
Electric Utility revenues since its adoption. California voters passed Proposition 26 in November
of 2010, adding to the Constitution new definitions of the term "tax" and —as a result — added
new limitations on the adoption of revenue measures defined by Proposition 26 to be a tax. In
reliance on the 2018 decision of the California Supreme Court in Citizens for Fair REU Rates v.
City of Redding, 6 Cal. 5th 1 (2018), the City does not believe that its PILOT is subject to
Proposition 26. The Court found that a budgetary transfer from the City of Redding's electric
utility enterprise fund to the city's general fund itself is not a tax. Further, as the City interprets
Proposition 26, it is neither retroactive as to local government; nor does it apply to formulas for
increasing revenue measures which formulas were established prior to the November 3, 2010
effective date of Proposition 26. However, the provisions of Proposition 26 are subject to
judicial interpretation, and there can be no assurances that, if challenged, a court would not find
that the PILOT violates Proposition 26 on grounds different from those in the Redding case. In
such circumstances there can be no assurances that the City would not be required to
discontinue the collection of the PILOT, and refund all or a portion of the PILOT collected after
the passage of Proposition 26. The PILOT is budgeted to constitute approximately 11% of
General Fund revenues in Fiscal Year 2021-22. See "CONSTITUTIONAL AND STATUTORY
LIMITATIONS ON TAXES AND APPROPRIATIONS."
Outstanding General Fund Debt and Lease Obligations
The City currently has no outstanding general fund general obligation bonds
outstanding. The 2012 Bonds currently constitute the only bonds payable from the General
Fund. In addition, the City has an outstanding capital lease for dispatch equipment for the
police department, which requires scheduled payments in Fiscal Years 2021-22 and 2022-23
with a total present value (as of June 30, 2021) totaling $173,080.
In connection with the City's electric, water and wastewater utilities, the City has entered
into installment purchase agreements, leases and other contractual commitments in connection
with the financing of various facilities. These obligations are payable from the respective
enterprise funds of the City, and are not payable from the General Fund.
Employee Relations
City employees are represented by various associations, and labor relations have been
generally amicable in that there have been no major strikes, work stoppages or other similar
incidents. The following table provides a list of departments in the City and the number of
employees within these departments for Fiscal Year 2021-22.
30
Table 8
Employee Organizations
Bargaining Group
IBEW
Fire Mid Management
Lodi Police Dispatchers Association
Police Officer's Association of Lodi
Lodi Police Mid -Management Association
Lodi Professional Firefighters
Lodi City Mid -Management Association
AFSCME General Services
AFSCME Maintenance and Operators
Total
Source: City of Lodi.
Contract
Fiscal Year 2021-22
Expiration Date
Budgeted Staff
12/31/2024
40
6/30/2022
5
6/30/2022
18
6/30/2022
60
6/30/2022
17
12/31/2022
49
12/31/2022
44
12/31/2022
79
12/31/2022
80
392
Of the 392 budgeted positions, 214 reside in the General Fund. The City provides
retirement and other post -employment benefits to City employees. See " — Retirement System"
herein.
Retirement System
This caption contains certain information relating to California Public Employees'
Retirement System ("CaIPERS'). The information is primarily derived from the City's
Comprehensive Annual Financial Report and information produced by CaIPERS, its
independent accountants and actuaries. The City has not independently verified the information
provided by Ca/PERS and makes no representations and expresses no opinion as to the
accuracy of the information provided by CaIPERS.
The comprehensive annual financial reports of Ca/PERS are available on its Internet
website at www.calpers.ca.gov. The CaIPERS website also contains CaIPERS' most recent
actuarial valuation reports and other information concerning benefits and other matters. Such
information is not incorporated by reference in this Official Statement. None of the Authority,
City or Purchaser can guarantee the accuracy of such information. Actuarial assessments are
"forward-looking" statements that reflect the judgment of the fiduciaries of the pension plans,
and are based upon a variety of assumptions, one or more of which may not materialize or may
be changed in the future. Actuarial assessments will change with the future experience of the
pension plans.
Description of Plans. All qualified permanent and probationary employees are eligible
to participate in the City's separate Miscellaneous and Safety Plans (the "Plans"), agent
multiple -employer defined benefit pension plans administered by the California Public
Employees' Retirement System ("CaIPERS"), which acts as a common investment and
administrative agent for its participating member employers. Benefit provisions under the Plans
are established by State statute and City resolution.
Benefits Provided. CaIPERS provides service retirement and disability benefits, annual
cost of living adjustments and death benefits to plan members, who must be public employees
31
and beneficiaries. Benefits are based on years of credited service, equal to one year of full-time
employment. Members with five years of total service are eligible to retire at age 50 with
statutorily reduced benefits. All members are eligible for non -duty disability benefits after 10
years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957
Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for
each plan are applied as specified by the Public Employees' Retirement Law.
Miscellaneous Plan
Hire Date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefit, as % of eligible compensation
Required employee contribution rates
Required employer contribution rates
Prior to January 1, On or after January 1,
2013 2013
2% @ 55
5 yrs of service
Monthly for life
50-67
1.426%-2.418%
7%
21.80%
2% @ 62
5 yrs of service
Monthly for life
52-67
1%-2.5%
6.75%
21.80%
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
Hire Date
Benefit formula
Benefit vesting schedule
Benefit payments
Retirement age
Monthly benefit, as % of eligible
compensation
Required employee contribution rates
Required employer contribution rates
Safety Plan
Prior to December 22,
2012
3% @ 50
5 yrs of service
Monthly for life
50-55
3%
9%
44.75%
December 22, 2012 to
December 31, 2012
3% @ 55
5 yrs of service
Monthly for life
50-55
2.4%-3%
9%
44.75%
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
On or after January 1,
2013
2.7% @ 57
5 yrs of service
Monthly for life
50-57
2%-2.7%
11.25%
44.75%
Employees Covered. As of June 30, 2021, the most recent actuarial valuation
available, the following employees were covered by the benefit terms of each Plan:
Miscellaneous Safety
Inactive employees or beneficiaries currently receiving benefits 135 115
Inactive employees entitled to but not yet receiving benefits 116 46
Active employees 269 24
Total
520 185
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
California Public Employees' Pension Reform Act of 2013. Employees hired prior to
January 1, 2013 and have remained under continuous employment with a CalPERS agency are
considered "Classic" employees. California Public Employees' Pension Reform Act of 2013
("PEPRA"), which was signed by the State Governor on September 12, 2012, established a new
pension benefit tier for employees who were hired on and after January 1, 2013, who were not
32
previously CalPERS members or have left employment with a CaIPERS agency for more than 6
months.
PEPRA adjusted the benefit formulas, required employee contribution, calculation of
benefits and maximum pay, as well as other benefits. PEPRA employees receive the following
benefit formulas: (i) 2.0% at age 62 formula for Miscellaneous employees; and (ii) 2.7% at age
57 for Safety employees. Employees are required to pay at least 50% of the total (annual)
normal cost rate, and are required to make the full amount of required employee contributions
themselves under PEPRA. Retirement benefits for such employees are calculated on the
highest average annual compensation over a consecutive 36 -month period. Accordingly,
retirement benefits for PEPRA miscellaneous employees are calculated as 2% of the average
final 36 months compensation and retirement benefits for PEPRA safety employees are
calculated as 2.7% of the average final 36 months of compensation. Retirement benefits for
Classic miscellaneous employees are calculated as 2% of the average final 12 months of
compensation and retirement benefits for Classic safety employees are calculated as 3% of the
average final 12 months compensation. Retroactive benefits increases are also prohibited, as
are contribution holidays, and purchases of additional non-qualified service credit. PEPRA also
capped pensionable income as noted below. Maximum amounts are set annually, subject to
adjustment in accord with the Consumer Price Index.
Required Contributions. Section 20814(c) of the Retirement Law requires that the
employer contribution rates for all public employers be determined on an annual basis by the
actuary and shall be effective on the July 1 following notice of a change in the rate. The total
plan contributions are determined through the CalPERS annual actuarial valuation process.
The actuarially determined rate is the estimated amount necessary to finance the costs of
benefits earned by employees during the year, with an additional amount to finance any
unfunded accrued liability. The City is required to contribute the difference between the
actuarially determined rate and the contribution rate of the employees. The City contribution
rates may change if plan contracts are amended. Beginning in Fiscal Year 2017-18, CalPERS
collects employer contributions for each plan as a percentage of payroll for the normal cost
portion and as a dollar amount for contributions toward the UAL. The dollar amounts are billed
on an annual basis. The actuarially determined normal cost rates and UAL contribution
amounts for each Plan for Fiscal Years 2020-21, 2021-22 and 2022-23 are as follows:
Fiscal Year 2020-21
Fiscal Year 2021-22
Fiscal Year 2022-23
Employer
Employer
Employer
Employer
Employer
Employer
Normal
Payment
Normal
Payment
Normal
Payment
Cost Rate
of UAL
Cost Rate
of UAL
Cost Rate
of UAL
Miscellaneous Plan 9.788%
$4,595,521
9.29%
$5,135,202
9.33%
$5,381,579
Safety 19.444%
$5,581,042
18.75%
$6,138,313
17.95%
$6,644,544
Source: Ca1PERS Actuarial Reports dated July 2019, July 2020 and July 2021.
33
The City's estimated total contribution amounts (including the required normal cost and
UAL contributions) and as a percentage of estimated covered payroll for the Plans in Fiscal
Years 2020-21, 2021-22, and 2022-23 are as follows:
Fiscal Year 2020-21
Fiscal Year 2021-22
Fiscal Year 2022-23
Total
% of
Total
% of
Total
% of
Employer
Covered
Employer
Covered
Employer
Covered
Contribution
Payroll
Contribution
Payroll
Contribution
Payroll
Miscellaneous Plan $6,482,251
33.629%
$7,033,549
34.42%
$7,318,390
35.25%
Safety $7,793,943
68.483%
$8,477,415
67.95%
$9,119,881
66.13%
Source: CaIPERS Actuarial Reports dated,
July 2019, July
2020 and July 2021.
Projected Employer Contributions. The following tables show the City's actuarially -
determined required employer contribution for Fiscal Year 2022-23 and projected employer
contributions (before cost sharing) for Fiscal Years 2023-24 through 2027-28 for each Plan by
normal cost (expressed as a percentage of total active payroll) and amortization of the unfunded
accrued liability (expressed as a dollar amount). The projections assume a 7.00% annual rate
of return for Fiscal Year 2020-21 but do not include any reductions in the normal cost that will
occur over time as new employees are hired into PEPRA or other lower cost benefit tiers.
Miscellaneous Plan
Required
Contribution
Projected Future Employer Contributions
Assumes 7.00% Return for Fiscal Year 2020-21
Fiscal Year 2022-23 2023-24
Fiscal Year 2022-23
2023-24
2024-25 2025-26 2026-27
2027-28
Normal Cost % 9.33%
9.2%
9.1% 8.9% 8.8%
8.7%
UAL Payment $5,381,579
$5,740,000
$6,114,000 $5,943,000 $6,233,000
$6,389,000
Safety Plan
Required
Contribution
Projected Future Employer Contributions
Assumes 7.00% Return for Fiscal Year 2020-21
Fiscal Year 2022-23 2023-24
2024-25 2025-26 2026-27 2027-28
Normal Cost % 17.95% 17.8%
17.5% 17.3% 17.0% 16.7%
UAL Payment $6,644,544 $7,065,000
$7,494,000 $7,776,000 $8,049,000 $8,254,000
Source: Ca1PERS Actuarial Reports dated July 2021.
34
Funded Status. The following table sets forth the schedule of funding for the Plans for
the actuarial valuations as of June 30 of the years 2017 through 2020.
Source: CaIPERS Actuarial Reports Dated July 2021
There is a two-year lag between the valuation date and the start of the contribution
Fiscal Year. The UAL was determined in the June 30, 2020 actuarial valuation, but the
corresponding UAL payments commence two years after the valuation date in Fiscal Year 2022-
23. This two-year lag is necessary due to the amount of time needed to extract and test the
membership and financial data, and the need to provide public agencies with their required
employer contribution well in advance of the start of the Fiscal Year.
Net Pension Liability. The City's net pension liability for the Miscellaneous Plan and
the Safety Plan totaled approximately $63.3 million and $83.8 million, respectively, measured as
of June 30, 2019, using an actuarial valuation as of June 30, 2018 rolled forward to June 30,
2019 using standard update procedures. For the year ended June 30, 2021, the City recognized
pension expense of $5,496,434 for the Miscellaneous Plan and $6,847,548 for the Safety Plan.
Sensitivity to Changes in Discount Rate. The discount rate used to measure the total
pension liability at June 30, 2019 with respect to the Plans was 7.15%. The following tables
present the City's proportionate share of the net pension liability for the Miscellaneous Plan and
the Safety Plan, calculated using the discount rate for the Plans, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 100 basis points
higher or 100 basis points lower than the current rate:
Miscellaneous Plan
1% Decrease (6.15%) Discount Rate (7.15%) 1% Increase (8.15%)
Net Pension Liability $89,658,828 $63,329,327 $41,451,990
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
35
Unfunded
Valuation Date
Accrued
Market Value of
Accrued
Funded
Annual Covered
Ended June 30
Liability
Assets (MVA)
Liability
Ratio
Payroll
Miscellaneous Plan
2017
$188,723,738
132,013,927
$56,709,811
70.0%
$18,487,271
2018
201,144,399
138,770,921
62,373,478
69.0
17,769,303
2019
207,262,408
143,558,757
63,703,651
69.3
18,837,110
2020
214,092,376
146,008,797
68,083,579
68.2
19,136,393
Safety
Plan
2017
$187,202,314
$111,871,224
$75,331,090
59.8%
$11,568,201
2018
201,528,295
118,166,810
83,361,485
58.6
10,491,335
2019
207,837,399
123,051,225
84,786,174
59.2
11,500,121
2020
216,958,916
126,462,975
90,495,941
58.3
12,712,307
Source: CaIPERS Actuarial Reports Dated July 2021
There is a two-year lag between the valuation date and the start of the contribution
Fiscal Year. The UAL was determined in the June 30, 2020 actuarial valuation, but the
corresponding UAL payments commence two years after the valuation date in Fiscal Year 2022-
23. This two-year lag is necessary due to the amount of time needed to extract and test the
membership and financial data, and the need to provide public agencies with their required
employer contribution well in advance of the start of the Fiscal Year.
Net Pension Liability. The City's net pension liability for the Miscellaneous Plan and
the Safety Plan totaled approximately $63.3 million and $83.8 million, respectively, measured as
of June 30, 2019, using an actuarial valuation as of June 30, 2018 rolled forward to June 30,
2019 using standard update procedures. For the year ended June 30, 2021, the City recognized
pension expense of $5,496,434 for the Miscellaneous Plan and $6,847,548 for the Safety Plan.
Sensitivity to Changes in Discount Rate. The discount rate used to measure the total
pension liability at June 30, 2019 with respect to the Plans was 7.15%. The following tables
present the City's proportionate share of the net pension liability for the Miscellaneous Plan and
the Safety Plan, calculated using the discount rate for the Plans, as well as what the City's net
pension liability would be if it were calculated using a discount rate that is 100 basis points
higher or 100 basis points lower than the current rate:
Miscellaneous Plan
1% Decrease (6.15%) Discount Rate (7.15%) 1% Increase (8.15%)
Net Pension Liability $89,658,828 $63,329,327 $41,451,990
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
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Safety Plan
1 % Decrease (6.15%) Discount Rate (7.15%) 1% Increase 8.15%)
Net Pension Liability $112,354,313 $83,825,883 $60,406,238
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
Pension Stabilization Fund and Pension Funding Policy. To address the issue of
rising pension costs and UAL in the Plans, the City adopted a Pension Stabilization Policy (the
"PSP") and created the Pension Stabilization Fund in late 2016 and first funded the Pension
Stabilization Fund in April 2017. As of December 31, 2021, the Pension Stabilization Fund had a
balance of $21,245,657. The PSF is held at Public Agency Retirement Services (PARS). The
PSP requires 100% of General Fund reserves in excess of the 16% General Fund reserve
target to be deposited into the Pension Stabilization Fund. All other funds invest a proportional
share based on the budgeted pension obligations in each fiscal year. The PSP remains in effect
until the funded status of the two Plans are at a combined 80% funded status when considering
the market value of assets at CalPERS and funds in the Pension Stabilization Fund. As of the
June 30, 2020 actuarial report (the most recent available report), the funded status for the
Miscellaneous Plan was 68.2%, the funded status for the Safety Plan was 58.3%, and the
funded status for the combined Plans was 63.2%. As of December 31, 2021, the combined
funded status when considering the Pension Stabilization Fund assets increases to 68.1%, or
an improvement of 4.9% over the funded ratio when considering assets at CalPERS alone.
Due to the uncertainty of the financial impact of the COVID-19 pandemic, the City
suspended contributions to the Pension Stabilization Fund during Fiscal Year 2020-21.
However, due to stronger than anticipated revenues during the COVID-19 pandemic, the PSP
was reinstated with the adoption of the Fiscal Year 2021-22 budget. In addition, partway through
Fiscal Year 2020-21. the City Council elected to use the Fiscal Year 2019-20 fund balance in
excess of reserves that would have otherwise been deposited into the Pension Stabilization
Fund to make additional discretionary payments ("ADPs") to CalPERS, which directly reduces
the City's liability with CaIPERS.
In addition to funding the Pension Stabilization Fund, the PSP requires the City to
budget the UAL portion of the pension bill at the monthly payment provided by CaIPERS, but to
pay at the annual amount each July. The annual amount is approximately a 3.6% discount from
the monthly amount due to expected earnings. The PSP further requires the City to take the
additional 3.6% and use it to make ADPs to CalPERS to reduce pension liability. The City has
executed this portion of the PSP every fiscal year beginning with the Fiscal Year 2018-19
budget year.
Potential Impacts on Future Required Contributions. The CalPERS Board of
Administration has adjusted and may in the future further adjust certain assumptions used in the
CalPERS actuarial valuations, which adjustments may increase the City's required contributions
to CalPERS in future years. Accordingly, the City cannot provide any assurances that the City's
required contributions to CalPERS in future years will not significantly increase (or otherwise
vary) from any past or current projected levels of contributions.
Change in Assumptions/Discount Rate. On December 21, 2016, the CalPERS Board of
Administration voted to lower its discount rate from the then -current rate of 7.50% to 7.00% over
a three-year period. The change was reflected in the June 30, 2016 actuarial report, which
36
lowered the discount rate from 7.50% to 7.375%; in the June 30, 2017 actuarial report, which
lowered the discount rate from 7.375% to 7.25%; and in the June 30, 2018 actuarial report,
which lowered the discount rate from 7.25% to 7.00%. CalPERS further reduced the discount
rate to 6.8% in September 2021.
Investment Performance. CalPERS earnings reports for Fiscal Years 2010 through
2020 report investment gains of approximately 13.3%, 21.7%, 0.1%, 13.2%, 18.4%, 2.4%,
0.6%, 11.2%, 8.6%, 6.7% and 4.7%, respectively. The CalPERS Fiscal Year 2019-20
investment gain of 4.7% is not included as an amortization base in the most recent CalPERS
valuation report and is not reflected in the numbers included herein. Future earnings
performance may increase or decrease future contribution rates for plan participants, including
the City. CalPERS has preliminarily reported a 21.3% investment return for Fiscal Year 2020-
21.
The CaIPERS website contains the most recent actuarial valuation reports for the City's
Miscellaneous Plan and Safety Plan and other information that concerns benefits and other
matters. The Comprehensive Annual financial reports of Ca/PERS are also available on
CaIPERS' Internet website at www.calpers.ca.gov. The textual reference to such Internet
website is provided for convenience only. None of the information on such Internet website is
incorporated by reference herein. Neither the City nor the Underwriter guarantee the accuracy
of such information.
See "APPENDIX B — ANNUAL COMPREHENSIVE FINANCIAL REPORT OF THE CITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021 — Note 8" for additional information regarding
the Plans, including a description of the actuarial methods and assumptions used to measure
the City's net pension liability as of the June 30, 2019 measurement date.
Other Post -Employment Benefits
Plan Description. The City sponsors a single -employer defined -benefit
postemployment healthcare plan (the "Retiree Health Plan") to provide medical insurance
benefits to eligible retired employees and their spouses. The Plan does not issue a publicly
available financial report. Medical coverage is provided through CalPERS healthcare program.
Employees who retire from the City and receive a CalPERS pension are eligible for
postemployment medical benefits. The City contributes the minimum amount provided under
Government Code Section 22825 of the Public Employees Medical and Hospital Care Act. In
general, retirees must contribute any premium amounts in excess of the City contribution.
However, as described below, a closed group of active employees and retirees receive
additional postemployment benefits.
Employees hired prior to the dates shown in the following table are allowed to convert
their accumulated sick leave into postemployment medical benefits at retirement as long as they
have ten or more years of service with the City.
Group
Executive Management
Mid -Management
Fire Mid -Management
Police Mid -Management
General Services
IBEW
37
Hired Prior to:
July 1, 1994
July 1, 1994
December 6, 1995
July 1, 1994
July 1, 1995
July 1, 1995
Maintenance and Operators July 1, 1995
Dispatchers July 1, 1994
Police October 10, 1994
Fire December 6, 1995
Funding Policy. Contribution requirements of the Retiree Health Plan are based on
pay-as-you-go financing. The City's policy is to fund the normal cost (current accrual for benefits
being earned) plus an amortization of the net (unfunded accrued) OPEB liability. For fiscal year
2020-21, the City contributed $1,772,822.
Net OPEB Liability. As of the June 30, 2019 measurement date, the City's actuarial
accrued OPEB liability was approximately $26.4 million. The actuarial value of plan assets was
approximately $2.0 million, resulting in an unfunded actuarial accrued OPEB liability of
approximately $24.4 million.
The following presents the OPEB liability of the City if it were calculated using a discount
rate that is one percentage point lower or one percentage point higher than the current rate, for
measurement period ended June 30, 2019:
Discount Rate — 1 %
2.56%
Net OPEB Liability $27,181,396
Current Discount Rate
3.56%
$24,358,432
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
Discount Rate + 1 %
4.56%
$21,984,101
Actuarial valuations of an ongoing plan involve estimates of the value of reported
amounts and assumptions about the probability of occurrence of events far into the future.
Examples include assumptions about future employment, mortality, and the healthcare cost
trend. Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
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OPEB Expense and Deferred Outflows/Inflows of Resources Related to OPEB. For
the fiscal year ended June 30, 2021, the City recognized OPEB expense of $1,836,904. At June
30, 2021, the City reported deferred outflows of resources related to OPEB from the following
sources:
Deferred Outflows of Deferred inflows of
Resources Resources
Contributions subsequent to
measurement date $1,885,306 -
Change of assumptions - $3,220,278
Difference between expected and
actual liability - 4,393,056
Difference between expected and
actual investment earnings 6,649
Total $1,891,955 $7,613,334
Source: City of Lodi Annual Comprehensive Financial Report for the Fiscal Year Ended June 30, 2021.
The $1,885,306 reported as deferred outflows of resources related to contributions
subsequent to the measurement date will be recognized as a reduction of the net OPEB liability
during the fiscal year ended June 30, 2021. The other amounts reported as deferred outflows of
resources and deferred inflows of resources related to OPEB will be recognized as OPEB
expense as follows: $(1,498,756) in the fiscal year ended June 30, 2022, $(1,490,544) in the
fiscal year ended June 30, 2023, $(1,491,725) in the fiscal year ended June 30, 2024,
$(1,163,749) in the fiscal year ended June 30, 2025, $(1,111,720) in the fiscal year ended June
30, 2026, and $(850,191) thereafter.
See "APPENDIX B — COMPREHENSIVE ANNUAL FINANCIAL REPORT OF THE CITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021 — Note 9" for additional information regarding
the Retiree Health Plan, including a description of the actuarial methods and assumptions used
to measure the City's net OPEB liability as of the June 30, 2019 measurement date.
City Investments
All funds of the City are invested by the City in accordance with the investment
guidelines of the California Government Code (Section 53601 and 53635) and the City's
Investment Policy, which is presented annually to the City Council for approval.
Pursuant to the Investment Policy, the policy of the City is to invest public funds in a
manner which will provide a sound investment return with maximum security while meeting the
daily cash flow demands of the entity and conforming to all state and local statues governing the
investment of public funds. The City's investment policy has three objectives: (1) protect
principal, (2) provide for liquidity needs, and (3) obtain the most reasonable rate of return
possible within the first two objectives.
The Investment Policy may be changed at any time at the discretion of the City Council
(subject to State of California law provisions relating to authorized investments) and as the
California Government Code is amended. There can be no assurance, therefore, that the State
of California law and/or the Investment Policy will not be amended in the future to allow for
investments which are not currently permitted under such State law or the Investment Policy, or
that the objectives of the City with respect to investments will not change. All investments,
including the Authorized Investments and those authorized by law from time to time for
39
investments by public agencies, contain a certain degree of risk. Such risks include, but are not
limited to, a lower rate of return than expected and loss or delayed receipt of principal. The
occurrence of these events with respect to amounts held under the Indenture and the
Installment Purchase Agreement, or other amounts held by the City, could have a material
adverse effect on the City's finances.
below.
A summary of the City's pooled investment portfolio as of December 31, 2021 is set forth
Table 9
Investment Portfolio Summary
Type of Investment
Market Value
Cash and Equivalents
$65,748,019
Bond Mutual Funds
10,464,224
Local Bank Certificates of Deposit
2,000,000
Negotiable Certificates of Deposit
6,408,191
Agency Securities
7,761,742
US Treasury Notes
8,589,545
Corporate Securities
23,379,664
Municipal Securities
34,833,381
Supranational Securities
4,447,051
Total
$163,631,817
we,
Percent of Total
40.18%
6.39
1.22
3.92
4.74
5.25
14.29
21.29
2.72
100.00%
Estimated Direct and Overlapping Bonded Debt
The estimated direct and overlapping bonded debt of the City as of February 1, 2022 is
set forth below.
2021-22 Assessed Valuation: $7,353,233,712
OVERLAPPING TAX AND ASSESSMENT DEBT: % Applicable Debt 2/1/22
San Joaquin Delta Community College District 7.725% $ 14,560,080
Lodi Unified School District 36.895 111,496,690
TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT $126,056,770
DIRECT AND OVERLAPPING GENERAL FUND DEBT:
San Joaquin County Certificates of Participation 8.095% $ 4,889,380
Lodi Unified School District Certificates of Participation 36.895 3,713,482
City of Lodi General Fund Obligations 100.000 13,315,0000)
TOTAL DIRECT AND OVERLAPPING GENERAL FUND DEBT $21,917,862
COMBINED TOTAL DEBT
Ratios to 2021-22 Assessed Valuation:
Total Overlapping Tax and Assessment Debt ..... 1.71%
Total Direct Debt ($13,315,000) ....................... 0.18%
Combined Total Debt .......................................... 2.01%
$147,974,632(2)
(1) Excludes the Bonds.
(2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non -bonded capital lease
obligations
Source: California Municipal Statistics, Inc.
Risk Management
The City is self-insured for dental care, long-term disability, workers' compensation,
general liability and unemployment insurance. General liability and workers' compensation
are administered by outside agencies. The City administers unemployment insurance and
long-term disability. Self-insurance transactions are accounted for under the Insurance
Funds. At June 30, 2021, the Insurance Fund had a net position of $7,798,135.
CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES AND APPROPRIATIONS
The constitutional and statutory provisions discussed in this section have the potential to
affect the ability of the City to levy taxes and spend tax proceeds for operating and other
purposes.
Article XIIIA of the State Constitution
On June 6, 1978, California voters approved Proposition 13, which added Article
XIIIA to the State Constitution. Article XIIIA, as amended, limits the amount of any ad
valorem tax on real property to one percent of the full cash value thereof, except that
additional ad valorem taxes may be levied to pay debt service (i) on indebtedness approved
by the voters prior to July 1, 1978, (ii) on bonded indebtedness approved by a two-thirds
41
vote on or after July 1, 1978, for the acquisition or improvement of real property or (iii)
bonded indebtedness incurred by a school district, community college district or county
office of education for the construction, reconstruction, rehabilitation or replacement of
school facilities, including the furnishing and equipping of school facilities or the acquisition
or lease of real property for school facilities, approved by 55 percent of the voters voting on
the proposition. Article XIIIA defines full cash value to mean "the county assessor's
valuation of real property as shown on the 1975-76 tax bill under "full cash value," or
thereafter, the appraised value of real property when purchased, newly constructed, or a
change in ownership has occurred after the 1975 assessment." This full cash value may be
increased at a rate not to exceed two percent per year to account for inflation.
Article XIIIA has subsequently been amended to permit reduction of the "full cash
value" base in the event of declining property values caused by damage, destruction or other
factors, to provide that there would be no increase in the "full cash value" base in the event of
reconstruction of property damaged or destroyed in a disaster, and in other minor or technical
ways.
Legislation Implementing Article XIIIA
Legislation has been enacted and amended a number of times since 1978 to implement
Article XIIIA. Under current law, local agencies are no longer permitted to levy directly any
property tax (except to pay voter -approved indebtedness). The one percent property tax is
automatically levied by the County and distributed according to a formula among taxing
agencies. The formula apportions the tax roughly in proportion to the relative shares of taxes
levied prior to 1989.
Increases of assessed valuation resulting from reappraisals of property due to new
construction, change in ownership or from the two percent annual adjustment are allocated
among the various jurisdictions in the "taxing area" based upon their respective "situs." Any
such allocation made to a local agency continues as part of its allocation in future years.
All taxable property is shown at full market value on the tax rolls. Consequently, the tax
rate is expressed as $1 per $100 of taxable value. All taxable property value included in this
Official Statement is shown at 100 percent of market value (unless noted differently) and all tax
rates reflect the $1 per $100 of taxable value.
Article XIIB of the State Constitution
In addition to the limits Article XIIIA imposes on property taxes that may be collected by
local governments, certain other revenues of the State and most local governments are subject
to an annual "appropriations limit" imposed by Article XIIIB which effectively limits the amount of
such revenues those entities are permitted to spend. Article XIIIB, approved by the voters in
June 1979, was modified substantially by Proposition 111 in 1990. The appropriations limit of
each government entity applies to "proceeds of taxes," which consist of tax revenues, State
subventions and certain other funds, including proceeds from regulatory licenses, user charges
or other fees to the extent that such proceeds exceed "the cost reasonably borne by such
entity in providing the regulation, product or service." "Proceeds of taxes" excludes tax
refunds and some benefit payments such as unemployment insurance. No limit is imposed on
the appropriation of funds which are not "proceeds of taxes," such as reasonable user charges
or fees, and certain other non -tax funds. Article XIIIB also does not limit appropriation of local
revenues to pay debt service on Bonds existing or authorized by January 1, 1979, or
42
subsequently authorized by the voters, appropriations required to comply with mandates of
courts or the federal government, appropriations for qualified capital outlay projects, and
appropriation by the State of revenues derived from any increase in gasoline taxes and motor
vehicle weight fees above January 1, 1990, levels. The appropriations limit may also be
exceeded in case of emergency; however, the appropriations limit for the next three years
following such emergency appropriation must be reduced to the extent by which it was
exceeded, unless the emergency arises from civil disturbance or natural disaster declared by
the Governor, and the expenditure is approved by two-thirds of the legislative body of the local
government.
The State and each local government entity has its own appropriations limit. Each year,
the limit is adjusted to allow for changes, if any, in the cost of living, the population of the
jurisdiction, and any transfer to or from another government entity of financial responsibility for
providing services. Proposition 111 requires that each agency's actual appropriations be tested
against its limit every two years.
If the aggregate "proceeds of taxes" for the preceding two-year period exceeds the
aggregate limit, the excess must be returned to the agency's taxpayers through tax rate or fee
reductions over the following two years.
The City has never exceeded its appropriations limit.
Articles XIIIC and MID of the State Constitution
General. On November 5, 1996, the voters of the State approved Proposition 218,
known as the "Right to Vote on Taxes Act." Proposition 218 adds Articles XIIIC and MID to the
California Constitution and contains a number of interrelated provisions affecting the ability of
the City to levy and collect both existing and future taxes, assessments, fees and charges.
On November 2, 2010, California voters approved Proposition 26, entitled the
"Supermajority Vote to Pass New Taxes and Fees Act." Section 1 of Proposition 26 declares
that Proposition 26 is intended to limit the ability of the State Legislature and local government
to circumvent existing restrictions on increasing taxes by defining the new or expanded taxes as
"fees." Proposition 26 amended Articles XIIIA and XIIIC of the State Constitution. The
amendments to Article XIIIA limit the ability of the State Legislature to impose higher taxes (as
defined in Proposition 26) without a two-thirds vote of the Legislature. The amendments to
Article XIIIC define "taxes" that are subject to voter approval as "any levy, charge, or exaction of
any kind imposed by a local government," with certain exceptions.
Taxes. Article XIIIC requires that all new local taxes be submitted to the electorate
before they become effective. Taxes for general governmental purposes of the City ("general
taxes") require a majority vote; taxes for specific purposes ("special taxes"), even if deposited in
the City's General Fund, require a two-thirds vote.
Property -Related Fees and Charges. Article MID also adds several provisions making
it generally more difficult for local agencies to levy and maintain property -related fees, charges,
and assessments for municipal services and programs.
Reduction or Repeal of Taxes, Assessments, Fees and Charges. Article XIIIC also
removes limitations on the initiative power in matters of reducing or repealing local taxes,
assessments, fees or charges. No assurance can be given that the voters of the City will not, in
43
the future, approve an initiative or initiatives which reduce or repeal local taxes, assessments,
fees or charges currently comprising a substantial part of the City's General Fund. If such
repeal or reduction occurs, the City's ability to pay debt service on the Bonds could be adversely
affected.
Burden of Proof. Article XIIIC provides that local government "bears the burden of
proving by a preponderance of the evidence that a levy, charge, or other exaction is not a tax,
that the amount is no more than necessary to cover the reasonable costs of the governmental
activity, and that the manner in which those costs are allocated to a payor bear a fair or
reasonable relationship to the payor's burdens on, or benefits received from, the governmental
activity." Similarly, Article MID provides that in "any legal action contesting the validity of a fee
or charge, the burden shall be on the agency to demonstrate compliance" with Article XIIID.
Judicial Interpretation of Proposition 218. The interpretation and application of
Articles XIIIC and MID will ultimately be determined by the courts, and it is not possible at this
time to predict with certainty the outcome of such determination.
Impact on City's General Fund. The City does not believe that any material source of
General Fund revenue is subject to challenge under Proposition 218 or Proposition 26.
The approval requirements of Articles XIIIC and MID reduce the flexibility of the City to
raise revenues for the General Fund, and no assurance can be given that the City will be able to
impose, extend or increase the taxes, fees, charges or taxes in the future that it may need to
meet increased expenditure needs.
Proposition 62
Proposition 62 was adopted by the voters at the November 4, 1986, general election and
(a) requires that any new or higher taxes for general governmental purposes imposed by local
governmental entities such as the City be approved by a two-thirds vote of the governmental
entity's legislative body and by a majority vote of the voters of the governmental entity voting in
an election on the tax, (b) requires that any special tax (defined as taxes levied for other than
general governmental purposes) imposed by a local governmental entity be approved by a two-
thirds vote of the voters of the governmental entity voting in an election on the tax, (c) restricts
the use of revenues from a special tax to the purposes or for the service for which the special
tax was imposed, (d) prohibits the imposition of ad valorem taxes on real property by local
governmental entities except as permitted by Article XIIIA, (e) prohibits the imposition of
transaction taxes and sales taxes on the sale of real property by local governmental entities,
and (f) requires that any tax imposed by a local governmental entity on or after August 1, 1985,
be ratified by a majority vote of the voters voting in an election on the tax within two years of the
adoption of the initiative or be terminated by November 15, 1988.
California appellate court cases have overturned the provisions of Proposition 62
pertaining to the imposition of taxes for general government purposes. However, the California
Supreme Court upheld Proposition 62 in its decision on August 28, 1995, in Fresno County
Transportation Authority v. Guardino. This decision reaffirmed the constitutionality of
Proposition 62. Certain matters regarding Proposition 62 were not addressed in the Supreme
Court's decision, such as what remedies exist for taxpayers subject to a tax not in compliance
with Proposition 62, and whether the decision applies to charter cities. The City has not
experienced any substantive adverse financial impact as a result of the passage of this initiative.
44
Proposition 1A; Proposition 22
Proposition 1A. Proposition 1A, proposed by the Legislature in connection with the
State's Fiscal Year 2004-05 Budget, approved by the voters in November 2004 and generally
effective in Fiscal Year 2006-07, provided that the State may not reduce any local sales tax rate,
limit existing local government authority to levy a sales tax rate or change the allocation of local
sales tax revenues, subject to certain exceptions. Proposition 1A generally prohibited the State
from shifting to schools or community colleges any share of property tax revenues allocated to
local governments for any Fiscal Year, as set forth under the laws in effect as of November 3,
2004. Any change in the allocation of property tax revenues among local governments within a
county had to be approved by two-thirds of both houses of the Legislature.
Proposition 22. Proposition 22, entitled "The Local Taxpayer, Public Safety and
Transportation Protection Act," was approved by the voters of the State in November 2010.
Proposition 22 eliminates or reduces the State's authority to (i) temporarily shift property taxes
from cities, counties and special districts to schools, (ii) use vehicle license fee revenues to
reimburse local governments for State -mandated costs (the State will have to use other
revenues to reimburse local governments), (iii) redirect property tax increment from
redevelopment agencies to any other local government, (iv) use State fuel tax revenues to pay
debt service on State transportation bonds, or (v) borrow or change the distribution of State fuel
tax revenues.
Possible Future Initiatives
Articles XIIIA, XIIIB, XIIIC and MID and Propositions 62, 111, 218, 22, 26 and 1A were
each adopted as measures that qualified for the ballot pursuant to the State's initiative process.
From time to time other initiative measures could be adopted, further affecting revenues of the
City or the City's ability to expend revenues. The nature and impact of these measures cannot
be anticipated by the City.
RISK FACTORS
The following describes certain special considerations and risk factors affecting the
payment of and security for the Bonds. The following discussion is not meant to be an
exhaustive list of the risks associated with the purchase of any Bonds and does not necessarily
reflect the relative importance of the various risks. Potential investors in the Bonds are advised
to consider the following special factors along with all other information in this Official Statement
in evaluating the Bonds. There can be no assurance that other considerations will not
materialize in the future.
Special Obligations of the Authority
The Bonds are special obligations of the Authority and are payable solely from, and
secured by, a pledge of Revenues and certain funds and accounts held under the Indenture.
Revenues consist primarily of Lease Payments payable by the City under the Lease. If, for any
reason, the Revenues collected under the Indenture are not sufficient to pay debt service on the
Bonds, the Authority will not be obligated to utilize any other of its funds, other than moneys on
deposit in the Bond Fund and certain other funds and accounts established under the Indenture,
to pay debt service on the Bonds. The Authority has no taxing power.
45
No Pledge of Taxes
The obligation of the City to pay the Lease Payments and Additional Rental does not
constitute an obligation of the City for which the City is obligated to levy or pledge any form of
taxation or for which the City has levied or pledged any form of taxation. The obligation of the
City to pay Lease Payments and Additional Rental does not constitute a debt or indebtedness of
the Authority, the City, the State of California or any of its political subdivisions within the
meaning of any constitutional or statutory debt limitation or restriction.
Limitations on Taxes and Fees
Certain taxes, assessments, fees and charges presently imposed by the City could be
subject to the voter approval requirements of Article XIIIC and Article XIIID of the State
Constitution. Based upon the outcome of an election by the voters, such fees, charges,
assessments and taxes might no longer be permitted to be imposed, or may be reduced or
eliminated and new taxes, assessments fees and charges may not be approved. The City has
assessed the potential impact on its financial condition of the provisions of Article XIIIC and
Article XIIID of the State Constitution respecting the imposition and increase of taxes, fees,
charges and assessments and does not believe that an election by the voters to reduce or
eliminate the imposition of certain existing fees, charges, assessments and taxes would
substantially affect its financial condition. However, the City believes that if the initiative power
was exercised so that all local taxes, assessments, fees and charges that may be subject to
Article XIIIC and Article XIIID of the State Constitution are eliminated or substantially reduced,
the financial condition of the City, including its General Fund, could be materially adversely
affected.
Although the City does not currently anticipate that the provisions of Article XIIIC and
Article XIIID of the State Constitution would adversely affect its ability to pay Lease Payments
and its other obligations payable from the General Fund, no assurance can be given regarding
the ultimate interpretation or effect of Article XIIIC and Article XIIID of the State Constitution on
the City's finances. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES
AND APPROPRIATIONS."
Additional Obligations of the City
The City is permitted to enter into other obligations which constitute additional charges
against its revenues without the consent of Owners of the Bonds. To the extent that additional
obligations are incurred by the City, the funds available to pay Lease Payments may be
decreased.
The Lease Payments and other payments due under the Lease (including payment of
costs of repair and maintenance of the Leased Property, taxes and other governmental charges
levied against the Leased Property) are payable from funds lawfully available to the City. If the
amounts that the City is obligated to pay in a fiscal year exceed the City's revenues for such
year, the City may choose to make some payments rather than making other payments,
including Lease Payments and Additional Rental, based on the perceived needs of the City.
The same result could occur if, because of California Constitutional limits on expenditures, the
City is not permitted to appropriate and spend all of its available revenues or is required to
expend available revenues to preserve the public health, safety and welfare.
46
Default
Whenever any event of default referred to in the Lease happens and continues, the
Authority is authorized under the terms of the Lease to exercise any and all remedies available
under law or granted under the Lease. See APPENDIX C — "Summary of Principal Legal
Documents" for a detailed description of available remedies in the case of a default under the
Lease.
In the event of a default, there is no remedy of acceleration of the total Lease Payments
due over the term of the Lease. The Trustee is not empowered to sell the Leased Property and
use the proceeds of such sale to prepay the Bonds or pay debt service on the Bonds.
The City will be liable only for Lease Payments on an annual basis and, in the event of a
default, the Trustee would be required to seek a separate judgment each year for that year's
defaulted Lease Payments. Any such suit for money damages would be subject to limitations
on legal remedies against municipalities in California, including a limitation on enforcement of
judgments against funds of a fiscal year other than the fiscal year in which the Lease Payments
were due and against funds needed to serve the public welfare and interest.
Abatement
Under certain circumstances related to damage, destruction, condemnation or title
defects which cause a substantial interference with the use and possession of the Leased
Property, the City's obligation to make Lease Payments will be subject to full or partial
abatement and could result in the Trustee having inadequate funds to pay the principal and
interest on the Bonds as and when due. See "SECURITY FOR THE BONDS — Abatement" and
"APPENDIX C — Summary of Principal Legal Documents."
Natural Calamities
From time to time, the City is subject to natural calamities, including, but not limited to,
earthquake, flood, drought, or wildfire, that may adversely affect economic activity in the City,
and which could have a negative impact on City finances. There can be no assurance that the
occurrence of any natural calamity would not cause substantial interference to the Leased
Property (potentially resulting in abatement of the City's obligation to make Lease Payments), or
that the City would have insurance or other resources available to make repairs to the Leased
Property in order to make Lease Payments under the Lease. See "- Abatement" above. The
City does not maintain earthquake insurance on the Leased Property.
Flood. Based on flood risk evaluations prepared by the Federal Emergency
Management Agency (FEMA) for the City and San Joaquin County, effective October 19, 2009,
flood hazards are a constraint to development only in two areas of the City: the area
immediately adjacent to the Mokelumne River along the City's northern boundary, and the area
around the White Slough Water Pollution Control Facility, the City's wastewater treatment
facility, in the southwest corner of the City. These areas lie within Zone AE, meaning that they
are subject to a 1 % annual (100 -year) flood. Flooding depths in this area are generally greater
than three feet. No new development is planned within either of these areas. Most of the City
lies within Zone X, which describes lands subject to the 0.2% annual (500 -year) flood zone or
that lie within the 100 -year flood zone, but with flooding depths less than one foot. The Leased
Property lies within Zone X.
47
Drought. On October 19, 2021, the Governor declared a Statewide drought state of
emergency and requested that all water users voluntarily reduce water use by 15%. The
declaration encouraged water agencies to draw upon supplies other than groundwater and to
implement their water shortage contingency plans and authorized the State Water Resources
Control Board to adopt regulations that prohibit wasteful water use (such as the use of potable
water to wash paved surfaces or to irrigate landscaping during the two days following rainfall).
On January 4, 2022, the State Water Resources Control Board adopted regulations that prohibit
overwatering yards, washing cars without a shutoff nozzle, and watering grass within 48 hours
after rainfall. There can be no assurance that subsequent declarations will not impose stricter
water use restrictions should dry conditions persist in future years.
Seismic. Major earthquake fault zones in the vicinity of the City include the Greenville
fault zone approximately 34 miles south of the City and the San Joaquin fault approximately 24
miles southwest of the City, among others. The City cannot predict how much damage may
occur within the City to the Leased Property, specifically, and how much reduction in assessed
valuation in the City may result from an earthquake. Under the Lease, the City is not required to
obtain earthquake insurance on the Leased Property.
Fire Hazards. In recent years, wildfires have caused extensive damage throughout the
State. Certain of these fires have burned thousands of acres and destroyed hundreds and in
some cases thousands of homes. In some instances, entire neighborhoods have been
destroyed. Several fires which occurred in 2017 damaged or destroyed property in areas that
were not previously considered to be at risk from such events. In November 2018, the Camp
Fire occurred in Butte County, California. The Camp Fire is the deadliest and most destructive
wildfire in the recorded history of the State burning more than 150,000 acres and destroying
more than 11,500 structures, including most of the structures in the City of Paradise, California.
Some commentators believe that climate change will lead to even more frequent and damaging
wildfires in the future. However, the City and immediately surrounding area is not characterized
by substantial areas of wildlands or other topography that contribute to wildland fires. No portion
of the City is classified as having a "High" or "Very High" fire hazard risk.
Public Health Emergencies
In recent years, public health authorities have warned of threats posed by outbreaks of
disease and other public health threats. On February 11, 2020, the WHO announced the official
name for the outbreak of COVID-19, an upper respiratory tract illness. COVID-19 has since
spread across the globe. The spread of COVID-19 is having significant adverse health and
financial impacts throughout the world, including the City. The WHO has declared the COVID-19
outbreak to be a pandemic, and states of emergency have been declared by the Governor of
the State and the President of the United States.
The COVID-19 outbreak is ongoing, and its duration and severity and its economic
effects are uncertain in many respects. Uncertain too are the additional actions, if any, that may
be taken by federal and State governmental authorities to contain or mitigate the effects of the
outbreak. The ultimate impact of COVID-19 on the City's operations and finances and the
economy, real estate market and development within the City is not fully known, and it may be
some time before the full adverse impact of the COVID-19 outbreak is known. Certain reports
providing preliminary information regarding the impact of the COVID-19 pandemic are described
in this Official Statement. Further, there could be future COVID-19 outbreaks or other public
health emergencies that could have material adverse effects on the City's operations and
finances.
48
Limitations on Remedies Available to Bond Owners
The ability of the City to comply with its covenants under the Lease may be adversely
affected by actions and events outside of the control of the City, and may be adversely affected
by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments,
fees and charges. See "CONSTITUTIONAL AND STATUTORY LIMITATIONS ON TAXES
AND APPROPRIATIONS" above. Furthermore, any remedies available to the owners of the
Bonds upon the occurrence of an event of default under the Lease or the Indenture are in many
respects dependent upon judicial actions, which are often subject to discretion and delay and
could prove both expensive and time consuming to obtain.
In addition to the limitations on Bondholder remedies contained in the Lease and the
Indenture, the rights and obligations under the Bonds, the Lease and the Indenture may be
subject to the following: the United States Bankruptcy Code and applicable bankruptcy,
insolvency, reorganization, moratorium, or similar laws relating to or affecting the enforcement
of creditors' rights generally, now or hereafter in effect; usual equity principles which may limit
the specific enforcement under State law of certain remedies; the exercise by the United States
of America of the powers delegated to it by the Federal Constitution; and the reasonable and
necessary exercise, in certain exceptional situations, of the police power inherent in the
sovereignty of the State of California and its governmental bodies in the interest of serving a
significant and legitimate public purpose.
Bankruptcy proceedings, or the exercise of powers by the federal or state government, if
initiated, could subject the Owners of the Bonds to judicial discretion and interpretation of their
rights in bankruptcy or otherwise, and consequently may entail risks of delay, limitation or
modification of their rights. The opinion of Bond Counsel notes that the rights of the owners of
the Bonds and the enforceability of the Bonds and the Indenture are limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting creditors' rights
generally, and by equitable principles, whether considered at law or in equity.
Loss of Tax -Exemption
The City has covenanted in the Lease, and the Authority has covenanted in the
Indenture, that each will not take any action, or fail to take any action, if any such action or
failure to take action would adversely affect the exclusion from gross income of interest on the
Bonds under Section 103 of the Internal Revenue Code of 1986. In the event either the City or
the Authority fails to comply with the foregoing tax covenant, interest on the Bonds may be
includable in the gross income of the Owners thereof for federal tax purposes retroactive to the
risk of issuance. See "TAX MATTERS".
Cybersecurity
The City, like many other public and private entities, relies on computer and other digital
networks and systems to conduct its operations. As a recipient and provider of personal, private
or other sensitive electronic information, the City is potentially subject to multiple cyber threats,
including without limitation hacking, viruses, ransomware, malware and other attacks. On April
4 and May 3, 2019, the City experienced information security incidents involving ransomware
impacting multiple City systems. The City did not pay any ransom and its systems were either
rebuilt or restored from backups. The City retained the services of outside professionals to
provide legal, technical, and forensic services through the City's cyber insurance coverage.
49
With the exception of the City's $50,000 deductible, all costs associated with these information
security incidents, including legal and forensic experts and employee overtime, were covered by
insurance. The City believes it has taken reasonable steps to mitigate the adverse effects of
cyberattacks, including steps to harden its cybersecurity. The City also provides regular and
frequent training for employees in the use of its digital networks and systems and the methods
outside actors use to attempt to gain access to the City's network.
No assurance can be given that the City's efforts to manage cyber threats and attacks
will be successful in all cases, or that any such attack will not materially impact the operations or
finances of the City. The City is also reliant on other entities and service providers in connection
with the administration of the Bonds, including without limitation the County tax collector for the
levy and collection of property taxes, and the Trustee. No assurance can be given that the City,
the Authority and these other entities will not be affected by cyber threats and attacks in a
manner that may affect the Bond owners.
IRS Audit of Tax -Exempt Bond Issues
The Internal Revenue Service (the "IRS") 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 IRS. It is also possible that the market value of
such Bonds might be affected as a result of such an audit of such Bonds (or by an audit of
similar bonds or securities).
Secondary Market for Bonds
There can be no guarantee that there will be a secondary market for the Bonds or, if a
secondary market exists, that any Bonds can be sold for any particular price. Prices of bond
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. No assurance can be
given that the market price for the Bonds will not be affected by the introduction or enactment of
any future legislation (including without limitation amendments to the Internal Revenue Code),
or changes in interpretation of the Internal Revenue Code, or any action of the Internal Revenue
Service, including but not limited to the publication of proposed or final regulations, the issuance
of rulings, the selection of the Bonds for audit examination, or the course or result of any
Internal Revenue Service audit or examination of the Bonds or obligations that present similar
tax issues as the Bonds. In addition, a number of local governments in the State have recently
instituted bankruptcy or pre -bankruptcy proceedings. No assurance can be given that the
market price for the Bonds will not be affected by the outcomes of these bankruptcy
proceedings or the institution of bankruptcy or pre -bankruptcy proceedings for additional local
governments in the State.
TAX MATTERS
Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel, subject, however to the qualifications set forth below,
under existing law, the interest on the Bonds is excluded from gross income for federal income
tax purposes and such interest is not an item of tax preference for purposes of the federal
alternative minimum tax.
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The opinions set forth in the preceding paragraph are subject to the condition that the
Authority comply with all requirements of the Internal Revenue Code of 1986, as amended (the
"Tax Code") that must be satisfied subsequent to the issuance of the Bonds in order that the
interest thereon be, and continue to be, excludable from gross income for federal income tax
purposes. The Authority has made certain representations and covenants in order to comply
with each such requirement. Inaccuracy of those representations, or failure to comply with
certain of those covenants, may cause the inclusion of such interest in gross income for federal
income tax purposes, which may be retroactive to the date of issuance of the Bonds.
Tax Treatment of Original Issue Discount and Premium. If the initial offering price to
the public at which a Bond is sold is less than the amount payable at maturity thereof, then such
difference constitutes "original issue discount" for purposes of federal income taxes and State of
California personal income taxes. If the initial offering price to the public at which a Bond is sold
is greater than the amount payable at maturity thereof, then such difference constitutes "bond
premium" for purposes of federal income taxes and State of California personal income taxes.
Under the Tax Code, original issue discount is treated as interest excluded from federal
gross income and exempt from State of California personal income taxes to the extent properly
allocable to each owner thereof subject to the limitations described in the first paragraph of this
section. The original issue discount accrues over the term to maturity of the Bond on the basis
of a constant interest rate compounded on each interest or principal payment date (with straight-
line interpolations between compounding dates). The amount of original issue discount
accruing during each period is added to the adjusted basis of such Bonds to determine taxable
gain upon disposition (including sale, redemption, or payment on maturity) of such Bond. The
Tax Code contains certain provisions relating to the accrual of original issue discount in the
case of purchasers of the Bonds who purchase the Bonds after the initial offering of a
substantial amount of such maturity. Owners of such Bonds should consult their own tax
advisors with respect to the tax consequences of ownership of Bonds with original issue
discount, including the treatment of purchasers who do not purchase in the original offering to
the public at the first price at which a substantial amount of such Bonds is sold to the public.
Under the Tax Code, bond premium is amortized on an annual basis over the term of the
Bond (said term being the shorter of the Bond's maturity date or its call date). The amount of
bond premium amortized each year reduces the adjusted basis of the owner of the Bond for
purposes of determining taxable gain or loss upon disposition. The amount of bond premium on
a Bond is amortized each year over the term to maturity of the Bond on the basis of a constant
interest rate compounded on each interest or principal payment date (with straight-line
interpolations between compounding dates). Amortized Bond premium is not deductible for
federal income tax purposes. Owners of premium Bonds, including purchasers who do not
purchase in the original offering, should consult their own tax advisors with respect to State of
California personal income tax and federal income tax consequences of owning such Bonds.
California Tax Status. In the further opinion of Bond Counsel, interest on the Bonds is
exempt from California personal income taxes.
Other Tax Considerations. Current and future legislative proposals, if enacted into
law, clarification of the Tax 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 legislative
proposals, clarification of the Tax Code or court decisions may also affect the market price for,
51
or marketability of, the Bonds. It cannot be predicted whether or in what form any such proposal
might be enacted or whether, if enacted, such legislation would apply to bonds issued prior to
enactment.
The opinions expressed by Bond Counsel are based upon existing legislation and
regulations as interpreted by relevant judicial and regulatory authorities as of the date of such
opinion, and Bond Counsel has expressed no opinion with respect to any proposed legislation
or as to the tax treatment of interest on the Bonds, or as to the consequences of owning or
receiving interest on the Bonds, as of any future date. 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.
Owners of the Bonds should also be aware that the ownership or disposition of, or the
accrual or receipt of interest on, the Bonds may have federal or state tax consequences other
than as described above. Other than as expressly described above, Bond Counsel expresses
no opinion regarding other federal or state tax consequences arising with respect to the Bonds,
the ownership, sale or disposition of the Bonds, or the amount, accrual or receipt of interest on
the Bonds.
CERTAIN LEGAL MATTERS
The Bonds are offered when, as and if issued and received by the Underwriter and
subject to the approval as to their legality by Jones Hall, A Professional Law Corporation, San
Francisco, California, Bond Counsel. Certain legal matters will be passed upon for the City and
the Authority by the City Attorney. Certain legal matters will be passed upon for the City by its
Disclosure Counsel, Jones Hall, A Professional Law Corporation, San Francisco, California and
for the Underwriter by Kutak Rock LLP, Los Angeles, California.
Payment of the fees and expenses of Bond Counsel and Underwriter's Counsel is
contingent upon execution and delivery of the Bonds.
LITIGATION
To the knowledge of the City, there is no controversy or litigation of any nature now
pending or threatened restraining or enjoining the execution and delivery of the Bonds, the
Indenture, the Lease or in any way contesting or affecting the validity of the Bonds or any
proceedings of the City or the Authority taken with respect to the execution and delivery thereof.
FINANCIAL STATEMENTS
The Pun Group, Certified Public Accountants (the "Auditor"), audited the financial
statements of the City for the Fiscal Year ended June 30, 2021. The Auditor's examination was
made in accordance with generally accepted auditing standards and Governmental Auditing
Standards, issued by the Comptroller General of the United States. See "APPENDIX B -
Audited Financial Statements of the City for Fiscal Year Ended June 30, 2021."
52
The City has not requested nor did the City obtain permission from the Auditor to include
the audited financial statements as an appendix to this Official Statement. Accordingly, the
Auditor has not performed any post -audit review of the financial condition or operations of the
City and has not participated in the preparation of, or reviewed, this Official Statement.
RATING
S&P Global Ratings, a business unit of Standard & Poor's Financial Services LLC
("S&P"), is expected to assign the Bonds the long-term rating of "".
The rating reflects only the views of S&P, and any explanation of the significance of such
rating may be obtained only from S&P. There is no assurance that the rating will remain in effect
for any given period of time or that it will not be revised downward or withdrawn entirely by S&P,
if, in their judgment, circumstances so warrant. The City undertakes no responsibility to oppose
any such revision or withdrawal. Any downward revision or withdrawal of the rating may have an
adverse effect on the market price of the Bonds.
CONTINUING DISCLOSURE
The City will covenant for the benefit of owners of the Bonds to provide certain financial
information and operating data relating to the City by not later than 7 months after the end of
each fiscal year of the City (currently June 30th), commencing with the report for the 2021-22
Fiscal Year (the "Annual Report"), and to provide notices of the occurrence of certain
enumerated events. Such reports are required to be filed with the Municipal Securities
Rulemaking Board through its Electronic Municipal Market Access system ("EMMA"). The
specific nature of the information to be contained in the Annual Report or the notices of
enumerated events is described in "APPENDIX E — Form of Continuing Disclosure Certificate,"
attached to this Official Statement. These covenants have been made in order to assist the
underwriter of the Bonds in complying with Securities Exchange Commission Rule 15c2 -
12(b)(5).
The City has entered into a number of continuing disclosure undertakings in connection
with City obligations, including obligations payable from the City's General Fund, as well as
obligations payable from the revenues relating to the water system and the City's electric and
wastewater utilities. During the past five years, the City has prepared continuing disclosure
reports pursuant to these undertakings.
Within the past five years, the City and certain of its related entities have failed to comply
in certain respects with continuing disclosure obligations related to outstanding indebtedness,
by (i) filing audited financial statements and operating data on EMMA for Fiscal Years 2017-18
and 2018-19 up to 24 days late and (ii) failing to associate certain filings on EMMA with all
relevant CUSIPs of outstanding indebtedness.
The City has adopted a disclosure policy intended to assure future compliance with the
City's continuing disclosure requirements.
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MUNICIPAL ADVISOR
Fieldman, Rolapp & Associates, Inc. (the "Municipal Advisor") has assisted the City with
various matters relating to the planning, structuring and delivery of the Bonds. The Municipal
Advisor is a financial advisory firm and is not engaged in the business of underwriting or
distributing municipal securities or other public securities. The Municipal Advisor assumes no
responsibility for the accuracy, completeness or fairness of this Official Statement. The
Municipal Advisor will receive compensation from the City contingent upon the sale and delivery
of the Bonds.
UNDERWRITING
The Bonds are being purchased by Piper Sandler & Co. (the "Underwriter"), at a
purchase price of $ (which represents the aggregate principal amount of the Bonds
($ ), plus an original issue premium/less an original issue discount of $
less an Underwriter's discount of $ ).
The purchase agreement relating to the Bonds provides that the Underwriter will
purchase all of the Bonds, if any are purchased, the obligation to make such purchase being
subject to certain terms and conditions set forth in such purchase agreement.
The Underwriter may offer and sell the 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.
Piper Sandler & Co. has entered into a distribution agreement with Charles Schwab &
Co., Inc. ("CS&Co.") for the retail distribution of certain securities offerings at the original issue
prices. Pursuant to the agreement, CS&Co. will purchase the Bonds from Piper Sandler & Co.
at the original issue price less a negotiated portion of the selling concession applicable to any
Bonds that CS&Co. sells.
PROFESSIONAL SERVICES
In connection with the issuance of the Bonds, all or a portion of the fees payable to the
Bond Counsel, Underwriter's Counsel, the Financial Advisor and the Trustee are contingent
upon the issuance and delivery of the Bonds.
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EXECUTION
The execution and delivery of this Official Statement have been authorized by the Board
of Directors of the Authority and the City Council of the City.
LODI PUBLIC FINANCING AUTHORITY
M
Executive Director
CITY OF LODI
City Manager
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APPENDIX A
GENERAL INFORMATION ABOUT THE CITY OF LODI
AND SAN JOAQUIN COUNTY
The following information concerning the City of Lodi (the "City') and San Joaquin
County (the "County') are included only for the purpose of supplying general information
regarding the community. The 2022 Bonds are not a debt of the City, the County, the State of
California (the "State') or any of its political subdivisions, and neither the City, the County, the
State nor any of its political subdivisions is liable therefor.
General
The City. The City is located in the County of San Joaquin (the "County") between
Stockton and Sacramento, and adjacent to U.S. Highway 99, approximately 90 miles east of
San Francisco. The City was incorporated as a General Law City on December 6, 1906.
The City operates under a City Council -Manager form of government and provides the
following services: public safety (police, fire and graffiti abatement), public utilities services
(electric, water and sewer), transportation services (streets, flood control and transit), leisure,
cultural and social services (parks and recreation, library, and community center), and general
government services (management, human resources administration, financial administration,
building maintenance and equipment maintenance).
The County. The County is one of California's original counties and was created at the
time of statehood in 1850. The County covers an area of approximately 1,436 square miles,
consisting of 1,399 square miles of land and 27 square miles of water. The County is adjacent
to Stanislaus County to the south and southeast, Alameda and Contra Costa Counties to the
west, Sacramento County to the north, Amador County to the northeast, Calaveras County to
the east and a corner of Santa Clara County to the southwest.
Population
Population figures for the City, the County and the State for the last five years are shown
in the following table.
CITY OF LODI, SAN JOAQUIN COUNTY AND THE STATE OF CALIFORNIA
Population Estimates
Calendar Years 2017 through 2021, as of January 1
Calendar
City of
San Joaquin
State of
Year
Lodi
County
California
2017
65,606
744,843
39,352,398
2018
66,389
752,958
39,519,535
2019
67,430
752,958
39,605,361
2020
68,011
773,505
39,648,938
2021
68,751
773,505
39,466,855
Source: State Department of Finance estimates.
A-1
Employment and Industry
The City is included in the Stockton Metropolitan Statistical Area ("MSA"), which includes
all of San Joaquin County. The unemployment rate in the County was 6.6% in November 2021,
down from a revised 7.3% in October 2021, and below the year-ago estimate of 8.7%. This
compares with an unadjusted unemployment rate of 5.4% for the State and 3.9% for the nation
during the same period.
Set forth below is data from calendar years 2016 to 2020 reflecting the County's civilian
labor force, employment and unemployment. These figures are county -wide statistics and may
not necessarily accurately reflect employment trends in the City.
STOCKTON-LODI MSA
(San Joaquin County)
Annual Average Labor Force and Employment by Industry
Calendar Years 2016 through 2020
(March 2020 Benchmark)
Civilian Labor Force
Employment
Unemployment
Unemployment Rate
Wage and Salary Employment: (2)
Agriculture
Mining and Logging
Construction
Manufacturing
Wholesale Trade
Retail Trade
Transportation, Warehousing and Utilities
Information
Financial Activities
Professional and Business Services
Educational and Health Services
Leisure and Hospitality
Other Services
Federal Government
State Government
Local Government
Total All Industries (3)
2016
2017
2018
2019
2020
318,300
323,200
324,200
326,500
331,800
292,400
300,400
304,300
306,900
294,500
25,900
22,800
19,900
19,600
37,400
8.2%
7.0%
6.1%
6.0%
11.3%
16,700
16,400
15,600
15,400
14,300
100
100
100
100
100
11,100
11,700
12,800
13,100
12,900
19,800
20,300
20,600
20,600
20,500
10,700
11,100
11,700
11,600
10,500
26,500
26,800
26,700
26,200
24,600
23,000
26,200
28,400
31,300
38,300
2,000
1,800
1,800
1,600
1,200
7,500
7,800
7,800
7,900
7,800
19,600
19,200
19,600
20,200
21,100
36,400
38,200
38,800
39,100
37,100
20,400
21,500
22,000
22,600
18,400
7,500
7,600
7,600
7,800
6,700
3,000
3,100
3,100
3,200
3,300
6,400
6,600
6,700
6,800
6,800
31,400
32,800
33,700
34,900
33,100
242,000
251,100
256,900
262,400
256,600
(1) Labor force data is by place of residence; includes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(2) Industry employment is by place of work; excludes self-employed individuals, unpaid family workers, household
domestic workers, and workers on strike.
(3) Totals may not add due to rounding.
Source: State of California Employment Development Department.
A-2
Largest Employers
The following table lists the major employers within the County, listed in alphabetical
order without regard to the number of employees, as of January 2022.
SAN JOAQUIN COUNTY
Major Employers
As of January 2022
Employer Name
Location
Industry
A Sambado & Sons Inc
Linden
Nuts -Edible
Amazon Fulfillment Ctr
Stockton
Mail Order Fulfillment Service
Ashley Lane LP
Stockton
Real Estate
Blue Shield of California
Lodi
Insurance
Dameron Hospital
Stockton
Hospitals
Deuel Vocational Instn Fire
Tracy
Fire Departments
Foster Care Svc
Stockton
Government Offices -County
Leprino Foods Co
Tracy
Cheese Processors (mfrs)
Lodi Health Home Health Agency
Lodi
Home Health Service
Lodi Memorial Hospital
Lodi
Hospitals
NA Chaderjian Youth
Stockton
State Govt -Correctional Institutions
Pacific Coast Producers
Lodi
Canning (mfrs)
Prima Frutta Packing Inc
Linden
Fruit & Produce Packers
Safeway Distribution Ctr
Tracy
Distribution Centers (whls)
San Joaquin County CA Pubc
Stockton
Government Offices -County
San Joaquin County Human Svc
Stockton
Government Offices -County
San Joaquin County Sch
Stockton
School Districts
San Joaquin General Hospital
French Camp
Hospitals
San Joaquin Sheriff's Office
French Camp
Government Offices -County
Sjgov
Stockton
Government Offices -County
St Joseph's Cancer Ctr
Stockton
Cancer Treatment Centers
St Joseph's Regional Health
Stockton
Hospitals
Stockton Police Dept
Stockton
Police Departments
Stockton Unified School Dist
Stockton
School Districts
Walmart Supercenter
Stockton
Department Stores
Source: State of California Employment Development Department, extracted from The America's Labor Market
Information System (ALMIS) Employer Database, 2022 1st Edition.
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The following table lists the ten principal employers within the City, by number of
employees, as of June 30, 2021.
CITY OF LODI
Principal Employers
As of June 30, 2021
Employer Name
Number of Employees
Lodi Unified School District
1,389
Pacific Coast Producers
1,298
Adventist Health Lodi Memorial
1,204
Blue Shield of CA
1,042
Cepheid
750
Walmart Supercenter
439
City of Lodi
415
Rich Products formerly known as Cottage Bakery
276
Costco Wholesale
265
Frank C Alegre Trucking Inc.
210
Source: City of Lodi Annual Comprehensive Financial Report for fiscal year ended June 30, 2021; City of
Lodi.
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Commercial Activity
Summaries of historic taxable sales within the City and the County during the past five
years in which data is available are shown in the following tables.
Total taxable sales during the first three quarters of calendar year 2021 in the City were
$1,039,174,212, a 22.30% increase over the total taxable sales of $849,721,205 reported during
the first three quarters of calendar year 2020.
CITY OF LODI
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Source: State Department of Tax and Fee Administration.
Total taxable sales during the first three quarters of calendar year 2021 in the County
were $16,201,722,121, a 44.88% increase over the total taxable sales of $11,182,961,549
reported during the first three quarters of calendar year 2020.
SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores
Number Taxable
of Permits Transactions
Total All Outlets
Number Taxable
of Permits Transactions
2016
Retail Stores
Total All Outlets
14,682
Number
Taxable
Number
Taxable
14,758
of Permits
Transactions
of Permits
Transactions
2016
1,327
$779,583
1,987
$947,638
2017
1,300
856,206
1,972
1,029,268
2018
1,328
945,797
2,064
1,134,229
2019
1,344
972,278
2,107
1,162,963
2020
1,468
958,572
2,321
1,160,904
Source: State Department of Tax and Fee Administration.
Total taxable sales during the first three quarters of calendar year 2021 in the County
were $16,201,722,121, a 44.88% increase over the total taxable sales of $11,182,961,549
reported during the first three quarters of calendar year 2020.
SAN JOAQUIN COUNTY
Taxable Retail Sales
Number of Permits and Valuation of Taxable Transactions
(Dollars in Thousands)
Retail Stores
Number Taxable
of Permits Transactions
Total All Outlets
Number Taxable
of Permits Transactions
2016
9,480
$7,380,226
14,682
$10,922,271
2017
9,506
7,994,473
14,758
12,153,268
2018
9,660
8,855,169
15,457
13,457,721
2019
9,978
9,058,063
16,144
14,311,068
2020
11,188
10,122,979
18,358
15,609,880
Source: State Department of Tax and Fee Administration
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Effective Buying Income
"Effective Buying Income" is defined as personal income less personal tax and nontax
payments, a number often referred to as "disposable" or "after-tax" income. Personal income is
the aggregate of wages and salaries, other labor -related income (such as employer
contributions to private pension funds), proprietor's income, rental income (which includes
imputed rental income of owner -occupants of non-farm dwellings), dividends paid by
corporations, interest income from all sources, and transfer payments (such as pensions and
welfare assistance). Deducted from this total are personal taxes (federal, state and local),
nontax payments (fines, fees, penalties, etc.) and personal contributions to social insurance.
According to U.S. government definitions, the resultant figure is commonly known as
"disposable personal income."
The following table summarizes the median household effective buying income for the
City, the County, the State and the United States for the period 2018 through 2022.
CITY OF LODI AND SAN JOAQUIN COUNTY
Median Household Effective Buying Income
2018 through 2022
Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 through 2022.
M
2018
2019
2020
2021
2022
City of Lodi
$46,144
$50,111
$52,418
$53,760
$64,155
San Joaquin County
49,883
55,534
58,141
59,914
68,971
California
59,646
62,637
65,870
67,956
77,058
United States
50,735
52,841
55,303
56,790
64,448
Source: The Nielsen Company (US), Inc for 2018; Claritas, LLC for 2019 through 2022.
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Building Activity
The tables below summarize building activity in the City and the County for the past five
available years.
CITY OF LODI
Building Permit Activity
For Calendar Years 2016 through 2020
(Dollars in Thousands)
Source: Construction Industry Research Board, Building Permit Summary
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2016
2017
2018
2019
2020
Permit Valuation
New Single-family
$47,331.6
$54,475.9
$55,587.1
$28,041.8
$12,473.4
New Multi -family
13,501.8
16,178.1
0.0
19,280.1
0.0
Res. Alterations/Additions
4,619.9
4,791.8
7,349.5
4,817.3
2,327.9
Total Residential
$65,453.3
$75,445.8
$62,936.6
$52,139.2
$14,801.3
New Commercial
$6,019.3
$21,785.2
$10,987.0
44,067.4
6,193.9
New Industrial
0.0
0.0
0.0
0.0
0.0
New Other
2,568.9
3,478.6
5,402.4
13,929.2
1,563.3
Com. Alterations/Additions
16,162.1
17,768.4
10,005.7
4,880.1
4,076.4
Total Nonresidential
$25,750.3
$43,032.2
$26,395.1
$62,876.7
$11,833.6
New Dwelling Units
Single Family
189
168
243
111
44
Multiple Family
82
134
0
158
0
TOTAL
271
302
243
269
44
Source: Construction Industry Research Board, Building Permit Summary.
SAN JOAQUIN COUNTY
Building Permit Activity
For Calendar
Years 2016 through 2020
(Dollars in Thousands)
2016
2017
2018
2019
2020
Permit Valuation
New Single-family
$467,494.7
$652,308.1
$883,071.1
$843,700.9
$870,859.6
New Multi -family
66,794.5
62,635.8
99,601.4
57,271.1
38,411.8
Res. Alterations/Additions
99,049.9
86,516.1
95,073.4
98,681.9
40,144.4
Total Residential
$633,339.1
$801,460.0
$1,077,745.9
$999,653.9
$949,415.8
New Commercial
$218,485.4
$357,856.9
$498,359.0
380,383.3
255,761.2
New Industrial
61,687.0
179,728.4
240,073.7
120,003.8
534,199.5
New Other
46,379.4
27,794.7
31,904.4
61,991.7
33,112.3
Com. Alterations/Additions
298,721.9
269,172.8
249,142.4
363,840.9
135,285.4
Total Nonresidential
$625,273.7
$834,552.8
$1,019,479.5
926,219.7
958,358.4
New Dwelling Units
Single Family
1,754
2,078
2,765
2,564
2,843
Multiple Family
550
516
293
461
245
TOTAL
2,304
2,594
3,358
3,025
3,088
Source: Construction Industry Research Board, Building Permit Summary
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APPENDIX B
AUDITED FINANCIAL STATEMENTS OF THE CITY
FOR THE FISCAL YEAR ENDED JUNE 30, 2021
s
APPENDIX C
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS
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APPENDIX D
FORM OF OPINION OF BOND COUNSEL
, 2022
Lodi Public Financing Authority
221 West Pine Street
Lodi, CA 95240
OPINION: $ Lodi Public Financing Authority 2022 Lease Revenue Bonds
(2012 Refunding; Capital Protects Financing)
Members of the Board of Directors of the Authority:
We have acted as bond counsel to the Lodi Public Financing Authority (the "Authority")
in connection with the issuance by the Authority of the captioned bonds dated the date hereof
(the "Bonds"). In such capacity, we have examined such law and such certified proceedings,
opinions, certifications and other documents as we have deemed necessary to render this
opinion.
The Bonds are issued pursuant to Article 4 of Chapter 5, Division 7, Title 1 of the
Government Code of the State of California (the "Bond Law"), the Indenture of Trust, dated as
of March 1, 2022 (the "Indenture"), by and between the Authority and U.S. Bank Trust
Company, National Association, as trustee (the "Trustee "), and a resolution (the "Resolution")
of the Board of Directors of the Authority adopted March 2, 2022. Under the Indenture, the
Authority has pledged certain revenues (the "Revenues") for the payment of principal, premium
(if any), and interest on the Bonds when due, including lease payments made by the City of Lodi
(the "City") under a Lease Agreement dated as of March 1, 2022 (the "Lease Agreement")
between the Authority and the City.
Regarding questions of fact material to our opinion, we have relied on representations of
the Authority contained in the Indenture and the City contained in the Lease Agreement, and in
the certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
Based on the foregoing, we are of the opinion that, under existing law:
1. The Authority is a duly created and validly existing joint exercise of powers
authority with the power to adopt the Resolution, enter into the Indenture and perform the
agreements on its part contained therein, and issue the Bonds.
2. The City is a duly created and validly existing general law city with the power to
enter into the Lease Agreement and perform the agreements on its part contained therein.
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3. The Indenture has been duly authorized, executed and delivered by the
Authority, and constitutes a valid and binding obligation of the Authority, enforceable against the
Authority.
4. The Lease Agreement has been duly authorized, executed and delivered by the
Authority and the City, and constitutes a valid and binding obligation of the Authority and the
City, enforceable against the Authority and the City.
5. The Indenture creates a valid lien on the Revenues and other funds pledged by
the Indenture for the security of the Bonds, on a parity with other bonds (if any) issued or to be
issued under the Indenture.
6. The Bonds have been duly authorized and executed by the Authority, and are
valid and binding limited obligations of the Authority, payable solely from the Revenues and
other funds provided therefor in the Indenture.
7. Interest on the Bonds is excludable from gross income for federal income tax
purposes and is not an item of tax preference for purposes of the federal alternative minimum
tax imposed on individuals and corporations. The opinions set forth in the preceding sentence
are subject to the condition that the Authority and the City comply with all requirements of the
Internal Revenue Code of 1986 that must be satisfied subsequent to the delivery of the Bonds in
order that such interest be, or continue to be, excluded from gross income for federal income
tax purposes. The Authority and the City have covenanted to comply with each such
requirement. Failure to comply with certain of such requirements may cause the inclusion of
interest on the Bonds in gross income for federal income tax purposes to be retroactive to the
date of issuance of the Bonds. We express no opinion regarding other federal tax
consequences arising with respect to the Bonds.
8. Interest on the Bonds is exempt from personal income taxation imposed by the State
of California.
The rights of the owners of the Bonds and the enforceability of the Bonds and the
Indenture are limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally, and by equitable principles, whether considered at law
or in equity.
This opinion is given as of the date hereof, and we assume no obligation to revise or
supplement this opinion to reflect any facts or circumstances that may hereafter come to our
attention, or any changes in law that may hereafter occur. Moreover, our opinions are not a
guarantee of a particular result, and are not binding on the Internal Revenue Service or the
courts; rather, our opinions represent our legal judgment based upon our review of existing law
that we deem relevant to such opinions and in reliance upon the representations, covenants and
opinions referenced above. Our engagement with respect to this matter has terminated as of the
date hereof.
Respectfully submitted,
A Professional Law Corporation
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APPENDIX E
FORM OF CONTINUING DISCLOSURE CERTIFICATE
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BONDS
(2012 Refunding; Capital Projects Financing)
This Continuing Disclosure Certificate (this "Disclosure Certificate") is executed and
delivered by the City of Lodi, a municipal corporation (the "City"), in connection with the
issuance of the $ Lodi Public Financing Authority (the "Authority") 2022 Lease
Revenue Bonds (2012 Refunding; Capital Projects Financing) (the "2022 Bonds"). The 2022
Bonds are being issued pursuant to an Indenture of Trust dated as of March 1, 2022 (the
"Indenture"), by and between the Authority and U.S. Bank Trust Company, National Association,
as trustee for the 2022 Bonds (the "Trustee"). In connection therewith, the City covenants and
agrees as follows:
Section 1. Purpose of the Disclosure Certificate. This Disclosure Certificate is
being executed and delivered by the City for the benefit of the holders and beneficial owners of
the 2022 Bonds and in order to assist the Participating Underwriter in complying with S.E.C.
Rule 15c2 -12(b)(5).
Section 2. Definitions. In addition to the definitions set forth above and in the
Indenture, which apply to any capitalized term used in this Disclosure Certificate unless
otherwise defined in this Section, the following capitalized terms shall have the following
meanings:
"Annual Report" means any Annual Report provided by the City pursuant to, and as
described in, Sections 3 and 4 of this Disclosure Certificate.
"Annual Report Date" means the date that is seven months after the end of the City's
fiscal year (currently January 31 based on the City's fiscal year end of June 30).
"Dissemination Agent" shall mean the City, or any Dissemination Agent designated in
writing by the City and which has filed with the City a written acceptance of such designation.
"EMMA System" shall mean the MSRB's Electronic Municipal Market Access system, or
such other electronic system designated by the MSRB.
"Listed Events" means any of the events listed in Section 5(a) of this Disclosure
Certificate.
"MSRB" means the Municipal Securities Rulemaking Board, which has been designated
by the Securities and Exchange Commission as the sole repository of disclosure information for
purposes of the Rule.
"Official Statement" means the final official statement dated 2022,
executed by the City and Authority in connection with the issuance of the 2022 Bonds.
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"Participating Underwrite" means Piper Sandler & Co., the original underwriter of the
2022 Bonds required to comply with the Rule in connection with offering of the 2022 Bonds.
"Rule" means Rule 15c2 -12(b)(5) adopted by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as it may be amended from time to time.
Section 3. Provision of Annual Reports.
(a) The City shall, or shall cause the Dissemination Agent to, not later than the
Annual Report Date, commencing January 31, 2023, with the report for the 2021-22 fiscal year,
provide to the MSRB, in an electronic format as prescribed by the MSRB, an Annual Report that
is consistent with the requirements of Section 4 of this Disclosure Certificate. Not later than 15
Business Days prior to the Annual Report Date, the City shall provide the Annual Report to the
Dissemination Agent (if other than the City). If by the Annual Report Date the Dissemination
Agent (if other than the City) has not received a copy of the Annual Report, the Dissemination
Agent shall contact the City to determine if the City is in compliance with the previous sentence.
The Annual Report may be submitted as a single document or as separate documents
comprising a package, and may include by reference other information as provided in Section 4
of this Disclosure Certificate; provided that the audited financial statements of the City may be
submitted separately from the balance of the Annual Report, and later than the Annual Report
Date, if not available by that date. If the City's fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section 5(b).
(b) If the City does not provide, or cause the Dissemination Agent to provide, an
Annual Report by the Annual Report Date as required in subsection (a) above, the
Dissemination Agent shall provide a notice to the MSRB, in a timely manner, in an electronic
format as prescribed by the MSRB.
(c) With respect to each Annual Report, the Dissemination Agent shall:
(i) determine each year prior to the Annual Report Date the then -applicable
rules and electronic format prescribed by the MSRB for the filing of annual
continuing disclosure reports; and
(ii) if the Dissemination Agent is other than the City, file a report with the City
and the Participating Underwriter certifying that the Annual Report has been
provided pursuant to this Disclosure Certificate, and stating the date it was
provided.
Section 4. Content of Annual Reports. The City's Annual Report shall contain or
incorporate by reference the following documents and information:
(a) The City's audited financial statements for the most recently completed fiscal
year, prepared in accordance with Generally Accepted Accounting Principles as promulgated to
apply to governmental entities from time to time by the Governmental Accounting Standards
Board. If the City's audited financial statements are not available by the Annual Report Date, the
Annual Report shall contain unaudited financial statements in a format similar to the financial
statements contained in the Official Statement, and the audited financial statements shall be
filed in the same manner as the Annual Report when they become available.
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(b) Unless otherwise provided in the audited financial statements filed on or before
the Annual Report Date, financial information and operating data with respect to the City for the
preceding fiscal year, substantially similar to that provided in the corresponding tables in the
Official Statement:
(i) Principal amount of 2022 Bonds outstanding as of the June 30 preceding
the filing of the Annual Report.
(ii) Balance in each fund under the Indenture as of the June 30 preceding the
filing of the Annual Report.
(iii) Updates as of the June 30 preceding the filing of the Annual Report of the
substance of the information contained in the following tables in the Official
Statement:
(1) Table 1 - Statement of Revenues, Expenditures, and Changes in
Fund Balances;
(2) Table 4 - General Fund Tax Revenues by Source;
(3) Table 6 - Assessed Value of Taxable Property; and
(4) Table 7 - Principal Property Tax Payers.
(c) In addition to any of the information expressly required to be provided under
paragraph (b) above, the City shall provide such further material information, if any, as may be
necessary to make the specifically required statements, in the light of the circumstances under
which they are made, not misleading.
(d) Any or all of the items listed above may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
which are available to the public on the MSRB's Internet web site or filed with the Securities and
Exchange Commission. The City shall clearly identify each such other document so included
by reference.
Section 5. Reporting of Listed Events.
(a) The City shall give, or cause to be given, notice of the occurrence of any of the
following Listed Events with respect to the 2022 Bonds:
(1) Principal and interest payment delinquencies.
(2) Non-payment related defaults, if material.
(3) Unscheduled draws on debt service reserves reflecting financial
difficulties.
(4) Unscheduled draws on credit enhancements reflecting financial
difficulties.
(5) Substitution of credit or liquidity providers, or their failure to perform.
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(6) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the 2022 Bonds, or other material events
affecting the tax status of the 2022 Bonds.
(7) Modifications to rights of security holders, if material.
(8) Bond calls, if material, and tender offers.
(9) Defeasances.
(10) Release, substitution, or sale of property securing repayment of the
securities, if material.
(11) Rating changes.
(12) Bankruptcy, insolvency, receivership or similar event of the City.
(13) The consummation of a merger, consolidation, or acquisition involving the
City, or the sale of all or substantially all of the assets of the City (other
than in the ordinary course of business), the entry into a definitive
agreement to undertake such an action, or the termination of a definitive
agreement relating to any such actions, other than pursuant to its terms, if
material.
(14) Appointment of a successor or additional Trustee or the change of name
of the Trustee, if material.
(15) Incurrence of a financial obligation of the obligated person, if material, or
agreement to covenants, events of default, remedies, priority rights, or
other similar terms of a financial obligation of the obligated person, any of
which affect security holders, if material.
(16) Default, event of acceleration, termination event, modification of terms, or
other similar events under the terms of a financial obligation of the
obligated person, any of which reflect financial difficulties.
(b) Upon the occurrence of a Listed Event, the City shall, or shall cause the
Dissemination Agent (if not the City) to, file a notice of such occurrence with the MSRB, in an
electronic format as prescribed by the MSRB, in a timely manner not in excess of 10 Business
Days after the occurrence of the Listed Event. Notwithstanding the foregoing, notice of Listed
Events described in subsection (a)(8) above need not be given under this subsection any earlier
than the notice (if any) of the underlying event is given to holders of affected Bonds under the
Indenture.
(c) The City acknowledges that the events described in subparagraphs (a)(2), (a)(7),
(a)(8) (if the event is a bond call), (a)(10), (a)(13), (a)(14), and (a)(15) of this Section 5 contain
the qualifier "if material" and that subparagraph (a)(6) also contains the qualifier "material" with
respect to certain notices, determinations or other events affecting the tax status of the 2022
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Bonds. The City shall cause a notice to be filed as set forth in paragraph (b) above with respect
to any such event only to the extent that it determines the event's occurrence is material for
purposes of U.S. federal securities law. Upon occurrence of any of these Listed Events, the
City will as soon as possible determine if such event would be material under applicable federal
securities law. If such event is determined to be material, the City will cause a notice to be filed
as set forth in paragraph (b) above.
(d) For purposes of this Disclosure Certificate, any event described in paragraph
(a)(12) above is considered to occur when any of the following occur: the appointment of a
receiver, trustee, or similar officer for the City in a proceeding under the United States
Bankruptcy Code or in any other proceeding under state or federal law in which a court or
governmental authority has assumed jurisdiction over substantially all of the assets or business
of the City, or if such jurisdiction has been assumed by leaving the existing governing body and
officials or officers in possession but subject to the supervision and orders of a court or
governmental authority, or the entry of an order confirming a plan of reorganization,
arrangement, or liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the City.
(e) For purposes of Section 5(a)(15) and (16), "financial obligation" means a (i) debt
obligation; (ii) derivative instrument entered into in connection with, or pledged as security or a
source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The
term financial obligation shall not include municipal securities as to which a final official
statement has been provided to the Municipal Securities Rulemaking Board consistent with the
Rule.
Section 6. Identifying Information for Filings with the MSRB. All documents
provided to the MSRB under the Disclosure Certificate shall be accompanied by identifying
information as prescribed by the MSRB.
Section 7. Termination of Reporting Obligation. The City's obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in
full of all of the 2022 Bonds. If such termination occurs prior to the final maturity of the 2022
Bonds, the City shall give notice of such termination in the same manner as for a Listed Event
under Section 5(b).
Section 8. Dissemination Agent. The City may, from time to time, appoint or
engage a Dissemination Agent to assist it in carrying out its obligations under this Disclosure
Certificate, and may discharge any such Agent, with or without appointing a successor
Dissemination Agent. The initial Dissemination Agent shall be the City. Any Dissemination
Agent may resign by providing 30 days' written notice to the City.
Section 9. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that the following conditions are satisfied:
(a) if the amendment or waiver relates to the provisions of Sections 3(a), 4 or 5(a), it
may only be made in connection with a change in circumstances that arises from a change in
legal requirements, change in law, or change in the identity, nature, or status of an obligated
person with respect to the 2022 Bonds, or type of business conducted;
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(b) the undertakings herein, as proposed to be amended or waived, would, in the
opinion of nationally recognized bond counsel, have complied with the requirements of the Rule
at the time of the primary offering of the 2022 Bonds, after taking into account any amendments
or interpretations of the Rule, as well as any change in circumstances; and
(c) the proposed amendment or waiver either (i) is approved by holders of the 2022
Bonds in the manner provided in the Indenture for amendments to the Indenture with the
consent of holders, or (ii) does not, in the opinion of the Trustee or nationally recognized bond
counsel, materially impair the interests of the holders or beneficial owners of the 2022 Bonds.
If the annual financial information or operating data to be provided in the Annual Report
is amended pursuant to the provisions hereof, the first annual financial information filed
pursuant hereto containing the amended operating data or financial information shall explain, in
narrative form, the reasons for the amendment and the impact of the change in the type of
operating data or financial information being provided.
If an amendment is made to the undertaking specifying the accounting principles to be
followed in preparing financial statements, the annual financial information for the year in which
the change is made shall present a comparison between the financial statements or information
prepared on the basis of the new accounting principles and those prepared on the basis of the
former accounting principles. The comparison shall include a qualitative discussion of the
differences in the accounting principles and the impact of the change in the accounting
principles on the presentation of the financial information, in order to provide information to
investors to enable them to evaluate the ability of the City to meet its obligations. To the extent
reasonably feasible, the comparison shall be quantitative. A notice of the change in the
accounting principles shall be filed in the same manner as for a Listed Event under Section 5(c).
Section 10. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to that
which is specifically required by this Disclosure Certificate, the City shall have no obligation
under this Disclosure Certificate to update such information or include it in any future Annual
Report or notice of occurrence of a Listed Event.
Section 11. Default. In the event of a failure of the City to comply with any
provision of this Disclosure Certificate, the Participating Underwriter or any holder or beneficial
owner of the 2022 Bonds may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the City to comply
with its obligations under this Disclosure Certificate. A default under this Disclosure Certificate
shall not be deemed an Event of Default under the Indenture, and the sole remedy under this
Disclosure Certificate in the event of any failure of the City to comply with this Disclosure
Certificate shall be an action to compel performance.
Section 12. Duties, Immunities and Liabilities of Dissemination Agent. The
Dissemination Agent shall have only such duties as are specifically set forth in this Disclosure
Certificate, and the City agrees to indemnify and save the Dissemination Agent, its officers,
directors, employees and agents, harmless against any loss, expense and liabilities which it
may incur arising out of or in the exercise or performance of its powers and duties hereunder,
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including the costs and expenses (including attorneys' fees) of defending against any claim of
liability, but excluding liabilities due to the Dissemination Agent's negligence or willful
misconduct. The Dissemination Agent shall have no duty or obligation to review any information
provided to it hereunder and shall not be deemed to be acting in any fiduciary capacity for the
City, the Trustee, the 2022 Bond owners or any other party. The obligations of the City under
this Section shall survive resignation or removal of the Dissemination Agent and payment of the
2022 Bonds.
Section 13. Beneficiaries. This Disclosure Certificate shall inure solely to the
benefit of the City, the Trustee, the Dissemination Agent, the Participating Underwriter and
holders and beneficial owners from time to time of the 2022 Bonds, and shall create no rights in
any other person or entity.
Section 14. Counterparts. This Disclosure Certificate may be executed in
several counterparts, each of which shall be regarded as an original, and all of which shall
constitute one and the same instrument.
Date: .2022
E-7
CITY OF LODI
M
APPENDIX F
DTC AND THE BOOK -ENTRY ONLY SYSTEM
The information in this Appendix F regarding DTC and its book -entry system has been
obtained from DTC's website, for use in securities offering documents, and the City takes no
responsibility for the accuracy or completeness thereof or for the absence of material changes
in such information after the date hereof.
The Depository Trust Company ("DTC"), New York, New York, acts as securities
depository for the Bonds. The Bonds were 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 was issued for each
maturity of each series of the Bonds, each 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, as
amended. 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 a Standard & Poor's
rating of AA+. The DTC Rules applicable to Participants are on file with the Securities and
Exchange Commission. More information about DTC can be found at www.dtcc.com.
Purchases of the 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
the Bonds, except in the event that use of the book -entry system for the Bonds is discontinued.
F-1
To facilitate subsequent transfers, all Bonds deposited by Direct Participants with DTC
are registered in the name of DTC's partnership nominee, Cede & Co. or such other name as
may be requested by an authorized representative of DTC. The deposit of Bonds with DTC and
their registration in the name of Cede & Co. or such other DTC nominee do not affect any
change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the
Bonds; DTC's records reflect only the identity of the Direct Participants to whose accounts such
Bonds are credited, which may or may not be the Beneficial Owners. The Direct and Indirect
Participants will remain responsible for keeping account of their holdings on behalf of their
customers.
Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
regulatory requirements as may be in effect from time to time. Beneficial Owners of Bonds may
wish to take certain steps to augment the transmission to them of notices of significant events
with respect to the Bonds, such as 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 the notices be provided directly to them.
While the Bonds are in the book -entry -only system, redemption notices will be sent to
DTC. If less than all of the Bonds of a maturity are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each Direct Participant in such issue to be
redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to the Bonds unless authorized by a Direct Participant in accordance with DTC's MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the City as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting
rights to those Direct Participants to whose accounts the Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
Principal 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 City or the Trustee on the 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 Trustee or the City, subject to any
statutory or regulatory requirements as may be in effect from time to time. Payment of principal
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 City or the Trustee, disbursement
of such payments to Direct Participants will be the responsibility of DTC, and disbursement of
such payments to the Beneficial Owners will be the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as depository with respect to the Bonds at
any time by giving reasonable notice to the City or the Trustee. Under such circumstances, in
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the event that a successor depository is not obtained, certificates representing the Bonds are
required to be printed and delivered.
The City may decide to discontinue use of the system of book -entry -only transfers
through DTC (or a successor securities depository). In that event, certificates representing the
Bonds will be printed and delivered to DTC.
F-3
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE REFUNDING BONDS
(2012 REFUNDING; CAPITAL PROJECTS FINANCING)
BOND PURCHASE AGREEMENT
52022
Lodi Public Financing Authority
P.O. Box 3006
Lodi, California 95241-1910
City of Lodi
P.O. Box 3006
Lodi, California 95241-1910
Ladies and Gentlemen:
Piper Sandler & Co. (the "Underwriter"), hereby offers to enter into this Bond Purchase
Agreement with you, the City of Lodi (the "City") and the Lodi Public Financing Authority (the
"Authority"), for the purchase by the Underwriter and the delivery by you of the Authority's 2022
Lease Revenue Refunding Bonds (the "Bonds"). The Bonds are primarily being issued to (i) refund
the outstanding amount of the Authority's $19,080,000 original principal amount of 2012 Refunding
Lease Revenue Bonds (the "Refunded Bonds") and the City's related lease payment obligation and
(ii) finance the acquisition and construction of capital improvements of the City, including a new
animal shelter. This offer is made subject to acceptance by you prior to 11:59 p.m., Los Angeles time,
on the date hereof. Upon such acceptance, this Bond Purchase Agreement shall be in full force and
effect in accordance with its terms and shall be binding upon you and the Underwriter.
1. Purchase and Sale. Upon the terms and conditions and upon the basis of the
representations, warranties and agreements hereinafter set forth, the Underwriter agrees to purchase
from the Authority all (but not less than all) of the $ aggregate principal amount of the Bonds.
The purchase price for the Bonds shall be $ (being the principal amount of the Bonds,
[plus original issue premium] [less original issue discount] in the amount of $ and less an
Underwriter's discount in the amount of $).
The Bonds will be dated the date of delivery thereof and will have the maturities and bear
interest at the rates set forth on Exhibit A hereto. The Bonds will be subject to redemption as set forth
in the Indenture and Official Statement herein described. The Bonds will be issued in book -entry form
only. It is anticipated that CUSIP identification numbers will be inserted on the Bonds, but neither the
failure to provide such numbers nor any error with respect thereto shall constitute a cause for failure
or refusal by the Underwriter to accept delivery of the Bonds in accordance with the terms of this Bond
Purchase Agreement.
[The scheduled payment of principal of and interest on [the Bonds] [certain maturities of the
Bonds indicated on Exhibit A hereto] when due will be guaranteed under a municipal bond insurance
policy (the "Policy") to be issued concurrently with the delivery of the Bonds by (the
"Insurer"). As an accommodation to the Authority and City, the Underwriter will wire from the
Purchase Price the premium for the Policy in the amount of $ on the date of Closing (defined
below).]
2. Authorizing Instruments and Law. The Bonds shall be issued pursuant to the
provisions of a resolution (the "Resolution") adopted by the Authority on , 2022 authorizing
the issuance of the Bonds and the Marks -Roos Local Bond Pooling Act of 1985, constituting Section
6584, et seq. of the California Government Code (the "JPA Act"). The Bonds are issued pursuant to
an Indenture of Trust, dated as of March 1, 2022 (the "Indenture"), between the Authority and U.S.
Bank National Association, as trustee (the "Trustee"), and shall be as described in the Indenture.
The Bonds are limited obligations of the Authority payable primarily from and secured by
certain lease payments (the "Lease Payments") to be paid by the City pursuant to a Lease Agreement,
dated as of March 1, 2022, between the City and the Authority (the "Lease"), for certain real property
and the improvements thereon (the "Leased Property").
The Refunded Bonds will be defeased and refunded in accordance with Irrevocable Refunding
Instructions from the Authority to U.S. Bank National Association, as trustee for the Refunded Bonds,
dated , 2022 (the "Irrevocable Refunding Instructions").
3. Offering the Bonds. The Underwriter agrees to offer all the Bonds to the public
initially at the prices (or yields) set forth on the cover pages of the Official Statement of the Authority
pertaining to the Bonds, dated , 2022 (the Official Statement, together with all appendices
thereto, and with such changes therein and supplements thereto as are consented to in writing by the
Authority, the City, the Underwriter or its legal counsel in accordance with the provisions of Sections
60) and 70) hereof or otherwise consented to by the Underwriter pursuant to Section 10(b)(v), are
herein called the "Official Statement"). Subsequent to the initial public offering of the Bonds, the
Underwriter reserves the right to change the public offering prices (or yields) as they deem necessary
in connection with the marketing of the Bonds. The Bonds may be offered and sold to certain dealers
at prices lower than such initial public offering prices. "Public Offering" shall include an offering to a
number of institutional investors or registered investment companies, regardless of the number of such
investors to which the Bonds are sold.
The City and the Authority acknowledge and agree that (i) the purchase and sale of the Bonds
pursuant to this Bond Purchase Agreement is an arm's-length commercial transaction between the
City, the Authority and the Underwriter, and that the Underwriter has financial and other interests that
differ from those of the City and the Authority, (ii) in connection with such transaction the Underwriter
is not acting as a municipal advisor, financial advisor or fiduciary to the City and the Authority or any
other person or entity and have not assumed a fiduciary responsibility in favor of the City or the
Authority with respect to the offering of the Bonds or the process leading thereto (whether or not the
Underwriter has advised or is currently advising the City or the Authority on other matters), (iii) the
only contractual obligations the Underwriter has to the City and the Authority with respect to the
transaction contemplated hereby expressly are set forth in this Bond Purchase Agreement, except as
otherwise provided by applicable rules and regulations of the SEC or the rules of the Municipal
Securities Rulemaking Board (the "MSR -B") and (iv) the City and the Authority have consulted with
their own legal and other professional advisors to the extent they deemed appropriate in connection
with the offering of the Bonds. The City and the Authority acknowledge that they have previously
provided the Underwriter with an acknowledgement of receipt of the required Underwriter disclosure
2
under Rule G-17 of the MSRB relating to disclosures concerning the Underwriter's role in the
transaction, disclosures concerning the Underwriter's compensation, conflict disclosures, if any, and
disclosures concerning complex municipal securities financing, if any.
4. Delivery of Official Statement. If requested by the Underwriter, the Authority shall
deliver to the Underwriter two (2) copies of the Official Statement manually executed on behalf of the
Authority and the City. The Authority shall also deliver copies of the Official Statement in such
quantities as the Underwriter may reasonably request in order to enable the Underwriter to distribute a
single copy of each Official Statement to any potential customer of the Underwriter requesting an
Official Statement during the time period beginning when the Official Statement becomes available
and ending on the End Date (defined below). The Authority shall deliver these copies to the
Underwriter within seven (7) business days after the execution of this Bond Purchase Agreement and
in sufficient time to accompany or precede any sales confirmation that requests payment from any
customer of the Underwriter. The Authority and the City shall prepare the Official Statement,
including any amendments thereto, in word -searchable PDF format as described in the MSRB's Rule
G-32 and shall provide the electronic copy of the word -searchable PDF format of the Official Statement
to the Underwriter no later than one (1) business day prior to the Closing Date to enable the Underwriter
to comply with MSRB Rule G-32. The Authority and the Underwriter hereby agree that the end of the
underwriting period shall be the date of Closing (as defined below) unless the Underwriter informs the
Authority in writing of a different end of the underwriting period.
"End Date" as used herein is that date which is the earlier of:
(a) twenty-five (25) days after the end of the underwriting period, as defined in
SEC Rule 15c2-12 originally adopted by the Securities and Exchange Commission on June 28, 1989,
as amended ("Rule 15c2-12"); or
(b) the time when the Official Statement becomes available from the MSRB, but
in no event less than twenty-five (25) days after the underwriting period (as defined in Rule 15c2-12)
ends.
The Underwriter acknowledges that the "End Date" will be the date of Closing unless the
Underwriter otherwise notifies the Authority and the City in writing that the Underwriter still owns
some or all of the Bonds.
The Authority and the City have authorized the use of the Official Statement in connection
with the public offering of the Bonds. The Authority and the City also have consented to the use by
the Underwriter prior to the date hereof of the Preliminary Official Statement dated , 2022,
relating to the Bonds in connection with the public offering of the Bonds, (which, together with all
appendices thereto, is herein called the "Preliminary Official Statement"). Authorized officers of
the City and the Authority have certified to the Underwriter that such Preliminary Official Statement
was deemed to be final as of its date for purposes of Rule 15c2-12, with the exception of certain final
pricing and related information referred to in Rule 15c2-12. The Underwriter has distributed a copy
of each Preliminary Official Statement to potential customers on request.
5. The Closing. At 9:00 A.M., California time, on , 2022, or at such other time
or on such earlier or later business day as shall have been mutually agreed upon by the Authority, the
City and the Underwriter, the Authority, upon receipt of the purchase price thereof, will deliver (i) the
Bonds in book -entry form through the facilities of The Depository Trust Company ("DTC"), and
(ii) the closing documents hereinafter mentioned at the offices of Jones Hall, A Professional Law
Corporation, San Francisco, California ("Bond Counsel"), or another place to be mutually agreed upon
by the Authority, the City and the Underwriter. The Underwriter will accept such delivery from the
Authority. The Underwriter will pay the purchase price of the Bonds as set forth in Section 1 hereof
by wire transfer of immediately available funds. This payment and delivery, together with the delivery
of the aforementioned documents, is herein called the "Closing."
6. City Representations, Warranties and Covenants. The City represents, warrants and
covenants to the Underwriter that:
(a) The City is a general law city organized and operating pursuant to the laws of
the State of California (the "State") with power and authority to enter into and perform its duties under
the Lease, the Continuing Disclosure Certificate, dated , 2022 (the "Continuing Disclosure
Certificate"), the Site Lease, dated as of March 1, 2022 (the "Site Lease"), between the City and the
Authority, the Official Statement and this Bond Purchase Agreement (collectively, the "City
Documents").
(b) To the best knowledge of the City, neither the approval, execution and delivery
of the City Documents, and compliance with the provisions on the City's part contained therein, nor
the consummation of any other of the transactions herein and therein contemplated, nor the fulfillment
of the terms hereof and thereof, materially conflicts with or constitutes a material breach of or default
under nor materially contravenes any law, administrative regulation, judgment, decree, loan agreement,
indenture, bond, note, resolution, agreement or other instrument to which the City is a party or is
otherwise subject, nor does any such execution, delivery, adoption or compliance result in a security
interest or encumbrance of any nature whatsoever upon any of the properties or assets of the City under
the terms of any such law, administrative regulation, judgment, decree, loan agreement, indenture,
bond, note, resolution, agreement or other instrument, except as provided by the City Documents.
(c) The City Documents 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,
except as the enforcement thereof may be limited by bankruptcy, insolvency, moratorium,
reorganization, fraudulent conveyance or other laws affecting the enforcement of creditors' rights
generally, and by the application of equitable principles if sought, by the exercise of judicial discretion,
and by the limitations on legal remedies imposed on actions against cities in the State.
(d) Except as may be required under blue sky or other securities laws of any state,
there is no material consent, approval, authorization or other order of, or filing with, or certification
by, any regulatory agency having jurisdiction over the City required for the execution and delivery of
the Bonds or the consummation by the City of the other transactions contemplated by the Official
Statement and this Bond Purchase Agreement.
(e) To the best of the knowledge of the City, there is, and on the Closing there will
be, no action, suit, proceeding or investigation at law or in equity before or by any court or
governmental agency or body pending (notice of which has been received by the City) or threatened
against the City to restrain or enjoin the delivery of any of the Bonds, or the payments to be made
pursuant to the Lease, or in any way contesting or affecting the validity of the City Documents or the
Bonds or the authority of the City to approve this Bond Purchase Agreement, or enter into the City
Documents or contesting the powers of the City to enter into or perform its obligations under any of
rd
the foregoing or in any way contesting the powers of the City in connection with any action
contemplated by this Bond Purchase Agreement or to restrain or enjoin the execution, sale and delivery
of the Bonds, contesting the completeness or accuracy of the Preliminary Official Statement as of its
date or the Official Statement or any supplement or amendment thereto wherein an unfavorable
decision, ruling or finding would materially adversely affect the validity or enforceability of the City
Documents to be executed by it or asserting that the Preliminary Official Statement as of its date or the
Official Statement contained any untrue statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the statements therein, in light of all the
circumstances under which they were made, not misleading, or, except as described in the Preliminary
Official Statement and the Official Statement, nor is there any basis for any such action, suit,
proceeding or investigation.
(f) The Preliminary Official Statement provided to the Underwriter has been
deemed final by the City, as required by Rule 15c2-12. As of the date thereof and at all times
subsequent thereto up to and including the Closing, the information relating to the City, the Bonds, the
Leased Property and the City Documents contained in the Official Statement was and will be materially
complete for its intended purposes. The information relating to the City, the Bonds, the Leased
Property and the City Documents contained in the Official Statement as of the date hereof is true and
correct in all material respects and such information does not contain any untrue or misleading
statement of a material fact or omit to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading in any material respect.
(g) The City agrees to cooperate with the Underwriter in endeavoring to qualify
the Bonds for offering and sale under the securities or blue sky laws of such jurisdictions of the United
States as the Underwriter may request; provided, however, that the City will not be required to execute
a special or general consent to service of process in any jurisdiction in which it is not now so subject
or to qualify to do business as a foreign corporation in any jurisdiction where it is not so qualified. The
Underwriter shall be responsible for all costs relating to such qualification of the Bonds under blue sky
or similar laws.
(h) By official action of the City prior to or concurrently with the execution hereof,
the City has duly approved the distribution of the Official Statement, and has duly authorized and
approved the execution and delivery of, and the performance by the City of the obligations on its part
contained in the City Documents and the consummation by it of all other transactions contemplated by
the Official Statement and this Bond Purchase Agreement.
(i) To the best knowledge of the City, it is not in any material respect in breach of
or default under any material applicable law or administrative regulation of the State or the United
States or any material applicable judgment or decree or any loan agreement, indenture, bond, note,
resolution, agreement or other instrument to which the City is a party or is otherwise subject and in
connection with which the City is obligated to make payments from its own funds, and no event has
occurred and is continuing which, with the passage of time or the giving of notice, or both, would
constitute a default or an event of default under any such instrument the consequence of which could
materially and adversely affect the performance of the City under the City Documents.
0) If between the date of this Bond Purchase Agreement and the End Date an
event occurs, of which the City has knowledge, which might or would cause the information relating
to the City, the City's finances, the Leased Property, or the City's functions, duties and responsibilities
contained in the Official Statement, as then supplemented or amended, to contain an untrue statement
of a material fact or to omit to state a material fact required to be stated therein or necessary to make
such information therein, in the light of the circumstances under which it was presented, not misleading
in any material respect, the City will notify the Underwriter, and if, in the opinion of the Underwriter,
the City or their respective legal counsel, such event requires the preparation and publication of a
supplement or amendment to the Official Statement, the City will cooperate with the Underwriter in
the preparation of an amendment or supplement to the Official Statement in a form and in a manner
approved by the Underwriter, provided all expenses thereby incurred will be paid for by the City.
(k) If the information relating to the Leased Property, the City, its functions, duties
and responsibilities contained in the Official Statement is amended or supplemented pursuant to the
immediately preceding subparagraph, at the time of each supplement or amendment thereto and (unless
subsequently again supplemented or amended pursuant to such subparagraph) at all times subsequent
thereto up to and including the date of the Closing, the portions of 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 the light of the circumstances under which it
was presented, not misleading in any material respect.
(1) The City covenants that it will comply with all tax covenants relating to it in
the City Documents and the Tax Certificate.
(m) Any certificate signed by a duly authorized official of the City and delivered to
the Underwriter shall be deemed a representation and warranty by the City to the Underwriter as to the
statements made therein.
(n) As of the time of acceptance hereof and as of the Closing, the City does not
and will not have outstanding any indebtedness which is payable from the City's general fund except
as disclosed in the Official Statement.
(o) Between the date of this Bond Purchase Agreement and the date of Closing,
the City will not, except as disclosed in the Official Statement, offer or issue any certificates, notes or
other obligations for borrowed money, or, other than in the normal course of its operations, incur any
material liabilities, direct or contingent, secured by or payable from the City's general fund.
(p) The City will undertake, pursuant to the Continuing Disclosure Certificate, to
provide or cause to be provided annual financial reports and notices of certain events; a description of
this undertaking is set forth in the Official Statement. Except as disclosed in the Preliminary Official
Statement and Official Statement, the City and its related entities have not failed to comply in any
material respect with a continuing disclosure undertaking under Rule 15c2-12 during the previous five
years.
(q) The City is the owner in fee of title of the Leased Property and no other
governmental authority, person, firm or corporation can claim ownership to the Leased Property.
(r) The Leased Property is an essential asset of the City.
(s) As of the time of acceptance hereof and as of the Closing, the value of the
Leased Property is not less than the initial aggregate principal amount of the Bonds.
(t) The financial statements of, and other financial information regarding the City
in the Official Statement fairly present the financial position and results of the operations of the City
as of the dates and for the periods therein set forth and the audited financial statements have been
prepared in accordance with generally accepted accounting principles applicable to cities.
7. Authority Representations, Warranties and Covenants. The Authority represents,
warrants and covenants to the City and the Underwriter that:
(a) The Authority is a joint powers authority, duly organized and existing under
the Constitution (the "Constitution") and laws of the State, including the JPA Act, with full right,
power and authority to enter into, execute and deliver the Authority Documents (defined below) and
to perform its obligations hereunder.
(b) By all necessary official action, the Authority has duly authorized and approved
the execution and delivery of, and the performance by the Authority of the obligations on its part
contained in the Bond Purchase Agreement, the Bonds, the Indenture, the Lease, the Site Lease, the
Irrevocable Refunding Instructions and the Assignment Agreement, dated as of March 1, 2022 (the
"Assignment Agreement"), between the Authority and the Trustee (collectively, the "Authority
Documents"), and has approved the use by the Underwriter of the Preliminary Official Statement, and
the Official Statement and, as of the date hereof, such authorizations and approvals are in full force
and effect and have not been amended, modified or rescinded. When executed and delivered by the
parties hereto, the Authority Documents will constitute the legally valid and binding obligations of the
Authority enforceable upon the Authority in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or affecting creditors rights generally, to the exercise of judicial
discretion and to the limitations on legal remedies against joint powers authorities in California. The
Authority has complied and will at the Closing, be in compliance in all respects, with the terms of the
Authority Documents.
(c) The Bonds, when issued in accordance with the Indenture, will be valid and
binding limited obligations of the Authority, entitled to the benefits of the Indenture and enforceable
in accordance with their terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors'
rights generally, to the exercise of judicial discretion and to the limitations on legal remedies against
joint powers authorities in California.
(d) As of the time of acceptance hereof and as of the time of the Closing, except
as otherwise disclosed in the Official Statement, to the best knowledge of the Authority, the Authority
is not and will not be in any material respect in breach of or in default under any law or administrative
rule or regulation of the State or the United States, or any applicable judgment or decree or any trust
agreement, loan agreement, bond, note, resolution, ordinance, agreement or other instrument to which
the Authority is a party or is otherwise subject, and no event has occurred and is continuing which,
with the passage of time or the giving of notice, or both, would constitute a default or event of default
under any such instrument which breach, default or event could have an adverse effect on the
Authority's ability to perform its obligations under the Authority Documents; and, as of such times,
except as disclosed in the Official Statement, the authorization, execution and delivery of the Authority
Documents and compliance by the Authority with the provisions thereof do not and will not conflict
with or constitute a breach of or default under any applicable constitutional provision, law or
administrative rule or regulation of the State or the United States or any applicable judgment, decree,
7
license, permit, trust agreement, loan agreement, bond, note, resolution, ordinance, agreement or other
instrument to which the Authority is subject, or by which it or any of its properties is bound, nor will
any such authorization, execution, delivery or compliance result in the creation or imposition of any
lien, charge or other security interest or encumbrance of any nature whatsoever upon any of its assets
or properties under the terms of any such law, regulation or instrument except as provided in the
Authority Documents.
(e) As of the time of acceptance hereof and the Closing, except as disclosed in the
Official Statement, there is no action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, government agency, public board or body, pending (notice of which has been
received by the Authority), or to the best knowledge of the Authority threatened against the Authority
in any material respect:
(i) affecting the existence of the Authority or the titles of the officers of
the Authority to their respective offices;
(ii) affecting, contesting or seeking to prohibit, restrain or enjoin the
issuance or delivery of any of the Bonds, or the payment or collection of any amounts pledged or to be
pledged to pay the principal of and interest on the Bonds, or in any way contesting or affecting the
validity of the Authority Documents or the consummation of the transactions on the part of the
Authority contemplated thereby, or contesting the exclusion of the interest on the Bonds from Federal
or State taxation, as applicable, or contesting the powers of the Authority or its authority to enter into
the Lease and to pledge the Lease Payments for repayment of the Bonds;
(iii) which may result in any material adverse change relating to the
financial condition of the Authority;
(iv) contesting the completeness or accuracy of the Preliminary Official
Statement as of its date or the Official Statement or any supplement or amendment thereto or asserting
that the Preliminary Official Statement as of its date or the Official Statement contained any untrue
statement of a material fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of all the circumstances under which they were made,
not misleading; or
(v) challenging the ability of the Authority to sell the Bonds to the
Underwriter.
(f) The Authority 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 to qualify the Bonds for offer and sale under the blue sky laws or other securities laws and
regulations of such states and other jurisdictions of the United States as the Underwriter may designate
and will use its best efforts to continue such qualification in effect so long as required for distribution
of the Bonds; provided however, that in no event shall the Authority be required to take any action
which would subject it to general or unlimited service of process in any jurisdiction in which it is not
now so subject.
(g) Any certificate signed by a duly authorized officer of the Authority and
delivered to the Underwriter shall be deemed to be a representation and warranty by the Authority to
the Underwriter as to the statements made therein.
(h) As of the time of acceptance hereof and as of the date of Closing, except as
otherwise disclosed in the Official Statement, the Authority has complied with the filing requirements
of the JPA Act.
(i) The Authority will advise the Underwriter promptly of any proposal to amend
or supplement the Official Statement from the delivery of the Official Statement to the End Date and
will not effect or consent to any such amendment or supplement without prior consultation with the
Underwriter. The Authority will advise the Underwriter promptly of the institution of any proceedings
known to it by any governmental agency prohibiting or otherwise affecting the use of the Official
Statement in connection with the offering, sale or distribution of the Bonds.
0) Substantially all the proceeds from the sale of the Bonds (after deducting the
expenses of issuance and sale of the Bonds paid for from such proceeds) will be used as set forth in
the Indenture and as described in the Official Statement, and the Authority will not take or omit to take
any action which action or omission will in any way cause the proceeds from the sale of the Bonds to
be applied in a manner contrary to that provided in the Indenture and the Lease, as amended from time
to time.
(k) For a period beginning on the date hereof and continuing until the End Date,
(a) the Authority will not adopt any amendment of, or supplement to, the Official Statement without
prior consultation with the Underwriter and Kutak Rock LLP, counsel to the Underwriter
("Underwriter's Counsel") and (b) if any event relating to or affecting the Authority shall occur as a
result of which it is necessary, in the opinion of the Underwriter and Underwriter's Counsel, to amend
or supplement the Official Statement in order to make the Official Statement not misleading in the
light of the circumstances existing at the time it is delivered to a purchaser of the Bonds, the Authority
will forthwith cause the City to prepare and furnish to the Underwriter a reasonable number of copies
of an amendment of, or supplement to, the Official Statement (in form and substance satisfactory to
Underwriter's Counsel) which will amend or supplement the Official Statement so that it will not
contain an untrue statement of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances existing at the time the Official Statement is
delivered to a purchaser of the Bonds, not misleading.
8. Establishment of Issue Price.
(a) The Underwriter agrees to assist the Authority in establishing the issue price of
the Bonds and shall execute and deliver to the Authority at Closing an "issue price" or similar
certificate, together with the supporting pricing wires or equivalent communications, substantially in
the form attached hereto as Exhibit B, with such modifications as may be appropriate or necessary, in
the reasonable judgment of the Underwriter, the Authority and Bond Counsel, to accurately reflect, as
applicable, the sales price or prices or the initial offering price or prices to the public of the Bonds.
(b) Except as otherwise set forth in Exhibit A attached hereto, the Authority will
treat the first price at which 10% of each maturity of the Bonds (the "10% test") is sold to the public
as the issue price of that maturity. At or promptly after the execution of this Bond Purchase Agreement,
the Underwriter shall report to the Authority the price or prices at which it has sold to the public each
maturity of Bonds. If at that time the 10% test has not been satisfied as to any maturity of the Bonds,
the Underwriter agrees to promptly report to the Authority the prices at which it sells the unsold Bonds
of that maturity to the public. That reporting obligation shall continue, whether or not the Closing Date
has occurred, until either (i) the Underwriter has sold all Bonds of that maturity or (ii) the 10% test has
7
been satisfied as to the Bonds of that maturity, provided that, the Underwriter's reporting obligation
after the Closing Date may be at reasonable periodic intervals or otherwise upon request of the
Authority or Bond Counsel. For purposes of this Section, if Bonds mature on the same date but have
different interest rates, each separate CUSIP number within that maturity will be treated as a separate
maturity of the Bonds.
(c) The Underwriter confirms that it has offered the Bonds to the public on or
before the date of this Bond Purchase Agreement at the offering price or prices (the "initial offering
price"), or at the corresponding yield or yields, set forth in Exhibit A attached hereto. Exhibit A also
sets forth, as of the date of this Bond Purchase Agreement, the maturities, if any, of the Bonds for
which the Underwriter represents that (i) the 10% test has been satisfied (assuming orders are
confirmed by the close of the business day immediately following the date of this Bond Purchase
Agreement) and (ii) the 10% test has not been satisfied and for which the Authority and the Underwriter
agree that the restrictions set forth in the next sentence shall apply, which will allow the Authority to
treat the initial offering price to the public of each such maturity as of the sale date as the issue price
of that maturity (the "hold -the -offering -price rule"). So long as the hold -the -offering -price rule
remains applicable to any maturity of the Bonds, the Underwriter will neither offer nor sell unsold
Bonds of that maturity to any person at a price that is higher than the initial offering price to the public
during the period starting on the sale date and ending on the earlier of the following:
(A) the close of the fifth (5th) business day after the sale date; or
(B) the date on which the Underwriter has sold at least 10% of that
maturity of the Bonds to the public at a price that is no higher than the initial offering price to the
public.
The Underwriter will advise the Authority promptly after the close of the fifth (5th) business
day after the sale date whether it has sold 10% of that maturity of the Bonds to the public at a price
that is no higher than the initial offering price to the public.
(d) The Underwriter confirms that:
(i) any selling group agreement and any third -party distribution agreement relating to the initial
sale of the Bonds to the public, together with the related pricing wires, contains or will contain language
obligating each dealer who is a member of the selling group and each broker-dealer that is a party to
such third -party distribution agreement, as applicable:
(A)(i) to report the prices at which it sells to the public the unsold Bonds of each
maturity allocated to it, whether or not the Closing Date has occurred, until either all Bonds of that
maturity allocated to it have been sold or it is notified by the Underwriter that the 10% test has been
satisfied as to the Bonds of that maturity, provided that, the reporting obligation after the Closing Date
may be reasonable periodic intervals or otherwise upon request of the Underwriter and (ii) to comply
with the hold -the -offering -price rule, if applicable, if and for so long as directed by the Underwriter,
(B) to promptly notify the Underwriter of any sales of Bonds that, to its knowledge,
are made to a purchaser who is a related party to an underwriter participating in the initial sale of the
Bonds to the public (each such term being used as defined below), and
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(C) to acknowledge that, unless otherwise advised by the dealer or broker-dealer, the
Underwriter shall assume that each order submitted by the dealer or broker-dealer is a sale to the public.
(ii) any selling group agreement relating to the initial sale of the Bonds to the public, together
with the related pricing wires, contains or will contain language obligating each dealer that is a party
to a third -party distribution agreement to be employed in connection with the initial sale of the Bonds
to the public to require each broker-dealer that is a party to such third -party distribution agreement to
(A) report the prices at which it sells to the public the unsold Bonds of each maturity allocated to it,
whether or not the Closing Date has occurred, until either all Bonds of that maturity allocated to it have
been sold or it is notified by the Underwriter or the dealer that the 10% test has been satisfied as to the
Bonds of that maturity, provided that, the reporting obligation after the Closing Date may be at
reasonable periodic intervals or otherwise upon request of the Underwriter or the dealer, and (B)
comply with the hold -the -offering -price rule, if applicable, if and for so long as directed by the
Underwriter or the dealer and as set forth in the related pricing wires.
(e) The Authority acknowledges that, in making the representation set forth in this section,
the Underwriter will rely on (i) in the event a selling group has been created in connection with the
initial sale of the Bonds to the public, the agreement of each dealer who is a member of the selling
group to comply with the requirements for establishing the issue price of the Bonds, including, but not
limited to, its agreement to comply with the hold -the -offering -price rule, if applicable to the Bonds, as
set forth in a selling group agreement and the related pricing wires, and (ii) in the event that a third -
party distribution agreement was employed in connection with the initial sale of the Bonds to the
public, the agreement of each broker-dealer that is a party to such agreement to comply with the
requirements for establishing the issue price of the Bonds, including, but not limited to, its agreement
to comply with the hold -the -offering -price rule, if applicable to the Bonds, as set forth in the third -
party distribution agreement and the related pricing wires. The Authority further acknowledges that
the Underwriter shall not be liable for the failure of any dealer who is a member of a selling group, or
of any broker-dealer that is a party to a third -party distribution agreement, to comply with its
corresponding agreement to comply with the requirements for establishing the issue price of the Bonds,
including, but not limited to, its agreement to comply with the hold -the -offering -price rule, if
applicable to the Bonds.
(f) The Underwriter acknowledges that sales of any Bonds to any person that is a
related party to an underwriter participating in the initial sale of the Bonds to the public (each such
term being used as defined below) shall not constitute sales to the public for purposes of this section.
Further, for purposes of this section:
a. "public" means any person other than an underwriter or a
related party;
b. "underwriter" means (A) any person that agrees pursuant to a
written contract with the Authority (or with the lead underwriter to form an underwriting syndicate) to
participate in the initial sale of the Bonds to the public and (B) any person that agrees pursuant to a
written contract directly or indirectly with a person described in clause (A) to participate in the initial
sale of the Bonds to the public (including a member of a selling group or a party to a third -party
distribution agreement participating in the initial sale of the Bonds to the public);
C. a purchaser of any of the Bonds is a "related party" to an
underwriter if the underwriter and the purchaser are subject, directly or indirectly, to (A) more than
11
50% common ownership of the voting power or the total value of their stock, if both entities are
corporations (including direct ownership by one corporation of another), (B) more than 50% common
ownership of their capital interests or profits interests, if both entities are partnerships (including direct
ownership by one partnership of another), or (C) more than 50% common ownership of the value of
the outstanding stock of the corporation or the capital interests or profit interests of the partnership, as
applicable, if one entity is a corporation and the other entity is a partnership (including direct ownership
of the applicable stock or interests by one entity of the other); and
d. "sale date" means the date of execution of this Bond Purchase
Agreement by all parties.
9. Closing Conditions. The Underwriter has entered into this Bond Purchase Agreement
in reliance upon the representations, warranties and covenants herein and the performance by the
Authority and the City of their respective obligations hereunder, both as of the date hereof and as of
the date of the Closing. The Underwriter's obligations hereunder are and shall be subject to the
following additional conditions:
(a) Bring -Down Representation. The representations, warranties and covenants of
the Authority and the City contained herein shall be true and correct at the date hereof and at the time
of the Closing, as if made on the date of the Closing.
(b) Executed Agreements and Performance Thereunder. At the time of the
Closing:
(i) the City Documents and the Authority Documents shall be in full force
and effect, and shall not have been amended, modified or supplemented except with the prior written
consent of the Underwriter;
(ii) there shall be in full force and effect such resolutions (the
"Authorizing Resolutions") as, in the opinion of Bond Counsel, shall be necessary in connection with
the transactions on the part of the Authority and the City contemplated by the City Documents and the
Authority Documents;
(iii) the Authority shall perform or have performed its obligations required
or specified in the Authority Documents to be performed at or prior to Closing;
(iv) the City shall perform or have performed its obligations required as
specified in the City Documents to be performed at or prior to Closing; and
(v) the Official Statement shall not have been supplemented or amended,
except pursuant to Paragraph 60) or 7(i), or as otherwise may have been agreed to in writing by the
Underwriter.
(c) No Default. At the time of the Closing, no default shall have occurred or be
existing under the Authority Documents or the City Documents and neither the Authority nor the City
shall be in default in the payment of principal or interest on any of its bonded indebtedness or other
obligations payable from the City's general fund which default shall adversely impact the ability of the
Authority to make payments on the Bonds or the City to make payments pursuant to the Lease.
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(d) Termination Events. The Underwriter shall have the right to terminate this
Bond Purchase Agreement, without liability therefor, by written notification to the Authority and the
City if at any time at or prior to the Closing the market price or marketability of the Bonds, or the
ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have been materially
adversely affected in the reasonable judgment of the Underwriter (evidenced by a written notice to the
City and the Authority terminating the obligation of the Underwriter to accept delivery of and pay for
the Bonds) by reason of any of the following:
(i) an amendment to the Constitution of the United States or by any
legislation in or by the Congress of the United States or by the State, or the amendment of legislation
pending as of the date of the Authority Documents or the City Documents in the Congress of the United
States, or the recommendation to Congress or endorsement for passage (by press release, other form
of notice or otherwise) of legislation by the President of the United States, the Treasury Department of
the United States, the Internal Revenue Service or the Chairman or ranking minority member of the
Committee on Finance of the United States Senate or the Committee on Ways and Means of the United
States House of Representatives, or the proposal for consideration of legislation by either such
Committee, or the presentment of legislation for consideration as an option by either such Committee,
or by the staff of the Joint Committee on Taxation of the Congress of the United States, or the favorable
reporting for passage of legislation to either House of the Congress of the United States by a Committee
of such House to which such legislation has been referred for consideration, or any decision of any
Federal or State court or any ruling or regulation (final, temporary or proposed) or official statement
on behalf of the United States Treasury Department, the Internal Revenue Service or other Federal or
State authority materially adversely affecting the Federal or State tax status of the Authority or the
City, or the interest on bonds or notes or obligations of the general character of the Bonds; or
(ii) any legislation, ordinance, rule or regulation shall be introduced in, or
be enacted by any governmental body, department or agency of the States or a decision by any court
of competent jurisdiction within the State or any court of the United States shall be rendered which, in
the reasonable opinion of the Underwriter, materially adversely affects the market price of the Bonds;
or
(iii) legislation shall be enacted by the Congress of the United States, or a
decision by a court of the United States shall be rendered, or a stop order, ruling, regulation or official
statement by, or on behalf of, the Securities and Exchange Commission or any other governmental
agency having jurisdiction of the subject matter shall be issued or made to the effect that the issuance,
offering or sale of obligations of the general character of the Bonds, or the issuance, offering or sale of
the Bonds, including all underlying obligations, as contemplated hereby or by the Official Statement,
is in violation or would be in violation of, or that obligations of the general character of the Bonds, or
the Bonds, are not exempt from registration under, any provision of the federal securities laws,
including the Securities Act of 1933, as amended and as then in effect, or that the Indenture needs to
be qualified under the Trust Indenture Act of 1939, as amended and as then in effect; or
(iv) the New York Stock Exchange or other national securities exchange,
or any governmental or regulatory authority, shall impose, as to the Bonds or obligations of the general
character of the Bonds, any material restrictions not now in force, or increase materially those now in
force, with respect to the extension of credit by, or the charge to the net capital requirements of the
Underwriter; or
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(v) a general banking moratorium shall have been established by federal or
State authorities; or
(vi) there shall have occurred (i) an outbreak or escalation of hostilities or
the declaration by the United States of a national emergency or war or (ii) any other calamity or crisis
in the financial markets of the United States or elsewhere or the escalation of such calamity or crisis;
or
(vii) the commencement of any action, suit or proceeding described in
Paragraphs 6(e) or 7(e) hereof, or
(viii) a general suspension of trading on the New York Stock Exchange or
other major exchange shall be in force, or minimum or maximum prices for trading shall have been
fixed and be in force, or maximum ranges for prices for securities shall have been required and be in
force on any such exchange, whether by virtue of determination by that exchange or by order of the
Securities and Exchange Commission or any other governmental authority having jurisdiction; or
(ix) [any rating of the Insurer shall have been downgraded, suspended or
withdrawn or placed on negative outlook or negative watch by a national rating service, which, in the
Underwriter's reasonable opinion, materially adversely affects the marketability or market price of the
Bonds or the ability of the Underwriter to enforce contracts for the sale of the Bonds; or]
(x) any event occurring or information becoming known which, in the
reasonable judgment of the Underwriter, makes untrue or incorrect in any material respect any
statement or information contained in the Preliminary Official Statement or in the Official Statement
or has the effect that the Preliminary Official Statement or the Official Statement contains any untrue
statement of a material fact or omits to state a material fact required to be stated therein or necessary
to make the statements therein, in the light of the circumstances under which they were made, not
misleading; or
(xi) any rating of the Bonds or other obligations of the City shall have been
downgraded, suspended or withdrawn or placed on negative outlook or negative watch by a national
rating service, which, in the Underwriter's reasonable opinion, materially adversely affects the
marketability or market price of the Bonds or the ability of the Underwriter to enforce contracts for the
sale of the Bonds; or
(xii) any proceeding shall be pending or threatened by the Securities and
Exchange Commission against the Authority or the City; or
(xiii) any fact or event shall exist or have existed that requires or has required
an amendment of or supplement to the Official Statement in which the market price or marketability
of the Bonds, or the ability of the Underwriter to enforce contracts for the sale of the Bonds, shall have
been materially adversely affected in the reasonable judgment of the Underwriter; or
(xiv) there shall have occurred any materially adverse change in the affairs
or financial condition of the Authority or the City; or
(xv) a material disruption in securities settlement, payment or clearance
services affecting the Bonds shall have occurred; or
14
(xvi) the marketability of the Bonds or the market price thereof, in the
opinion of the Underwriter, has been materially and adversely affected by disruptive events,
occurrences or conditions in the securities or debt markets; or
(xvii) a decision by a court of the United States shall be rendered, or a stop
order, release, regulation or no -action letter by or on behalf of the SEC or any other governmental
agency having jurisdiction of the subject matter shall have been issued or made, to the effect that the
issuance, offering or sale of the Bonds, including the underlying obligations as contemplated by this
Bond Purchase Agreement or by the Official Statement, or any document relating to the issuance,
offering or sale of the Bonds, is or would be in violation of any provision of the federal securities laws
at the Closing Date, including the Securities Act, the Exchange Act and the Trust Indenture Act.
(e) Closing Documents. At or prior to the Closing, the Underwriter shall receive
with respect to the Bonds (unless the context otherwise indicates) the following documents:
(1) Bond Opinion. The approving opinions of Bond Counsel dated the
date of Closing and substantially in the forms included as APPENDIX D to the Official Statement and
a reliance letter(s) thereon dated the date of Closing addressed to the Underwriter and the Trustee.
(2) Supplemental Opinion. A supplemental opinion of Bond Counsel
dated the date of Closing, addressed to the Underwriter, to the effect that:
(A) the statements on the cover of the Official Statement and in the
Official Statement under the captions "INTRODUCTION," "THE BONDS," "THE LEASED
PROPERTY," "SECURITY FOR THE BONDS," and "TAX MATTERS," and in "APPENDIX C —
SUMMARY OF PRINCIPAL LEGAL DOCUMENTS" and "APPENDIX D — FORM OF OPINION
OF BOND COUNSEL," excluding any material that may be treated as included under such captions
and appendices by any cross-reference, insofar as such statements expressly summarize provisions of
the Bonds, the Lease, the Site Lease, the Indenture, and Bond Counsel's final opinion concerning
certain federal tax matters relating to the Bonds, are accurate in all material respects as of the date of
Closing; provided, that Bond Counsel need not express any opinion with respect to any financial or
statistical data contained therein or with respect to DTC or the book -entry system in which the Bonds
are initially delivered;
(B) The Lease, the Site Lease, the Assignment Agreement, the
Continuing Disclosure Certificate and this Bond Purchase Agreement have been duly authorized,
executed and delivered by the City and the Authority, as applicable, and are valid, legal and binding
agreements of the City and the Authority enforceable in accordance with their terms, except that the
rights and obligations under the Lease, the Site Lease, the Assignment Agreement, the Continuing
Disclosure Certificate and this Bond Purchase Agreement are subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights,
to the application of equitable principles if equitable remedies are sought, to the exercise of judicial
discretion in appropriate cases and to limitations on legal remedies against public agencies in the State,
and provided that no opinion is expressed with respect to any indemnification or contribution
provisions contained therein.
(C) The Bonds are exempt from registration under the Securities
Act of 1933, as amended, and the Indenture is exempt from qualification as an indenture pursuant to
the Trust Indenture Act of 1939, as amended.
1
(3) Negative Assurance Letter of Disclosure Counsel. A letter of Jones
Hall, A Professional Law Corporation, Disclosure Counsel to the Authority and the City, dated the
date of Closing and addressed to the Authority, the City, and the Underwriter to the effect that based
upon their participation in the preparation of the Official Statement as Disclosure Counsel to the
Authority and without having undertaken to determine independently the accuracy or completeness of
the contents in the Official Statement, such counsel has no reason to believe that the Preliminary
Official Statement (except for the completion of pricing information and any other matters or terms of
the Bonds relating thereto) as of its date or as of the date of this Purchase Agreement or the Official
Statement as of its date or as of the date of the Closing (except that no opinion need be expressed as to
any financial, statistical, economic, engineering or demographic data or forecasts, numbers, charts,
tables, graphs, maps, estimates, projections, assumptions or expressions of opinion, any information
about feasibility, valuation, appraisals, assessed values, market absorption, real estate, ownership,
environmental or archaeological matters, the appendices thereto, or any information about [the Insurer,
the Policy,] book -entry, The Depository Trust Company, debt service requirements or tax exemption
included or referred to therein, which may be expressly excluded from the scope of the opinions),
contains any untrue statement of a material fact or omits to state any material fact necessary to make
the statements therein, in the light of the circumstances under which they were made, not misleading.
(4) Municipal Advisor Certificate. A certificate of Fieldman, Rolapp &
Associates, Inc. ("Fieldman"), dated the Closing Date and addressed to the Authority, the City and the
Underwriter, to the effect that (i) Fieldman has reviewed the Preliminary Official Statement and the
Official Statement and (ii) no information has come to its attention which would lead it to believe that
the information contained in the Preliminary Official Statement, as of its date and as of the date of this
Purchase Agreement and the Official Statement, as of its date and the Closing Date, is not true or
correct in all material respects, or that the Preliminary Official Statement, as of its date and as of the
date of this Purchase Agreement and the Official Statement, as of its date and the Closing Date contains
any untrue statement of a material fact or omits to state a material fact where necessary to make a
statement not misleading.
(5) Opinion of City Attorney. An opinion of the City Attorney, dated the
date of the Closing and addressed to the Authority, the Trustee and the Underwriter, to the effect that:
(A) the City is a general law city duly organized and validly
existing under the Constitution and laws of the State of California;
(B) the resolution of the City approving and authorizing the
execution and delivery of the City Documents and approving and authorizing the issuance of the Bonds
and the delivery of the Official Statement and other actions of the City was duly adopted at a meeting
of the governing body of the City which was called and held pursuant to law and with all public notice
required by law and at which a quorum was present and acting throughout, and the resolution is now
in full force and effect and has not been amended or superseded in any way;
(C) the City Documents have been duly authorized, executed and
delivered by the City, and (assuming due execution and delivery by parties other than the City) are
valid, legal and binding agreements of the City enforceable in accordance with their terms, except that
the rights and obligations under the City Documents are subject to bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws affecting creditors' rights,
to the application of equitable principles if equitable remedies are sought, to the exercise of judicial
discretion in appropriate cases and to limitations on legal remedies against public agencies in the State;
IV
(D) the authorization, execution and delivery of the Bonds, the
Official Statement, and the City Documents by the City and compliance with the provisions thereof by
the City of its obligations thereunder, will not conflict with, or constitute a breach or default under, in
any material respect, any law, administrative regulation, court decree, resolution, ordinance or other
agreement to which the City is subject or by which it is bound; and
(E) there is no action, suit, proceeding, inquiry or investigation at
law or in equity before or by any court or public body pending with respect to which the City has been
served or, to such counsel's knowledge, threatened against or affecting the City, except as may be
disclosed in the Official Statement, which would materially adversely impact the City's ability to
complete the transactions contemplated by the City Documents, the Official Statement or any other
document or certificate related to such transactions, restrain or enjoin the collection of Lease Payments
with respect to the Lease, or in any way contesting or affecting the validity of the Bonds, the Official
Statement or the City Documents.
(6) Authority Counsel Opinion. An opinion of counsel to the Authority,
dated the date of the Closing and addressed to the City, the Trustee and the Underwriter, to the effect
that:
(A) the Authority is a joint exercise of powers authority organized
and existing under the laws of the State of California;
(B) the resolution of the Authority approving and authorizing the
execution and delivery of the Authority Documents, the Bonds and the Official Statement and other
actions of the Authority was duly adopted at a meeting of the governing body of the Authority which
was called and held pursuant to law and with all public notice required by law and at which a quorum
was present and acting throughout, and the resolution is now in full force and effect and has not been
amended or superseded in any way;
(C) the Authority Documents have been duly authorized, executed
and delivered by the Authority, and (assuming due execution and delivery by parties other than the
Authority) are valid, legal and binding agreements of the Authority enforceable in accordance with
their terms, except that the rights and obligations under the Authority Documents are subject to
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws
affecting creditors' rights, to the application of equitable principles if equitable remedies are sought,
to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against
public agencies in the State;
(D) there is no action, suit, proceeding, inquiry or investigation at
law or in equity before or by any court or public body pending with respect to which the Authority has
been served or, to the such counsel's knowledge, threatened against or affecting the Authority, except
as may be disclosed in the Official Statement, which would materially adversely impact the Authority's
ability to complete the transactions contemplated by the Authority Documents, the Official Statement
or any other document or certificate related to such transactions, restrain or enjoin the collection of
Lease Payments with respect to the Lease, or in any way contesting or affecting the validity of the
Bonds, the Official Statement, the Authority Documents or the transactions described in and
contemplated thereby wherein an unfavorable decision, ruling or finding would materially adversely
affect the validity and enforceability of the Bonds or the Authority Documents or in which a final
adverse decision could materially adversely affect the operations of the Authority; and
17
(E) the execution and delivery of the Authority Documents and the
issuance of the Bonds and compliance with the provisions thereof, do not and will not in any material
respect conflict with or constitute on the part of the Authority a breach of or default under any
agreement or other instrument to which the Authority is a party or by which it is bound or any existing
law, regulation, court order or consent decree to which the Authority is subject, which breach or default
has or may have a material adverse effect on the ability of the Authority to perform its obligations
under the Authority Documents.
(7) Underwriter's Counsel Opinion. An opinion of Underwriter's Counsel,
dated the date of the Closing addressed to the Underwriter, in such form as may be acceptable to the
Underwriter.
(8) City Certificate. A certificate, dated the date of Closing, signed by a
duly authorized official of the City satisfactory in form and substance to the Underwriter to the effect
that: (a) the representations, warranties and covenants of the City contained in this Bond Purchase
Agreement are true and correct in all material respects on and as of the date of the Closing as if made
on the date of the Closing; (b) the City has complied with all agreements, covenants and conditions to
be complied with by the City at or prior to the Closing under the City Documents; (c) to the best of
such official's knowledge, no event affecting the City has occurred since the date of the Official
Statement which either makes untrue or incorrect in any material respect as of the Closing the
statements or information contained in the Official Statement or is not reflected in the Official
Statement but should be reflected therein in order to make the statements and information therein, in
the light of the circumstances under which they were made, not misleading in any material respect.
(9) Authority Certificate. A certificate of the Authority, dated the date of
the Closing, signed on behalf of the Authority by the Chair or other duly authorized officer of the
Authority to the effect that (a) the representations, warranties and covenants of the Authority contained
herein and in the Authority Documents are true and correct in all material respects on and as of the
date of the Closing as if made on the date of the Closing; (b) the Authority has complied with all
agreements, covenants and conditions to be complied with by the Authority at or prior to the Closing
under the Authority Documents and (c) to the best of such official's knowledge, no event affecting the
Authority has occurred since the date of the Official Statement which has not been disclosed therein
or in any supplement or amendment thereto which event should be disclosed in the Official Statement
in order to make the statements therein, in the light of the circumstances under which they were made,
not misleading.
(10) Trustee's Certificate. A certificate of the Trustee, dated the Closing
Date, in form and substance acceptable to the Authority, Bond Counsel, the Underwriter and
Underwriter's Counsel.
(11) Trustee Incumbency Certificate. A certified copy of a certificate of an
officer of the Trustee certifying as to the incumbency, signature and signing authority of the officers
who have executed and delivered the Indenture and agreed to accept the duties of Trustee under the
Indenture.
(12) Trustee Counsel's Opinion. An opinion, dated the date of the Closing
addressed to the Authority, the City and the Underwriter, of the Trustee's Counsel, in form and content
satisfactory to the Authority, Bond Counsel, the Underwriter and Underwriter's Counsel.
I:
(13) Title Policy. A copy of a CLTA or ALTA title insurance policy in an
amount equal to the principal amount of the Bonds, insuring the City's leasehold interest in the Leased
Property, subject only to Permitted Encumbrances (as defined in the Lease) or such other acceptable
encumbrances.
(14) Transcripts. Two CD transcripts of the proceedings prepared by Bond
Counsel relating to the authorization and issuance of the Bonds will be delivered in due course after
the Closing.
(15) Official Statement. The Official Statement and each supplement or
amendment, if any, thereto, executed on behalf of the Authority by a duly authorized officer of each.
(16) Documents. An original executed or certified copy of each of the
Authority Documents, the City Documents and the Joint Exercise of Powers Agreement (the "JPA
Agreement"), dated , between the City and the Industrial Development Authority of the City
of Lodi and any amendments thereto.
(17) City Resolution. Certified copy by the City Clerk, of each resolution
of the City relating to the City Documents, the actions contemplated thereby, provided that such
resolutions may be contained in the transcripts.
(18) Authority Resolution. Certified copy by the Secretary or Assistant
Secretary of the Authority, of each resolution of the Authority relating to the Authority Documents,
the Bonds and the transactions contemplated thereby, provided that such resolutions may be contained
in the transcripts.
(19) IRS Form 8038-G. Evidence that the federal tax information form
8038 G has been prepared for filing.
(20) Tax Certificate. A Tax Certificate in a form satisfactory to Bond
Counsel.
(21) Rating. Evidence as of the Closing satisfactory to the Underwriter that
the Bonds have received the rating set forth in the Official Statement and that such rating has not been
reduced or withdrawn.
(22) CDIAC Statement. A copy of the Notice of Final Sale required to be
delivered to the California Debt and Investment Advisory Commission pursuant to section 53583 of
the Government Code and section 8855(g) of the Government Code.
(23) rPolic . The Policy, duly executed by the Insurer.
(24) Insurer Counsel Opinion. An opinion of counsel to the Insurer, dated
the Closing Date, addressed to the Authority, the City and the Underwriter, in form and substance
satisfactory to the Underwriter and Bond Counsel.
(25) Insurer Certificate. A certificate or certificates of the Insurer, dated the
Closing Date, as to the accuracy of the information relating to the Insurer and the Policy included in
the Official Statement and such other matters reasonably requested by the Underwriter and Bond
Counsel.]
19
(26) Additional Documents. Such additional certificates, instruments and
other documents as the Underwriter and Bond Counsel may reasonably deem necessary.
If the Authority or the City shall be unable to satisfy the conditions contained in this Bond
Purchase Agreement, or if the obligations of the Underwriter shall be terminated for any reason
permitted by this Bond Purchase Agreement, this Bond Purchase Agreement may be terminated by the
Underwriter, and none of the Underwriter, the Authority or the City shall be under further obligation
hereunder.
10. Expenses. Except as otherwise provided in this Section, the Underwriter shall be under
no obligation to pay, and the Authority or the City shall pay or cause to be paid, the expenses incident
to the performance of the obligations of the Authority and the City hereunder including but not limited
to:
(a) the costs of the preparation and printing, or other reproduction (for distribution
on or prior to the date hereof) of the City Documents and the Authority Documents and the cost of
preparing, printing, issuing and delivering the Bonds;
(b) the fees and disbursements of any counsel, municipal advisors, accountants, or
other experts or consultants retained by the Authority or the City;
(c) the fees and disbursements of Bond Counsel and Disclosure Counsel;
(d) the cost of preparation and printing the Preliminary Official Statement and any
supplements and amendments thereto and the cost of preparation and printing of the Official Statement,
including a reasonable number of copies thereof for distribution by the Underwriter; and
(e) charges of rating agencies for the rating of the Bonds.
The Underwriter shall pay all expenses incurred by the Underwriter in connection with the
public offering and distribution of the Bonds including, but not limited to: (i) the fees and
disbursements of Underwriter's Counsel; and (ii) all out-of-pocket disbursements and expenses
incurred by the Underwriter in connection with the offering and distribution of the Bonds (including
other expenses, fees of the California Debt and Investment Advisory Commission, CUSIP Service
Bureau fees, and any other fees and expenses), except as otherwise provided in the preceding paragraph
or otherwise agreed to by the Underwriter, the Authority and the City in writing. Any meals in
connection with or adjacent to meetings, rating agency presentations, pricing activities or other
transaction -related activities shall be considered an expense of the transaction and included in the
expense component of the Underwriter's discount.
11. Notice. Any notice or other communication to be given to the Underwriter may be
given by delivering the same to Piper Sandler & Co., 2321 Rosecrans Avenue, Suite 3200, El Segundo,
California 90245, Attention: Public Finance. Any notice or other communication to be given to the
Authority or the City pursuant to this Bond Purchase Agreement may be given by delivering the same
in writing to such entity, at the addresses set forth on the cover page hereof.
12. Entire Agreement. This Bond Purchase Agreement, when accepted by the Authority
and the City, shall constitute the entire agreement among the Authority, the City and the Underwriter
and is made solely for the benefit of the Authority, the City and the Underwriter (including the
20
successors or assigns of any Underwriter). Except as provided in Section 16 below, no other person
shall acquire or have any right hereunder by virtue hereof, except as provided herein. All the
Authority's and the City's representations, warranties and agreements in this Bond Purchase
Agreement shall remain operative and in full force and effect, regardless of any investigation made by
or on behalf of the Underwriter, until the earlier of (a) delivery of and payment for the Bonds hereunder,
and (b) any termination of this Bond Purchase Agreement.
13. Definitions. Terms not otherwise defined herein shall have the same meaning as when
used in the Indenture or the Lease.
14. Severability. In case any one or more of the provisions contained herein shall for any
reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof.
15. State of California Law Governs. The validity, interpretation and performance of
the Authority Documents shall be governed by the laws of the State.
16. No Assignment. The rights and obligations created by this Bond Purchase Agreement
shall not be subject to assignment by the Underwriter, the Authority or the City without the prior
written consent of the other parties hereto.
21
17. Counterparts. This Bond Purchase Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
PIPER SANDLER & CO.
Authorized Officer
The foregoing is hereby agreed to and accepted as of the date
first above written:
LODI PUBLIC FINANCING AUTHORITY
By:_
Title:
Time of Execution:
CITY OF LODI
By:
Titl
Time of Execution:
p.m. California time
p.m. California time
[EXECUTION PAGE OF BOND PURCHASE AGREEMENT]
S-1
EXHIBIT A
MATURITY SCHEDULE
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE REFUNDING BONDS
(2012 REFUNDING; CAPITAL PROJECTS FINANCING)
MATURITY SCHEDULE
Subject to
Hold -The-
Offering -
10% Test Price Rule
Maturity Principal Interest 10% Test Not (marked if
(October 1) Amount Rate Yield Price Satisfied* Satisfied used)
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
20 (T)
(I) Insured Bond.
(T) Term Bond.
(c)Priced to optional call at [par] on October 1, 20
* At the time of execution of this Purchase Agreement and assuming orders are confirmed by the close of the business day
immediately following the date of this Purchase Agreement.
A- I
EXHIBIT B
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE REFUNDING BONDS
(2012 REFUNDING; CAPITAL PROJECTS FINANCING)
FORM OF ISSUE PRICE CERTIFICATE
The undersigned, on behalf of Piper Sandler & Co. ("Piper") hereby certify as set forth below
with respect to the sale and issuance of the above -captioned bonds (the "Bonds").
1. Sale of the General Rule Maturities. As of the date of this certificate, for each
Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity was sold
to the Public is the respective price listed in Schedule A.
2. Defined Terms.
(a) General Rule Maturities means those Maturities of the Bonds listed in
Schedule A hereto as the "General Rule Maturities."
(b) Issuer means the Lodi Public Financing Authority.
(c) Maturity means Bonds with the same credit and payment terms. Bonds with
different maturity dates, or Bonds with the same maturity date but different stated interest rates, are
treated as separate maturities.
(d) Public means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than an Underwriter or a related party to an Underwriter.
The term "related party" for purposes of this certificate generally means any two or more persons who
have greater than 50 percent common ownership, directly or indirectly.
(e) Underwriter means (i) any person that agrees pursuant to a written contract
with the Issuer (or with the lead underwriter to form an underwriting syndicate) to participate in the
initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract
directly or indirectly with a person described in clause (i) of this paragraph to participate in the initial
sale of the Bonds to the Public (including a member of a selling group or a party to a retail or other
third -party distribution agreement participating in the initial sale of the Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only. Nothing in
this certificate represents Piper's interpretation of any laws, including specifically Sections 103 and
148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The
undersigned understands that the foregoing information will be relied upon by the Issuer with respect
to certain of the representations set forth in the Certificate as to Tax Exemption and with respect to
compliance with the federal income tax rules affecting the Bonds, and by Jones Hall, A Professional
Law Corporation in connection with rendering its opinion that the interest on the Bonds is excluded
from gross income for federal income tax purposes, the preparation of the Internal Revenue Service
Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time
relating to the Bonds.
PIPER SANDLER & CO.
By:
Name:
Dated: , 2022
SCHEDULE A
SALE PRICES OF THE GENERAL RULE MATURITIES
(to be attached)
Jones Hall 2-23-22 Agenda
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER
TAX UNDER SECTION 11929 OF THE CALIFORNIA REVENUE AND TAXATION
CODE. THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER
SECTION 27383 OF THE CALIFORNIA GOVERNMENT CODE.
SITE LEASE
This SITE LEASE (this "Site Lease"), dated for convenience as of March 1, 2022, is
between the CITY OF LODI, a general law city and municipal corporation duly organized
and existing under the Constitution and laws of the State of California, as lessor (the
"City"), and the LODI PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized
and existing under the laws of the State of California, as lessee (the "Authority").
BACKGROUND:
1. The Authority previously issued its $19,080,000 Lodi Public Financing
Authority 2012 Refunding Lease Revenue Bonds (the "2012 Bonds") for the purpose of
refinancing outstanding certificates of participation that were executed and delivered to
finance various municipal facilities of the City.
2. In connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of
September 1, 2012, pursuant to which, respectively, the City leased to the Authority and
subleased from the Authority the land and improvements constituting the City's police
building and Carnegie Forum.
3. In order to take advantage of prevailing bond market conditions, the City is
proceeding to refund the 2012 Bonds.
4. The City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of certain capital improvements,
including a new animal shelter and park and playground improvements and upgrades (the
"Project").
5. To that end, the City has proposed to lease the land and improvements
constituting the City's police building and the City's Fire Station #2, as more particularly
described in Appendix A attached hereto and by this reference incorporated herein
(the "Leased Property"). to the Authority under this Site Lease, in consideration of the
payment by the Authority of an upfront rental payment (the "Site Lease Payment") that is
sufficient to provide funds for the refunding of the 2012 Bonds and the financing of the
Project.
6. The Authority has authorized the issuance of its Lodi Public Financing
Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing) in the aggregate principal amount of $ (the "Bonds") under an
Indenture of Trust dated as of March 1, 2022 (the "Indenture"), between the Authority and
U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), for the
purpose of providing the funds to enable the Authority to pay the Site Lease Payment to
the City in accordance with the Site Lease.
7. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has agreed to lease the Leased Property
back to the City under a Lease Agreement dated as of March 1, 2022 (the "Lease"), which
has been recorded concurrently herewith, under which the City has agreed to pay
semiannual Lease Payments as the rental for the Leased Property thereunder.
8. The lease payments made by the City under the Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of March 1, 2022, between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
AGREEMENT:
In consideration of the above premises and of the mutual promises and covenants
herein contained and for other valuable consideration, the parties hereto do hereby agree
as follows:
SECTION 1. Lease of Property to Authority. The City hereby leases the Leased
Property to the Authority and the Authority hereby leases the Leased Property from the
City, on the terms and conditions hereinafter set forth.
SECTION 2. Term; Possession. The term of this Site Lease commences on the
Closing Date and ends on the date on which the Indenture is discharged in accordance
with Section 10.03 thereof, but under any circumstances not later than October 1,
The provisions of this Section 2 are subject in all respects to any other provisions of this
Site Lease relating to the termination hereof.
SECTION 3. Rental. The Authority shall pay to the City as and for rental of the
Leased Property hereunder, the sum of $ (the "Site Lease Payment"). The Site
Lease Payment is due and payable upon the issuance of the Bonds and the execution
and delivery hereof, and will be paid from the proceeds of the Bonds. The Authority and
the City hereby find and determine that the total amount of the Site Lease Payment does
not exceed the fair market value of the leasehold interest in the Leased Property which is
conveyed hereunder by the City to the Authority. No other amount of rental is due and
payable by the Authority for the use and occupancy of the Leased Property under this Site
Lease.
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As provided in the Indenture, a portion of the proceeds of the Bonds will be applied
to make the Site Lease Payment by depositing an amount with the 2012 Trustee to be
held, invested and administered in accordance with the Escrow Agreement for the purpose
of refunding the 2012 Bonds, and another portion will be held by the Trustee to provide
funds to finance the Project.
SECTION 4. Leaseback to City. The Authority shall lease the Leased Property back
to the City under the Lease.
SECTION 5. Assignments and Subleases. Unless the City is in default under the
Lease, the Authority may not assign its rights under this Site Lease or sublet all or any
portion of the Leased Property, except as provided in the Assignment Agreement and in
the Lease, without the prior written consent of the City.
SECTION 6. Substitution or Release of Property. If the City exercises its option
under Section 3.2 of the Lease to substitute property for the Leased Property in whole or
in part, such substitution shall also operate to substitute property for the Leased Property
which is leased hereunder. If the City exercises its option under Section 3.3 of the Lease
to release a portion of the Leased Property from the Lease, such substitution shall also
operate to release such portion of the Leased Property hereunder. The description of the
Leased Property which is leased under the Lease shall conform at all times to the
description of the Leased Property which is leased hereunder.
SECTION 7. Right of Entry. The City reserves the right for any of its duly authorized
representatives to enter upon the Leased Property, or any portion thereof, at any
reasonable time to inspect the same or to make any repairs, improvements or changes
necessary for the preservation thereof.
SECTION 8. Termination. The Authority agrees, upon the termination of this Site
Lease, to quit and surrender the Leased Property in the same good order and condition
as the Leased Property was in at the time of commencement of the term hereof,
reasonable wear and tear excepted, and agrees that all buildings, improvements and
structures then existing upon the Leased Property shall remain thereon and title thereto
shall vest thereupon in the City for no additional consideration.
SECTION 9. Default. If the Authority defaults in the performance of any obligation
on its part to be performed under the terms of this Site Lease, which default continues for
30 days following notice and demand for correction thereof to the Authority, the City may
exercise any and all remedies granted by law, except that no merger of this Site Lease
and of the Lease shall be deemed to occur as a result thereof and no such remedy may
include termination hereof; provided, however, that so long as the Lease remains in effect,
the Lease Payments payable by the City under the Lease shall continue to be paid to the
Trustee.
SECTION 10. Quiet Enjoyment. The Authority at all times during the term of this
Site Lease shall peaceably and quietly have, hold and enjoy all of the Leased Property,
subject to the provisions of the Lease and subject only to Permitted Encumbrances (as
that term is defined in the Lease).
SECTION 11. Waiver of Personal Liability. All liabilities under this Site Lease on
the part of the Authority are solely corporate liabilities of the Authority as a public entity,
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and the City hereby releases each and every member and officer of the Authority of and
from any personal or individual liability under this Site Lease. No member or officer of the
Authority or its governing board shall at any time or under any circumstances be
individually or personally liable under this Site Lease for anything done or omitted to be
done by the Authority hereunder.
SECTION 12. Taxes. The City covenants and agrees to pay any and all
assessments of any kind or character and also all taxes, including possessory interest
taxes, levied or assessed upon the Leased Property and any improvements thereon.
SECTION 13. Eminent Domain. If the whole or any part of the Leased Property or
any improvements thereon is taken by eminent domain proceedings, the interest of the
Authority shall be recognized and is hereby determined to be the amount of the then
unpaid Lease Payments payable under the Lease and the balance of the award, if any,
shall be paid to the City.
SECTION 14. Partial Invalidity. If any one or more of the terms, provisions,
covenants or conditions of this Site Lease shall to any extent be declared invalid,
unenforceable, void or voidable for any reason whatsoever by a court of competent
jurisdiction, the finding or order or decree of which becomes final, none of the remaining
terms, provisions, covenants and conditions of this Site Lease shall be affected thereby,
and each provision of this Site Lease shall be valid and enforceable to the fullest extent
permitted by law.
SECTION 15. Notices. Any notice, request, complaint, demand or other
communication under this Site Lease shall be given by first class mail or personal delivery
to the party entitled thereto at its address set forth below, or by telecopy, telex or other
form of telecommunication, at its number set forth below. Notice shall be effective either
(a) upon transmission by telecopy, telex or other form of telecommunication, (b) 48 hours
after deposit in the United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The City, the Authority and the Trustee may,
by written notice to the other parties, from time to time modify the address or number to
which communications are to be given hereunder.
If to the Authority City of Lodi
or the City. 221 West Pine Street
Lodi, CA 95240
Attention: City Manager
Fax: (209) 333-6807
If to the Trustee: U.S. Bank Trust Company, National Association
Attn.: Global Corporate Trust
One California Street, Suite 1000
San Francisco, CA 94111
Fax: 415-677-3768
SECTION 16. Amendment of this Site Lease. The Authority and the City may at
any time amend or modify any of the provisions of this Site Lease, but only (a) with the
prior written consent of the Owners of a majority in aggregate principal amount of the
Outstanding Bonds; or (b) without the consent of any of the Bond Owners, but only if such
amendment or modification is for any one or more of the following purposes:
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(i) to make cure any ambiguity, or to cure, correct or supplement any
defective provision contained herein, or in any other respect
whatsoever as the Authority and the City may deem necessary or
desirable, provided that, in the opinion of Bond Counsel, such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds;
(ii) to amend any provision hereof relating to the Tax Code, to any extent
whatsoever but only if and to the extent such amendment will not
adversely affect the exclusion from gross income of interest on the
Bonds under the Tax Code, in the opinion of Bond Counsel;
(iii) to conform to any amendment of the Indenture which is made thereto
in accordance with Section 9.01 of the Indenture; or
(iv) for the purpose of effectuating any substitution or release of property
under Section 6.
SECTION 17. Governing Law. This Site Lease shall be construed in accordance
with and governed by the Constitution and laws of the State of California.
SECTION 18. Third Party Beneficiary. The Trustee is hereby made a third party
beneficiary under this Site Lease with all rights of a third party beneficiary.
SECTION 19. Binding Effect. This Site Lease inures to the benefit of and is binding
upon the Authority, the City and their respective successors and assigns, subject,
however, to the limitations contained herein.
SECTION 20. Section Headings. All section headings contained herein are for
convenience of reference only and are not intended to define or limit the scope of any
provision of this Site Lease.
SECTION 21. Execution in Counterparts. This Site Lease may be executed in any
number of counterparts, each of which shall be deemed to be an original but all together
shall constitute but one and the same lease. It is also agreed that separate counterparts
of this Site Lease may be separately executed by the Authority and the City, all with the
same force and effect as though the same counterpart had been executed by both the
Authority and the City.
SECTION 22. Defined Terms. All capitalized terms used herein and not otherwise
defined have the respective meanings given those terms in the Indenture.
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IN WITNESS WHEREOF, the City and the Authority have caused this Site Lease
to be executed by their respective officers thereunto duly authorized, all as of the day and
year first above written.
Attest:
Attest:
[to come]
City Clerk
[to come]
Secretary
CITY OF LODI, as lessor
Steve Schwabauer
City Manager
LODI PUBLIC FINANCING AUTHORITY, as
lessee
M
If
Steve Schwabauer
Executive Director
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of
Lodi, County of San Joaquin, State of California, which is more particularly described as
follows:
TRACT ONE:
PARCEL ONE:
THE SOUTH 120 FEET OF THE WEST 50 FEET OF LOT 8, IN BLOCK 2, AS SHOWN
UPON MAP ENTITLED CITY OF LODI, FILED FOR RECORD AUGUST 25, 1869, IN
VOL. 2 OF MAPS AND PLATS, PAGE 12, SAN JOAQUIN COUNTY RECORDS.
PARCEL TWO:
THE NORTH 50 FEET OF THE WEST 50 FEET OF LOT 8 AND THE EAST 30 FEET
OF LOT 8, ALL IN BLOCK 2, AS SHOWN UPON MAP ENTITLED CITY OF LODI,
FILED FOR RECORDED AUGUST 25, 1869, IN VOL 2 OF MAPS AND PLATS, PAGE
12, SAN JOAQUIN COUNTY RECORDS.
PARCEL THREE:
THE WEST 10 FEET OF LOT 7, IN BLOCK 2, AS SHOWN UPON MAP ENTITLED
CITY OF LODI FILED FOR RECORD AUGUST 25, 1869, IN VOL 2 OF MAPS AND
PLATS, PAGE 12, SAN JOAQUIN
COUNTY RECORDS.
PARCEL FOUR:
COMMENCING AT THE SOUTH END OF THE LINE BETWEEN LOTS 6 AND 7, IN
BLOCK 2 AND RUNNING IN A WESTERLY DIRECTION ALONG THE NORTH SIDE
OF ELM STREET 70 FEET; THENCE NORTHERLY AND PARALLEL WITH THE
BOUNDARY LINES OF SAID LOTS, 170 FEET; THENCE EASTERLY 70 FEET;
THENCE IN A SOUTHERLY DIRECTION 170 FEET TO THE POINT OF BEGINNING,
BEING THE EAST 70 FEET OF LOT 7 IN BLOCK NO. 2 IN THE TOWN OF LODI,
(NOW CITY OF LODI)
SAVE AND EXCEPT THEREFROM THE EAST 5 FEET THEREOF, HERETOFORE
CONVEYED TO DAN W. BIRD, ALL ACCORDING TO THE OFFICIAL MAP OF THE
FORMER TOWN OF MOKELUMNE, NOR ON FILE IN THE OFFICE OF THE COUNTY
RECORDER, COUNTY OF SAN JOAQUIN, STATE OF CALIFORNIA.
PARCEL FIVE:
THE WEST 50 FEET OF LOT 6 AND THE EAST 5 FEET OF LOT 7 IN BLOCK 2 OF
MOKELUMNE (NOT CITY OF LODI) ACCORDING TO THE OFFICIAL MAPS OR PLAT
F-115
THEREOF FILED AUGUST 25, 1869 AT 8:48 A.M., IN BOOK OF MAPS AND PLATS,
VOLUME 2, PAGE 12, OF SAN JOAQUIN COUNTY RECORDS.
PARCEL SIX:
THE WEST 20 FEET OF LOT 5 AND THE EAST 30 FEET OF LOT 6, IN BLOCK 2,
CITY OF LODI, ACCORDING TO THE OFFICIAL MAP OR PLAT THEREOF, FILED
FOR RECORD AUGUST 25, 1869, IN VOLUME 2 OF MAPS AND PLATS, PAGE 12
SAN JOAQUIN COUNTY RECORDS.
A.P.N. 043-022-13
TRACT TWO:
PARCEL ONE:
LOT 2, IN BLOCK 1, AS SHOWN UPON MAP ENTITLED WEST LODI, FILED FOR
RECORD SEPTEMBER 10, 1904, IN VOL. 3 OF MAPS AND PLATS, PAGE 25 SAN
JOAQUIN COUNTY RECORDS.
PARCEL ONE A:
THE EASTERLY 0.60 FEET OF THE FOLLOWING DESCRIBED LAND:
COMMENCING AT THE SOUTHEAST CORNER OF BLOCK 1 OF WEST LODI, AS
SHOWN IN THE MAP FILED FOR RECORD IN BOOK OF MAPS AND PLATS.
VOLUME 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS; THENCE NORTH 86
17'30" WEST 119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE
SOUTHEAST CORNER OF LOT 3 OF SAID BLOCK 1, SAID SOUTHEAST CORNER
ALSO BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 86 17'30" WEST
119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE SOUTHWEST
CORNER OF LOT 4 OF SAID BLOCK 1; THENCE NORTH 3 42'40" EAST 169.83
FEET ALONG THE WEST LINE OF SAID LOT 4 TO THE NORTHWEST CORNER
THEREOF; THENCE SOUTH 86 16'10" EAST 119.96 ALONG THE
NORTH LINE OF SAID LOTS 4 AND 3 TO THE NORTHEAST CORNER OF SAID LOT
3; THENCE SOUTH 03 43'50" WEST 169.79 FEET ALONG THE EAST LINE OF SAID
LOT 3 TO THE TRUE POINT OF BEGINNING.
SAID PARCEL ONE AND ONE A ABOVE ARE DESCRIBED ON THAT CERTAIN
CERTIFICATE OF LOT LINE ADJUSTMENT RECORDED JUNE 27, 2005 AS
INSTRUMENT NO. 2005-154383, OF OFFICIAL RECORDS.
PARCEL TWO:
LOT 1 IN BLOCK 1 OF WEST LODI, ACCORDING TO THE OFFICIAL MAP FOR PLAT
THEREOF FILED FOR RECORDED SEPTEMBER 10, 1904, AND RECORDED IN
BOOK OF MAPS AND PLATS, VOL 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS.
TOGETHER WITH ALL THAT PORTION OF PLEASANT AVENUE FROM THE NORTH
LINE OF ELM STREET TO THE SOUTH LINE OF THE 20 FOOT ALLEY BETWEEN
ELM STREET AND LOCUST STREET AS SET FORTH AND DEPICTED IN
RESOLUTION OF ABANDONMENT RECORDED OCTOBER 8, 2001, AS DOCUMENT
NO. 01164151 SAN JOAQUIN PUBLIC RECORDS.
UVA
A.P.N. 037-270-50
I� C
[add Fire Station #2]
End of Legal Description
P
Jones Hall 2-23-22 Agenda
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.
THIS TRANSACTION IS EXEMPT FROM CALIFORNIA DOCUMENTARY TRANSFER TAX
UNDER SECTION 11922 OF THE CALIFORNIA REVENUE AND TAXATION CODE. THIS
DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
LEASE AGREEMENT
Dated as of March 1, 2022
between the
LODI PUBLIC FINANCING AUTHORITY,
as lessor
and the
CITY OF LODI,
as lessee
Relating to
Lodi Public Financing Authority
2022 Lease Revenue Bonds
(2012 Bonds Refunding; Capital Projects Financing)
SECTION 4.1.
SECTION 4.2.
SECTION 4.3.
SECTION 4.4.
SECTION 4.5.
SECTION 4.6.
SECTION 4.7.
SECTION 5.1.
SECTION 5.2.
SECTION 5.3.
SECTION 5.4.
SECTION 5.5.
SECTION 5.6.
SECTION 5.7.
SECTION 5.8.
SECTION 5.9.
SECTION 5.10.
SECTION 6.1.
SECTION 6.2.
SECTION 6.3.
SECTION 6.3.
SECTION 7.1.
SECTION 7.2.
SECTION 7.3.
SECTION 7.4.
SECTION 7.5.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS
LEASE; LEASE PAYMENTS
Lease of Leased Property..............................................................
Term...............................................................................................
LeasePayments.............................................................................
Source of Payments; Covenant to Budget and Appropriate ..........
Additional Rental Payments...........................................................
QuietEnjoyment.............................................................................
Title.................................................................................................
ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND
OTHER MATTERS
Maintenance, Utilities, Taxes and Assessments ..................
Modification of Leased Property ...........................................
Liability and Property Damage Insurance ............................
Casualty Insurance...............................................................
Rental Interruption Insurance ...............................................
Recordation Hereof; Title Insurance .....................................
Insurance Net Proceeds; Form of Policies ...........................
Installation of City's Personal Property .................................
Liens.....................................................................................
Advances................................................................................
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
OF NET PROCEEDS
Application of Net Proceeds .................................................
Termination or Abatement Due to Eminent Domain ............
Abatement Due to Damage or Destruction ..........................
Abatement Due to Non -Completion of the Project ...............
ARTICLE VII
OTHER COVENANTS OF THE CITY
Disclaimer of Warranties......................................................
Access to the Leased Property ............................................
Release and Indemnification Covenants ..............................
Assignment and Subleasing by the City ...............................
Amendment Hereof..............................................................
USE
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13
13
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14
14
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14
15
15
15
16
16
17
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION1.1.
Definitions.......................................................................................
SECTION1.2.
Interpretation..................................................................................
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1.
Covenants, Representations and Warranties of the City ...............
SECTION 2.2.
Covenants, Representations and Warranties of the Authority.......
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; ACQUISITION
AND CONSTRUCTION OF PROJECT; SUBSTITUTION
AND RELEASE OF PROPERTY
SECTION 3.1.
Deposit of Moneys; Acquisition and Construction of Project..........
SECTION 3.2.
Substitution of Property..................................................................
SECTION 3.3.
Release of Property........................................................................
SECTION 4.1.
SECTION 4.2.
SECTION 4.3.
SECTION 4.4.
SECTION 4.5.
SECTION 4.6.
SECTION 4.7.
SECTION 5.1.
SECTION 5.2.
SECTION 5.3.
SECTION 5.4.
SECTION 5.5.
SECTION 5.6.
SECTION 5.7.
SECTION 5.8.
SECTION 5.9.
SECTION 5.10.
SECTION 6.1.
SECTION 6.2.
SECTION 6.3.
SECTION 6.3.
SECTION 7.1.
SECTION 7.2.
SECTION 7.3.
SECTION 7.4.
SECTION 7.5.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS
LEASE; LEASE PAYMENTS
Lease of Leased Property..............................................................
Term...............................................................................................
LeasePayments.............................................................................
Source of Payments; Covenant to Budget and Appropriate ..........
Additional Rental Payments...........................................................
QuietEnjoyment.............................................................................
Title.................................................................................................
ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND
OTHER MATTERS
Maintenance, Utilities, Taxes and Assessments ..................
Modification of Leased Property ...........................................
Liability and Property Damage Insurance ............................
Casualty Insurance...............................................................
Rental Interruption Insurance ...............................................
Recordation Hereof; Title Insurance .....................................
Insurance Net Proceeds; Form of Policies ...........................
Installation of City's Personal Property .................................
Liens.....................................................................................
Advances................................................................................
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN;
OF NET PROCEEDS
Application of Net Proceeds .................................................
Termination or Abatement Due to Eminent Domain ............
Abatement Due to Damage or Destruction ..........................
Abatement Due to Non -Completion of the Project ...............
ARTICLE VII
OTHER COVENANTS OF THE CITY
Disclaimer of Warranties......................................................
Access to the Leased Property ............................................
Release and Indemnification Covenants ..............................
Assignment and Subleasing by the City ...............................
Amendment Hereof..............................................................
USE
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13
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14
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15
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16
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SECTION 7.6.
Tax Covenants........................................................................................18
SECTION 7.7.
Continuing Disclosure..............................................................................19
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1.
Events of Default Defined........................................................................19
SECTION 8.2.
Remedies on Default...............................................................................19
SECTION 8.3.
No Remedy Exclusive.............................................................................21
SECTION 8.4.
Agreement to Pay Attorneys' Fees and Expenses..................................21
SECTION 8.5.
No Additional Waiver Implied by One Waiver.........................................22
SECTION 8.6.
Application of Proceeds...........................................................................22
SECTION 8.7.
Trustee and Bond Owners to Exercise Rights........................................22
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1.
Security Deposit......................................................................................22
SECTION 9.2.
Optional Prepayment...............................................................................23
SECTION 9.3.
Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain....................................................................................................23
SECTION 9.4.
Credit for Amounts on Deposit................................................................23
ARTICLE X
MISCELLANEOUS
SECTION10.1.
Notices.....................................................................................................23
SECTION 10.2.
Binding Effect..........................................................................................24
SECTION 10.3.
Severability..............................................................................................24
SECTION 10.4.
Net -net -net Lease....................................................................................24
SECTION 10.5.
Third Party Beneficiary............................................................................24
SECTION 10.6.
Further Assurances and Corrective Instruments.....................................24
SECTION 10.7.
Execution in Counterparts.......................................................................24
SECTION 10.8.
Applicable Law........................................................................................24
SECTION 10.9.
Authority and City Representatives.........................................................24
SECTION10.10
Captions...................................................................................................24
APPENDIX A DESCRIPTION OF THE LEASED PROPERTY
APPENDIX B SCHEDULE OF LEASE PAYMENTS
APPENDIX C DESCRIPTION OF PROJECT
LEASE AGREEMENT
This LEASE AGREEMENT (this "Lease"), dated for convenience as of March 1, 2022,
Is between the LODI PUBLIC FINANCING AUTHORITY, a joint powers authority duly organized
and existing under the laws of the State of California, as lessor (the "Authority"), and the
CITY OF LODI, a general law city and municipal corporation duly organized and existing
under the Constitution and laws of the State of California, as lessee (the "City").
BACKGROUND:
1. The Authority previously issued its $19,080,000 Lodi Public Financing
Authority 2012 Refunding Lease Revenue Bonds (the "2012 Bonds") for the purpose of
refinancing outstanding certificates of participation that were executed and delivered to
finance various municipal facilities of the City.
2. In connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of
September 1, 2012, pursuant to which, respectively, the City leased to the Authority and
subleased from the Authority the land and improvements constituting the City's police
building and Carnegie Forum.
3. In order to take advantage of prevailing bond market conditions, the City is
proceeding to refund the 2012 Bonds.
4. The City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of capital improvements, including
a new animal shelter and park and playground improvements and upgrades (the
"Project").
5. To that end, the City has leased the land and improvements constituting the
City's police building and the City's Fire Station #2, as more particularly described in
Appendix A attached hereto and by this reference incorporated herein (the "Leased
Property")to the Authority under a Site Lease dated as of March 1, 2022, which has been
recorded concurrently herewith (the "Site Lease"), in consideration of the payment by the
Authority of an upfront rental payment (the "Site Lease Payment") which is sufficient to
provide funds for the refunding of the 2012 Bonds and the financing of the Project.
6. The Authority has authorized the issuance of its Lodi Public Financing
Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing) in the aggregate principal amount of $ (the "Bonds") under an
Indenture of Trust dated as of March 1, 2022 (the "Indenture"), between the Authority and
U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), for the
purpose of providing the funds to enable the Authority to pay the Site Lease Payment to
the City in accordance with the Site Lease.
7. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has agreed to lease the Leased Property
back to the City under this Lease under which the City agrees to pay semiannual Lease
Payments as the rental for the Leased Property.
8. The lease payments made by the City under this Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement dated as of March 1, 2022, between the Authority as assignor and the Trustee
as assignee, which has been recorded concurrently herewith.
9. The City and the Authority have found and determined that all acts and
proceedings required by law necessary to make this Lease, when executed by the City
and the Authority, the valid, binding and legal obligations of the City and the Authority, and
to constitute this Lease a valid and binding agreement for the uses and purposes herein
set forth in accordance with its terms, have been done and taken, and the execution and
delivery of this Lease have been in all respects duly authorized.
AGREEMENT:
In consideration of the material covenants contained in this Lease, the parties
hereto hereby formally covenant, agree and bind themselves as follows:
ARTICLE I
DEFINITIONS; RULES OF INTERPRETATION
SECTION 1.1. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms in this Lease have the respective meanings
given them in the Indenture.
SECTION 1.2. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular
includes the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and includes the neuter, masculine or feminine gender, as
appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and do not affect the
meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Lease; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Lease as a
whole and not to any particular Article, Section or subdivision hereof.
-2-
ARTICLE II
COVENANTS, REPRESENTATIONS AND WARRANTIES
SECTION 2.1. Covenants, Representations and Warranties of the City. The City
makes the following covenants, representations and warranties to the Authority, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The City is a general law city and
municipal corporation duly organized and validly existing under the
Constitution and laws of the State of California, has full legal right,
power and authority under the laws of the State of California to enter
into the Site Lease and this Lease and to carry out and consummate
all transactions contemplated hereby, and by proper action the City
has duly authorized the execution and delivery of the Site Lease and
this Lease.
(b) Due Execution. The representatives of the City executing the Site
Lease and this Lease have been fully authorized to execute the same
under a resolution duly adopted by the City Council of the City.
(c) Valid, Binding and Enforceable Obligations. The Site Lease and this
Lease have been duly authorized, executed and delivered by the City
and constitute the legal, valid and binding obligations of the City
enforceable against the City in accordance with their respective
terms.
(d) No Conflicts. The execution and delivery of the Site Lease and this
Lease, the consummation of the transactions therein and herein
contemplated and the fulfillment of or compliance with the terms and
conditions thereof and hereof, do not and will not conflict with or
constitute a violation or breach of or default (with due notice or the
passage of time or both) under any applicable law or administrative
rule or regulation, or any applicable court or administrative decree or
order, or any indenture, mortgage, deed of trust, lease, contract or
other agreement or instrument to which the City is a party or by which
it or its properties are otherwise subject or bound, or result in the
creation or imposition of any prohibited lien, charge or encumbrance
of any nature whatsoever upon any of the property or assets of the
City, which conflict, violation, breach, default, lien, charge or
encumbrance would have consequences that would materially and
adversely affect the consummation of the transactions contemplated
by the Site Lease and this Lease or the financial condition, assets,
properties or operations of the City.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the City or of the voters of the City, and
no consent, permission, authorization, order or license of, or filing or
registration with, any governmental authority is necessary in
connection with the execution and delivery of the Site Lease and this
Lease, or the consummation of any transaction therein and herein
-3-
contemplated, except as have been obtained or made and as are in
full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the City
after reasonable investigation, threatened against or affecting the
City or the assets, properties or operations of the City which, if
determined adversely to the City or its interests, would have a
material and adverse effect upon the consummation of the
transactions contemplated by or the validity of the Site Lease and this
Lease, or upon the financial condition, assets, properties or
operations of the City, and the City is not in default with respect to
any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or other governmental authority, which
default might have consequences that would materially and adversely
affect the consummation of the transactions contemplated by the Site
Lease and this Lease or the financial conditions, assets, properties
or operations of the City.
SECTION 2.2. Covenants, Representations and Warranties of the Authority. The
Authority makes the following covenants, representations and warranties to the City, the
Trustee as of the date of the execution and delivery of this Lease:
(a) Due Organization and Existence. The Authority is a joint exercise of
powers authority duly organized and existing under a joint powers
agreement and the laws of the State of California; has power to enter
into this Lease, the Site Lease, the Assignment Agreement and the
Indenture; is possessed of full power to own and hold, improve and
equip real and personal property, and to lease the same; and has
duly authorized the execution and delivery of each of the aforesaid
agreements and such agreements constitute the legal, valid and
binding obligations of the Authority, enforceable against the Authority
in accordance with their respective terms.
(b) Due Execution. The representatives of the Authority executing this
Lease, the Site Lease, the Assignment Agreement and the Indenture
are fully authorized to execute the same pursuant to official action
taken by the governing body of the Authority.
(c) Valid, Binding and Enforceable Obligations. This Lease, the Site
Lease, the Assignment Agreement and the Indenture have been duly
authorized, executed and delivered by the Authority and constitute
the legal, valid and binding agreements of the Authority, enforceable
against the Authority in accordance with their respective terms.
(d) No Conflicts. The execution and delivery of this Lease, the Site
Lease, the Assignment Agreement and the Indenture, the
consummation of the transactions herein and therein contemplated
and the fulfillment of or compliance with the terms and conditions
hereof, do not and will not conflict with or constitute a violation or
me
breach of or default (with due notice or the passage of time or both)
under any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any indenture,
mortgage, deed of trust, lease, contract or other agreement or
instrument to which the Authority is a party or by which it or its
properties are otherwise subject or bound, or result in the creation or
imposition of any prohibited lien, charge or encumbrance of any
nature whatsoever upon any of the property or assets of the Authority,
which conflict, violation, breach, default, lien, charge or encumbrance
would have consequences that would materially and adversely affect
the consummation of the transactions contemplated by this Lease,
the Site Lease, the Assignment Agreement and the Indenture or the
financial condition, assets, properties or operations of the Authority.
(e) Consents and Approvals. No consent or approval of any trustee or
holder of any indebtedness of the Authority, and no consent,
permission, authorization, order or license of, or filing or registration
with, any governmental authority is necessary in connection with the
execution and delivery of this Lease, the Site Lease, the Assignment
Agreement or the Indenture, or the consummation of any transaction
herein or therein contemplated, except as have been obtained or
made and as are in full force and effect.
(f) No Litigation. There is no action, suit, proceeding, inquiry or
investigation before or by any court or federal, state, municipal or
other governmental authority pending or, to the knowledge of the
Authority after reasonable investigation, threatened against or
affecting the Authority or the assets, properties or operations of the
Authority which, if determined adversely to the Authority or its
interests, would have a material and adverse effect upon the
consummation of the transactions contemplated by or the validity of
this Lease, the Site Lease, the Assignment Agreement or the
Indenture, or upon the financial condition, assets, properties or
operations of the Authority, and the Authority is not in default with
respect to any order or decree of any court or any order, regulation
or demand of any federal, state, municipal or other governmental
authority, which default might have consequences that would
materially and adversely affect the consummation of the transactions
contemplated by this Lease, the Site Lease, the Assignment
Agreement or the Indenture or the financial conditions, assets,
properties or operations of the Authority.
-5-
ARTICLE III
DEPOSIT AND APPLICATION OF FUNDS; ACQUISITION AND
CONSTRUCTION OF PROJECT; SUBSTITUTION AND
RELEASE OF PROPERTY
SECTION 3.1. Deposit of Moneys; Acquisition and Construction of Project.
(a) Deposit of Bond Proceeds. On the Closing Date, the Authority will cause
the proceeds of sale of the Bonds to be deposited with the Trustee. The Trustee shall
deposit such proceeds in accordance with Section 3.02 of the Indenture.
(b) Acquisition and Construction of the Project. The Authority hereby appoints
the City as its agent to carry out all phases of the acquisition and construction of the Project
under and in accordance with the provisions hereof. The City hereby accepts its
appointment as agent of the Authority and assumes all rights, liabilities, duties and
responsibilities of the Authority regarding the acquisition and construction of the Project.
The City, as agent of the Authority hereunder, shall enter into, administer and enforce all
purchase orders or other contracts relating to the acquisition and construction of the
Project. The City shall requisition the payment of Project Costs from amounts held by the
Trustee in the Project Fund, pursuant to and in accordance with Section 3.04 of the
Indenture. All contracts for, and all work relating to, the acquisition and construction of
the Project are subject to all applicable provisions of law relating to the acquisition,
construction, improvement, and equipping of like facilities and property by the City.
As agent of the Authority, the City hereby agrees to supervise and provide for, or
cause to be supervised and provided for, the acquisition and construction of the Project in
accordance with the plans and specifications, purchase orders, construction contracts and
other documents relating thereto and approved by the City under all applicable
requirements of law.
SECTION 3.2. Substitution of Property. The City has the option at any time and
from time to time, to substitute other real property (the "Substitute Property") for the
Leased Property or any portion thereof (the "Former Property"), upon satisfaction of all
of the following requirements which are hereby declared to be conditions precedent to
such substitution:
(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the San Joaquin County Recorder
sufficient memorialization of, an amendment hereof which adds the
legal description of the Substitute Property to Appendix A and deletes
therefrom the legal description of the Former Property.
(c) The City has obtained a CLTA policy of title insurance insuring the
City's leasehold estate hereunder in the Substitute Property, subject
only to Permitted Encumbrances, in an amount at least equal to the
estimated value thereof.
(d) The City has certified in writing to the Authority and the Trustee that
the Substitute Property serves the municipal purposes of the City and
constitutes property which the City is permitted to lease under the
laws of the State of California, and has been determined to be
essential to the proper, efficient and economic operation of the City
and to serve an essential governmental function of the City.
(e) The Substitute Property does not cause the City to violate any of its
covenants, representations and warranties made herein.
(g) The City has filed with the Authority and the Trustee a written
certificate of the City or other written evidencing stating that the useful
life of the Substitute Property at least extends to October 1, ,
that the estimated value of the Leased Property, after substitution of
the Substitute Property and release of the Former Property, is at least
equal to the aggregate Outstanding principal amount of the Bonds,
and the fair rental value of the Leased Property, after substitution of
the Substitute Property and release of the Former Property, is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(h) The City has mailed written notice of such substitution to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Former Property and commence as to the Substitute Property,
and all references to the Former Property will apply with full force and effect to the
Substitute Property. The City is not entitled to any reduction, diminution, extension or
other modification of the Lease Payments whatsoever as a result of any substitution of
property under this Section. The Authority and the City will execute, deliver and cause to
be recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Former Property and to cause the Substitute
Property to become subject to all of the terms and conditions of the Site Lease, this Lease
and the Assignment Agreement.
SECTION 3.3. Release of Property. The City has the option at any time and from
time to time to release any portion of the Leased Property from this Lease (the "Released
Property") provided that the City has satisfied all of the following requirements which are
hereby declared to be conditions precedent to such release:
(a) No Event of Default has occurred and is continuing.
(b) The City has filed with the Authority and the Trustee, and caused to
be recorded in the office of the San Joaquin County Recorder
sufficient memorialization of, an amendment hereof which removes
the Released Property from the Site Lease and this Lease.
(c) The City has certified in writing to the Authority and the Trustee that
the value of the property which remains subject to this Lease
following such release is at least equal to the aggregate Outstanding
principal amount of the Bonds, and the fair rental value of the property
1115A
which remains subject to this Lease following such release is at least
equal to the Lease Payments thereafter coming due and payable
hereunder.
(d) The City has mailed written notice of such release to each rating
agency which then maintains a rating on the Bonds.
Upon the satisfaction of all such conditions precedent, the Term of this Lease will
thereupon end as to the Released Property. The City is not entitled to any reduction,
diminution, extension or other modification of the Lease Payments whatsoever as a result
of such release. The Authority and the City shall execute, deliver and cause to be
recorded all documents required to discharge the Site Lease, this Lease and the
Assignment Agreement of record against the Released Property.
ARTICLE IV
LEASE OF LEASED PROPERTY; TERM OF THIS LEASE;
LEASE PAYMENTS
SECTION 4.1. Lease of Leased Property. The Authority hereby leases the Leased
Property to the City and the City hereby leases the Leased Property from the Authority,
upon the terms and conditions set forth in this Lease.
SECTION 4.2. Term. The Term of this Lease commences on the Closing Date and
ends on the date on which the Indenture is discharged in accordance with Section 10.03
thereof, but under any circumstances not later than October 1, . The provisions
of this Section are subject to the provisions of Section 6.2 relating to the taking in eminent
domain of the Leased Property in whole or in part.
SECTION 4.3. Lease Payments.
(a) Obligation to Pay. Subject to the provisions of Sections 6.2 and 6.3 and the
provisions of Article IX, the City agrees to pay to the Authority, its successors and assigns,
the Lease Payments in the respective amounts specified in Appendix B attached to this
Lease, to be due and payable in immediately available funds on the Interest Payment
Dates immediately following each of the respective Lease Payment Dates specified in
Appendix B, and to be deposited by the City with the Trustee on each of the Lease
Payment Dates specified in Appendix B. Any amount held in the Bond Fund, the Interest
Account and the Principal Account on any Lease Payment Date (other than amounts
resulting from the prepayment of the Lease Payments in part but not in whole under Article
IX, and amounts required for payment of past due principal or interest on any Bonds not
presented for payment) will be credited towards the Lease Payment then required to be
paid hereunder. The City is not required to deposit any Lease Payment with the Trustee
on any Lease Payment Date if the amounts then held in the Bond Fund, the Interest
Account and the Principal Account are at least equal to the Lease Payment then required
to be deposited with the Trustee. The Lease Payments payable in any Rental Period are
for the use of the Leased Property during that Rental Period.
(b) Effect of Prepayment. If the City prepays all Lease Payments in full under
Sections 9.2 or 9.3, the City's obligations under this Section will thereupon cease and
terminate. If the City prepays the Lease Payments in part but not in whole under Sections
9.2 or 9.3, the principal components of the remaining Lease Payments will be reduced in
integral multiples of $5,000 among Lease Payment Dates on a basis which corresponds
to the principal maturities of the Bonds which are redeemed thereby; and the interest
component of each remaining Lease Payment will be reduced by the aggregate
corresponding amount of interest which would otherwise be payable with respect to the
Bonds thereby redeemed under Section 4.01 of the Indenture.
(c) Rate on Overdue Payments. If the City fails to make any of the payments
required in this Section, the payment in default will continue as an obligation of the City
until the amount in default has been fully paid, and the City agrees to pay the same with
interest thereon, from the date of default to the date of payment at the highest rate of
interest on any Outstanding Bond.
(d) Fair Rental Value. The aggregate amount of the Lease Payments and
Additional Rental Payments coming due and payable during each Rental Period constitute
the total rental for the Leased Property for such Rental Period, and are payable by the City
in each Rental Period for and in consideration of the right of the use and occupancy of,
and the continued quiet use and enjoyment of the Leased Property during each Rental
Period. The parties hereto have agreed and determined that the total Lease Payments
represent the fair rental value of the Leased Property. In making that determination,
consideration has been given to the estimated value of the Leased Property, other
obligations of the City and the Authority under this Lease, the uses and purposes which
may be served by the Leased Property and the benefits therefrom which will accrue to the
City and the general public.
(e) Assignment. The City understands and agrees that all Lease Payments have
been assigned by the Authority to the Trustee in trust, under the Assignment Agreement,
for the benefit of the Owners of the Bonds, and the City hereby assents to such
assignment. The Authority hereby directs the City, and the City hereby agrees to pay to
the Trustee at its Office, all payments payable by the City under this Section and all
amounts payable by the City under Article IX.
SECTION 4.4. Source of Payments; Covenant to Budget and Appropriate. The
Lease Payments are payable from any source of available funds of the City, subject to the
provisions of Section 6.3. The City covenants to take all actions required to include the
Lease Payments in each of its budgets during the Term of this Lease and to make the
necessary appropriations for all Lease Payments and Additional Rental Payments. The
foregoing covenant of the City contained constitutes a duty imposed by law and each and
every public official of the City is required to take all actions required by law in the
performance of the official duty of such officials to enable the City to carry out and perform
the covenants and agreements in this Lease agreed to be carried out and performed by
the City.
SECTION 4.5. Additional Rental Payments. In addition to the Lease Payments, the
City shall pay when due the following amounts of Additional Rental Payments in
consideration of the lease of the Leased Property by the City from the Authority hereunder:
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(a) all fees and expenses incurred by the Authority in connection with or
by reason of its leasehold estate in the Leased Property, when due,
(b) all reasonable compensation to the Trustee for all services rendered
under the Indenture and for all reasonable expenses, charges, costs,
liabilities, legal fees and other disbursements incurred in and about
the performance of its powers and duties under the Indenture,
(c) the reasonable fees and expenses of such accountants, consultants,
attorneys and other experts as may be engaged by the Authority or
the Trustee to prepare audits, financial statements, reports, opinions
or provide such other services required under this Lease or the
Indenture,
(d) amounts coming due and payable as Excess Investment Earnings in
accordance with Section 7.6(e), and
(e) the reasonable out-of-pocket expenses of the Authority in connection
with the execution and delivery of this Lease or the Indenture, or in
connection with the issuance of the Bonds, including but not limited
to any and all expenses incurred in connection with the authorization,
sale and delivery of the Bonds, or incurred by the Authority in
connection with any litigation which may at any time be instituted
involving this Lease, the Bonds, the Indenture or any of the other
documents contemplated hereby or thereby, or otherwise incurred in
connection with the administration of this Lease.
SECTION 4.6. Quiet Enjoyment. Throughout the Term of this Lease, the Authority
shall provide the City with quiet use and enjoyment of the Leased Property and the City
will peaceably and quietly have and hold and enjoy the Leased Property, without suit,
trouble or hindrance from the Authority, except as expressly set forth in this Lease. The
Authority will, at the request of the City and at the City's cost, join in any legal action in
which the City asserts its right to such possession and enjoyment to the extent the
Authority may lawfully do so. Notwithstanding the foregoing, the Authority has the right to
inspect the Leased Property as provided in Section 7.2.
SECTION 4.7. Title. Upon the termination of this Lease (other than under Section
8.2(b) hereof), all right, title and interest of the Authority in and to the Leased Property
transfers to and vests in the City. The Authority shall take any and all steps and execute
and record any and all documents reasonably required by the City to consummate any
such transfer of title.
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ARTICLE V
MAINTENANCE; TAXES; INSURANCE; AND OTHER MATTERS
SECTION 5.1. Maintenance, Utilities, Taxes and Assessments. Throughout the
Term of this Lease, as part of the consideration for the rental of the Leased Property, all
improvement, repair and maintenance of the Leased Property are the responsibility of the
City, and the City will pay for or otherwise arrange for the payment of all utility services
supplied to the Leased Property, which may include, without limitation, janitor service,
security, power, gas, telephone, light, heating, water and all other utility services, and will
pay for or otherwise arrange for the payment of the cost of the repair and replacement of
the Leased Property resulting from ordinary wear and tear or want of care on the part of
the City or any assignee or sublessee thereof. In exchange for the Lease Payments herein
provided, the Authority agrees to provide only the Leased Property. The City waives the
benefits of subsections 1 and 2 of Section 1932, Section 1933(4) and Sections 1941 and
1942 of the California Civil Code, but such waiver does not limit any of the rights of the
City under the terms of this Lease.
The City shall also pay or cause to be paid all taxes and assessments of any type
or nature, if any, charged to the Authority or the City affecting the Leased Property or the
respective interests or estates therein; provided that with respect to special assessments
or other governmental charges that may lawfully be paid in installments over a period of
years, the City shall pay only such installments as are required to be paid during the Term
of this Lease as and when the same become due.
The City may, at its expense and in its name, in good faith contest any such taxes,
assessments, utility and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during the period
of such contest and any appeal therefrom unless the Authority notifies the City that, in its
reasonable opinion, by nonpayment of any such items the interest of the Authority in the
Leased Property will be materially endangered or the Leased Property or any part thereof
will be subject to loss or forfeiture, in which event the City shall promptly pay such taxes,
assessments or charges or provide the Authority with full security against any loss which
may result from nonpayment, in form satisfactory to the Authority and the Trustee.
SECTION 5.2. Modification of Leased Property. The City has the right, at its own
expense, to make additions, modifications and improvements to the Leased Property or
any portion thereof. All additions, modifications and improvements to the Leased Property
will thereafter comprise part of the Leased Property and become subject to the provisions
of this Lease. Such additions, modifications and improvements may not in any way
damage the Leased Property, or cause the Leased Property to be used for purposes other
than those authorized under the provisions of state and federal law; and the Leased
Property, upon completion of any additions, modifications and improvements made
thereto under this Section, must be of a value which is not substantially less than the value
thereof immediately prior to the making of such additions, modifications and
improvements. The City will not permit any mechanic's or other lien to be established or
remain against the Leased Property for labor or materials furnished in connection with any
remodeling, additions, modifications, improvements, repairs, renewals or replacements
made by the City under this Section; except that if any such lien is established and the
City first notifies or causes to be notified the Authority of the City's intention to do so, the
City may in good faith contest any lien filed or established against the Leased Property,
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and in such event may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom and shall provide
the Authority with full security against any loss or forfeiture which might arise from the
nonpayment of any such item, in form satisfactory to the Authority. The Authority will
cooperate fully in any such contest, upon the request and at the expense of the City.
SECTION 5.3. Liability and Property Damage Insurance. The City shall maintain or
cause to be maintained throughout the Term of this Lease, but only if and to the extent
available from reputable insurers at reasonable cost in the reasonable opinion of the City,
a standard commercial general liability insurance policy or policies in protection of the
Authority, the City, and their respective members, officers, agents, employees and
assigns. Said policy or policies shall provide for indemnification of said parties against
direct or contingent loss or liability for damages for bodily and personal injury, death or
property damage occasioned by reason of the operation of the Leased Property. Such
policy or policies shall provide coverage in such liability limits and be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained
as part of or in conjunction with any other insurance coverage carried by the City, and may
be maintained in whole or in part in the form of self-insurance by the City, subject to the
provisions of Section 5.7, or in the form of the participation by the City in a joint powers
agency or other program providing pooled insurance. The proceeds of such liability
insurance must be applied toward extinguishment or satisfaction of the liability with respect
to which paid.
SECTION 5.4. Casualty Insurance. The City shall procure and maintain, or cause
to be procured and maintained, throughout the Term of this Lease, casualty insurance
against loss or damage to all buildings situated on the Leased Property, in an amount at
least equal to the lesser of (a) 100% of the replacement value of the insured buildings, or
(b) 100% of the aggregate principal amount of the Outstanding Bonds. Such insurance
must, as nearly as practicable, cover loss or damage by explosion, windstorm, riot, aircraft,
vehicle damage, smoke and such other hazards as are normally covered by such
insurance, and must include earthquake insurance if available at reasonable cost from
reputable insurers in the judgment of the City. Such insurance may be subject to such
deductibles as the City deems adequate and prudent. Such insurance may be maintained
as part of or in conjunction with any other insurance coverage carried by the City, and may
be maintained in whole or in part in the form of the participation by the City in a joint powers
agency or other program providing pooled insurance; provided that such insurance may
not be maintained by the City in the form of self-insurance. The Net Proceeds of such
insurance must be applied as provided in Section 6.1.
SECTION 5.5. Rental Interruption Insurance. The City shall procure and maintain,
or cause to be procured and maintained, throughout the Term of this Lease, rental
interruption or use and occupancy insurance to cover loss, total or partial, of the use of
any portion of the Leased Property constituting buildings or other improvements as a result
of any of the hazards covered in the insurance required by Section 5.4, in an amount at
least equal to the maximum such Lease Payments coming due and payable during any
consecutive two Fiscal Years. Such insurance may be maintained as part of or in
conjunction with any other insurance coverage carried by the City, and may be maintained
in whole or in part in the form of the participation by the City in a joint powers agency or
other program providing pooled insurance; provided that such insurance may not be
maintained by the City in the form of self-insurance. The Net Proceeds of such insurance,
if any, must be paid to the Trustee and deposited in the Bond Fund, to be applied as a
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credit towards the payment of the Lease Payments allocable to the insured improvements
as the same become due and payable.
SECTION 5.6. Recordation Hereof; Title Insurance. On or before the Closing Date
the City shall, at its expense, (a) cause the Site Lease, the Assignment Agreement and
this Lease, or a memorandum hereof or thereof in form and substance approved by Bond
Counsel, to be recorded in the office of the San Joaquin County Recorder, and (b) obtain
a CLTA title insurance policy insuring the City's leasehold estate hereunder in the Leased
Property, subject only to Permitted Encumbrances, in an amount at least equal to the
aggregate principal amount of the Bonds. All Net Proceeds received under any such title
insurance policy must be deposited with the Trustee in the Bond Fund to be credited
towards the prepayment of the remaining Lease Payments under Section 9.3.
SECTION 5.7. Insurance Net Proceeds; Form of Policies. Each policy of insurance
maintained under Sections 5.4, 5.5 and 5.6 must name the Trustee as loss payee so as
to provide that all proceeds thereunder are payable to the Trustee. The City shall pay or
cause to be paid when due the premiums for all insurance policies required by this Lease.
All such policies shall provide that the Trustee is given 30 days' notice of each expiration,
any intended cancellation thereof or reduction of the coverage provided thereby. The City
must file with the Trustee annually, within 90 days following the close of each Fiscal Year,
a certificate of the City stating that all policies of insurance required hereunder are then in
full force and effect. The Trustee has no responsibility for the sufficiency, adequacy or
amount of any insurance or self-insurance herein required and is fully protected in
accepting payment on account of such insurance or any adjustment, compromise or
settlement of any loss.
If any insurance maintained under Section 5.3 is provided in the form of self-
insurance, the City must file with the Trustee annually, within 90 days following the close
of each Fiscal Year, a statement of the risk manager of the City or an independent
insurance adviser engaged by the City identifying the extent of such self-insurance and
stating the determination that the City maintains sufficient reserves with respect thereto.
If any such insurance is provided in the form of self-insurance by the City, the City has no
obligation to make any payment with respect to any insured event except from those
reserves.
SECTION 5.8. Installation of City's Personal Property. The City may at any time
and from time to time, in its sole discretion and at its own expense, install or permit to be
installed other items of equipment or other personal property in or upon the Leased
Property. All such items shall remain the sole property of the City, in which neither the
Authority nor the Trustee has any interest, and may be modified or removed by the City at
any time, provided that the City must repair all damage to the Leased Property resulting
from the installation, modification or removal of any such items. Nothing in this Lease
prevents the City from purchasing or leasing items to be installed under this Section under
a lease or conditional sale agreement, or subject to a vendor's lien or security agreement,
as security for the unpaid portion of the purchase price thereof, so long as no such lien or
security interest attaches to any part of the Leased Property.
SECTION 5.9. Liens. The City may not, directly or indirectly, create, incur, assume
or suffer to exist any mortgage, pledge, lien, charge, encumbrance or claim on or with
respect to the Leased Property, other than as herein contemplated and except for such
encumbrances as the City certifies in writing to the Trustee do not materially and adversely
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affect the leasehold estate of the City in the Leased Property hereunder. If any such
mortgage, pledge, lien, charge, encumbrance or claim does materially and adversely
affect the leasehold estate of the City in the Leased Property hereunder, the City will
promptly, at its own expense, take such action as may be necessary to duly discharge or
remove any such mortgage, pledge, lien, charge, encumbrance or claim, for which it is
responsible; provided that the City is not required to do so prior to the time when such
mortgage, pledge, lien, charge, encumbrance or claim actually causes such material
adverse effect. The City will reimburse the Authority for any expense incurred by it in
order to discharge or remove any such mortgage, pledge, lien, charge, encumbrance or
claim.
SECTION 5.10. Advances. If the City fails to perform any of its obligations under
this Article V, the Authority may (but is not required to) take such action as it deems
necessary to cure such failure, including the advancement of money, and the City shall
repay all such advances as Additional Rental Payments hereunder, with interest at the
rate set forth in Section 4.3(c).
ARTICLE VI
DAMAGE, DESTRUCTION AND EMINENT DOMAIN; USE OF NET
PROCEEDS
SECTION 6.1. Application of Net Proceeds. The Trustee, as assignee of the
Authority under the Assignment Agreement, has the right to receive all Net Proceeds. As
provided in the Indenture, the Trustee will deposit all Net Proceeds in the Insurance and
Condemnation Fund to be applied as set forth in Section 5.07 of the Indenture.
SECTION 6.2. Termination or Abatement Due to Eminent Domain. If the Leased
Property is taken permanently under the power of eminent domain or sold to a government
threatening to exercise the power of eminent domain, the Term of this Lease thereupon
ceases as of the day possession is taken. If less than all of the Leased Property is taken
permanently, or if the Leased Property is taken temporarily, under the power of eminent
domain, then:
(a) this Lease shall continue in full force and effect with respect thereto
and does not terminate by virtue of such taking, and the parties waive
the benefit of any law to the contrary; and
(b) the Lease Payments are subject to abatement in an amount
determined by the City such that the resulting Lease Payments
represent fair consideration for the use and occupancy of the
remaining usable portions of the Leased Property.
SECTION 6.3. Abatement Due to Damage or Destruction. The Lease Payments
are subject to abatement during any period in which by reason of damage or destruction
(other than by eminent domain which is hereinbefore provided for) there is substantial
interference with the use and occupancy by the City of the Leased Property or any portion
thereof. The Lease Payments are subject to abatement in an amount determined by the
City such that the resulting Lease Payments represent fair consideration for the use and
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occupancy of the remaining usable portions of the Leased Property not damaged or
destroyed. Such abatement will continue for the period commencing with such damage
or destruction and ending with the substantial completion of the work of repair or
reconstruction. In the event of any such damage or destruction, this Lease continues in
full force and effect and the City waives any right to terminate this Lease by virtue of any
such damage and destruction.
SECTION 6.4. Abatement Due to Non -Completion of the Project. The Lease
Payments are subject to abatement during any period prior to the issuance of a certificate
of occupancy for the Project, if it constitutes all or a portion of the Leased Property, there
is substantial interference with the use and occupancy by the City of the Leased Property
or any portion thereof. The Lease Payments are subject to abatement in an amount
determined by the City such that the resulting Lease Payments represent fair
consideration for the use and occupancy of the usable portions of the Leased Property.
Such abatement will continue for the period commencing with the substantial interference
with the use and occupancy of the Leased Property and ending with the substantial
completion of the Project. In the event of any such interference with use and occupancy
during construction of the Project, this Lease continues in full force and effect and the City
waives any right to terminate this Lease by virtue of any substantial interference.
Notwithstanding the foregoing, there shall be no abatement of Lease Payments under this
Section 6.4 to the extent that any capitalized interest is available to pay Lease Payments
which would otherwise be abated under this Section 6.4, it being hereby declared that
such capitalized interest constitutes a special fund for the payment of the Lease
Payments.
ARTICLE VII
OTHER COVENANTS OF THE CITY
SECTION 7.1. Disclaimer of Warranties. THE AUTHORITY AND THE TRUSTEE
MAKE NO AGREEMENT, WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO THE VALUE, DESIGN, CONDITION, MERCHANTABILITY OR
FITNESS FOR ANY PARTICULAR PURPOSE OR FITNESS FOR THE USE
CONTEMPLATED BY THE CITY OF THE LEASED PROPERTY OR ANY PORTION
THEREOF, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO
THE LEASED PROPERTY OR ANY PORTION THEREOF. THE CITY
ACKNOWLEDGES THAT THE AUTHORITY IS NOT A MANUFACTURER OF ANY
PORTION OF THE LEASED PROPERTY OR A DEALER THEREIN, THAT THE CITY
LEASES THE LEASED PROPERTY AS -IS, IT BEING AGREED THAT ALL OF THE
AFOREMENTIONED RISKS ARE TO BE BORNE BY THE CITY. The Authority has no
liability for incidental, indirect, special or consequential damages, in connection with or
arising out of this Lease for the existence, furnishing, functioning or use of the Leased
Property by the City.
SECTION 7.2. Access to the Leased Property. The City agrees that the Authority
and any Authorized Representative of the Authority, and the Authority's successors or
assigns, have the right at all reasonable times to enter upon and to examine and inspect
the Leased Property or any part thereof. The City further agrees that the Authority, any
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Authority Representative and the Authority's successors or assigns may have such rights
of access to the Leased Property or any component thereof as reasonably necessary to
cause the proper maintenance of the Leased Property if the City fails to perform its
obligations hereunder; provided, however, that neither the Authority nor any of its assigns
has any obligation to cause such proper maintenance.
SECTION 7.3. Release and Indemnification Covenants. The City agrees to
indemnify the Authority, the Trustee and their respective officers, agents, successors and
assigns, against all claims, losses and damages, including legal fees and expenses,
arising out of any of the following:
(a) the use, maintenance, condition or management of, or from any work
or thing done on the Leased Property by the City,
(b) any breach or default on the part of the City in the performance of any
of its obligations under this Lease,
(c) any negligence or willful misconduct of the City or of any of its agents,
contractors, servants, employees or licensees with respect to the
Leased Property,
(d) any intentional misconduct or negligence of any sublessee of the City
with respect to the Leased Property,
(e) the acquisition, construction, improvement and equipping of the
Leased Property, or the authorization of payment of the costs thereof,
or
(f) the acceptance and performance of the duties of the Trustee under
the Indenture and under this Lease.
No indemnification is made under this Section or elsewhere in this Lease for willful
misconduct or negligence under this Lease by the Authority, the Trustee or their respective
officers, agents, employees, successors or assigns.
SECTION 7.4. Assignment and Subleasing by the City. The City may sublease the
Leased Property, or any portion thereof, subject to all of the following conditions:
(a) this Lease and the obligation of the City to make Lease Payments
hereunder must remain obligations of the City;
(b) the City must, within 30 days after the delivery thereof, furnish or
cause to be furnished to the Authority and the Trustee a true and
complete copy of such sublease;
(c) no such sublease by the City may cause the Leased Property to be
used for a purpose which is not authorized under the provisions of
the laws of the State of California; and
(d) the City must furnish to the Authority and the Trustee a written opinion
of Bond Counsel stating that such sublease does not cause the
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interest on the Bonds to become included in gross income for
purposes of federal income taxation or to become subject to personal
income taxation by the State of California.
SECTION 7.5. Amendment Hereof. The Authority and the City may at any time
amend or modify any of the provisions of this Lease, but only: (a) with the prior written
consents of the Owners of a majority in aggregate principal amount of the Outstanding
Bonds; or (b) without the consent of the Trustee or any of the Bond Owners, but only if
such amendment or modification is for any one or more of the following purposes:
(i) to add to the covenants and agreements of the City contained in this
Lease, other covenants and agreements thereafter to be observed,
or to limit or surrender any rights or power herein reserved to or
conferred upon the City;
(ii) to make such provisions for the purpose of curing any ambiguity, or
of curing, correcting or supplementing any defective provision
contained herein, to conform to the original intention of the City and
the Authority;
(iii) to modify, amend or supplement this Lease in such manner as to
assure that the interest on the Bonds remains excluded from gross
income under the Tax Code;
(iv) to amend the description of the Leased Property to reflect accurately
the property originally intended to be included therein, or in
connection with any substitution or release of property under Sections
3.2 or 3.3;
(v) to obligate the City to pay additional amounts of rental for the use and
occupancy of the Leased Property, but only if (A) such additional
amounts of rental are pledged or assigned for the payment of any
bonds, notes, leases or other obligations the proceeds of which are
applied to finance or refinance the acquisition or construction of any
real or personal property for which the City is authorized to expend
funds subject to its control, (B) the City has obtained and filed with
the Trustee an appraisal showing that the appraised value of the
Leased Property is at least equal to the aggregate principal amount
of the Outstanding Bonds and all such other bonds, notes, leases or
other obligations, and (C) the City has filed with the Trustee written
evidence that the amendments made under this clause (v) will not of
themselves cause a reduction or withdrawal of any rating then
assigned to the Bonds; or
(vi) in any other respect whatsoever as the Authority and the City deem
necessary or desirable, if in the opinion of Bond Counsel such
modifications or amendments do not materially adversely affect the
interests of the Owners of the Bonds.
No such modification or amendment may (a) extend or have the effect of extending
any Lease Payment Date or reducing any Lease Payment or any premium payable upon
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the prepayment thereof, without the express consent of the Owners of the affected Bonds,
or (b) modify any of the rights or obligations of the Trustee without its written assent
thereto.
SECTION 7.6. Tax Covenants
(a) Private Business Use Limitation. The City shall assure that the proceeds of
the Bonds are not used in a manner which would cause the Bonds to satisfy the private
business tests of Section 141(b) of the Tax Code or the private loan financing test of
Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The City may not take any action or permit
or suffer any action to be taken if the result of the same would be to cause the Bonds to
be "federally guaranteed" within the meaning of Section 149(b) of the Tax Code.
(c) No Arbitrage. The City may not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any other
obligations which, if such action had been reasonably expected to have been taken, or
had been deliberately and intentionally taken, on the Closing Date, would have caused
the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Tax Code.
(d) Maintenance of Tax Exemption. The City shall take all actions necessary to
assure the exclusion of interest on the Bonds from the gross income of the Owners of the
Bonds to the same extent as such interest is permitted to be excluded from gross income
under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The City shall
calculate or cause to be calculated the Excess Investment Earnings in all respects at the
times and in the manner required under the Tax Code. The City shall pay the full amount
of Excess Investment Earnings to the United States of America in such amounts, at such
times and in such manner as may be required under the Tax Code. Such payments shall
be made by the City from any source of legally available funds of the City, and shall
constitute Additional Rental Payments hereunder.
The City shall keep or cause to be kept, and retain or cause to be retained for a
period of six years following the retirement of the Bonds, records of the determinations
made under this subsection (e). In order to provide for the administration of this subsection
(e), the City may provide for the employment of independent attorneys, accountants and
consultants compensated on such reasonable basis as the City may deem appropriate.
The Trustee has no duty or obligation to monitor or enforce compliance by the City of any
of the requirements under this subsection (e).
(f) Record Retention. The City will retain its records of all accounting and
monitoring it carries out with respect to the Bonds for at least 3 years after the Bonds
mature or are redeemed (whichever is earlier); however, if the Bonds are redeemed and
refunded, the City will retain its records of accounting and monitoring at least 3 years after
the earlier of the maturity or redemption of the obligations that refunded the Bonds.
(g) Compliance with Tax Certificate. The City will comply with the provisions
of the Certificate as to Arbitrage and the Use of Proceeds Certificate with respect to the
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Bonds, which are incorporated herein as if fully set forth herein. The covenants of this
Section will survive payment in full or defeasance of the Bonds.
SECTION 7.7. Continuing Disclosure. The City shall comply with and carry out all
of the provisions of the Continuing Disclosure Certificate executed by the City as of the
Closing Date, as originally executed and as it may be amended from time to time in
accordance with its terms. Notwithstanding any other provision of this Lease, failure of
the City to comply with such Continuing Disclosure Certificate will not constitute an Event
of Default, although any Participating Underwriter (as that term is defined in such
Continuing Disclosure Certificate) or any Owner or beneficial owner of the Bonds may take
such actions as may be necessary and appropriate to compel performance by the City of
its obligations under this Section, including seeking mandate or specific performance by
court order.
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
SECTION 8.1. Events of Default Defined. Any one or more of the following events
constitute an Event of Default hereunder:
(a) Failure by the City to pay any Lease Payment or other payment
required to be paid hereunder at the time specified herein.
(b) Failure by the City to observe and perform any covenant, condition or
agreement on its part to be observed or performed, other than as
referred to in the preceding subsection (a), for a period of 30 days
after written notice specifying such failure and requesting that it be
remedied has been given to the City by the Authority or the Trustee.
If in the reasonable opinion of the City the failure stated in the notice
can be corrected, but not within such 30 -day period, the failure will
not constitute an Event of Default if the City commences to cure the
failure within such 30 -day period and thereafter diligently and in good
faith cures the failure in a reasonable period of time.
(c) The filing by the City of a voluntary petition in bankruptcy, or failure
by the City promptly to lift any execution, garnishment or attachment,
or adjudication of the City as a bankrupt, or assignment by the City
for the benefit of creditors, or the entry by the City into an agreement
of composition with creditors, or the approval by a court of competent
jurisdiction of a petition applicable to the City in any proceedings
instituted under the provisions of the Federal Bankruptcy Code, as
amended, or under any similar acts which may hereafter be enacted.
SECTION 8.2. Remedies on Default. Whenever any Event of Default has happened
and is continuing, the Authority may exercise any and all remedies available under law or
granted under this Lease. Notwithstanding anything herein or in the Indenture to the
contrary, neither the Authority nor the Trustee may accelerate the Lease Payments or
otherwise declare any Lease Payments not then in default to be immediately due and
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payable. Each covenant hereof to be kept and performed by the City is expressly made
a condition and upon the breach thereof the Authority may exercise any and all rights
granted hereunder; except that no termination of this Lease may be effected either by
operation of law or acts of the parties hereto, except only in the manner herein expressly
provided. Upon the occurrence and during the continuance of any Event of Default, the
Authority may exercise each and every one of the following remedies, subject in all
respects to the limitations set forth in Section 8.3.
(a) Enforcement of Payments Without Termination. If the Authority does
not elect to terminate this Lease in the manner hereinafter provided
for in subparagraph (b) hereof, the City agrees to and shall remain
liable for the payment of all Lease Payments and the performance of
all conditions herein contained and shall reimburse the Authority for
any deficiency arising out of the re-leasing of the Leased Property,
or, if the Authority is unable to re -lease the Leased Property, then for
the full amount of all Lease Payments to the end of the Term of this
Lease, but said Lease Payments and/or deficiency shall be payable
only at the same time and in the same manner as hereinabove
provided for the payment of Lease Payments hereunder,
notwithstanding such entry or re-entry by the Authority or any suit in
unlawful detainer, or otherwise, brought by the Authority for the
purpose of effecting such re-entry or obtaining possession of the
Leased Property or the exercise of any other remedy by the Authority.
The City hereby irrevocably appoints the Authority as the agent and
attorney-in-fact of the City to enter upon and re -lease the Leased
Property upon the occurrence and continuation of an Event of Default
and to remove all personal property whatsoever situated upon the
Leased Property, to place the Leased Property in storage or other
suitable place in the County of San Joaquin for the account of and at
the expense of the City, and the City hereby exempts and agrees to
save harmless the Authority from any costs, loss or damage
whatsoever arising or occasioned by any such entry upon and re-
leasing of the Leased Property and the removal and storage of the
Leased Property by the Authority or its duly authorized agents in
accordance with the provisions herein contained. The City agrees
that the terms of this Lease constitute full and sufficient notice of the
right of the Authority to re -lease the Leased Property in the event of
such re-entry without effecting a surrender of this Lease, and further
agrees that no acts of the Authority in effecting such re-leasing shall
constitute a surrender or termination of this Lease irrespective of the
term for which such re-leasing is made or the terms and conditions of
such re-leasing, or otherwise, but that, on the contrary, in the event
of such default by the City the right to terminate this Lease shall vest
in the Authority to be effected in the sole and exclusive manner
hereinafter provided for in subparagraph (b) hereof. The City agrees
to surrender and quit possession of the Leased Property upon
demand of the Authority for the purpose of enabling the Leased
Property to be re -let under this paragraph, and the City further waives
the right to any rental obtained by the Authority in excess of the Lease
Payments and hereby conveys and releases such excess to the
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Authority as compensation to the Authority for its services in re-
leasing the Leased Property.
(b) Termination of Lease. If an Event of Default occurs and is continuing
hereunder, the Authority at its option may terminate this Lease and
re -lease all or any portion of the Leased Property. If the Authority
terminates this Lease at its option and in the manner hereinafter
provided on account of default by the City (and notwithstanding any
re-entry upon the Leased Property by the Authority in any manner
whatsoever or the re-leasing of the Leased Property), the City
nevertheless agrees to pay to the Authority all costs, loss or damages
howsoever arising or occurring payable at the same time and in the
same manner as is herein provided in the case of payment of Lease
Payments and Additional Rental Payments. Any surplus received by
the Authority from such re-leasing shall be deposited in the Bond
Fund. Neither notice to pay rent or to deliver up possession of the
premises given under law nor any proceeding in unlawful detainer
taken by the Authority shall of itself operate to terminate this Lease,
and no termination of this Lease on account of default by the City
shall be or become effective by operation of law, or otherwise, unless
and until the Authority shall have given written notice to the City of
the election on the part of the Authority to terminate this Lease. The
City covenants and agrees that no surrender of the Leased Property,
or of the remainder of the Term hereof or any termination of this
Lease shall be valid in any manner or for any purpose whatsoever
unless stated or accepted by the Authority by such written notice.
(c) Proceedings at Law or In Equity. If an Event of Default occurs and
continues hereunder, the Authority may take whatever action at law
or in equity may appear necessary or desirable to collect the amounts
then due and thereafter to become due hereunder or to enforce any
other of its rights hereunder.
SECTION 8.3. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority is intended to be exclusive and every such remedy is cumulative
and in addition to every other remedy given under this Lease or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or power accruing upon the
occurrence of any Event of Default impairs any such right or power or operates as a waiver
thereof, but any such right and power may be exercised from time to time and as often as
may be deemed expedient. In order to entitle the Authority to exercise any remedy
reserved to it in this Article VIII it is not necessary to give any notice, other than as
expressly required in this Article VIII or by law.
SECTION 8.4. Agreement to Pay Attorneys' Fees and Expenses. If the Authority
or the City defaults under any of the provisions of this Lease and the nondefaulting party
employs attorneys or incurs other expenses for the collection of moneys or the
enforcement or performance or observance of any obligation or agreement on the part of
the defaulting party herein contained, the defaulting party will on demand therefor pay to
the nondefaulting party the reasonable fees of such attorneys and such other expenses
so incurred by the nondefaulting party; provided, however, that the Trustee shall not be
required to expend its own funds for any payment described in this Section.
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SECTION 8.5. No Additional Waiver Implied by One Waiver. If the Authority or the
City breaches any agreement in this Lease and thereafter the other party waives the
breach, such waiver is limited to the particular breach so waived and does not operate to
waive any other breach hereunder.
SECTION 8.6. Application of Proceeds. All net proceeds received from the re -lease
of the Leased Property under this Article VIII, and all other amounts derived by the
Authority or the Trustee as a result of the occurrence of an Event of Default, must be paid
to and applied by the Trustee in accordance with Section 7.03 of the Indenture.
SECTION 8.7. Trustee and Bond Owners to Exercise Rights. Such rights and
remedies as are given to the Authority under this Article VIII have been assigned by the
Authority to the Trustee under the Assignment Agreement for the benefit of the Bond
Owners, to which assignment the City hereby consents. The Trustee and the Bond
Owners shall exercise such rights and remedies in accordance with the Indenture.
ARTICLE IX
PREPAYMENT OF LEASE PAYMENTS
SECTION 9.1. Security Deposit. Notwithstanding any other provision of this Lease,
the City may on any date secure the payment of the Lease Payments allocable to the
Leased Property in whole or in part by depositing with the Trustee an amount of cash
which, together with other available amounts on deposit in the funds and accounts
established under the Indenture, is either:
(a) sufficient to pay such Lease Payments, including the principal and
interest components thereof, in accordance with the Lease Payment
schedule set forth in Appendix B, or
(b) invested in whole or in part in non -callable Federal Securities in such
amount as will, in the opinion of an independent certified public
accountant, (which opinion must be addressed and delivered to the
Trustee), together with interest to accrue thereon and together with
any cash which is so deposited, be fully sufficient to pay such Lease
Payments when due under Section 4.3(a), as the City instructs at the
time of said deposit.
If the City makes a security deposit under this Section with respect to all unpaid
Lease Payments, and notwithstanding the provisions of Section 4.2, (a) the Term of this
Lease will continue, (b) all obligations of the City under this Lease, and all security
provided by this Lease for said Lease Payments, will thereupon cease and terminate,
excepting only the obligation of the City to make, or cause to be made all of said Lease
Payments from such security deposit, and (c) under Section 4.7, title to the Leased
Property will vest in the City on the date of said deposit automatically and without further
action by the City or the Authority. Said security deposit constitutes a special fund for the
payment of Lease Payments in accordance with the provisions of this Lease.
902
SECTION 9.2. Optional Prepayment. The City has the option to prepay the principal
components of the Lease Payments in whole, or in part in any integral multiple of $5,000,
from any source of legally available funds, on any date on or after April 1, , at a
prepayment price equal to the aggregate principal components of the Lease Payments to
be prepaid, together with the interest component of the Lease Payment required to be
paid on such Interest Payment Date, and together with a prepayment premium equal to
the premium (if any) required to be paid on the resulting redemption of Bonds under
Section 4.01(a) of the Indenture. Such prepayment price shall be deposited by the Trustee
in the Redemption Fund to be applied to the redemption of Bonds under Section 4.01(a)
of the Indenture. The City shall give written notice to the Trustee of its intention to prepay
the Lease Payments under this Section in sufficient time to enable the Trustee to give
notice of the corresponding redemption of Bonds in accordance with Section 4.03 of the
Indenture. .
SECTION 9.3. Mandatory Prepayment From Net Proceeds of Insurance or Eminent
Domain. The City shall prepay the principal components of the Lease Payments allocable
to the Leased Property in whole or in part on any date, from and to the extent of any Net
Proceeds of insurance award or eminent domain award with respect to the Leased
Property theretofore deposited in the Redemption Fund for that purpose under Article VI
hereof and Section 5.07 of the Indenture. Such Net Proceeds, to the extent remaining
after payment of any delinquent Lease Payments, will be credited towards the City's
obligations under this Section and applied to the corresponding redemption of Bonds
under Section 4.01(b) of the Indenture.
SECTION 9.4. Credit for Amounts on Deposit. If the principal components of the
Lease Payments are prepaid in full under this Article IX, such that the Indenture is
discharged by its terms as a result of such prepayment, at the written election of the City
filed with the Trustee any or all amounts then on deposit in the Bond Fund (and the
accounts therein) will be credited towards the amounts then required to be so prepaid.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. Notices. Any notice, request, complaint, demand or other
communication under this Lease shall be given by first class mail or personal delivery to
the party entitled thereto at its address set forth below, or by facsimile transmission or
other form of telecommunication, at its number set forth below. Notice shall be effective
either (a) upon transmission by facsimile transmission or other form of telecommunication,
(b) 48 hours after deposit in the United States of America first class mail, postage prepaid,
or (c) in the case of personal delivery to any person, upon actual receipt. The Authority,
the City or the Trustee may, by written notice to the other parties, from time to time modify
the address or number to which communications are to be given hereunder.
If to the Authority City of Lodi
or the City. 221 West Pine Street
Lodi, CA 95240
Attention: City Manager
Fax: (209) 333-6807
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If to the Trustee: U.S. Bank Trust Company, National Association
Attn.: Global Corporate Trust
One California Street, Suite 1000
San Francisco, CA 94111
Fax: 415-677-3768
SECTION 10.2. Binding Effect. This Lease inures to the benefit of and binds the
Authority, the City and their respective successors and assigns.
SECTION 10.3. Severability. If any provision of this Lease is held invalid or
unenforceable by any court of competent jurisdiction, such holding will not invalidate or
render unenforceable any other provision hereof.
SECTION 10.4. Net -net -net Lease. This Lease is deemed and construed to be a
"net -net -net lease" and the City hereby agrees that the Lease Payments are an absolute
net return to the Authority, free and clear of any expenses, charges or set -offs whatsoever.
SECTION 10.5. Third Party Beneficiary. The Trustee is hereby made a third party
beneficiary hereunder with all rights of a third party beneficiary.
SECTION 10.6. Further Assurances and Corrective Instruments. The Authority and
the City shall, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements hereto and such further
instruments as may reasonably be required for correcting any inadequate or incorrect
description of the Leased Property hereby leased or intended so to be or for carrying out
the expressed intention of this Lease.
SECTION 10.7. Execution in Counterparts. This Lease may be executed in several
counterparts, each of which is an original and all of which constitute but one and the same
instrument.
SECTION 10.8. Applicable Law. This Lease is governed by and construed in
accordance with the laws of the State of California.
SECTION 10.9. Authority and City Representatives. Whenever under the
provisions of this Lease the approval of the Authority or the City is required, or the Authority
or the City is required to take some action at the request of the other, such approval or
such request shall be given for the Authority and for the City by an Authorized
Representative thereof, and any party hereto may conclusively rely upon any such
approval or request.
SECTION 10.10. Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of any
provisions or Section of this Lease.
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IN WITNESS WHEREOF, the Authority and the City have caused this Lease to be
executed in their respective names by their duly authorized officers, all as of the date first
above written.
Attest:
Attest:
[to come]
Secretary
[to come]
City Clerk
LODI PUBLIC FINANCING AUTHORITY, as
lessor
M
Steve Schwabauer
Executive Director
CITY OF LODI, as lessee
By
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Steve Schwabauer
City Manager
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of
Lodi, County of San Joaquin, which is more particularly described as follows:
TRACT ONE:
PARCEL ONE:
THE SOUTH 120 FEET OF THE WEST 50 FEET OF LOT 8, IN BLOCK 2, AS SHOWN
UPON MAP ENTITLED CITY OF LODI, FILED FOR RECORD AUGUST 25, 1869, IN
VOL. 2 OF MAPS AND PLATS, PAGE 12, SAN JOAQUIN COUNTY RECORDS.
PARCEL TWO:
THE NORTH 50 FEET OF THE WEST 50 FEET OF LOT 8 AND THE EAST 30 FEET
OF LOT 8, ALL IN BLOCK 2, AS SHOWN UPON MAP ENTITLED CITY OF LODI,
FILED FOR RECORDED AUGUST 25, 1869, IN VOL 2 OF MAPS AND PLATS, PAGE
12, SAN JOAQUIN COUNTY RECORDS.
PARCEL THREE:
THE WEST 10 FEET OF LOT 7, IN BLOCK 2, AS SHOWN UPON MAP ENTITLED
CITY OF LODI FILED FOR RECORD AUGUST 25, 1869, IN VOL 2 OF MAPS AND
PLATS, PAGE 12, SAN JOAQUIN
COUNTY RECORDS.
PARCEL FOUR:
COMMENCING AT THE SOUTH END OF THE LINE BETWEEN LOTS 6 AND 7, IN
BLOCK 2 AND RUNNING IN A WESTERLY DIRECTION ALONG THE NORTH SIDE
OF ELM STREET 70 FEET; THENCE NORTHERLY AND PARALLEL WITH THE
BOUNDARY LINES OF SAID LOTS, 170 FEET; THENCE EASTERLY 70 FEET;
THENCE IN A SOUTHERLY DIRECTION 170 FEET TO THE POINT OF BEGINNING,
BEING THE EAST 70 FEET OF LOT 7 IN BLOCK NO. 2 IN THE TOWN OF LODI,
(NOW CITY OF LODI)
SAVE AND EXCEPT THEREFROM THE EAST 5 FEET THEREOF, HERETOFORE
CONVEYED TO DAN W. BIRD, ALL ACCORDING TO THE OFFICIAL MAP OF THE
FORMER TOWN OF MOKELUMNE, NOR ON FILE IN THE OFFICE OF THE COUNTY
RECORDER, COUNTY OF SAN JOAQUIN, STATE OF CALIFORNIA.
PARCEL FIVE:
THE WEST 50 FEET OF LOT 6 AND THE EAST 5 FEET OF LOT 7 IN BLOCK 2 OF
MOKELUMNE (NOT CITY OF LODI) ACCORDING TO THE OFFICIAL MAPS OR PLAT
F-115
THEREOF FILED AUGUST 25, 1869 AT 8:48 A.M., IN BOOK OF MAPS AND PLATS,
VOLUME 2, PAGE 12, OF SAN JOAQUIN COUNTY RECORDS.
PARCEL SIX:
THE WEST 20 FEET OF LOT 5 AND THE EAST 30 FEET OF LOT 6, IN BLOCK 2,
CITY OF LODI, ACCORDING TO THE OFFICIAL MAP OR PLAT THEREOF, FILED
FOR RECORD AUGUST 25, 1869, IN VOLUME 2 OF MAPS AND PLATS, PAGE 12
SAN JOAQUIN COUNTY RECORDS.
A.P.N. 043-022-13
TRACT TWO:
PARCEL ONE:
LOT 2, IN BLOCK 1, AS SHOWN UPON MAP ENTITLED WEST LODI, FILED FOR
RECORD SEPTEMBER 10, 1904, IN VOL. 3 OF MAPS AND PLATS, PAGE 25 SAN
JOAQUIN COUNTY RECORDS.
PARCEL ONE A:
THE EASTERLY 0.60 FEET OF THE FOLLOWING DESCRIBED LAND:
COMMENCING AT THE SOUTHEAST CORNER OF BLOCK 1 OF WEST LODI, AS
SHOWN IN THE MAP FILED FOR RECORD IN BOOK OF MAPS AND PLATS.
VOLUME 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS; THENCE NORTH 86
17'30" WEST 119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE
SOUTHEAST CORNER OF LOT 3 OF SAID BLOCK 1, SAID SOUTHEAST CORNER
ALSO BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 86 17'30" WEST
119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE SOUTHWEST
CORNER OF LOT 4 OF SAID BLOCK 1; THENCE NORTH 3 42'40" EAST 169.83
FEET ALONG THE WEST LINE OF SAID LOT 4 TO THE NORTHWEST CORNER
THEREOF; THENCE SOUTH 86 16'10" EAST 119.96 ALONG THE
NORTH LINE OF SAID LOTS 4 AND 3 TO THE NORTHEAST CORNER OF SAID LOT
3; THENCE SOUTH 03 43'50" WEST 169.79 FEET ALONG THE EAST LINE OF SAID
LOT 3 TO THE TRUE POINT OF BEGINNING.
SAID PARCEL ONE AND ONE A ABOVE ARE DESCRIBED ON THAT CERTAIN
CERTIFICATE OF LOT LINE ADJUSTMENT RECORDED JUNE 27, 2005 AS
INSTRUMENT NO. 2005-154383, OF OFFICIAL RECORDS.
PARCEL TWO:
LOT 1 IN BLOCK 1 OF WEST LODI, ACCORDING TO THE OFFICIAL MAP FOR PLAT
THEREOF FILED FOR RECORDED SEPTEMBER 10, 1904, AND RECORDED IN
BOOK OF MAPS AND PLATS, VOL 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS.
TOGETHER WITH ALL THAT PORTION OF PLEASANT AVENUE FROM THE NORTH
LINE OF ELM STREET TO THE SOUTH LINE OF THE 20 FOOT ALLEY BETWEEN
ELM STREET AND LOCUST STREET AS SET FORTH AND DEPICTED IN
RESOLUTION OF ABANDONMENT RECORDED OCTOBER 8, 2001, AS DOCUMENT
NO. 01164151 SAN JOAQUIN PUBLIC RECORDS.
UVA
A.P.N. 037-270-50
[add Fire Station #2]
End of Legal Description
I� C
APPENDIX B
SCHEDULE OF LEASE PAYMENTS
Lease Principal Interest Aggregate
Payment Date* Component Component Lease Payment
* Lease Payment Dates are the Business Day immediately preceding each date listed in the
schedule
B-1
APPENDIX C
DESCRIPTION OF PROJECT
The Project consists of the acquisition and construction of an Animal Shelter to be
owned and operated by the City, park and playground upgrades and improvements,
and such other improvements identified by the City from time to time.
C-1
Jones Hall 2-23-22 Agenda
TO BE RECORDED AND WHEN RECORDED
RETURN TO:
Jones Hall, A Professional Law Corporation
475 Sansome Street, Suite 1700
San Francisco, California 94111
Attention: Christopher K. Lynch, Esq.
THIS DOCUMENT IS EXEMPT FROM RECORDING FEES UNDER SECTION 27383 OF THE
CALIFORNIA GOVERNMENT CODE.
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "Agreement"), dated for convenience as of
March 1, 2022, is between the LODI PUBLIC FINANCING AUTHORITY, a joint powers authority
duly organized and existing under the laws of the State of California (the "Authority"), and
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association
organized and existing under the laws of the United States of America, as trustee (the
"Trustee").
BACKGROUND:
1. The Authority previously issued its $19,080,000 Lodi Public Financing
Authority 2012 Refunding Lease Revenue Bonds (the "2012 Bonds") for the purpose of
refinancing outstanding certificates of participation that were executed and delivered to
finance various municipal facilities of the City.
2. In connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of
September 1, 2012, pursuant to which, respectively, the City leased to the Authority and
subleased from the Authority the land and improvements constituting the City's police
building and Carnegie Forum.
3. In order to take advantage of prevailing bond market conditions, the City is
proceeding to refund the 2012 Bonds.
4. The City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of capital improvements, including,
among other things, a new animal shelter and park and playground improvements and
upgrades (the "Project").
5. To that end, the City has leased the land and improvements constituting the
City's police building and the City's Fire Station #2, as more particularly described in
Appendix A attached hereto and by this reference incorporated herein (the "Leased
Property"), to the Authority under a Site Lease dated as of March 1, 2022, which has been
recorded concurrently herewith (the "Site Lease"), in consideration of the payment by the
Authority of an upfront rental payment (the "Site Lease Payment") that is sufficient to
provide funds for the refunding of the 2012 Bonds and the financing of the Project.
6. The Authority has authorized the issuance of its Lodi Public Financing
Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing) in the aggregate principal amount of $ (the "Bonds") under an
Indenture of Trust dated as of March 1, 2022 (the "Indenture"), between the Authority and
U.S. Bank Trust Company, National Association, as trustee (the "Trustee"), for the
purpose of providing the funds to enable the Authority to pay the Site Lease Payment to
the City in accordance with the Site Lease.
7. In order to provide revenues which are sufficient to enable the Authority to pay
debt service on the Bonds, the Authority has agreed to lease the Leased Property back to
the City under the Lease Agreement dated as of March 1, 2022 which has been recorded
concurrently herewith (the "Lease") under which the City has agreed to pay semiannual
Lease Payments as the rental for the Leased Property.
8. The Authority has requested the Trustee to enter into this Agreement for the
purpose of assigning certain of its rights under the Lease to the Trustee for the benefit of
the Bond owners.
AGREEMENT:
In consideration of the material covenants contained in this Agreement, the parties
hereto hereby formally covenant, agree and bind themselves as follows:
SECTION 1. Defined Terms. All capitalized terms not otherwise defined herein
have the respective meanings given those terms in the Indenture.
SECTION 2. Assignment. The Authority hereby assigns to the Trustee, for the
benefit of the Owners of all Bonds which are issued and Outstanding under the Indenture,
all of the Authority's rights under the Lease (excepting only the Authority's rights under
Sections 4.5, 5.10, 7.3 and 8.4 of the Lease), including but not limited to:
(a) the right to receive and collect all of the Lease Payments from the
City under the Lease;
(b) the right to receive and collect any proceeds of any insurance
maintained thereunder with respect to the Leased Property, or any
eminent domain award (or proceeds of sale under threat of eminent
domain) paid with respect to the Leased Property; and
(c) the right to exercise such rights and remedies conferred on the
Authority under the Lease as may be necessary or convenient (i) to
-2-
enforce payment of the Lease Payments and any amounts required
to be deposited in the Insurance and Condemnation Fund established
under Section 5.07 of the Indenture, or (ii) otherwise to protect the
interests of the Bond Owners in the event of a default by the City
under the Lease.
The Trustee shall administer all of the rights assigned to it by the Authority under
this Agreement in accordance with the provisions of the Indenture, for the benefit of the
Owners of Bonds. The assignment made under this Section 2 is absolute and irrevocable,
and without recourse to the Authority.
SECTION 3. Acceptance. The Trustee hereby accepts the assignments made
herein for the purpose of securing the payments due under the Lease and Indenture to,
and the rights under the Lease and Indenture of, the Owners of the Bonds, all subject to
the provisions of the Indenture. The recitals contained herein are those of the Authority
and not of the Trustee, and the Trustee assumes no responsibility for the correctness
thereof.
SECTION 4. Conditions. This Agreement confers no rights and imposes no duties
upon the Trustee beyond those expressly provided in the Indenture. The assignment
hereunder to the Trustee is solely in its capacity as Trustee under the Indenture.
SECTION 5. Execution in Counterparts. This Agreement may be executed in any
number of counterparts, each of which is an original and all together constitute one and
the same agreement. Separate counterparts of this Agreement may be separately
executed by the Trustee and the Authority, both with the same force and effect as though
the same counterpart had been executed by the Trustee and the Authority.
SECTION 6. Binding Effect. This Agreement inures to the benefit of and binds the
Authority and the Trustee, and their respective successors and assigns, subject, however,
to the limitations contained herein.
SECTION 7. Governing Law. This Agreement is governed by the Constitution and
laws of the State of California.
-3-
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers as of the day and year first written above.
Attest:
[to come]
Secretary
LODI PUBLIC FINANCING AUTHORITY
Steve Schwabauer
Executive Director
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION, as Trustee
a
ie
Serena M. Kohne
Authorized Officer
APPENDIX A
DESCRIPTION OF THE LEASED PROPERTY
The Leased Property consists of that certain real property situated in the City of
Lodi, County of San Joaquin, which is more particularly described as follows:
TRACT ONE:
PARCEL ONE:
THE SOUTH 120 FEET OF THE WEST 50 FEET OF LOT 8, IN BLOCK 2, AS SHOWN
UPON MAP ENTITLED CITY OF LODI, FILED FOR RECORD AUGUST 25, 1869, IN
VOL. 2 OF MAPS AND PLATS, PAGE 12, SAN JOAQUIN COUNTY RECORDS.
PARCEL TWO:
THE NORTH 50 FEET OF THE WEST 50 FEET OF LOT 8 AND THE EAST 30 FEET
OF LOT 8, ALL IN BLOCK 2, AS SHOWN UPON MAP ENTITLED CITY OF LODI,
FILED FOR RECORDED AUGUST 25, 1869, IN VOL 2 OF MAPS AND PLATS, PAGE
12, SAN JOAQUIN COUNTY RECORDS.
PARCEL THREE:
THE WEST 10 FEET OF LOT 7, IN BLOCK 2, AS SHOWN UPON MAP ENTITLED
CITY OF LODI FILED FOR RECORD AUGUST 25, 1869, IN VOL 2 OF MAPS AND
PLATS, PAGE 12, SAN JOAQUIN
COUNTY RECORDS.
PARCEL FOUR:
COMMENCING AT THE SOUTH END OF THE LINE BETWEEN LOTS 6 AND 7, IN
BLOCK 2 AND RUNNING IN A WESTERLY DIRECTION ALONG THE NORTH SIDE
OF ELM STREET 70 FEET; THENCE NORTHERLY AND PARALLEL WITH THE
BOUNDARY LINES OF SAID LOTS, 170 FEET; THENCE EASTERLY 70 FEET;
THENCE IN A SOUTHERLY DIRECTION 170 FEET TO THE POINT OF BEGINNING,
BEING THE EAST 70 FEET OF LOT 7 IN BLOCK NO. 2 IN THE TOWN OF LODI,
(NOW CITY OF LODI)
SAVE AND EXCEPT THEREFROM THE EAST 5 FEET THEREOF, HERETOFORE
CONVEYED TO DAN W. BIRD, ALL ACCORDING TO THE OFFICIAL MAP OF THE
FORMER TOWN OF MOKELUMNE, NOR ON FILE IN THE OFFICE OF THE COUNTY
RECORDER, COUNTY OF SAN JOAQUIN, STATE OF CALIFORNIA.
PARCEL FIVE:
THE WEST 50 FEET OF LOT 6 AND THE EAST 5 FEET OF LOT 7 IN BLOCK 2 OF
MOKELUMNE (NOT CITY OF LODI) ACCORDING TO THE OFFICIAL MAPS OR PLAT
THEREOF FILED AUGUST 25, 1869 AT 8:48 A.M., IN BOOK OF MAPS AND PLATS,
VOLUME 2, PAGE 12, OF SAN JOAQUIN COUNTY RECORDS.
PARCEL SIX:
THE WEST 20 FEET OF LOT 5 AND THE EAST 30 FEET OF LOT 6, IN BLOCK 2,
CITY OF LODI, ACCORDING TO THE OFFICIAL MAP OR PLAT THEREOF, FILED
FOR RECORD AUGUST 25, 1869, IN VOLUME 2 OF MAPS AND PLATS, PAGE 12
SAN JOAQUIN COUNTY RECORDS.
A.P.N. 043-022-13
TRACT TWO:
PARCEL ONE:
LOT 2, IN BLOCK 1, AS SHOWN UPON MAP ENTITLED WEST LODI, FILED FOR
RECORD SEPTEMBER 10, 1904, IN VOL. 3 OF MAPS AND PLATS, PAGE 25 SAN
JOAQUIN COUNTY RECORDS.
PARCEL ONE A:
THE EASTERLY 0.60 FEET OF THE FOLLOWING DESCRIBED LAND:
COMMENCING AT THE SOUTHEAST CORNER OF BLOCK 1 OF WEST LODI, AS
SHOWN IN THE MAP FILED FOR RECORD IN BOOK OF MAPS AND PLATS.
VOLUME 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS; THENCE NORTH 86
17'30" WEST 119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE
SOUTHEAST CORNER OF LOT 3 OF SAID BLOCK 1, SAID SOUTHEAST CORNER
ALSO BEING THE TRUE POINT OF BEGINNING; THENCE NORTH 86 17'30" WEST
119.90 FEET ALONG THE SOUTH LINE OF SAID BLOCK 1 TO THE SOUTHWEST
CORNER OF LOT 4 OF SAID BLOCK 1; THENCE NORTH 3 42'40" EAST 169.83
FEET ALONG THE WEST LINE OF SAID LOT 4 TO THE NORTHWEST CORNER
THEREOF; THENCE SOUTH 86 16'10" EAST 119.96 ALONG THE
NORTH LINE OF SAID LOTS 4 AND 3 TO THE NORTHEAST CORNER OF SAID LOT
3; THENCE SOUTH 03 43'50" WEST 169.79 FEET ALONG THE EAST LINE OF SAID
LOT 3 TO THE TRUE POINT OF BEGINNING.
SAID PARCEL ONE AND ONE A ABOVE ARE DESCRIBED ON THAT CERTAIN
CERTIFICATE OF LOT LINE ADJUSTMENT RECORDED JUNE 27, 2005 AS
INSTRUMENT NO. 2005-154383, OF OFFICIAL RECORDS.
PARCEL TWO:
LOT 1 IN BLOCK 1 OF WEST LODI, ACCORDING TO THE OFFICIAL MAP FOR PLAT
THEREOF FILED FOR RECORDED SEPTEMBER 10, 1904, AND RECORDED IN
BOOK OF MAPS AND PLATS, VOL 3 PAGE 25, SAN JOAQUIN COUNTY RECORDS.
TOGETHER WITH ALL THAT PORTION OF PLEASANT AVENUE FROM THE NORTH
LINE OF ELM STREET TO THE SOUTH LINE OF THE 20 FOOT ALLEY BETWEEN
ELM STREET AND LOCUST STREET AS SET FORTH AND DEPICTED IN
RESOLUTION OF ABANDONMENT RECORDED OCTOBER 8, 2001, AS DOCUMENT
NO. 01164151 SAN JOAQUIN PUBLIC RECORDS.
A.P.N. 037-270-50
[add Fire Station #2]
End of Legal Description
A-3
Jones Hall 2-23-22 Agenda
INDENTURE OF TRUST
Dated as of March 1, 2022
between
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as Trustee
and the
LODI PUBLIC FINANCING AUTHORITY
Authorizing the Issuance of
Lodi Public Financing Authority
2022 Lease Revenue Bonds
(2012 Refunding; Capital Projects Financing)
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION1.01.
Definitions...........................................................................................................2
SECTION1.02.
Authorization.......................................................................................................2
SECTION 1.03.
Interpretation.......................................................................................................3
ARTICLE II
THE BONDS
SECTION 2.01.
Authorization of Bonds........................................................................................3
SECTION 2.02.
Terms of the Bonds.............................................................................................3
SECTION 2.03.
Transfer and Exchange of Bonds........................................................................5
SECTION 2.04.
Book -Entry System.............................................................................................5
SECTION 2.05.
Registration Books..............................................................................................7
SECTION 2.06.
Form and Execution of Bonds.............................................................................7
SECTION 2.07.
Bonds Mutilated, Lost, Destroyed or Stolen........................................................8
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF PROCEEDS
SECTION 3.01.
Issuance of the Bonds.........................................................................................8
SECTION 3.02.
Application of Proceeds of Sale of Bonds; Transfer of Prior Funds .....................8
SECTION 3.03.
Establishment and Application of Costs of Issuance Fund..................................9
SECTION 3.04.
Establishment and Application of Project Fund...................................................9
SECTION 3.05.
Validity of Bonds...............................................................................................10
ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01.
Terms of Redemption........................................................................................10
SECTION 4.02.
Selection of Bonds for Redemption...................................................................11
SECTION 4.03.
Notice of Redemption; Rescission.....................................................................11
SECTION 4.04.
Partial Redemption of Bonds.............................................................................12
SECTION 4.05.
Effect of Redemption........................................................................................12
ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST
SECTION 5.01.
Security for the Bonds; Bond Fund....................................................................13
SECTION 5.02.
Allocation of Revenues.....................................................................................13
SECTION 5.03.
Application of Interest Account..........................................................................14
SECTION 5.04.
Application of Principal Account........................................................................14
SECTION5.05.
Reserved..........................................................................................................14
SECTION 5.06.
Application of Redemption Fund.......................................................................14
SECTION 5.07.
Insurance and Condemnation Fund..................................................................14
SECTION 5.08.
Investments......................................................................................................16
SECTION 5.09.
Valuation and Disposition of Investments..........................................................16
ARTICLE VI
COVENANTS OF THE AUTHORITY
SECTION 6.01.
Punctual Payment.............................................................................................18
SECTION 6.02.
Extension of Payment of Bonds........................................................................18
SECTION 6.03.
Against Encumbrances.....................................................................................18
SECTION 6.04.
Power to Issue Bonds and Make Pledge and Assignment................................18
SECTION 6.05.
Accounting Records..........................................................................................18
SECTION 6.06.
Limitation on Additional Obligations..................................................................19
SECTION 6.07.
Tax Covenants..................................................................................................19
SECTION 6.08.
Enforcement of Lease.......................................................................................19
SECTION 6.09.
Waiver of Laws.................................................................................................20
SECTION 6.10.
Further Assurances...........................................................................................20
ARTICLE VII
SECTION 11.01.
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01.
Events of Default...............................................................................................20
SECTION 7.02.
Remedies Upon Event of Default......................................................................21
SECTION 7.03.
Application of Revenues and Other Funds After Default...................................21
SECTION 7.04.
Trustee to Represent Bond Owners..................................................................22
SECTION 7.05.
Limitation on Bond Owners' Right to Sue..........................................................22
SECTION 7.06.
Absolute Obligation of Authority........................................................................23
SECTION 7.07.
Termination of Proceedings..............................................................................23
SECTION 7.08.
Remedies Not Exclusive...................................................................................23
SECTION 7.09.
No Waiver of Default.........................................................................................23
SECTION 7.10.
Notice to Bond Owners of Default.....................................................................23
ARTICLE VIII
THE TRUSTEE
SECTION 8.01.
Appointment of Trustee.....................................................................................24
SECTION 8.02.
Acceptance of Trusts; Removal and Resignation of Trustee .............................24
SECTION 8.03.
Merger or Consolidation....................................................................................26
SECTION 8.04.
Liability of Trustee.............................................................................................26
SECTION 8.05.
Right to Rely on Documents..............................................................................28
SECTION 8.06.
Preservation and Inspection of Documents.......................................................29
SECTION 8.07.
Compensation and Indemnification...................................................................29
ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
SECTION 9.01.
Amendments Permitted.....................................................................................30
SECTION 9.02.
Effect of Supplemental Indenture......................................................................31
SECTION 9.03.
Endorsement of Bonds; Preparation of New Bonds..........................................31
SECTION 9.04.
Amendment of Particular Bonds........................................................................32
ARTICLE X
DEFEASANCE
SECTION 10.01.
Discharge of Indenture....................................................................................32
SECTION 10.02.
Discharge of Liability on Bonds.......................................................................32
SECTION 10.03.
Deposit of Money or Securities with Trustee...................................................33
SECTION 10.04.
Unclaimed Funds............................................................................................33
ARTICLE XI
MISCELLANEOUS
SECTION 11.01.
Liability of Authority Limited to Revenues........................................................34
SECTION 11.02.
Limitation of Rights to Parties and Bond Owners............................................34
SECTION 11.03.
Funds and Accounts.......................................................................................34
SECTION 11.04.
Waiver of Notice; Requirement of Mailed Notice.............................................34
SECTION 11.05.
Destruction of Bonds.......................................................................................35
SECTION 11.06.
Severability of Invalid Provisions.....................................................................35
SECTION11.07.
Notices............................................................................................................35
SECTION 11.08.
Evidence of Rights of Bond Owners................................................................35
SECTION 11.09.
Disqualified Bonds..........................................................................................36
SECTION 11.10.
Money Held for Particular Bonds.....................................................................36
SECTION 11.11.
Waiver of Personal Liability.............................................................................36
SECTION 11.12.
Successor Is Deemed Included in All References to Predecessor ..................36
SECTION 11.13.
Execution in Several Counterparts..................................................................37
SECTION 11.14.
Payment on Non -Business Day......................................................................37
SECTION 11.15.
Governing Law................................................................................................37
APPENDIX A DEFINITIONS
APPENDIX B FORM OF BOND
APPENDIX C FORM OF PROJECT FUND REQUISITION
INDENTURE OF TRUST
This INDENTURE OF TRUST (this "Indenture"), dated for convenience as of March 1,
2022, is between the LODI PUBLIC FINANCING AUTHORITY, a joint powers authority duly
organized and existing under the laws of the State of California (the "Authority"), and U.S.
BANK TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association organized
and existing under the laws of the United States of America, with a corporate trust office
in San Francisco, California, being qualified to accept and administer the trusts hereby
created (the "Trustee").
BACKGROUND:
1. The Authority previously issued its $19,080,000 Lodi Public Financing
Authority 2012 Refunding Lease Revenue Bonds (the "2012 Bonds") for the purpose of
refinancing outstanding certificates of participation that were executed and delivered to
finance various municipal facilities of the City of Lodi (the "City").
2. In connection with the issuance of the 2012 Bonds, the City and the Authority
entered into a Site Lease and a Lease Agreement, each of which was dated as of
September 1, 2012, pursuant to which, respectively, the City leased to the Authority and
subleased from the Authority the land and improvements constituting the City's police
building and Carnegie Forum.
3. In order to take advantage of prevailing bond market conditions, the City is
proceeding to refund the 2012 Bonds.
4. The City further wishes to leverage the savings achieved by refinancing the
2012 Bonds to finance the acquisition and construction of capital improvements, including
a new animal shelter and park and playground improvements and upgrades (the
"Project").
5. To that end, the City has leased the City's police building and the City's Fire
Station #2 (the "Leased Property") to the Authority under a Site Lease dated as of March
1, 2022 (the "Site Lease"), in consideration of the payment by the Authority of an upfront
rental payment (the "Site Lease Payment") which is sufficient to provide funds for the
refunding of the 2012 Bonds and the financing of the Project.
6. The Authority has authorized the issuance of its Lodi Public Financing
Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing) in the aggregate principal amount of $ (the "Bonds") under this
Indenture for the purpose of providing the funds to enable the Authority to pay the Site
Lease Payment to the City in accordance with the Site Lease.
7. In order to provide revenues which are sufficient to enable the Authority to
pay debt service on the Bonds, the Authority has leased the Leased Property back to the
City under a Lease Agreement dated as of March 1, 2022 (the "Lease"), under which the
City has agreed to pay semiannual Lease Payments as the rental for the Leased Property
thereunder.
8. The lease payments made by the City under the Lease have been assigned
by the Authority to the Trustee for the security of the Bonds under an Assignment
Agreement, dated as of March 1, 2022, between the Authority as assignor and the Trustee
as assignee.
9. In order to provide for the authentication and delivery of the Bonds, to
establish and declare the terms and conditions upon which the Bonds are to be issued
and to secure the payment of the principal thereof, premium (if any) and interest thereon,
the Authority has authorized the execution and delivery of this Indenture.
10. The Authority has found and determined, and hereby affirms, that all acts
and proceedings required by law necessary to make the Bonds, when executed by the
Authority, authenticated and delivered by the Trustee and duly issued, the valid, binding
and legal special obligations of the Authority, and to constitute this Indenture a valid and
binding agreement for the uses and purposes herein set forth in accordance with its terms,
have been done and taken, and the execution and delivery of this Indenture have been in
all respects duly authorized.
AGREEMENT:
In order to secure the payment of the principal of and the interest and redemption
premium (if any) on all the Outstanding Bonds under this Indenture according to their
tenor, and to secure the performance and observance of all the covenants and conditions
therein and herein set forth, and to declare the terms and conditions upon and subject to
which the Bonds are to be issued and received, and in consideration of the premises and
of the mutual covenants herein contained and of the purchase and acceptance of the
Bonds by the Owners thereof, and for other valuable considerations, the receipt of which
is hereby acknowledged, the Authority and the Trustee do hereby covenant and agree
with one another, for the benefit of the respective Owners from time to time of the Bonds,
as follows:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1.01. Definitions. Unless the context clearly otherwise requires or unless
otherwise defined herein, the capitalized terms defined in Appendix A attached to this
Indenture have the respective meanings specified in that Appendix when used in this
Indenture.
SECTION 1.02. Authorization. Each of the parties hereby represents and warrants
that it has full legal authority and is duly empowered to enter into this Indenture, and has
taken all actions necessary to authorize the execution hereof by the officers and persons
signing it.
-2-
SECTION 1.03. Interpretation.
(a) Unless the context otherwise indicates, words expressed in the singular shall
include the plural and vice versa and the use of the neuter, masculine, or feminine gender
is for convenience only and shall be deemed to include the neuter, masculine or feminine
gender, as appropriate.
(b) Headings of articles and sections herein and the table of contents hereof are
solely for convenience of reference, do not constitute a part hereof and shall not affect the
meaning, construction or effect hereof.
(c) All references herein to "Articles," "Sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture as
a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE II
THE BONDS
SECTION 2.01. Authorization of Bonds. The Authority has reviewed all proceedings
heretofore taken and has found, as a result of such review, and hereby finds and
determines that all things, conditions and acts required by law to exist, happen or be
performed precedent to and in connection with the issuance of the Bonds do exist, have
happened and have been performed in due time, form and manner as required by law,
and the Authority is now duly empowered, under each and every requirement of law, to
issue the Bonds in the manner and form provided in this Indenture.
The Authority hereby authorizes the issuance of Bonds in the aggregate principal
amount of $ under the Bond Law for the purposes of providing funds to pay
the Site Lease Payment to the City and thereby provide funds to refund the 2012 Bonds
and finance the Project. The Bonds are authorized and issued under, and are subject to
the terms of, this Indenture and the Bond Law. The Bonds are designated the "Lodi Public
Financing Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing)."
SECTION 2.02. Terms of the Bonds.
(a) Payment Provisions. The Bonds shall be issued in fully registered form
without coupons in denominations of $5,000 or any integral multiple thereof, so long as no
Bond has more than one maturity date. The Bonds shall mature on October 1 in each of
the years and in the amounts, and bear interest (calculated on the basis of a 360 -day year
of twelve 30 -day months) at the rates, as follows:
Maturity Date Principal Interest
(October 1) Amount Rate
-3-
(T)Term Bond
Interest on the Bonds is payable from the Interest Payment Date next preceding
the date of authentication thereof unless:
(a) a Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which
event it will bear interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the
date to which interest has been paid in full, payable on each Interest
Payment Date.
Interest is payable on each Interest Payment Date to the persons in whose names
the ownership of the Bonds is registered on the Registration Books at the close of business
on the immediately preceding Record Date, except as provided below. Interest on any
Bond which is not punctually paid or duly provided for on any Interest Payment Date is
payable to the person in whose name the ownership of such Bond is registered on the
Registration Books at the close of business on a special record date for the payment of
-4-
such defaulted interest to be fixed by the Trustee, notice of which is given to such Owner
by first-class mail not less than 10 days prior to such special record date.
The Trustee will pay interest on the Bonds by check of the Trustee mailed by first
class mail, postage prepaid, on each Interest Payment Date to the Owners of the Bonds
at their respective addresses shown on the Registration Books as of the close of business
on the preceding Record Date. At the written request of the Owner of Bonds in an
aggregate principal amount of at least $1,000,000, which written request is on file with the
Trustee as of any Record Date, the Trustee will pay interest on such Bonds on each
succeeding Interest Payment Date by wire transfer in immediately available funds to such
account of a financial institution within the United States of America as specified in such
written request, which written request will remain in effect until rescinded in writing by the
Owner. The Trustee will pay principal of the Bonds in lawful money of the United States
of America by check of the Trustee upon presentation and surrender thereof at the Office
of the Trustee.
SECTION 2.03. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon
the Registration Books, by the person in whose name it is registered, in person or by a
duly authorized attorney of such person, upon surrender of such Bond to the Trustee at
its Office for cancellation, accompanied by delivery of a written instrument of transfer in a
form acceptable to the Trustee, duly executed. The Trustee shall require the Owner
requesting such transfer to pay any tax or other governmental charge required to be paid
with respect to such transfer. Whenever any Bond or Bonds shall be surrendered for
transfer, the Authority shall execute and the Trustee shall authenticate and deliver to the
transferee a new Bond or Bonds of like series, interest rate, maturity and aggregate
principal amount. The Authority shall pay the cost of printing Bonds and any services
rendered or expenses incurred by the Trustee in connection with any transfer of Bonds.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a
like aggregate principal amount of Bonds of other authorized denominations and of the
same series, interest rate and maturity. The Trustee shall require the Owner requesting
such exchange to pay any tax or other governmental charge required to be paid with
respect to such exchange. The Authority shall pay the cost of printing Bonds and any
services rendered or expenses incurred by the Trustee in connection with any exchange
of Bonds.
(c) Limitations. The Trustee may refuse to transfer or exchange, under the
provisions of this Section 2.03, any Bonds selected by the Trustee for redemption under
Article IV, or any Bonds during the period established by the Trustee for the selection of
Bonds for redemption.
SECTION 2.04. Book -Entry System.
(a) Original Delivery. The Bonds will be initially delivered in the form of a
separate single fully registered bond (which may be typewritten) for each maturity of the
Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on
the Registration Books in the name of the Nominee. Except as provided in subsection (c),
the ownership of all of the Outstanding Bonds shall be registered in the name of the
Nominee on the Registration Books.
-5-
With respect to Bonds the ownership of which shall be registered in the name of
the Nominee, the Authority and the Trustee has no responsibility or obligation to any
Depository System Participant or to any person on behalf of which the Nominee holds an
interest in the Bonds. Without limiting the generality of the immediately preceding
sentence, the Authority and the Trustee has no responsibility or obligation with respect to
(i) the accuracy of the records of the Depository, the Nominee or any Depository System
Participant with respect to any ownership interest in the Bonds, (ii) the delivery to any
Depository System Participant or any other person, other than a Bond Owner as shown in
the Registration Books, of any notice with respect to the Bonds, including any notice of
redemption, (iii) the selection by the Depository of the beneficial interests in the Bonds to
be redeemed if the Authority elects to redeem the Bonds in part, (iv) the payment to any
Depository System Participant or any other person, other than a Bond Owner as shown in
the Registration Books, of any amount with respect to principal, premium, if any, or interest
on the Bonds or (v) any consent given or other action taken by the Depository as Owner
of the Bonds. The Authority and the Trustee may treat and consider the person in whose
name each Bond is registered as the absolute owner of such Bond for the purpose of
payment of principal of and premium, if any, and interest on such Bond, for the purpose
of giving notices of redemption and other matters with respect to such Bond, for the
purpose of registering transfers of ownership of such Bond, and for all other purposes
whatsoever. The Trustee shall pay the principal of and the interest and premium, if any,
on the Bonds only to the respective Owners or their respective attorneys duly authorized
in writing, and all such payments shall be valid and effective to fully satisfy and discharge
all obligations with respect to payment of principal of and interest and premium, if any, on
the Bonds to the extent of the sum or sums so paid. No person other than a Bond Owner
shall receive a Bond evidencing the obligation of the Authority to make payments of
principal, interest and premium, if any, under this Indenture. Upon delivery by the
Depository to the Authority of written notice to the effect that the Depository has
determined to substitute a new Nominee in its place, and subject to the provisions herein
with respect to Record Dates, such new nominee shall become the Nominee hereunder
for all purposes; and upon receipt of such a notice the Authority shall promptly deliver a
copy of the same to the Trustee.
(b) Representation Letter. In order to qualify the Bonds for the Depository's
book -entry system, the Authority shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the Bonds. The execution
and delivery of such letter shall not in any way limit the provisions of subsection (a) above
or in any other way impose upon the Authority or the Trustee any obligation whatsoever
with respect to persons having interests in the Bonds other than the Bond Owners. Upon
the written acceptance by the Trustee, the Trustee shall agree to take all action reasonably
necessary for all representations of the Trustee in such letter with respect to the Trustee
to at all times be complied with. In addition to the execution and delivery of such letter,
the Authority may take any other actions, not inconsistent with this Indenture, to qualify
the Bonds for the Depository's book -entry program.
(c) Transfers Outside Book -Entry System. If either (i) the Depository determines
not to continue to act as Depository for the Bonds, or (ii) the Authority determines to
terminate the Depository as such, then the Authority shall thereupon discontinue the book -
entry system with such Depository. In such event, the Depository shall cooperate with the
Authority and the Trustee in the issuance of replacement Bonds by providing the Trustee
with a list showing the interests of the Depository System Participants in the Bonds, and
M
by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or
before the date such replacement Bonds are to be issued. The Depository, by accepting
delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If, prior
to the termination of the Depository acting as such, the Authority fails to identify another
Securities Depository to replace the Depository, then the Bonds shall no longer be
required to be registered in the Registration Books in the name of the Nominee, but shall
be registered in whatever name or names the Owners transferring or exchanging Bonds
shall designate, in accordance with the provisions hereof.
If the Authority determines that it is in the best interests of the beneficial owners of
the Bonds that they be able to obtain certificated Bonds, the Authority may notify the
Depository System Participants of the availability of such certificated Bonds through the
Depository. In such event, the Trustee will issue, transfer and exchange Bonds as
required by the Depository and others in appropriate amounts; and whenever the
Depository requests, the Trustee and the Authority shall cooperate with the Depository in
taking appropriate action (y) to make available one or more separate certificates
evidencing the Bonds to any Depository System Participant having Bonds credited to its
account with the Depository, or (z) to arrange for another Securities Depository to maintain
custody of a single certificate evidencing such Bonds, all at the Authority's expense.
(d) Payments to the Nominee. Notwithstanding any other provision of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal of and interest and premium, if any, on such Bond
and all notices with respect to such Bond shall be made and given, respectively, as
provided in the letter described in subsection (b) of this Section or as otherwise instructed
by the Depository.
SECTION 2.05. Registration Books. The Trustee will keep or cause to be kept, at
the Office of the Trustee, sufficient records for the registration and transfer of ownership
of the Bonds, which shall upon reasonable notice as agreed to by the Trustee, be open to
inspection during regular business hours by the Authority; and, upon presentation for such
purpose, the Trustee shall, under such reasonable regulations as it may prescribe, register
or transfer or cause to be registered or transferred, on such records, the ownership of the
Bonds as hereinbefore provided.
SECTION 2.06. Form and Execution of Bonds. The Bonds, the form of Trustee's
certificate of authentication, and the form of assignment to appear thereon, are set forth
in Appendix B attached hereto and by this reference incorporated herein, with necessary
or appropriate variations, omissions and insertions, as permitted or required by this
Indenture.
The Chairman of the Authority shall execute, and the Secretary of the Authority
shall attest each Bond. Either or both of such signatures may be made manually or may
be affixed by facsimile thereof. If any officer whose signature appears on any Bond ceases
to be such officer before the Closing Date, such signature will nevertheless be as effective
as if the officer had remained in office until the Closing Date. Any Bond may be signed
and attested on behalf of the Authority by such persons as at the actual date of the
execution of such Bond are the proper officers of the Authority, duly authorized to execute
debt instruments on behalf of the Authority, although on the date of such Bond any such
person was not an officer of the Authority.
-7-
Only those Bonds bearing a certificate of authentication in the form set forth in
Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate of the Trustee is
conclusive evidence that such Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
SECTION 2.07. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is
mutilated, the Authority, at the expense of the Owner of such Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and
deliver such mutilated Bond to, or upon the order of, the Authority. If any Bond is lost,
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
Trustee and, if such evidence is satisfactory and if indemnity satisfactory to the Trustee is
given, the Authority, at the expense of the Owner, shall execute, and the Trustee shall
thereupon authenticate and deliver, a new Bond of like tenor in lieu of and in substitution
for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum not
exceeding the actual cost of preparing each new Bond issued under this Section and of
the expenses which may be incurred by the Trustee in connection therewith. Any Bond
issued under the provisions of this Section in lieu of any Bond alleged to be lost, destroyed
or stolen will constitute an original additional contractual obligation on the part of the
Authority whether or not the Bond so alleged to be lost, destroyed or stolen be at any time
enforceable by anyone, and shall be equally and proportionately entitled to the benefits of
this Indenture with all other Bonds issued under this Indenture.
Notwithstanding any other provision of this Section 2.07, in lieu of delivering a new
Bond for which principal has become due for a Bond which has been mutilated, lost,
destroyed or stolen, the Trustee may make payment of such Bond in accordance with its
terms upon receipt of indemnity satisfactory to the Trustee.
ARTICLE III
ISSUANCE OF BONDS; APPLICATION OF
PROCEEDS
SECTION 3.01. Issuance of the Bonds. At any time after the execution of this
Indenture, the Authority may execute and the Trustee shall authenticate and, upon the
Written Request of the Authority, deliver the Bonds to the Original Purchaser.
SECTION 3.02. Application of Proceeds of Sale of Bonds; Transfer of Prior Funds.
Upon the receipt of payment for the Bonds in the amount of $ on the Closing
Date, the Trustee shall deposit the proceeds thereof into a temporary account, which shall
be disbursed in full on the Closing Date (whereupon said temporary account shall be
closed) as follows:
(a) The Trustee shall deposit the amount of $ into the Costs of
Issuance Fund.
(b) The Trustee shall deposit the amount of $ into the Project
Fund.
(c) The Trustee shall transfer the amount of $ , constituting
the remainder of such proceeds and representing the full amount of
the Site Lease Payment, to the 2012 Trustee for deposit into the
Redemption Fund established and held by the 2012 Trustee for the
2012 Bonds.
In addition to the foregoing transfers, on the Closing Date the 2012 Trustee will
transfer any moneys in the funds and accounts established for the 2012 Bonds and
deposit them in the Redemption Fund for the 2012 Bonds.
SECTION 3.03. Establishment and Application of Costs of Issuance Fund. The
Trustee shall establish, maintain and hold in trust a separate fund designated as the
"Costs of Issuance Fund" into which the Trustee shall deposit a portion of the proceeds of
sale of the Bonds under Section 3.02(a). The Trustee shall disburse amounts in the Costs
of Issuance Fund from time to time to pay the Costs of Issuance upon submission of a
Written Requisition of the Authority stating the person to whom payment is to be made,
the amount to be paid, the purpose for which the obligation was incurred and that such
payment is a proper charge against said fund. Each such Written Requisition of the
Authority shall be sufficient evidence to the Trustee of the facts stated therein and the
Trustee shall have no duty to confirm the accuracy of such facts. The Trustee may
conclusively rely on such Written Requisitions and shall be fully protected in relying
thereon. On June 30, 2022, or upon the earlier Written Request of the Authority, the
Trustee shall transfer all amounts remaining in the Costs of Issuance Fund to the Project
Fund and shall thereupon close the Costs of Issuance Fund.
SECTION 3.04. Establishment and Application of Project Fund. The Trustee shall
establish, maintain and hold in trust a separate fund designated as the "Project Fund" into
which the Trustee shall deposit a portion of the proceeds of sale of the Bonds under
Section 3.02(b).
The Trustee shall administer such fund as provided in this Section 3.04. Amounts
on deposit in the Project Fund shall be used, as provided below, to pay the Project Costs,
and to reimburse the City for the same. Pending such use, amounts on deposit in the
Project Fund shall be invested only in Permitted Investments, with interest earnings and
other investment income thereon being retained therein. All moneys remaining in the
Project Fund upon the completion of the Project (as determined by the City in its sole
discretion with written notice to the Trustee) shall be transferred by the Trustee and the
Project Fund shall be closed as hereinafter provided.
The Trustee shall, from time to time, disburse money from the Project Fund to pay
the Project Costs for the Project, as hereinafter provided, in each case promptly after
receipt of, and in accordance with, a Written Certificate in the form attached hereto as
Appendix C.
In making such payments, the Trustee may rely upon the representations made in
the Written Certificate. If for any reason the City should decide prior to the payment of
any item in said Written Certificate not to pay such item, then it shall give written notice of
such decision to the Trustee and thereupon the Trustee shall not make such payment,
and the Trustee shall have no liability to the City or the designated payee as a result of
such nonpayment. In no event shall the Trustee be responsible for the adequacy or due
performance of any contracts relating to the Project or for the use or application of money
properly disbursed pursuant to requests made under this Section 3.04.
If, after payment by the Trustee of all Written Certificates theretofore tendered to
the Trustee under the provisions of this Section 3.04 and after the City has notified the
Trustee of the completion of the Project, there shall remain any balance of money in the
Project Fund, all money so remaining (other than a reasonable retainage to pay Project
Costs, as determined in the sole discretion of the City with written notice to the Trustee)
shall be transferred to the Bond Fund and used to pay principal of and interest on the
Bonds, as directed by the City.
At such time as no moneys remain in the Project Fund, the Project Fund shall be
closed.
SECTION 3.05. Validity of Bonds. The recital contained in the Bonds that the same
are issued under the Constitution and laws of the State of California shall be conclusive
evidence of their validity and of compliance with the provisions of law in their issuance.
ARTICLE IV
REDEMPTION OF BONDS
SECTION 4.01. Terms of Redemption.
(a) Optional Redemption. The Bonds maturing on or before October 1, ,
are not subject to optional redemption prior to their stated maturity. The Bonds maturing
on or after October 1, , are subject to redemption, as a whole or in part at the election
of the Authority among maturities on such basis as designated by the Authority and by lot
within a maturity, at the option of the Authority, on April 1, , and on any date
thereafter, at a redemption price equal to 100% of the principal amount of Bonds to be
redeemed, together with accrued interest thereon to the date fixed for redemption, without
premium.
The Authority must give the Trustee written notice of its intention to redeem Bonds
under this subsection (a), and the manner of selecting such Bonds for redemption from
among the maturities thereof, in sufficient time to enable the Trustee to give notice of such
redemption in accordance with Section 4.03.
(b) Special Mandatory Redemption From Insurance or Condemnation Proceeds.
The Bonds are subject to redemption as a whole, or in part on a pro rata basis among
maturities, on any date, from any Net Proceeds required to be used for such purpose as
provided in Section 5.07, at a redemption price equal to 100% of the principal amount
thereof plus interest accrued thereon to the date fixed for redemption, without premium.
(c) Mandatory Sinking Fund Redemption. The Term Bonds are subject to
mandatory redemption in part by lot, at a redemption price equal to 100% of the principal
amount thereof to be redeemed, without premium, in the aggregate respective principal
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amounts and on October 1 in the respective years as set forth in the following tables;
provided, however, that if some but not all of the Term Bonds have been redeemed under
subsections (a) or (b) of this Section, the total amount of all future sinking fund payments
shall be reduced by the aggregate principal amount of the Term Bonds so redeemed, to
be allocated among such sinking fund payments on a pro rata basis in integral multiples
of $5,000 (as set forth in a schedule provided by the Authority to the Trustee).
Mandatory Sinking Fund Redemption of
Term Bonds Maturing October 1,
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
Mandatory Sinking Fund Redemption of
Term Bonds Maturing October 1,
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
SECTION 4.02. Selection of Bonds for Redemption. Whenever provision is made
in this Indenture for the redemption of less than all of the Bonds of a single maturity, the
Trustee shall select the Bonds of that maturity to be redeemed by lot in any manner which
the Trustee in its sole discretion deems appropriate. For purposes of such selection, the
Trustee shall treat each Bond as consisting of separate $5,000 portions and each such
portion shall be subject to redemption as if such portion were a separate Bond.
SECTION 4.03. Notice of Redemption; Rescission. The Trustee shall mail notice
of redemption of the Bonds by first class mail, postage prepaid, not less than 20 nor more
than 60 days before any redemption date, to the respective Owners of any Bonds
designated for redemption at their addresses appearing on the Registration Books and to
one or more Securities Depositories and to the Municipal Securities Rulemaking Board as
provided in the Continuing Disclosure Certificate. Each notice of redemption shall state
the date of the notice, the redemption date, the place or places of redemption, whether
less than all of the Bonds (or all Bonds of a single maturity) are to be redeemed, the CUSIP
numbers and (in the event that not all Bonds within a maturity are called for redemption)
Bond numbers of the Bonds to be redeemed and the maturity or maturities of the Bonds
to be redeemed, and in the case of Bonds to be redeemed in part only, the respective
portions of the principal amount thereof to be redeemed. Each such notice shall also state
that on the redemption date there will become due and payable on each of said Bonds the
redemption price thereof, and that from and after such redemption date interest thereon
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shall cease to accrue, and shall require that such Bonds be then surrendered to the
Trustee. Neither the failure to receive any notice nor any defect therein shall affect the
sufficiency of the proceedings for such redemption or the cessation of accrual of interest
from and after the redemption date. Notice of redemption of Bonds shall be given by the
Trustee, at the expense of the Authority, for and on behalf of the Authority.
Any notice of a redemption of Bonds under Section 4.01(a) may provide that the
redemption shall be conditional upon the receipt of sufficient funds to accomplish the
redemption. The Authority has the right to rescind any notice of the redemption of Bonds
under Section 4.01(a) by written notice to the Trustee on or prior to the dated fixed for
redemption. Any notice of redemption shall be cancelled and annulled if for any reason
funds will not be or are not available on the date fixed for redemption for the payment in
full of the Bonds then called for redemption, and such cancellation shall not constitute an
Event of Default. The Authority and the Trustee have no liability to the Bond Owners or
any other party related to or arising from such rescission of redemption. The Trustee shall
mail notice of such rescission of redemption in the same manner as the original notice of
redemption was sent under this Section.
SECTION 4.04. Partial Redemption of Bonds. Upon surrender of any Bonds
redeemed in part only, the Authority shall execute and the Trustee shall authenticate and
deliver to the Owner thereof, at the expense of the Authority, a new Bond or Bonds of
authorized denominations equal in aggregate principal amount to the unredeemed portion
of the Bonds surrendered.
SECTION 4.05. Effect of Redemption. Notice of redemption having been duly given
as aforesaid, and moneys for payment of the redemption price of, together with interest
accrued to the date fixed for redemption on, including any applicable premium, the Bonds
(or portions thereof) so called for redemption being held by the Trustee, on the redemption
date designated in such notice, the Bonds (or portions thereof) so called for redemption
shall become due and payable, interest on the Bonds so called for redemption shall cease
to accrue, said Bonds (or portions thereof) shall cease to be entitled to any benefit or
security under this Indenture, and the Owners of said Bonds shall have no rights in respect
thereof except to receive payment of the redemption price thereof.
All Bonds redeemed under the provisions of this Article shall be canceled by the
Trustee upon surrender thereof and destroyed in accordance with the retention policy of
the Trustee then in effect.
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ARTICLE V
REVENUES; FUNDS AND ACCOUNTS; PAYMENT OF
PRINCIPAL AND INTEREST
SECTION 5.01. Security for the Bonds; Bond Fund.
(a) Pledge of Revenues and Other Amounts. Subject only to the provisions of
this Indenture permitting the application thereof for the purposes and on the terms and
conditions set forth herein, all of the Revenues and all amounts (including proceeds of the
sale of the Bonds) held in any fund or account established under this Indenture are hereby
pledged to secure the payment of the principal of and interest and premium (if any) on the
Bonds in accordance with their terms and the provisions of this Indenture. Said pledge
constitutes a lien on and security interest in the Revenues and such amounts and shall
attach, be perfected and be valid and binding from and after the Closing Date, without the
need for any physical delivery thereof or further act.
(b) Assignment to Trustee. Under the Assignment Agreement, the Authority has
transferred to the Trustee all of the rights of the Authority in the Lease (other than the
rights of the Authority under Sections 4.5, 5.10, 7.3 and 8.4 thereof). The Trustee is
entitled to collect and receive all of the Revenues, and any Revenues collected or received
by the Authority shall be deemed to be held, and to have been collected or received, by
the Authority as the agent of the Trustee and shall forthwith be paid by the Authority to the
Trustee. The Trustee is also entitled to and shall, subject to the provisions of Article VIII,
take all steps, actions and proceedings which the Trustee determines to be reasonably
necessary in its judgment to enforce, either jointly with the Authority or separately, all of
the rights of the Authority and all of the obligations of the City under the Lease.
(c) Deposit of Revenues in Bond Fund. All Revenues shall be promptly
deposited by the Trustee upon receipt thereof in a special fund designated as the "Bond
Fund" which the Trustee shall establish, maintain and hold in trust; except that all moneys
received by the Trustee and required hereunder or under the Lease to be deposited in the
Redemption Fund or the Insurance and Condemnation Fund shall be promptly deposited
in such funds. All Revenues deposited with the Trustee shall be held, disbursed, allocated
and applied by the Trustee only as provided in this Indenture. Any surplus remaining in
the Bond Fund, after payment in full of (i) the principal of and interest on the Bonds or
provision therefore under Article X, and (ii) any applicable fees and expenses to the
Trustee, shall be withdrawn by the Trustee and remitted to the City.
SECTION 5.02. Allocation of Revenues. On or before each Interest Payment Date,
the Trustee shall transfer from the Bond Fund and deposit into the following respective
accounts (each of which the Trustee shall establish and maintain within the Bond Fund),
the following amounts in the following order of priority:
(a) Deposit to Interest Account. The Trustee shall deposit in the Interest
Account an amount required to cause the aggregate amount on
deposit in the Interest Account to be at least equal to the amount of
interest becoming due and payable on such Interest Payment Date
on all Bonds then Outstanding.
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(b) Deposit to Principal Account. The Trustee shall deposit in the
Principal Account an amount required to cause the aggregate amount
on deposit in the Principal Account to equal the principal amount of
the Bonds coming due and payable on such Interest Payment Date,
including principal of any Term Bonds payable as a result of
mandatory sinking fund redemption under Section 4.01(c).
SECTION 5.03. Application of Interest Account. All amounts in the Interest Account
shall be used and withdrawn by the Trustee solely for the purpose of paying interest on
the Bonds as it comes due and payable (including accrued interest on any Bonds
purchased or redeemed prior to maturity), including principal of any Term Bonds payable
as a result of mandatory sinking fund redemption under Section 4.01(c).
SECTION 5.04. Application of Principal Account. All amounts in the Principal
Account shall be used and withdrawn by the Trustee solely to pay the principal amount of
the Bonds at their respective maturity dates.
SECTION 5.05. Reserved.
SECTION 5.06. Application of Redemption Fund. The Trustee shall establish and
maintain the Redemption Fund, into which the Trustee shall deposit a portion of the
Revenues received, in accordance with a Written Request of the Authority, amounts in
which shall be used and withdrawn by the Trustee solely for the purpose of paying the
principal and premium (if any) of the Bonds to be redeemed under Section 4.01, other
than the principal of any Term Bonds payable as a result of mandatory sinking fund
redemption under Section 4.01(c); provided, however, that at any time prior to the
selection of Bonds for redemption, the Trustee may apply such amounts to the purchase
of Bonds at public or private sale, when and at such prices (including brokerage and other
charges, but excluding accrued interest, which is payable from the Interest Account) as
shall be directed under a Written Request of the Authority, except that the purchase price
(exclusive of accrued interest) may not exceed the redemption price then applicable to the
Bonds. The Trustee shall be entitled to conclusively rely on any Written Request of the
Authority received under this Section 5.06, and shall be fully protected in relying thereon.
SECTION 5.07. Insurance and Condemnation Fund.
(a) Establishment of Fund. Upon the receipt of proceeds of insurance or eminent
domain with respect to the Leased Property, the Trustee shall establish and maintain an
Insurance and Condemnation Fund, to be held and applied as hereinafter set forth in this
Section 5.07.
(b) Application of Insurance Proceeds. Any Net Proceeds of insurance against
accident to or destruction of the Leased Property collected by the City or the Authority in
the event of any such accident or destruction shall be paid to the Trustee under Section
6.3 of the Lease and deposited by the Trustee promptly upon receipt thereof in the
Insurance and Condemnation Fund. If the City fails to determine and notify the Trustee in
writing of its determination, within 45 days following the date of such deposit, to replace,
repair, restore, modify or improve the Leased Property which has been damaged or
destroyed, then such Net Proceeds shall be promptly transferred by the Trustee to the
Redemption Fund and applied to the redemption of Bonds under Section 4.01(b).
Notwithstanding the foregoing sentence, however, if the Leased Property is damaged or
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destroyed in full, the Net Proceeds of such insurance shall be used by the City to rebuild
or replace the Leased Property if such proceeds are not sufficient to redeem Outstanding
Bonds equal in aggregate principal amount to the unpaid Lease Payments allocable to the
Leased Property. All proceeds deposited in the Insurance and Condemnation Fund and
not so transferred to the Redemption Fund shall be applied to the prompt replacement,
repair, restoration, modification or improvement of the damaged or destroyed portions of
the Leased Property by the City, upon receipt of a Written Request of the City which: (i)
states with respect to each payment to be made (A) the requisition number, (B) the name
and address of the person to whom payment is due, (C) the amount to be paid and (D)
that each obligation mentioned therein has been properly incurred, is a proper charge
against the Insurance and Condemnation Fund and has not been the basis of any previous
withdrawal; and (ii) specifies in reasonable detail the nature of the obligation. Any balance
of the proceeds remaining after such work has been completed as certified by the City
under a Written Certificate to the Trustee shall be paid to the City. The Trustee shall be
entitled to conclusively rely on any Written Request or Written Certificate received under
this subsection (b) of this Section 5.07 and in each case, shall be fully protected in relying
thereon.
(c) Application of Eminent Domain Proceeds. If all or any part of the Leased
Property is taken by eminent domain proceedings (or sold to a government threatening to
exercise the power of eminent domain) the Authority shall deposit or cause to be deposited
with the Trustee the Net Proceeds therefrom, which the Trustee shall deposit in the
Insurance and Condemnation Fund under Section 6.2(b) of the Lease and which shall be
applied and disbursed by the Trustee as follows:
(i) If the City has not given written notice to the Trustee, within 45 days
following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for
the replacement of the Leased Property or such portion thereof, the
Trustee shall transfer such Net Proceeds to the Redemption Fund to
be applied towards the redemption of the Bonds under Section
4.01(b).
(ii) If the City has given written notice to the Trustee, within 45 days
following the date on which such Net Proceeds are deposited with the
Trustee, of its determination that such Net Proceeds are needed for
replacement of the Leased Property or such portion thereof, the
Trustee shall pay to the City, or to its order, from said proceeds such
amounts as the City may expend for such replacement, upon the filing
of Written Requisitions of the City as agent for the Authority.
In each case, the Trustee may conclusively rely upon any notice
received under this subsection (c)(ii) of this Section and is protected
in relying thereon.
(d) Reliance on Independent Advice. In making any such determination whether
to repair, replace or rehabilitate the Leased Property under this Section 5.07, the City may
obtain, but is not required to obtain, at its expense, the report of an independent engineer
or other independent professional consultant, a copy of which must be filed with the
Trustee. The Trustee shall have no duty to review or examine such report. Any such
determination by the City is final.
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SECTION 5.08. Investments. All moneys in any of the funds or accounts
established with the Trustee under this Indenture shall be invested by the Trustee solely
in Permitted Investments. Such investments shall be directed by the Authority in a Written
Request of the Authority filed with the Trustee at least 2 Business Days in advance of the
making of such investments. In the absence of any such directions from the Authority, the
Trustee shall invest any such moneys in Permitted Investments which constitute money
market funds; provided, however, that any such investment shall be made by the Trustee
only if, prior to the date on which such investment is to be made, the Trustee shall have
received a Written Request of the Authority specifying a specific money market fund and,
if no such Written Request of the Authority is so received, the Trustee shall hold such
moneys uninvested. Permitted Investments purchased as an investment of moneys in
any fund shall be deemed to be part of such fund or account. To the extent Permitted
Investments are registrable, such Permitted Investments must be registered in the name
of the Trustee.
All interest or gain derived from the investment of amounts in any of the funds or
accounts established hereunder shall be deposited in the Bond Fund. For purposes of
acquiring any investments hereunder, the Trustee may commingle funds held by it
hereunder. The Trustee or any of its affiliates may act as principal or agent in the
acquisition or disposition of any investment and may impose its customary charges
therefor. The Trustee shall incur no liability for losses arising from any investments made
under this Section 5.08.
The Trustee may make any investments hereunder through its own bond or
investment department or trust investment department, or those of its parent or any
affiliate. The Trustee or any of its affiliates may act as sponsor, advisor or manager in
connection with any investments made by the Trustee hereunder. The Trustee 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 Trustee or for any third person or is dealing as a
principal for its own account.
The Trustee shall furnish the Authority periodic cash transaction statements which
include detail for all investment transactions effected by the Trustee or brokers selected
by the Authority. Upon the Authority's election, such statements will be delivered via the
Trustee's Online Trust and Custody service and upon electing such service, paper
statements will be provided only upon request. The Authority waives the right to receive
brokerage confirmations of security transactions effected by the Trustee as they occur, to
the extent permitted by law. The Authority further understands that trade confirmations for
securities transactions effected by the Trustee will be available upon request and at no
additional cost and other trade confirmations may be obtained from the applicable broker.
SECTION 5.09. Valuation and Disposition of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the Authority
covenants that all investments of amounts deposited in any fund or account created by or
under this Indenture, or otherwise containing gross proceeds of the Bonds (within the
meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued at the
Fair Market Value thereof as such term is defined in subsection (d) below. The Trustee
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shall have no duty in connection with the determination of Fair Market Value other than to
follow the investment directions of the Authority in any Written Request of the Authority.
(b) Investments in funds or accounts (or portions thereof) that are subject to a
yield restriction under applicable provisions of the Tax Code; provided that the Authority
shall inform the Trustee in writing which funds are subject to a yield restriction.
(c) For the purpose of determining the amount in any fund or account
established hereunder, the value of Permitted Investments credited to such fund shall be
valued by the Trustee at least annually on or before July 15. The Trustee may sell or
present for redemption, any Permitted Investment so purchased by the Trustee whenever
it is necessary in order to provide moneys to meet any required payment, transfer,
withdrawal or disbursement from the fund to which such Permitted Investment is credited,
and the Trustee shall not be liable or responsible for any loss resulting from any such
Permitted Investment.
(d) For purposes of this Section 5.09, the term "Fair Market Value" means the
price at which a willing buyer would purchase the investment from a willing seller in a bona
fide, arm's length transaction (determined as of the date the contract to purchase or sell
the investment becomes binding) if the investment is traded on an established securities
market (within the meaning of Section 1273 of the Tax Code) and, otherwise, the term
"Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as
referenced above) if (i) the investment is a certificate of deposit that is acquired in
accordance with applicable regulations under the Tax Code, (ii) the investment is an
agreement with specifically negotiated withdrawal or reinvestment provisions and a
specifically negotiated interest rate (for example, a guaranteed investment contract, a
forward supply contract or other investment agreement) that is acquired in accordance
with applicable regulations under the Tax Code, or (iii) the investment is a United States
Treasury Security -- State and Local Government Series which is acquired in accordance
with applicable regulations of the United States Bureau of Public Debt.
(e) To the extent of any valuations made by the Trustee hereunder, the Trustee
may utilize and rely upon computerized securities pricing services that may be available
to it, including those available through its regular accounting system.
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ARTICLE VI
COVENANTS OF THE AUTHORITY
SECTION 6.01. Punctual Payment. The Authority shall punctually pay or cause to
be paid the principal of and interest and premium (if any) on all the Bonds in strict
conformity with the terms of the Bonds and of this Indenture, according to the true intent
and meaning thereof, but only out of the Revenues and other amounts pledged for such
payment as provided in this Indenture.
SECTION 6.02. Extension of Payment of Bonds. The Authority shall not directly or
indirectly extend or assent to the extension of the maturity of any of the Bonds or the time
of payment of any claims for interest by the purchase of such Bonds or by any other
arrangement, and in case the maturity of any of the Bonds or the time of payment of any
such claims for interest shall be extended, such Bonds or claims for interest shall not be
entitled, in case of any default hereunder, to the benefits of this Indenture, except subject
to the prior payment in full of the principal of all of the Bonds then Outstanding and of all
claims for interest thereon which have not been so extended. Nothing in this Section 6.02
limits the right of the Authority to issue Bonds for the purpose of refunding any Outstanding
Bonds, and such issuance does not constitute an extension of maturity of the Bonds.
SECTION 6.03. Against Encumbrances. The Authority shall not create, or permit
the creation of, any pledge, lien, charge or other encumbrance upon the Revenues and
other assets pledged or assigned under this Indenture while any of the Bonds are
Outstanding, except the pledge and assignment created by this Indenture. Subject to this
limitation, the Authority expressly reserves the right to enter into one or more other
indentures for any of its corporate purposes, and reserves the right to issue other
obligations for such purposes.
SECTION 6.04. Power to Issue Bonds and Make Pledge and Assignment. The
Authority is duly authorized under law to issue the Bonds and to enter into this Indenture
and to pledge and assign the Revenues and other amounts purported to be pledged and
assigned, respectively, under this Indenture and under the Assignment Agreement in the
manner and to the extent provided in this Indenture and the Assignment Agreement. The
Bonds and the provisions of this Indenture are and will be the legal, valid and binding
special obligations of the Authority in accordance with their terms, and the Authority and
the Trustee shall at all times, subject to the provisions of Article VIII and to the extent
permitted by law, defend, preserve and protect said pledge and assignment of Revenues
and other assets and all the rights of the Bond Owners under this Indenture against all
claims and demands of all persons whomsoever.
SECTION 6.05. Accounting Records. The Trustee shall at all times keep, or cause
to be kept, proper books of record and account, prepared in accordance with corporate
industry standards, in which complete and accurate entries shall be made of all
transactions made by it relating to the proceeds of Bonds and all funds and accounts
established under this Indenture. The Trustee shall make such books of record and
account available for inspection by the Authority and the City, during business hours, upon
reasonable notice, and under reasonable circumstances.
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SECTION 6.06. Limitation on Additional Obligations. The Authority covenants that
no additional bonds, notes or other indebtedness shall be issued or incurred which are
payable out of the Revenues in whole or in part.
SECTION 6.07. Tax Covenants.
(a) Private Business Use Limitation. The Authority shall assure that the
proceeds of the Bonds are not used in a manner which would cause the Bonds to satisfy
the private business tests of Section 141(b) of the Tax Code or the private loan financing
test of Section 141(c) of the Tax Code.
(b) Federal Guarantee Prohibition. The Authority may not take any action or
permit or suffer any action to be taken if the result of the same would be to cause the
Bonds to be "federally guaranteed" within the meaning of Section 149(b) of the Tax Code.
(c) No Arbitrage. The Authority may not take, or permit or suffer to be taken by
the Trustee or otherwise, any action with respect to the proceeds of the Bonds or of any
other obligations which, if such action had been reasonably expected to have been taken,
or had been deliberately and intentionally taken, on the Closing Date, would have caused
the Bonds to be "arbitrage bonds" within the meaning of Section 148(a) of the Tax Code.
(d) Maintenance of Tax Exemption. The Authority shall take all actions
necessary to assure the exclusion of interest on the Bonds from the gross income of the
Owners of the Bonds to the same extent as such interest is permitted to be excluded from
gross income under the Tax Code as in effect on the Closing Date.
(e) Rebate of Excess Investment Earnings to United States. The Authority shall
calculate or cause to be calculated all amounts of excess investment earnings with respect
to the Bonds which are required to be rebated to the United States of America under
Section 148(f) of the Tax Code, at the times and in the manner required under the Tax
Code. The Authority shall pay when due an amount equal to excess investment earnings
to the United States of America in such amounts, at such times and in such manner as
may be required under the Tax Code, such payments to be made from amounts paid by
the City for that purpose under Section 4.5(d) of the Lease. The Authority shall keep or
cause to be kept, and retain or cause to be retained for a period of six years following the
retirement of the Bonds, records of the determinations made under this subsection (e).
(f) Record Retention. The Authority will retain its records of all accounting and
monitoring it carries out with respect to the Bonds for at least 3 years after the Bonds
mature or are redeemed (whichever is earlier); however, if the Bonds are redeemed and
refunded, the Authority will retain its records of accounting and monitoring at least 3 years
after the earlier of the maturity or redemption of the obligations that refunded the Bonds.
(g) Compliance with Tax Certificate. The Authority will comply with the
provisions of the Certificate as to Arbitrage and the Use of Proceeds Certificate with
respect to the Bonds, which are incorporated herein as if fully set forth herein. The
covenants of this Section will survive payment in full or defeasance of the Bonds.
SECTION 6.08. Enforcement of Lease. The Trustee shall promptly collect all
amounts (to the extent any such amounts are available for collection) due from the City
under the Lease. Subject to the provisions of Article VIII, the Trustee shall enforce, and
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take all steps, actions and proceedings which the Trustee determines to be reasonably
necessary for the enforcement of all of its rights thereunder as assignee of the Authority
and for the enforcement of all of the obligations of the City under the Lease.
SECTION 6.09. Waiver of Laws. The Authority shall not at any time insist upon or
plead in any manner whatsoever, or claim or take the benefit or advantage of, any stay or
extension law now or at any time hereafter in force that may affect the covenants and
agreements contained in this Indenture or in the Bonds, and all benefit or advantage of
any such law or laws is hereby expressly waived by the Authority to the extent permitted
by law.
SECTION 6.10. Further Assurances. The Authority will make, execute and deliver
any and all such further indentures, instruments and assurances as may be reasonably
necessary or proper to carry out the intention or to facilitate the performance of this
Indenture and for the better assuring and confirming unto the Owners of the Bonds of the
rights and benefits provided in this Indenture.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.01. Events of Default. The following events constitute Events of Default
hereunder:
(a) Failure to pay any installment of the principal of any Bonds when due,
whether at maturity as therein expressed, by proceedings for
redemption, by acceleration, or otherwise.
(b) Failure to pay any installment of interest on the Bonds when due.
(c) Failure by the Authority to observe and perform any of the other
covenants, agreements or conditions on its part contained in this
Indenture or in the Bonds, if such failure has continued for a period of
30 days after written notice thereof, specifying such failure and
requiring the same to be remedied, has been given to the Authority
by the Trustee; provided, however, if in the reasonable opinion of the
Authority the failure stated in the notice can be corrected, but not
within such 30 -day period, such failure shall not constitute an Event
of Default if the Authority institutes corrective action within such 30 -
day period and thereafter diligently and in good faith cures the failure
in a reasonable period of time.
(d) The commencement by the Authority of a voluntary case under
Title 11 of the United States Code or any substitute or successor
statute.
(e) The occurrence and continuation of an event of default under and as
defined in the Lease.
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SECTION 7.02. Remedies Upon Event of Default. If any Event of Default occurs,
then, and in each and every such case during the continuance of such Event of Default,
the Trustee may, and at the written direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding shall, in each case, upon receipt of
indemnification satisfactory to Trustee against the costs, expenses and liabilities to be
incurred in connection with such action, upon notice in writing to the Authority, declare the
principal of all of the Bonds then Outstanding, and the interest accrued thereon, to be due
and payable immediately, and upon any such declaration the same shall become and shall
be immediately due and payable, anything in this Indenture or in the Bonds contained to
the contrary notwithstanding.
Any such declaration is subject to the condition that if, at any time after such
declaration and before any judgment or decree for the payment of the moneys due shall
have been obtained or entered, the Authority deposits with the Trustee a sum sufficient to
pay all the principal of and installments of interest on the Bonds payment of which is
overdue, with interest on such overdue principal at the rate borne by the respective Bonds
to the extent permitted by law, and the reasonable fees, charges and expenses (including
those of its legal counsel, including the allocated costs of internal attorneys) of the Trustee,
and any and all other Events of Default known to the Trustee (other than in the payment
of principal of and interest on the Bonds due and payable solely by reason of such
declaration) have been made good or cured to the satisfaction of the Trustee or provision
deemed by the Trustee to be adequate has been made therefor, then, and in every such
case, the Owners of a majority in aggregate principal amount of the Bonds then
Outstanding, by written notice to the Authority, the City and the Trustee, may, on behalf of
the Owners of all of the Bonds, rescind and annul such declaration and its consequences
and waive such Event of Default; but no such rescission and annulment shall extend to or
shall affect any subsequent Event of Default, or shall impair or exhaust any right or power
consequent thereon.
SECTION 7.03. Application of Revenues and Other Funds After Default. If an Event
of Default occurs and is continuing, all Revenues and any other funds then held or
thereafter received by the Trustee under any of the provisions of this Indenture shall be
applied by the Trustee in the following order of priority:
(a) To the payment of reasonable fees, charges and expenses of the
Trustee (including reasonable fees and disbursements of its legal
counsel including outside counsel and the allocated costs of internal
attorneys) incurred in and about the performance of its powers and
duties under this Indenture;
(b) To the payment of the principal of and interest then due on the Bonds
(upon presentation of the Bonds to be paid, and stamping or
otherwise noting thereon of the payment if only partially paid, or
surrender thereof if fully paid) in accordance with the provisions of
this Indenture, as follows:
First: To the payment to the persons entitled thereto of all installments
of interest then due in the order of the maturity of such
installments, and, if the amount available shall not be sufficient
to pay in full any installment or installments maturing on the
same date, then to the payment thereof ratably, according to the
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amounts due thereon, to the persons entitled thereto, without
any discrimination or preference;
Second: To the payment to the persons entitled thereto of the unpaid
principal of any Bonds which shall have become due, whether
at maturity or by acceleration or redemption, with interest on the
overdue principal at the rate borne by the respective Bonds (to
the extent permitted by law), and, if the amount available shall
not be sufficient to pay in full all the Bonds, together with such
interest, then to the payment thereof ratably, according to the
amounts of principal due on such date to the persons entitled
thereto, without any discrimination or preference; and
SECTION 7.04. Trustee to Represent Bond Owners. The Trustee is hereby
irrevocably appointed (and the successive respective Owners of the Bonds, by taking and
holding the same, shall be conclusively deemed to have so appointed the Trustee) as
trustee and true and lawful attorney-in-fact of the Owners of the Bonds for the purpose of
exercising and prosecuting on their behalf such rights and remedies as may be available
to such Owners under the provisions of the Bonds, this Indenture and applicable
provisions of any law. All rights of action under this Indenture or the Bonds may be
prosecuted and enforced by the Trustee without the possession of any of the Bonds or
the production thereof in any proceeding relating thereto, and any such suit, action or
proceeding instituted by the Trustee shall be brought in the name of the Trustee for the
benefit and protection of all the Owners of such Bonds, subject to the provisions of this
Indenture.
SECTION 7.05. Limitation on Bond Owners' Right to Sue. Notwithstanding any
other provision hereof, no Owner of any Bonds has the right to institute any suit, action or
proceeding at law or in equity, for the protection or enforcement of any right or remedy
under this Indenture, the Lease or any other applicable law with respect to such Bonds,
unless (a) such Owner has given to the Trustee written notice of the occurrence of an
Event of Default; (b) the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding have requested the Trustee in writing to exercise the powers
hereinbefore granted or to institute such suit, action or proceeding in its own name;
(c) such Owner or Owners have tendered to the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request; (d) the
Trustee has failed to comply with such request for a period of 60 days after such written
request has been received by, and said tender of indemnity has been made to, the
Trustee; and (e) no direction inconsistent with such written request has been given to the
Trustee during such 60 day period by the Owners of a majority in aggregate principal
amount of the Bonds then Outstanding.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of Bonds
of any remedy hereunder or under law; it being understood and intended that no one or
more Owners of Bonds shall have any right in any manner whatever by his or their action
to affect, disturb or prejudice the security of this Indenture or the rights of any other Owners
of Bonds, or to enforce any right under the Bonds, this Indenture, the Lease or other
applicable law with respect to the Bonds, except in the manner herein provided, and that
all proceedings at law or in equity to enforce any such right shall be instituted, had and
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maintained in the manner herein provided and for the benefit and protection of all Owners
of the Outstanding Bonds, subject to the provisions of this Indenture.
SECTION 7.06. Absolute Obligation of Authority. Nothing herein or in the Bonds
contained affects or impairs the obligation of the Authority, which is absolute and
unconditional, to pay the principal of and interest and premium (if any) on the Bonds to
the respective Owners of the Bonds at their respective dates of maturity, or upon
acceleration or call for redemption, as herein provided, but only out of the Revenues and
other assets herein pledged therefor, or affect or impair the right of such Owners, which
is also absolute and unconditional, to enforce such payment by virtue of the contract
embodied in the Bonds.
SECTION 7.07. Termination of Proceedings. In case any proceedings taken by the
Trustee or by any one or more Bond Owners on account of any Event of Default have
been discontinued or abandoned for any reason or have been determined adversely to
the Trustee or the Bond Owners, then in every such case the Authority, the Trustee and
the Bond Owners, subject to any determination in such proceedings, shall be restored to
their former positions and rights hereunder, severally and respectively, and all rights,
remedies, powers and duties of the Authority, the Trustee and the Bond Owners shall
continue as though no such proceedings had been taken.
SECTION 7.08. Remedies Not Exclusive. No remedy herein conferred upon or
reserved to the Trustee, to the Owners of the Bonds is intended to be exclusive of any
other remedy or remedies, and each and every such remedy, to the extent permitted by
law, shall be cumulative and in addition to any other remedy given hereunder or now or
hereafter existing at law or in equity or otherwise.
SECTION 7.09. No Waiver of Default. No delay or omission of the Trustee or any
Owner of the Bonds to exercise any right or power arising upon the occurrence of any
default or Event of Default shall impair any such right or power or shall be construed to be
a waiver of any such default or Event of Default or an acquiescence therein; and every
power and remedy given by this Indenture to the Trustee or to the Owners of the Bonds
may be exercised from time to time and as often as may be deemed expedient by the
Trustee or the Bond Owners.
SECTION 7.10. Notice to Bond Owners of Default. Immediately upon becoming
aware of the occurrence of an Event of Default, but in no event later than five Business
Days following becoming aware of such occurrence, the Trustee shall promptly give
written notice thereof by first class mail, postage prepaid, to the Owner of each
Outstanding Bond, unless such Event of Default has been cured before the giving of such
notice; provided, however that except in the case of an Event of Default described in
Sections 7.01(a) or 7.01(b), the Trustee may elect not to give such notice to the Bond
Owners if and so long as the Trustee in good faith determines that it is in the best interests
of the Bond Owners not to give such notice.
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ARTICLE VIII
THE TRUSTEE
SECTION 8.01. Appointment of Trustee. U.S. Bank Trust Company, National
Association is hereby appointed Trustee by the Authority for the purpose of receiving all
moneys required to be deposited with the Trustee hereunder and to allocate, use and
apply the same as provided in this Indenture. The Authority will maintain a Trustee which
is qualified under the provisions of the foregoing provisions of this Article VIII, so long as
any Bonds are Outstanding.
SECTION 8.02. Acceptance of Trusts; Removal and Resignation of Trustee. The
Trustee hereby accepts the express trusts imposed upon it by this Indenture, and agrees
to perform said trusts, but only upon and subject to the following express terms and
conditions:
(a) The Trustee shall, prior to an Event of Default, and after the curing or
waiver of all Events of Default which may have occurred, perform
such duties and only such duties as are expressly and specifically set
forth in this Indenture and no implied duties or covenants shall be
read into this Indenture against the Trustee. If an Event of Default
has occurred (which has not been cured), the Trustee shall exercise
such of the rights and powers vested in it by hereunder, and use the
same degree of care and skill in their exercise, as a prudent man
would exercise or use under the circumstances in the conduct of his
own affairs.
(b) The Authority may remove the Trustee at any time, unless an Event
of Default has occurred and is then continuing, and shall remove the
Trustee (a) if at any time requested to do so by the Owners of a
majority in aggregate principal amount of the Bonds then Outstanding
(or their attorneys duly authorized in writing) or (b) if at any time the
Trustee ceases to be eligible in accordance with Section 8.02, or
becomes incapable of acting, or is adjudged a bankrupt or insolvent,
or a receiver of the Trustee or its property is appointed, or any public
officer takes control or charge of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation.
(c) The Trustee may at any time resign by giving written notice of such
resignation to the Authority and the City, and by giving the Bond
Owners notice of such resignation by mail at the addresses shown
on the Registration Books.
(d) Any removal or resignation of the Trustee and appointment of a
successor Trustee shall become effective upon acceptance of
appointment by the successor Trustee. In the event of the removal
or resignation of the Trustee under subsections (b) or (d),
respectively, the Authority shall promptly appoint a successor
Trustee.
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If no successor Trustee has been appointed and accepted
appointment within 45 days of giving notice of removal or notice of
resignation as aforesaid, the resigning Trustee may petition any court
of competent jurisdiction for the appointment of a successor Trustee,
and such court may thereupon, after such notice (if any) as it may
deem proper, appoint such successor Trustee. Any successor
Trustee appointed under this Indenture, must signify its acceptance
of such appointment by executing and delivering to the Authority, to
its predecessor Trustee a written acceptance thereof, and after
payment by the Authority of all unpaid fees and expenses of the
predecessor Trustee, and thereupon such successor Trustee,
without any further act, deed or conveyance, shall become vested
with all the moneys, estates, properties, rights, powers, trusts, duties
and obligations of such predecessor Trustee, with like effect as if
originally named Trustee herein; but, nevertheless at the Written
Request of the Authority or the request of the successor Trustee,
such predecessor Trustee shall execute and deliver any and all
instruments of conveyance or further assurance and do such other
things as may reasonably be required for more fully and certainly
vesting in and confirming to such successor Trustee all the right, title
and interest of such predecessor Trustee in and to the Leased
Property held by such predecessor Trustee under this Indenture and
shall pay over, transfer, assign and deliver to the successor Trustee
any money or other property subject to the trusts and conditions
herein set forth. Upon request of the successor Trustee, the Authority
shall execute and deliver any and all instruments as may be
reasonably required for more fully and certainly vesting in and
confirming to such successor Trustee all such moneys, estates,
properties, rights, powers, trusts, duties and obligations. Upon
acceptance of appointment by a successor Trustee as provided in
this subsection, the Authority shall promptly mail or cause the
successor trustee to mail a notice of the succession of such Trustee
to the trusts hereunder to each rating agency which is then rating the
Bonds and to the Bond Owners at the addresses shown on the
Registration Books. If the Authority fails to mail such notice within 15
days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the
expense of the Authority.
(e) Any Trustee appointed under this Indenture shall be a corporation or
association organized and doing business under the laws of any state
or the United States of America or the District of Columbia, shall be
authorized under such laws to exercise corporate trust powers, shall
have (or, in the case of a corporation or association that is a member
of a bank holding company system, the related bank holding
company has) a combined capital and surplus of at least
$50,000,000, and shall be subject to supervision or examination by a
federal or state agency, so long as any Bonds are Outstanding. If
such corporation or association publishes a report of condition at
least annually under law or to the requirements of any supervising or
examining agency above referred to, then for the purpose of this
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subsection (e), the combined capital and surplus of such corporation
or association shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. If the
Trustee at any time ceases to be eligible in accordance with the
provisions of this subsection (e), the Trustee shall resign immediately
in the manner and with the effect specified in this Section.
SECTION 8.03. Merger or Consolidation. Any bank, national banking association,
federal savings association, or trust company into which the Trustee may be merged or
converted or with which it may be consolidated or any bank, national banking association,
federal savings association, or trust company resulting from any merger, conversion or
consolidation to which it shall be a party or any bank, national banking association, federal
savings association, or trust company to which the Trustee may sell or transfer all or
substantially all of its corporate trust business, provided such bank, national banking
association, federal savings association, or trust company shall be eligible under
subsection (e) of Section 8.02 shall be the successor to such Trustee, without the
execution or filing of any paper or any further act, anything herein to the contrary
notwithstanding.
SECTION 8.04. Liability of Trustee.
(a) The recitals of facts herein and in the Bonds contained shall be taken as
statements of the Authority, and the Trustee shall not assume responsibility for the
correctness of the same, or make any representations as to the validity or sufficiency of
this Indenture, the Bonds or the Lease (including any right to receive moneys thereunder
or the value of or title to the premises upon which the Leased Property is located), nor
shall the Trustee incur any responsibility in respect thereof, other than as expressly stated
herein in connection with the respective duties or obligations of Trustee herein or in the
Bonds assigned to or imposed upon it. The Trustee shall, however, be responsible for its
representations contained in its certificate of authentication on the Bonds. The Trustee
shall not be liable in connection with the performance of its duties hereunder, except for
its own negligence. The Trustee may become the Owner of Bonds with the same rights it
would have if it were not Trustee, and, to the extent permitted by law, may act as
depository for and permit any of its officers or directors to act as a member of, or in any
other capacity with respect to, any committee formed to protect the rights of Bond Owners,
whether or not such committee shall represent the Owners of a majority in principal
amount of the Bonds then Outstanding.
(b) The Trustee is not liable for any error of judgment made by a responsible
officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts.
(c) The Trustee is not liable with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee under this Indenture or assigned to it under
the Assignment Agreement.
(d) The Trustee is not liable for any action taken by it and believed by it to be
authorized or within the discretion or rights or powers conferred upon it by this Indenture.
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(e) The Trustee shall not be deemed to have knowledge of any Event of Default
hereunder, or any other event which, with the passage of time, the giving of notice, or
both, would constitute an Event of Default hereunder unless and until it shall have actual
knowledge thereof, or a corporate trust officer shall have received written notice thereof
at its Office from the City, the Authority or the Owners of at least 25% in aggregate principal
amount of the Outstanding Bonds. Except as otherwise expressly provided herein, the
Trustee shall not be bound to ascertain or inquire as to the performance or observance by
the Authority or the City of any of the terms, conditions, covenants or agreements herein,
under the Lease or the Bonds or of any of the documents executed in connection with the
Bonds, or as to the existence of a default or an Event of Default or an event which would,
with the giving of notice, the passage of time, or both, constitute an Event of Default. The
Trustee is not responsible for the validity, effectiveness or priority of any collateral given
to or held by it. Without limiting the generality of the foregoing, the Trustee shall not be
required to ascertain or inquire as to the performance or observance by the City or the
Authority of the terms, conditions, covenants or agreements set forth in the Lease, other
than the covenants of the City to make Lease Payments to the Trustee when due and to
file with the Trustee when due, such reports and certifications as the City is required to file
with the Trustee thereunder.
(f) No provision of this Indenture requires the Trustee 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.
(g) The Trustee may execute any of the trusts or powers hereunder or perform
any duties hereunder either directly or through agents, receivers or attorneys and the
Trustee shall not be responsible for any misconduct or negligence on the part of any agent,
receiver or attorney appointed with due care by it hereunder.
(h) The Trustee has no obligation to exercise any of the rights or powers vested
in it by this Indenture at the request or direction of the Bond Owners under this Indenture,
unless such Owners have offered to the Trustee reasonable security or indemnity against
the costs, expenses and liabilities (including but not limited to fees and expenses of its
attorneys) which might be incurred by it in compliance with such request or direction. No
permissive power, right or remedy conferred upon the Trustee hereunder shall be
construed to impose a duty to exercise such power, right or remedy.
(i) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording protection to the
Trustee is subject to the provisions of Section 8.02(a), this Section 8.04 and Section 8.05,
and shall be applicable to the assignment of any rights under the Lease to the Trustee
under the Assignment Agreement.
(j) The Trustee is not accountable to anyone for the subsequent use or
application of any moneys which are released or withdrawn in accordance with the
provisions hereof.
(k) The Trustee makes no representation or warranty, expressed or implied as
to the title, value, design, compliance with specifications or legal requirements, quality,
durability, operation, condition, merchantability or fitness for any particular purpose for the
use contemplated by the Authority or the City of the Leased Property. In no event shall
the Trustee be liable for incidental, indirect, special or consequential damages in
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connection with or arising from the Lease or this Indenture for the existence, furnishing or
use of the Leased Property.
(1) The Trustee has no responsibility with respect to any information, statement,
or recital in any official statement, offering memorandum or any other disclosure material
prepared or distributed with respect to the Bonds.
(m) The Trustee is authorized and directed to execute the Assignment
Agreement in its capacity as Trustee hereunder.
(n) The Trustee agrees to accept and act upon instructions or directions
pursuant to this Indenture sent by unsecured e-mail (provided, that for purposes of this
Agreement, an e-mail does not constitute a notice, request or other communication
hereunder but rather the portable document format or similar attachment attached to such
e-mail shall constitute a notice, request or other communication hereunder), facsimile
transmission or other similar unsecured electronic methods, provided, however, that, the
Trustee shall have received an incumbency certificate listing persons designated to give
such instructions or directions and containing specimen signatures of such designated
persons, which such incumbency certificate shall be amended and replaced whenever a
person is to be added or deleted from the listing. If the Authority or the City elects to give
the Trustee e-mail or facsimile instructions (or instructions by a similar electronic method)
and the Trustee in its discretion elects to act upon such instructions, the Trustee's
understanding of such instructions shall be deemed controlling. The Trustee shall not be
liable for any losses, costs or expenses arising directly or indirectly from the Trustee's
reliance upon and compliance with such instructions notwithstanding such instructions
conflict or are inconsistent with a subsequent written instruction. The Authority and the
City agree to assume all risks arising out of the use of such electronic methods to submit
instructions and directions to the Trustee, including without limitation the risk of the Trustee
acting on unauthorized instructions, and the risk of interception and misuse by third
parties.
(o) The Trustee shall not be liable to the parties hereto or deemed in breach or
default hereunder if and to the extent its performance hereunder is prevented by reason
of force majeure. The term "force majeure" means an occurrence that is beyond the
control of the Trustee and could not have been avoided by exercising due care. Force
majeure shall include, but not be limited to, acts of God, terrorism, war, riots, strikes, fire,
floods, earthquakes, epidemics or other similar occurrences.
SECTION 8.05. Right to Rely on Documents. The Trustee shall be protected and
shall incur no liability in acting or refraining from acting in reliance upon any notice,
resolution, request, consent, order, certificate, report, opinion, bonds or other paper or
document believed by them to be genuine and to have been signed or presented by the
proper party or parties. The Trustee is under no duty to make any investigation or inquiry
as to any statements contained or matter referred to in any paper or document but may
accept and conclusively rely upon the same as conclusive evidence of the truth and
accuracy of any such statement or matter and shall be fully protected in relying thereon.
The Trustee may consult with counsel, who may be counsel of or to the Authority, 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.
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The Trustee may treat the Owners of the Bonds appearing in the Registration
Books as the absolute owners of the Bonds for all purposes and the Trustee shall not be
affected by any notice to the contrary.
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee deems it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a Written Certificate, Written Request or Written Requisition of the Authority
or the City, and such Written Certificate, Written Request or Written Requisition shall be
full warrant to the Trustee for any action taken or suffered under the provisions of this
Indenture in reliance upon such Written Certificate, Written Request or Written Requisition,
and the Trustee shall be fully protected in relying thereon, but in its discretion the Trustee
may, in lieu thereof, accept other evidence of such matter or may require such additional
evidence as to it may deem reasonable.
SECTION 8.06. Preservation and Inspection of Documents. All documents
received by the Trustee under the provisions of this Indenture shall be retained in its
respective possession and in accordance with its retention policy then in effect and shall,
upon reasonable notice to Trustee, be subject to the inspection of the Authority, the City
and any Bond Owner, and their agents and representatives duly authorized in writing,
during business hours and under reasonable conditions as agreed to by the Trustee.
SECTION 8.07. Compensation and Indemnification. The Authority shall pay to the
Trustee from time to time, on demand, the compensation for all services rendered under
this Indenture and also all reasonable expenses, advances (including any interest on
advances), charges, legal (including outside counsel and the allocated costs of internal
attorneys) and consulting fees and other disbursements, incurred in and about the
performance of its powers and duties under this Indenture.
The Authority shall indemnify the Trustee, its officers, directors, employees and
agents against any cost, loss, liability or expense whatsoever (including but not limited to
fees and expenses of its attorneys) incurred without negligence or willful misconduct on
its part, arising out of or in connection with the acceptance or administration of this trust
and this Indenture, including costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers hereunder or
under the Assignment Agreement or the Lease. As security for the performance of the
obligations of the Authority under this Section 8.07 and the obligation of the Authority to
make Additional Rental Payments to the Trustee, the Trustee shall have a lien prior to the
lien of the Bonds upon all property and funds held or collected by the Trustee as such.
The rights of the Trustee and the obligations of the Authority under this Section 8.07 shall
survive the resignation or removal of the Trustee or the discharge of the Bonds and this
Indenture and the Lease.
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ARTICLE IX
MODIFICATION OR AMENDMENT HEREOF
SECTION 9.01. Amendments Permitted.
(a) Amendments With Bond Owner Consent. This Indenture and the rights and
obligations of the Authority and of the Owners of the Bonds and of the Trustee may be
modified or amended from time to time and at any time by Supplemental Indenture, which
the Authority and the Trustee may enter into when the written consents of the Owners of
a majority in aggregate principal amount of all Bonds then Outstanding are filed with the
Trustee. No such modification or amendment may (i) extend the fixed maturity of any
Bonds, or reduce the amount of principal thereof or extend the time of payment, or change
the method of computing the rate of interest thereon, or extend the time of payment of
interest thereon, without the consent of the Owner of each Bond so affected, or (ii) reduce
the aforesaid percentage of Bonds the consent of the Owners of which is required to effect
any such modification or amendment, or permit the creation of any lien on the Revenues
and other assets pledged under this Indenture prior to or on a parity with the lien created
by this Indenture except as permitted herein, or deprive the Owners of the Bonds of the
lien created by this Indenture on such Revenues and other assets (except as expressly
provided in this Indenture), without the consent of the Owners of all of the Bonds then
Outstanding. It is not necessary for the consent of the Bond Owners to approve the
particular form of any Supplemental Indenture, but it is sufficient if such consent approves
the substance thereof.
(b) Amendments Without Owner Consent. This Indenture and the rights and
obligations of the Authority, of the Trustee and the Owners of the Bonds may also be
modified or amended from time to time and at any time by a Supplemental Indenture,
which the Authority and the Trustee may enter into without the consent of any Bond
Owners, if the Trustee has been furnished an opinion of counsel that the provisions of
such Supplemental Indenture shall not materially adversely affect the interests of the
Owners of the Bonds, including, without limitation, for any one or more of the following
purposes:
(i) to add to the covenants and agreements of the Authority in this
Indenture contained, other covenants and agreements thereafter to
be observed, to pledge or assign additional security for the Bonds (or
any portion thereof), or to surrender any right or power herein
reserved to or conferred upon the Authority;
(ii) to cure any ambiguity, inconsistency or omission, or to cure or correct
any defective provision, contained in this Indenture, or in regard to
matters or questions arising under this Indenture, as the Authority
deems necessary or desirable, provided that such modification or
amendment does not materially adversely affect the interests of the
Bond Owners, in the opinion of Bond Counsel filed with the Trustee;
(iii) to modify, amend or supplement this Indenture in such manner as to
permit the qualification hereof under the Trust Indenture Act of 1939,
as amended, or any similar federal statute hereafter in effect, and to
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add such other terms, conditions and provisions as may be permitted
by said act or similar federal statute;
(iv) to modify, amend or supplement this Indenture in such manner as to
assure that the interest on the Bonds remains excluded from gross
income under the Tax Code; or
(v) to facilitate the issuance of additional obligations of the City under the
Lease Agreement as provided in Section 7.5(b)(5) thereof.
(c) Limitation. The Trustee is not obligated to enter into any Supplemental
Indenture authorized by subsections (a) or (b) of this Section 9.01 which materially
adversely affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
(d) Bond Counsel Opinion Requirement. Prior to the Trustee entering into any
Supplemental Indenture hereunder, the Authority shall deliver to the Trustee an opinion of
Bond Counsel stating, in substance, that such Supplemental Indenture has been adopted
in compliance with the requirements of this Indenture and that the adoption of such
Supplemental Indenture will not, in and of itself, adversely affect the exclusion from gross
income for purposes of federal income taxes of interest on the Bonds.
(e) Notice of Amendments. The Authority shall deliver or cause to be delivered
a draft of any Supplemental Indenture to each rating agency which then maintains a rating
on the Bonds, at least 10 days prior to the effective date of such Supplemental Indenture
under this Section 9.01.
SECTION 9.02. Effect of Supplemental Indenture. Upon the execution of any
Supplemental Indenture under this Article IX, this Indenture shall be deemed to be
modified and amended in accordance therewith, and the respective rights, duties and
obligations under this Indenture of the Authority, the Trustee and all Owners of Bonds
Outstanding shall thereafter be determined, exercised and enforced hereunder subject in
all respects to such modification and amendment, and all the terms and conditions of any
such Supplemental Indenture shall be deemed to be part of the terms and conditions of
this Indenture for any and all purposes.
SECTION 9.03. Endorsement of Bonds; Preparation of New Bonds. Bonds
delivered after the execution of any Supplemental Indenture under this Article may, and if
the Authority so determines shall, bear a notation by endorsement or otherwise in form
approved by the Authority as to any modification or amendment provided for in such
Supplemental Indenture, and, in that case, upon demand on the Owner of any Bonds
Outstanding at the time of such execution and presentation of his Bonds for the purpose
at the Office of the Trustee or at such additional offices as the Trustee may select and
designate for that purpose, a suitable notation shall be made on such Bonds. If the
Supplemental Indenture shall so provide, new Bonds so modified as to conform, in the
opinion of the Authority, to any modification or amendment contained in such
Supplemental Indenture, shall be prepared and executed by the Authority and
authenticated by the Trustee, and upon demand on the Owners of any Bonds then
Outstanding shall be exchanged at the Office of the Trustee, without cost to any Bond
Owner, for Bonds then Outstanding, upon surrender for cancellation of such Bonds, in
equal aggregate principal amount of the same maturity.
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SECTION 9.04. Amendment of Particular Bonds. The provisions of this Article IX
do not prevent any Bond Owner from accepting any amendment as to the particular Bonds
held by such Owner.
ARTICLE X
DEFEASANCE
SECTION 10.01. Discharge of Indenture. Any or all of the Outstanding Bonds may
be paid by the Authority in any of the following ways, provided that the Authority also pays
or causes to be paid any other sums payable hereunder by the Authority:
(a) by paying or causing to be paid the principal of and interest and
premium (if any) on such Bonds, as and when the same become due
and payable;
(b) by depositing with the Trustee, in trust, at or before maturity, money
or securities in the necessary amount (as provided in Section 10.03)
to pay or redeem such Bonds; or
(c) by delivering all of such Bonds to the Trustee for cancellation.
If the Authority also pays or causes to be paid all other sums payable hereunder
by the Authority, then and in that case, at the election of the Authority (evidenced by a
Written Certificate of the Authority, filed with the Trustee, signifying the intention of the
Authority to discharge all such indebtedness and this Indenture), and notwithstanding that
any of such Bonds shall not have been surrendered for payment, this Indenture and the
pledge of Revenues and other assets made under this Indenture with respect to such
Bonds and all covenants, agreements and other obligations of the Authority under this
Indenture with respect to such Bonds shall cease, terminate, become void and be
completely discharged and satisfied, subject to Section 10.02. In such event, upon the
Written Request of the Authority, the Trustee shall execute and deliver to the Authority all
such instruments as may be necessary or desirable to evidence such discharge and
satisfaction, and the Trustee shall pay over, transfer, assign or deliver to the City all
moneys or securities or other property held by it under this Indenture which are not
required for the payment or redemption of any of such Bonds not theretofore surrendered
for such payment or redemption. The Trustee is entitled to conclusively rely on any such
Written Certificate or Written Request and, in each case, is fully protected in relying
thereon.
SECTION 10.02. Discharge of Liability on Bonds. Upon the deposit with the
Trustee, in trust, at or before maturity, of money or securities in the necessary amount (as
provided in Section 10.03) to pay or redeem any Outstanding Bonds (whether upon or
prior to the maturity or the redemption date of such Bonds), provided that, if such Bonds
are to be redeemed prior to maturity, notice of such redemption shall have been given as
provided in Article IV or provision satisfactory to the Trustee shall have been made for the
giving of such notice, then all liability of the Authority in respect of such Bonds shall cease,
terminate and be completely discharged, and the Owners thereof shall thereafter be
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entitled only to payment out of such money or securities deposited with the Trustee as
aforesaid for their payment, subject, however, to the provisions of Section 10.04.
The Authority may at any time surrender to the Trustee, for cancellation by the
Trustee, any Bonds previously issued and delivered, which the Authority may have
acquired in any manner whatsoever, and such Bonds, upon such surrender and
cancellation, shall be deemed to be paid and retired.
SECTION 10.03. Deposit of Money or Securities with Trustee. Whenever in this
Indenture it is provided or permitted that there be deposited with or held in trust by the
Trustee money or securities in the necessary amount to pay or redeem any Bonds, the
money or securities so to be deposited or held may include money or securities held by
the Trustee in the funds and accounts established under this Indenture and shall be:
(a) lawful money of the United States of America in an amount equal to
the principal amount of such Bonds and all unpaid interest thereon to
maturity, except that, in the case of Bonds which are to be redeemed
prior to maturity and in respect of which notice of such redemption
shall have been given as provided in Article IV or provision
satisfactory to the Trustee shall have been made for the giving of such
notice, the amount to be deposited or held shall be the principal
amount of such Bonds, premium, if any, and all unpaid interest
thereon to the redemption date; or
(b) non -callable Federal Securities, the principal of and interest on which
when due will, in the written opinion of an Independent Accountant
filed with the City, the Authority and the Trustee, provide money
sufficient to pay the principal of and interest and premium (if any) on
the Bonds to be paid or redeemed, as such principal, interest and
premium become due, provided that in the case of Bonds which are
to be redeemed prior to the maturity thereof, notice of such
redemption shall have been given as provided in Article IV or
provision satisfactory to the Trustee has been made for the giving of
such notice;
provided, in each case, that (i) the Trustee shall have been irrevocably instructed (by the
terms of this Indenture or by Written Request of the Authority) to apply such money to the
payment of such principal, interest and premium (if any) with respect to such Bonds, and
(ii) the Authority shall have delivered to the Trustee an opinion of Bond Counsel to the
effect that such Bonds have been discharged in accordance with this Indenture (which
opinion may rely upon and assume the accuracy of the Independent Accountant's opinion
referred to above). The Trustee shall be entitled to conclusively rely on such Written
Request or opinion and shall be fully protected, in each case, in relying thereon.
SECTION 10.04. Unclaimed Funds. Notwithstanding any provisions of this
Indenture, any moneys held by the Trustee in trust for the payment of the principal of, or
interest on, any Bonds and remaining unclaimed for 2 years after the principal of all of the
Bonds has become due and payable (whether at maturity or upon call for redemption or
by acceleration as provided in this Indenture), if such moneys were so held at such date,
or 2 years 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 Authority free from the trusts
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created by this Indenture, and all liability of the Trustee with respect to such moneys shall
thereupon cease; provided, however, that before the repayment of such moneys to the
Authority as aforesaid, the Trustee shall (at the cost of the Authority) first mail to the
Owners of Bonds which have not yet been paid, at the addresses shown on the
Registration Books, a notice, in such form as may be deemed appropriate by the Trustee
with respect to the Bonds so payable and not presented and with respect to the provisions
relating to the repayment to the Authority of the moneys held for the payment thereof.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Liability of Authority Limited to Revenues. Notwithstanding
anything in this Indenture or in the Bonds contained, the Authority is not required to
advance any moneys derived from any source other than the Revenues, the Additional
Rental Payments and other assets pledged under this Indenture for any of the purposes
in this Indenture mentioned, whether for the payment of the principal of or interest on the
Bonds or for any other purpose of this Indenture. Nevertheless, the Authority may, but is
not required to, advance for any of the purposes hereof any funds of the Authority which
may be made available to it for such purposes.
SECTION 11.02. Limitation of Rights to Parties and Bond Owners. Nothing in this
Indenture or in the Bonds expressed or implied is intended or shall be construed to give
to any person other than the Authority, the Trustee, the City and the Owners of the Bonds,
any legal or equitable right, remedy or claim under or in respect of this Indenture or any
covenant, condition or provision therein or herein contained; and all such covenants,
conditions and provisions are and shall be held to be for the sole and exclusive benefit of
the Authority, the Trustee, the City and the Owners of the Bonds.
SECTION 11.03. Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the Trustee may be established and
maintained in the accounting records of the Trustee, either as a fund or an account, and
may, for the purposes of such records, any audits thereof and any reports or statements
with respect thereto, be treated either as a fund or as an account; but all such records with
respect to all such funds and accounts shall at all times be maintained in accordance with
corporate industry standards to the extent practicable, and with due regard for the
requirements of Section 6.05 and for the protection of the security of the Bonds and the
rights of every Owner thereof. The Trustee may establish such funds and accounts as it
deems necessary or appropriate to perform its obligations under this Indenture.
SECTION 11.04. Waiver of Notice; Requirement of Mailed Notice. Whenever in
this Indenture the giving of notice by mail or otherwise is required, the giving of such notice
may be waived in writing by the person entitled to receive such notice and in any such
case the giving or receipt of such notice shall not be a condition precedent to the validity
of any action taken in reliance upon such waiver. Whenever in this Indenture any notice
is required to be given by mail, such requirement may be satisfied by the deposit of such
notice in the United States mail, postage prepaid, by first class mail.
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SECTION 11.05. Destruction of Bonds. Whenever in this Indenture provision is
made for the cancellation by the Trustee, and the delivery to the Authority, of any Bonds,
the Trustee shall destroy such Bonds as may be allowed by law and deliver a certificate
of such destruction to the Authority.
SECTION 11.06. Severability of Invalid Provisions. If any one or more of the
provisions contained in this Indenture or in the Bonds shall for any reason be held to be
invalid, illegal or unenforceable in any respect, then such provision or provisions shall be
deemed severable from the remaining provisions contained in this Indenture and such
invalidity, illegality or unenforceability shall not affect any other provision of this Indenture,
and this Indenture shall be construed as if such invalid or illegal or unenforceable provision
had never been contained herein. The Authority hereby declares that it would have
entered into this Indenture and each and every other Section, paragraph, sentence, clause
or phrase hereof and authorized the issuance of the Bonds pursuant thereto irrespective
of the fact that any one or more Sections, paragraphs, sentences, clauses or phrases of
this Indenture may be held illegal, invalid or unenforceable.
SECTION 11.07. Notices. All notices or communications to be given under this
Indenture shall be given by first class mail or personal delivery to the party entitled thereto
at its address set forth below, or at such address as the party may provide to the other
party in writing from time to time. Notice shall be effective either (a) upon transmission by
facsimile transmission or other form of telecommunication, confirmed by telephone, (b) 48
hours after deposit in the United States mail, postage prepaid, or (c) in the case of personal
delivery to any person, upon actual receipt. The Authority, the City or the Trustee may,
by written notice to the other parties, from time to time modify the address or number to
which communications are to be given hereunder.
If to the Authority City of Lodi
or the City: 221 West Pine Street
Lodi, CA 95240
Attention: City Manager
Fax: (209) 333-6807
If to the Trustee: U.S. Bank Trust Company, National Association
Attn.: Global Corporate Trust
One California Street, Suite 1000
San Francisco, CA 94111
Fax: 415-677-3768
SECTION 11.08. Evidence of Rights of Bond Owners. Any request, consent or
other instrument required or permitted by this Indenture to be signed and executed by
Bond Owners may be in any number of concurrent instruments of substantially similar
tenor and shall be signed or executed by such Bond Owners in person or by an agent or
agents duly appointed in writing. Proof of the execution of any such request, consent or
other instrument or of a writing appointing any such agent, or of the holding by any person
of Bonds transferable by delivery, shall be sufficient for any purpose of this Indenture and
shall be conclusive in favor of the Trustee and the Authority if made in the manner provided
in this Section 11.08.
The fact and date of the execution by any person of any such request, consent or
other instrument or writing may be proved by the certificate of any notary public or other
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officer of any jurisdiction, authorized by the laws thereof to take acknowledgments of
deeds, certifying that the person signing such request, consent or other instrument
acknowledged to him the execution thereof, or by an affidavit of a witness of such
execution duly sworn to before such notary public or other officer.
The ownership of Bonds shall be proved by the Registration Books.
Any request, consent, or other instrument or writing of the Owner of any Bond shall
bind every future Owner of the same Bond and the Owner of every Bond issued in
exchange therefor or in lieu thereof, in respect of anything done or suffered to be done by
the Trustee or the Authority in accordance therewith or reliance thereon.
SECTION 11.09. Disqualified Bonds. In determining whether the Owners of the
requisite aggregate principal amount of Bonds have concurred in any demand, request,
direction, consent or waiver under this Indenture, Bonds which are known by the Trustee
to be owned or held by or for the account of the Authority or the City, or by any other
obligor on the Bonds, or by any person directly or indirectly controlling or controlled by, or
under direct or indirect common control with, the Authority or the City or any other obligor
on the Bonds, shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination. Bonds so owned which have been pledged in good faith may be
regarded as Outstanding for the purposes of this Section if the pledgee shall establish to
the satisfaction of the Trustee the pledgee's right to vote such Bonds and that the pledgee
is not a person directly or indirectly controlling or controlled by, or under direct or indirect
common control with, the Authority or the City or any other obligor on the Bonds. In case
of a dispute as to such right, the Trustee shall be entitled to rely upon the advice of counsel
in any decision by Trustee and shall be fully protected in relying thereon.
Upon request, the Authority shall certify to the Trustee those Bonds disqualified
under this Section 11.09, and the Trustee may conclusively rely on such certifications.
SECTION 11.10. Money Held for Particular Bonds. The money held by the Trustee
for the payment of the interest, premium, if any, or principal due on any date with respect
to particular Bonds (or portions of Bonds in the case of Bonds redeemed in part only) shall,
on and after such date and pending such payment, be set aside on its books and held in
trust by it for the Owners of the Bonds entitled thereto, subject, however, to the provisions
of Section 10.04 but without any liability for interest thereon.
SECTION 11.11. Waiver of Personal Liability. No member, officer, agent or
employee of the Authority shall be individually or personally liable for the payment of the
principal of or interest or premium (if any) on the Bonds or be subject to any personal
liability or accountability by reason of the issuance thereof; but nothing herein contained
shall relieve any such member, officer, agent or employee from the performance of any
official duty provided by law or by this Indenture.
SECTION 11.12. Successor Is Deemed Included in All References to Predecessor.
Whenever in this Indenture either the Authority, the City or the Trustee is named or
referred to, such reference shall be deemed to include the successors or assigns thereof,
and all the covenants and agreements in this Indenture contained by or on behalf of the
Authority, the City or the Trustee shall bind and inure to the benefit of the respective
successors and assigns thereof whether so expressed or not.
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SECTION 11.13. Execution in Several Counterparts. This Indenture may be
executed in any number of counterparts and each of such counterparts shall for all
purposes be deemed to be an original; and all such counterparts, or as many of them as
the Authority and the Trustee shall preserve undestroyed, shall together constitute but one
and the same instrument.
SECTION 11.14. Payment on Non -Business Day. In the event any payment is
required to be made hereunder on a day which is not a Business Day, such payment shall
be made on the next succeeding Business Day and with the same effect as if made on
such preceding non -Business Day.
SECTION 11.15. Governing Law. This Indenture shall be governed by and
construed in accordance with the laws of the State of California.
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IN WITNESS WHEREOF, the LOBI PUBLIC FINANCING AUTHORITY has caused this
Indenture to be signed in its name by its Executive Director and attested to by its
Secretary, and U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION, In token of Its
acceptance of the trusts created hereunder, has caused this Indenture to be signed in its
corporate name by its officer thereunto duly authorized, all as of the day and year first
above written.
Attest:
Secretary
LODI PUBLIC FINANCING AUTHORITY
By
Executive Director
U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
M
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Authorized Officer
APPENDIX A
DEFINITIONS
"Additional Rental Payments" means the amounts of additional rental which are
payable by the City under Section 4.5 of the Lease or which are otherwise identified as
Additional Rental Payments under the Lease.
"Assignment Agreement" means the Assignment Agreement dated as of March 1,
2022, between the Authority as assignor and the Trustee as assignee, as originally
executed or as thereafter amended.
"Authority" means the Lodi Public Financing Authority, a joint exercise of powers
authority duly organized and existing under the laws of the State of California.
"Authorized Representative" means: (a) with respect to the Authority, its Chair,
Executive Director, Treasurer, General Counsel or any other person designated as an
Authorized Representative of the Authority by a Written Certificate of the Authority signed
by its Executive Director and filed with the City and the Trustee; and (b) with respect to
the City, its City Manager, Deputy City Manager, City Attorney or any other person
designated as an Authorized Representative of the City by a Written Certificate of the City
signed by its City Manager and filed with the Authority and the Trustee.
"Bond Counsel" means (a) Jones Hall, A Professional Law Corporation, or (b) any
other attorney or firm of attorneys appointed by or acceptable to the Authority of nationally -
recognized experience in the issuance of obligations the interest on which is excludable
from gross income for federal income tax purposes under the Tax Code.
"Bond Fund" means the fund by that name established and held by the Trustee
under Section 5.01.
"Bond Law" means Article 4 of Chapter 5, Division 7, Title 1 of the Government
Code of the State of California, commencing with Section 6584 of said Code.
"Bond Year" means each twelve-month period extending from October 2 in one
calendar year to October 1 of the succeeding calendar year, both dates inclusive; except
that the first Bond Year commences on the Closing Date and extends to and including
October 1, 2022.
"Bonds" means the $ aggregate principal amount of Lodi Public
Financing Authority 2022 Lease Revenue Bonds (2012 Bonds Refunding; Capital Projects
Financing) authorized by and at any time Outstanding under this Indenture.
"Business Day" means a day (other than a Saturday or a Sunday) on which banks
are not required or authorized to remain closed in the City in which the Office of the Trustee
is located.
"City" means the City of Lodi, a general law city and municipal corporation
organized and existing under the Constitution and laws of the State of California.
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"Closing Date" means the date of delivery of the Bonds to the Original Purchaser.
"Costs of Issuance" means all items of expense directly or indirectly payable by or
reimbursable to the City relating to the authorization, issuance, sale and delivery of the
Bonds, the refunding of the 2012 Bonds and the financing of the Project, including but not
limited to: printing expenses; rating agency fees; filing and recording fees; initial fees,
expenses and charges of the Trustee and their respective counsel, including the Trustee's
first annual administrative fee; fees, charges and disbursements of attorneys, financial
advisors, accounting firms, consultants and other professionals; fees and charges for
preparation, execution and safekeeping of the Bonds; and any other cost, charge or fee
in connection with the original issuance of the Bonds, the refunding of the 2012 Bonds
and the financing of the Project.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee under Section 3.03.
"Depository" means (a) initially, DTC, and (b) any other Securities Depositories
acting as Depository under Section 2.04.
"Depository System Participant" means any participant in the Depository's
book -entry system.
"DTC" means The Depository Trust Company, New York, New York, and its
successors and assigns.
"Event of Default" means any of the events specified in Section 7.01.
"Excess Investment Earnings" means an amount required to be rebated to the
United States of America under Section 148(f) of the Tax Code due to investment of gross
proceeds of the Bonds at a yield in excess of the yield on the Bonds.
"Federal Securities" means: (a) any direct general obligations of the United States
of America (including obligations issued or held in book entry form on the books of the
Department of the Treasury of the United States of America), for which the full faith and
credit of the United States of America are pledged; (b) obligations of any agency,
department or instrumentality of the United States of America, the timely payment of
principal and interest on which are directly or indirectly secured or guaranteed by the full
faith and credit of the United States of America.
"Fiscal Year" means any twelve-month period extending from July 1 in one
calendar year to June 30 of the succeeding calendar year, both dates inclusive, or any
other twelve-month period selected and designated by the Authority as its official fiscal
year period.
"Indenture" means this Indenture of Trust, as originally executed or as it may from
time to time be supplemented, modified or amended by any Supplemental Indenture under
the provisions hereof.
"Independent Accountant" means any certified public accountant or firm of certified
public accountants appointed and paid by the Authority or the City, and who, or each of
whom (a) is in fact independent and not under domination of the Authority or the City; (b)
A-2
does not have any substantial interest, direct or indirect, in the Authority or the City; and
(c) is not connected with the Authority or the City as an officer or employee of the Authority
or the City but who may be regularly retained to make annual or other audits of the books
of or reports to the Authority or the City.
"Insurance and Condemnation Fund" means the fund by that name established
and held by the Trustee under Section 5.07.
"Interest Account" means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
"Interest Payment Date" means each April 1 and October 1, commencing October
1, 2022, so long as any Bonds remain unpaid.
"Lease" means the Lease Agreement dated as of March 1, 2022, between the
Authority as lessor and the City as lessee of the Leased Property, as originally executed
and as it may from time to time be supplemented, modified or amended in accordance
with the terms thereof and of this Indenture.
"Lease Payment Date" means, with respect to any Interest Payment Date, the
Business Day immediately preceding such Interest Payment Date.
"Lease Payments" means the amounts payable by the City under Section 4.3(a)
of the Lease, including any prepayment thereof and including any amounts payable upon
a delinquency in the payment thereof.
"Leased Property" means the real property described in Appendix A to the Lease,
together with all improvements and facilities at any time situated thereon.
"Net Proceeds" means amounts derived from any policy of casualty insurance or
title insurance with respect to the Leased Property, or the proceeds of any taking of the
Leased Property or any portion thereof in eminent domain proceedings (including sale
under threat of such proceedings), to the extent remaining after payment therefrom of all
expenses incurred in the collection and administration thereof.
"Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.04(a).
"Office" means the corporate trust office of the Trustee in St. Paul, Minnesota, or
such other or additional offices as the Trustee may designate in writing to the Authority
from time to time as the corporate trust office for purposes of the Indenture; except that
with respect to presentation of Bonds for payment or for registration of transfer and
exchange such term means the office or agency of the Trustee at which, at any particular
time, its corporate trust agency business is conducted.
"Original Purchaser" means Piper Sandler & Co., as original purchasers of the
Bonds upon their delivery by the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds, means
all Bonds theretofore, or thereupon being, authenticated and delivered by the Trustee
under this Indenture except: (a) Bonds theretofore canceled by the Trustee or surrendered
A-3
to the Trustee for cancellation; (b) Bonds with respect to which all liability of the Authority
shall have been discharged in accordance with Section 10.02, including Bonds (or portions
thereof) described in Section 11.09; and (c) Bonds for the transfer or exchange of or in
lieu of or in substitution for which other Bonds shall have been authenticated and delivered
by the Trustee under this Indenture.
"Owner", whenever used herein with respect to a Bond, means the person in
whose name the ownership of such Bond is registered on the Registration Books.
"Permitted Encumbrances" means, as of any time: (a) liens for general ad valorem
taxes and assessments, if any, not then delinquent, or which the City may permit to remain
unpaid under Article V of the Lease; (b) the Site Lease, the Lease and the Assignment
Agreement; (c) any right or claim of any mechanic, laborer, material man, supplier or
vendor not filed or perfected in the manner prescribed by law; (d) that certain Lease
Agreement (A-06-194) dated as of March 28, 2006, by and between the County of San
Joaquin and the City (as modified by an Assignment and Assumption of Lease, dated as
of July 1, 2008, among the County, the City and the Judicial Council of California,
Administrative Office of the Courts); (e) the exceptions disclosed in the title insurance
policy with respect to the Leased Property issued as of the Closing Date by Stewart Title
Guaranty Company; and (f) easements, rights of way, mineral rights, drilling rights and
other rights, reservations, covenants, conditions or restrictions which exist of record and
which the City certifies in writing will not materially impair the use of the Leased Property
for its intended purposes.
"Permitted Investments" means any of the following:
(a) any direct general obligations of the United States of America
(including obligations issued or held in book entry form on the books
of the Department of the Treasury of the United States of America),
for which the full faith and credit of the United States of America are
pledged.
(b) obligations of any agency, department or instrumentality of the United
States of America, the timely payment of principal and interest on
which are directly or indirectly secured or guaranteed by the full faith
and credit of the United States of America.
(c) Any direct or indirect obligations of an agency or department of the
United States of America whose obligations represent the full faith
and credit of the United States of America, or which are rated A or
better by S&P.
(d) Interest-bearing deposit accounts (including certificates of deposit) in
federal or State chartered savings and loan associations or in federal
or State of California banks (including the Trustee), provided that: (i)
the unsecured obligations of such commercial bank or savings and
loan association are rated A or better by S&P; or (ii) such deposits
are fully insured by the Federal Deposit Insurance Corporation or
secured at all times by collateral described in (a) or (b) above.
(e) Commercial paper rated "A-1+" or better by S&P.
A-4
(f) Federal funds or bankers acceptances with a maximum term of one
year of any bank which an unsecured, uninsured and unguaranteed
obligation rating of "A-1+" or better by S&P.
(g) 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 S&P of at least
AAAm-G, AAAm or AAm, which funds may include funds for which
the Trustee, its affiliates, parent or subsidiaries provide investment
advisory or other management services.
(h) Obligations the interest on which is excludable from gross income
pursuant to Section 103 of the Tax Code and which are either
(a) rated A or better by S&P, or (b) fully secured as to the payment of
principal and interest by Permitted Investments described in clauses
(a) or (b).
(i) Obligations issued by any corporation organized and operating within
the United States of America having assets in excess of
$500,000,000, which obligations are rated A or better by S&P.
Q) Bonds or notes issued by any state or municipality which are rated A
or better by S&P.
(k) Any investment agreement with, or guaranteed by, a financial
institution the long-term unsecured obligations or the claims paying
ability of which are rated A or better by S&P at the time of initial
investment, by the terms of which all amounts invested thereunder
are required to be withdrawn and paid to the Trustee in the event
either of such ratings at any time falls below A.
(1) The Local Agency Investment Fund of the State of California, created
pursuant to Section 16429.1 of the California Government Code, to
the extent the Trustee is authorized to register such investment in its
name.
"Principal Account" means the account by that name established and held by the
Trustee in the Bond Fund under Section 5.02.
"Project" means the public capital improvements described in Appendix C attached
to the Lease.
"Project Costs" means, with respect to the Project, all costs of the acquisition,
construction and installation thereof which are paid from moneys on deposit in the Project
Fund, including but not limited to:
(a) all costs required to be paid to any person under the terms of any
agreement for or relating to the acquisition, construction and installation of the
Improvements;
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(b) obligations incurred for labor and materials in connection with the
acquisition, construction and installation of the Improvements;
(c) the cost of performance or other bonds and any and all types of insurance
that may be necessary or appropriate to have in effect in connection with the acquisition,
construction and installation of the Improvements;
(d) all costs of engineering and architectural services, including the actual out-
of-pocket costs for test borings, surveys, estimates, plans and specifications and
preliminary investigations therefor, development fees, sales commissions, and for
supervising construction, as well as for the performance of all other duties required by or
consequent to the proper acquisition, construction and installation of the Improvements;
(e) any sums required to reimburse the City for advances made for any of the
above items or for any other costs incurred and for work done which are properly
chargeable to the acquisition, construction and installation of the Improvements;
(f) all Costs of Issuance of the Bonds and other financing costs incurred in
connection with the acquisition, construction and installation of the Project; and
(g) the interest components of the Lease Payments allocable to the Project or
any component thereof, which come due during the period of acquisition, construction and
installation of the improvements or such component.
"Project Fund" means the fund by that name established and held by the Trustee
under Section 3.04.
"Record Date" means, with respect to any Interest Payment Date, the 151" calendar
day of the month preceding such Interest Payment Date, whether or not such day is a
Business Day.
"Redemption Fund" means the fund by that name established and held by the
Trustee under Section 5.06.
"Registration Books" means the records maintained by the Trustee under
Section 2.05 for the registration and transfer of ownership of the Bonds.
"Revenues" means: (a) all amounts received by the Authority or the Trustee under
or with respect to the Lease, including, without limiting the generality of the foregoing, all
of the Lease Payments (including both timely and delinquent payments, any late charges,
and whether paid from any source), but excluding (i) any amounts described in Section
7.5(b)(v) of the Lease, and (ii) any Additional Rental Payments; and (b) all interest, profits
or other income derived from the investment of amounts in any fund or account established
under this Indenture.
"Securities Depositories" means DTC; and, in accordance with then current
guidelines of the Securities and Exchange Commission, such other securities depositories
as the Authority designates in written notice filed with the Trustee.
A-6
"Site Lease" means the Site Lease dated as of March 1, 2022, between the City
as lessor and the Authority as lessee, as amended from time to time in accordance with
its terms.
"Site Lease Payment" means the amount payable by the Authority to the City on
the Closing Date under Section 3 of the Site Lease.
"S&P" means Standard & Poor's, a division of the McGraw Hill Companies, of New
York, New York, its successors and assigns.
"Supplemental Indenture" means any indenture hereafter duly authorized and
entered into between the Authority and the Trustee, supplementing, modifying or
amending this Indenture; but only if and to the extent that such Supplemental Indenture is
specifically authorized hereunder.
"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing
Date or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable proposed, temporary and
final regulations promulgated, and applicable official public guidance published, under
said Code.
"Term" means, with reference to the Lease, the time during which the Lease is in
effect, as provided in Section 4.2 thereof.
"Term Bonds" means the Bonds maturing on October 1, and October 1,
"Trustee" means U.S. Bank Trust Company, National Association, a national
banking association organized and existing under the laws of United States of America,
or its successor or successors, as Trustee hereunder as provided in Article VIII.
"2012 Bonds" has the meaning given that term in the recitals.
"2012 Trustee" means U.S. Bank Trust Company, National Association, its
successors and assigns, as successor trustee for the 2012 Bonds.
"Written Certificate," "Written Request" and "Written Requisition" of the Authority
or the City mean, respectively, a written certificate, request or requisition signed in the
name of the Authority or the City by its Authorized Representative. Any such instrument
and supporting opinions or representations, if any, may, but need not, be combined in a
single instrument with any other instrument, opinion or representation, and the two or more
so combined shall be read and construed as a single instrument.
A-7
LODI PUBLIC FINANCING AUTHORITY
2022 LEASE REVENUE BOND
(2012 BONDS REFUNDING; CAPITAL PROJECTS FINANCING)
INTEREST RATE: MATURITY DATE: ORIGINAL ISSUE DATE: CUSIP:
% October 1, , 2022
REGISTERED OWNER: CEDE & CO.
PRINCIPAL AMOUNT: "'
The LODI PUBLIC FINANCING AUTHORITY, a public body corporate and politic
duly organized and existing under the laws of the State of California (the "Authority"), for
value received, hereby promises to pay to the Registered Owner specified above or
registered assigns (the "Registered Owner"), on the Maturity Date specified above (subject
to any right of prior redemption hereinafter provided for), the Principal Amount specified
above, in lawful money of the United States of America, and to pay interest thereon in like
lawful money from the Interest Payment Date (as hereinafter defined) next preceding the
date of authentication of this Bond unless (i) this Bond is authenticated on or before an
Interest Payment Date and after the close of business on the 15th day of the month
preceding such interest payment date, in which event it shall bear interest from such
Interest Payment Date, or (ii) this Bond is authenticated on or before September 15, 2022,
in which event it shall bear interest from the Original Issue Date specified above; provided,
however, that if at the time of authentication of this Bond, interest is in default on this Bond,
this Bond shall bear interest from the Interest Payment Date to which interest has
previously been paid or made available for payment on this Bond, at the Interest Rate per
annum specified above, payable semiannually on April 1 and October 1 in each year,
commencing October 1, 2022 (the "Interest Payment Dates"), calculated on the basis of a
360 -day year composed of twelve 30 -day months.
Principal hereof and premium, if any, upon early redemption hereof are payable
upon presentation and surrender hereof at the corporate trust office of U.S. Bank Trust
Company, National Association, in St. Paul, Minnesota (the "Trust Office"), as trustee (the
"Trustee"). Interest hereon is payable by check of the Trustee mailed to the Registered
B-1
Owner hereof at the Registered Owner's address as it appears on the registration books
of the Trustee as of the close of business on the fifteenth day of the month preceding each
Interest Payment Date (a "Record Date"), or, upon written requestfiled::viFith the Trustee
as of such Record Date by a registered owner of at least $4-;-0.00-,00-6-.fn.--a---9-gfegate principal
amount of Bonds, by wire transfer in immediatety� avaifab16 f..und8"-to an account in the
United States designated by such,regi:-sterb�`bwn�r in s6ch written request.
This Bond:.fs.not 6.d:bbt,.-`of'the:City of LQdi (the "City"), the County of San Joaquin,
the State of Gaj06rnla of any oriits politic:ai_"st�tl isions, and neither the City, said County,
said State, npr::9hiy of iIts political subdivisions.,:°is liable hereon nor in any event shall this
Bond be payable out of any funds or properties of the Authority other than the Revenues.
This Bond is one of a duly authorized issue of bonds of the Authority designated
as the "Lodi Public Financing Authority 2022 Lease Revenue Bonds" (the "Bonds"), in an
aggregate principal amount of $ , all of like tenor and date (except for such
variation, if any, as may be required to designate varying numbers, maturities, interest
rates or redemption provisions) and all issued under the provisions of Article 4 of Chapter
5, Division 7, Title 1 of the Government Code of the State of California, commencing with
Section 6584 of said Code, and under an Indenture of Trust dated as of March 1, 2022,
between the Authority and the Trustee (the "Indenture") and a resolution of the Authority
adopted on March 2, 2022, authorizing the issuance of the Bonds. Reference is hereby
made to the Indenture (copies of which are on file at the office of the Authority) and all
supplements thereto for a description of the terms on which the Bonds are issued, the
provisions with regard to the nature and extent of the Revenues, and the rights thereunder
of the owners of the Bonds and the rights, duties and immunities of the Trustee and the
rights and obligations of the Authority thereunder, to all of the provisions of which the
Registered Owner of this Bond, by acceptance hereof, assents and agrees.
The Bonds have been issued by the Authority to refinance certain outstanding
lease revenue bonds issued by the Authority and to finance the acquisition and
construction of improvements owned by the City. This Bond and the interest and premium,
if any, hereon are special obligations of the Authority, payable from the Revenues, and
secured by a charge and lien on the Revenues as defined in the Indenture, consisting
principally of lease payments made by the City under a Lease Agreement dated as of
March 1, 2022, between the Authority as lessor and the City as lessee (the "Lease"). As
and to the extent set forth in the Indenture, all of the Revenues are exclusively and
irrevocably pledged in accordance with the terms hereof and the provisions of the
Indenture, to the payment of the principal of and interest and premium (if any) on the
Bonds.
The rights and obligations of the Authority and the owners of the Bonds may be
modified or amended at any time in the manner, to the extent and upon the terms provided
in the Indenture, but no such modification or amendment shall extend the fixed maturity of
any Bonds, or reduce the amount of principal thereof or premium (if any) thereon, or
extend the time of payment, or change the method of computing the rate of interest
thereon, or extend the time of payment of interest thereon, without the consent of the
owner of each Bond so affected.
The Bonds maturing on or before October 1, , are not subject to optional
redemption prior to their respective stated maturity dates. The Bonds maturing on or after
October 1, , are subject to redemption in whole, or in part at the request of the
B-2
Authority among maturities on such basis as the Authority may designate and by lot within
a maturity, at the option of the Authority, on any date on or after April 1, , from any
available source of funds, at a redemption price equal to 100% of the principal amount to
be redeemed plus accrued interest to the date of redemption, without premium.
The Bonds are subject to redemption as a whole, or in part by lot, on any date, to
the extent of any net proceeds of hazard or title insurance with respect to the property
which has been leased under the Lease (the "Leased Property") or any portion thereof
which are not used to repair or replace the Leased Property pursuant to the Lease, or to
the extent of any net proceeds arising from the disposition of the Leased Property or any
portion thereof in eminent domain proceedings which the City elects to be used for such
purpose pursuant to the Lease, at a redemption price equal to the principal amount thereof
plus interest accrued thereon to the date fixed for redemption, without premium.
The Bonds maturing on October 1, and October 1, ("Term Bonds") are
subject to mandatory redemption in part by lot, at a redemption price equal to 100% of the
principal amount thereof to be redeemed, without premium, in the aggregate respective
principal amounts and on October 1 in the respective years as set forth in the following
tables; provided, however, that if some but not all of the Term Bonds have been redeemed
as a result of an optional redemption or a special mandatory redemption, the total amount
of all future sinking fund payments will be reduced by the aggregate principal amount of
the Term Bonds so redeemed, to be allocated among such sinking fund payments on a
pro rata basis in integral multiples of $5,000 (as set forth in a schedule provided by the
Authority to the Trustee).
Mandatory Sinking Fund Redemption of
Term Bonds Maturing October 1,
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
Mandatory Sinking Fund Redemption of
Term Bonds Maturing October 1,
Sinking Fund
Redemption Date
(October 1)
Principal Amount
To Be Redeemed
As provided in the Indenture, notice of redemption will be mailed by the Trustee by
first class mail not less than 30 nor more than 60 days prior to the redemption date to the
respective owners of any Bonds designated for redemption at their addresses appearing
L1X3
on the registration books of the Trustee, but neither failure to receive such notice nor any
defect in the notice so mailed shall affect the sufficiency of the proceedings for redemption
or the cessation of accrual of interest thereon from and after the date fixed-f& redemption.
Notice of any optional redemption of the Bonds may be rescin.dedr�der.fk�e-circumstances
set forth in the Indenture, upon notice to the owners-eflWch. 6ai6W,4 `.._.::
If this Bond is called for -rede" M" itidn,.anc :`payment is duly provided therefor as
specified in the Ind nture -it�i4 s�;::Sk�all`-cease to accrue hereon from and after the date
fixed for redemp�jpri::: ,
This 8.6i d is transferable by tq:.:Registered Owner hereof, in person or by his
attorney duly authorized in writing, at the Trust Office, but only in the manner, subject to
the limitations and upon payment of the charges provided in the Indenture, and upon
surrender and cancellation of this Bond. Upon registration of such transfer, a new Bond
or Bonds, of authorized denomination or denominations, for the same aggregate principal
amount and of the same maturity will be issued to the transferee in exchange herefor.
This Bond may be exchanged at the Trust Office for Bonds of the same tenor, aggregate
principal amount, interest rate and maturity, of other authorized denominations.
The Authority and the Trustee may treat the Registered Owner hereof as the
absolute owner hereof for all purposes, and the Authority and the Trustee shall not be
affected by any notice to the contrary.
Unless this Bond is presented by an authorized representative of The Depository
Trust Company to the Authority or the Trustee for registration of transfer, exchange or
payment, and any Bond issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of The Depository Trust Company
and any payment is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL since
the registered owner hereof, Cede & Co., has an interest herein.
It is hereby certified by the Authority that all of the things, conditions and acts
required to exist, to have happened or to have been performed precedent to and in the
issuance of this Bond do exist, have happened or have been performed in due and regular
time, form and manner as required by the Ordinance and the laws of the State of California
and that the amount of this Bond, together with all other indebtedness of the Authority,
does not exceed any limit prescribed by the Ordinance or any laws of the State of
California, and is not in excess of the amount of Bonds permitted to be issued under the
Indenture.
This Bond shall not be entitled to any benefit under the Indenture or become valid
or obligatory for any purpose until the certificate of authentication hereon endorsed shall
have been manually signed by the Trustee.
IN WITNESS WHEREOF, the Lodi Public Financing Authority has caused this
Bond to be executed in its name and on its behalf with the facsimile signature of its Chair
and attested to by the facsimile signature of its Secretary, all as of the Original Issue Date
specified above.
LODI PUBLIC FINANCING.; VTHORITY
Chair
Dated:
CERTIFICATE OF AUTHENTICATION
This is one of the Bonds described in the within -mentioned Indenture.
U.S. BANK TRUST COMPANY,
NATIONAL ASSOCIATION,
as Trustee
1
ASSIGNMENT
Authorized Signatory
For value received the undersigned hereby sells, assigns and transfers unto
whose address and social security or other tax
identifying number is the within -mentioned Bond and hereby
irrevocably constitute(s) and appoint(s)
attorney, to transfer the same on the
registration books of the Trustee with full power of substitution in the premises.
Dated:
Signature Guaranteed:
Note: Signature(s) must be guaranteed by an eligible
guarantor institution.
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Note: The signature(s) on this Assignment must
correspond with the name(s) as written on the face of the
within Bond in every particular without alteration or
enlargement or any change whatsoever.
APPENDIX C
FORM OF PROJECT FUND REQUISITION
DISBURSEMENT REQUEST NO.:
U.S. Bank Trust Company, National Association
One California Street, Suite 1000
San Francisco, CA 94111
Attn: Global Corporate Trust
Re: $ Lodi Public Financing Authority 2022 Lease Revenue Bonds
(2012 Bonds Refunding; Capital Projects Financing)
Ladies and Gentlemen:
In accordance with the terms of an Indenture of Trust, by and between you and the
undersigned, dated as of March 1, 2022 (the "Indenture"), I am an Authorized
Representative and you are hereby authorized and requested to make immediate
disbursement of funds held by you in the Project Fund for Project Costs relating to the
Project (as such terms are defined in the Indenture) pursuant to Section 3.04 of the
Indenture.
You are hereby requested to pay from the Project Fund established by the
Indenture, to the person(s), corporation(s) or other entity(ies) designated on Schedule A
attached hereto, in payment of all or a portion of the Project Costs described on said
Schedule.
The undersigned hereby certifies that (i) the amounts listed on Schedule A
constitute Project Costs (as defined in the Indenture), (ii) no part of the amount requested
herein has been included in any other request previously filed with you; (iii) to the
knowledge of the undersigned, there has not been filed with or served upon the City any
notice of any lien or attachment upon or claim (except for any preliminary notice of lien as
may be filed in accordance with law) affecting the right of the person, corporation or other
entity stated below to receive payment of the amount stated below, which lien has not
been released or will not be released simultaneously with the payment requested
hereunder; and (iv) the labor, services and/or materials covered hereby have been
performed upon or furnished to the Improvements and the payment requested herein is
due and payable under a purchase order, contract or other authorization;
Dated: , 20
C-1
CITY OF LODI
0
Authorized Officer
SCHEDULE A
Payee Description Project Costs
(include address) of Costs Amount
C-2
Jones Hall 2-23-22 Agenda
IRREVOCABLE REFUNDING INSTRUCTIONS
Relating to
$19,080,000
Lodi Public Financing Authority
2012 Refunding Lease Revenue Bonds
These IRREVOCABLE REFUNDING INSTRUCTIONS (these "Instructions"), are dated
2022, and are given by the Lodi Public Financing Authority, a joint exercise of powers
agency duly established and authorized to transact business and exercise powers under and
pursuant to the provisions of Section 6500 of the California Government Code (the "Authority"),
to U.S. Bank Trust Company, National Association, a national banking association organized
and existing under the laws of the United States of America, successor to U.S. Bank National
Association acting as trustee for the hereinafter defined 2012 Bonds (the "2012 Trustee");
WITNESSETH:
1. The Authority previously issued its Lodi Public Financing Authority 2012
Refunding Lease Revenue Bonds (the "2012 Bonds").
2. The 2012 Bonds were issued pursuant to an Indenture of Trust, dated as of
September 1, 2012 (the "2012 Indenture of Trust"), by and between the Authority and the 2012
Trustee. The 2012 Bonds were issued for the purpose of (a) providing funds for the City of Lodi
(the "City") to prepay outstanding certificates of participation of the City and (b) paying the costs
of issuing the 2012 Bonds.
3. The City has determined that it is in its best financial interests at this time to
refund the currently outstanding 2012 Bonds, and intends concurrently to finance acquisition
and construction of additional capital improvements.
4. To that end, the City has proposed to lease to the Authority certain real property
and improvements of the City (the "Leased Property"), under a Site Lease, dated as of the date
hereof, by and between the City and the Authority (the "Site Lease") in consideration of the
payment by the Authority of an upfront rental payment (the "Site Lease Payment") which is
sufficient to provide funds for, among other things, the redemption of the 2012 Bonds.
5. In order to provide eligible funds to enable the Authority to pay the Site Lease
Payment to the City in accordance with the Site Lease, the Authority has issued its Lodi Public
Financing Authority Lease Revenue Bonds (2012 Refunding; Capital Projects Financing) in the
aggregate principal amount of $ (the "2022 Bonds"), pursuant to an Indenture of
Trust dated as of March 1, 2022 (the "2022 Indenture") by and between the Authority and U.S.
Bank Trust Company, National Association (the "2022 Trustee").
6. The Authority will use a portion of the proceeds from the issuance of the 2022
Bonds, together with certain other moneys, to defease the 2012 Bonds and provide for the
discharge of the City's obligations under the Lease Agreement dated as of September 1, 2012,
by and between the City and the Authority (the "Lease Agreement").
7. The Authority wishes to give these Instructions to the 2012 Trustee for the
purpose of providing the terms and conditions relating to the deposit and application of moneys
to provide for the defeasance, payment and redemption of all of the outstanding 2012 Bonds
pursuant to Section 4.01(a) and Section 10.01(b) of the 2012 Indenture of Trust.
NOW, THEREFORE, the Authority hereby irrevocably instructs the 2012 Trustee as
follows:
Section 1. Proceedings for Redemption of 2012 Bonds. The Authority hereby
irrevocably elects and directs the 2012 Trustee to redeem the 2012 Bonds on , 2022.
The Authority previously directed the 2012 Trustee to give notice of the redemption of the 2012
Bonds in accordance with Section 4.03 of the 2012 Indenture of Trust in substantially the form
of Exhibit A. The Authority hereby directs the 2012 Trustee to file a notice of defeasance of the
2012 Bonds in substantially the form of Exhibit B on the Electronic Municipal Market Access
system ("EMMA") on the date hereof. The sole remedy for failure to post such notice on EMMA
shall be an action by the holders of the 2012 Bonds in mandamus for specific performance or
similar remedy to compel performance.
Section 2. Deposit into Redemption Account; Use of Amounts in the
Redemption Account.
(a) On the date hereof, the 2022 Trustee shall transfer to the 2012 Trustee proceeds
of the 2022 Bonds in the amount of $ to be held in the Redemption Fund established
and held by the 2012 Trustee under the 2012 Indenture, and such funds, along with other
available moneys held by the 2012 Trustee under the 2012 Indenture ($ ), which shall
also be transferred to the Redemption Fund on the date hereof, shall be held uninvested.
[discuss]
(b) The 2012 Trustee shall use the funds available in the Redemption Fund to pay
the accrued interest on the 2012 Bonds to , 2022 and redeem the remaining outstanding
2012 Bonds on , 2022, without premium, pursuant to Section 4.01(a) of the 2012 Indenture
of Trust.
(c) The deposits into the Redemption Fund as described in this Section 2 constitute
prepayment of the City's Lease Payment obligation and the establishment of a security deposit
by the City under the Lease Agreement.
(d) On , 2022, following the payment and redemption of the 2012 Bonds as
described in this Section 2, the 2012 Trustee shall withdraw any amounts remaining on deposit
in the Redemption Fund and any other fund or account held by the 2012 Trustee under the
2012 Indenture of Trust, less any unpaid fees and expenses of the 2012 Trustee, and transfer
such amounts to the 2022 Trustee to be held in the Interest Account held by the 2022 Trustee
under the 2022 Indenture and to be used to pay interest on the 2022 Bonds.
Section 3. Amendment. These Instructions may be amended or supplemented by the
Authority, but only if the Authority shall file with the 2012 Trustee (a) an opinion of nationally
recognized bond counsel engaged by the Authority stating that such amendment or supplement
will not, of itself, adversely affect the exclusion from gross income of interest on the 2012 Bonds
or the 2022 Bonds under federal income tax law, and (b) a certification of an independent
certified public accountant stating that such amendment or supplement will not affect the
sufficiency of funds invested and held hereunder to make the payments required by Section 2.
2
Section 4. Concerning the 2012 Trustee. The 2012 Trustee shall not be liable for any
loss from any investment made by it in accordance with the terms of these Instructions.
The 2012 Trustee shall not be liable for the recitals or representations contained in these
Instructions and shall not be responsible for the sufficiency of amounts described in Section 2 to
pay the redemption price of the 2012 Bonds on the date specified in Section 2.
The protections, limitations from liability and indemnities provided to the 2012 Trustee
under the 2012 Indenture of Trust shall be afforded to the 2012 Trustee in acting pursuant to
these Instructions and such provisions of the 2012 Indenture are incorporated by reference
herein.
Section 5. Governing Law. These Instructions shall be construed in accordance
with and governed by the laws of the State of California.
LODI PUBLIC FINANCING AUTHORITY
go
ACCEPTED:
U.S. BANK TRUST COMPANY, NATIONAL ASSOCIATION,
as 2012 Trustee
Z
Authorized Officer
ACCEPTED:
CITY OF LODI,
City Manager
3
Executive Director
EXHIBIT A
FORM OF CONDITIONAL NOTICE OF REDEMPTION
$19,080,000
Lodi Public Financing Authority
2012 Lease Revenue Bonds
Date of issuance: September 5, 2012
NOTICE IS HEREBY GIVEN, by the Lodi Public Financing Authority (the "Authority")
that all of the captioned bonds maturing on or after October 1, 2022 have been called for
redemption under and within the meaning of the Indenture of Trust, dated as of
September 1, 2012 (the "2012 Indenture of Trust"), on , 2022 (the "Redemption Date"),
at a redemption price equal to 100% of the par amount of the 2012 Bonds to be redeemed
together with accrued interest thereon to the redemption date (the "Redemption Price").
The 2012 Bonds to be refunded consist of the following:
Maturity Date
(October 1)
Principal Amount
Interest Rate
CUSIP
2022
$1,065,000
5.000%
540259AG3
2023
1,120, 000
5.000
540259AH 1
2026
3,720,000
5.250
540259AK4
2031
7,410,000
4.125
540259AJ7
The CUSIP number of the 2012 Bonds has been assigned by an independent service
and is included in this notice solely for the convenience of the bond owners and neither U.S.
Bank Trust Company, National Association, as trustee for the 2012 Bonds (the "2012 Trustee"),
the Authority nor the City of Lodi (the "City") shall be liable for any inaccuracies in such
numbers.
Redemption of the 2012 Bonds as described in this notice shall be conditioned
upon the receipt by the 2012 Trustee from the City of the funds necessary for the
proposed redemption on or before the Redemption Date.
Payment of the Redemption Price of the 2012 Bonds called for redemption will become
due and payable on the Redemption Date upon presentation and surrender thereof in the
following manner:
Holders of the 2012 Bonds are requested to present their 2012 Bonds, at the following
addresses:
U.S. Bank Trust Company, National Association
111 Fillmore Avenue East
St. Paul, MN 55107
Additional information regarding the foregoing actions may be obtained from U.S. Bank
Trust Company, National Association, Corporate Trust Department, Bondholder Relations,
telephone number: 1-800-934-6802.
Interest on the principal amount designated to be prepaid shall cease to accrue on and
after the Redemption Date.
IMPORTANT NOTICE
Federal law requires the withholding of taxes at the applicable rate from the payment if
an IRS Form W-9 or applicable IRS Form W-8 is not provided. Please visit www.irs.gov for
additional information on the tax forms and instructions.
Dated: 2022 U.S. BANK TRUST COMPANY, NATIONAL
ASSOCIATION,
as Trustee
A-2
EXHIBIT B
FORM OF DEFEASANCE NOTICE
$19,080,000
Lodi Public Financing Authority
2012 Lease Revenue Bonds
Date of issuance: September 5, 2012
NOTICE IS HEREBY GIVEN, by the Lodi Public Financing Authority (the "Authority")
that all of the captioned bonds (the "2012 Bonds") maturing on or after October 1, 2022 have
been defeased and discharged under and within the meaning of the Indenture of Trust, dated as
of September 1, 2012 (the "2012 Indenture of Trust").
The Authority has irrevocably elected to redeem all of the outstanding 2012 Bonds on
2022, at a redemption price equal to 100% of the par amount of the 2012 Bonds to be
redeemed together with accrued interest thereon to the redemption date.
The 2012 Bonds consist of the following:
Maturity Date
(October 1)
Principal Amount
2022
$1,065,000
2023
1,120, 000
2026
3,720,000
2031
7,410,000
Interest Rate
CUSIP
5.000%
540259AG3
5.000
540259AH 1
5.250
540259AK4
4.125
540259AJ7
The CUSIP number of the 2012 Bonds has been assigned by an independent service
and is included in this notice solely for the convenience of the bond owners and neither U.S.
Bank Trust Company, National Association, as trustee for the 2012 Bonds (the "2012 Trustee"),
the Authority nor the City of Lodi shall be liable for any inaccuracies in such numbers.
Proceeds of the issuance of the Authority's Lodi Public Financing Authority 2022 Lease
Revenue Bonds (2012 Bond Refunding; Capital Projects Financing) sufficient to pay interest
and the redemption price of the 2012 Bonds on , 2022 are held in cash by the 2012
Trustee for the payment and redemption of the 2012 Bonds, as permitted under the 2012
Indenture of Trust.
As a consequence of the foregoing actions and in accordance with the 2012 Indenture of
Trust, the 2012 Bonds are no longer secured by a pledge of revenues under the 2012 Indenture
of Trust, and the 2012 Bonds are now payable solely from the moneys set aside for that
purpose under the 2012 Indenture of Trust.
Dated: 2022
B-1
4� - 3
RESOLUTION NO. 2022 -
A RESOLUTION OF THE LODI CITY COUNCIL MAKING FINDINGS AND APPROVING
DOCUMENTS AND ACTIONS RELATING TO THE PROPOSED ISSUANCE BY THE
LODI PUBLIC FINANCING AUTHORITY OF LEASE REVENUE BONDS TO
REFINANCE OUTSTANDING LEASE REVENUE BONDS AND PROVIDE FINANCING
FOR ACQUISITION AND CONSTRUCTION OF CAPITAL IMPROVEMENTS,
INCLUDING AN ANIMAL SHELTER AND PARKS AND PLAYGROUND
IMPROVEMENTS AND UPGRADES
WHEREAS, the Lodi Public Financing Authority (the "Authority") previously
issued its $19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Revenue
Bonds (the "2012 Bonds") for the purpose of refinancing outstanding certificates of
participation that were executed and delivered to finance various municipal facilities of
the City of Lodi (the "City"); and
WHEREAS, in connection with the issuance of the 2012 Bonds, the City and the
Authority entered into a Site Lease and a Lease Agreement, each of which was dated as
of September 1, 2012, pursuant to which, respectively, the City leased to the Authority
and subleased from the Authority the land and improvements constituting the City's
police building and Carnegie Forum; and
WHEREAS, in order to take advantage of prevailing bond market conditions, the
City Council wishes to authorize the refinancing of the 2012 Bonds; and
WHEREAS, the City further wishes to leverage the savings achieved by
refinancing the 2012 Bonds to finance the acquisition and construction of capital
improvements, including, among other things, a new animal shelter and park and
playground improvements and upgrades (the "Project"); and
WHEREAS, to that end, the City has proposed to lease the land and
improvements constituting the City's police building and its Fire Station #2 (the "Leased
Property") to the Authority under a Site Lease, the form of which is on file with the City
Clerk, in consideration of the payment by the Authority of an upfront rental payment
which is sufficient to provide funds to refinance the 2012 Bonds and finance the
acquisition and construction of the Project; and
WHEREAS, in order to raise funds for the upfront rental payment, the Authority
proposes to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue
Bonds (2012 Refunding; Capital Projects Financing) (the "Bonds") under Article 4 of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California,
commencing with Section 6584 of said Code (the "Bond Law"); and
WHEREAS, in order to secure the payments of principal of and interest on the
Bonds, the Authority proposes to lease the Leased Property back to the City under a
Lease Agreement (the "Lease Agreement"), the form of which is on file with the City
Clerk, under which the City is obligated to pay semiannual lease payments as rental for
the Leased Property, and the Authority will assign substantially all of its rights under the
Lease Agreement to U.S. Bank Trust Company, National Association, as trustee for the
Bonds; and
WHEREAS, there has been submitted to the City Council a form of preliminary
Official Statement in connection with the marketing of the Bonds and the City Council,
with the aid of its staff, has reviewed the preliminary Official Statement to assure proper
disclosure of all material facts relating to the Bonds that are in the personal knowledge of
the members of the City Council and the City staff; and
WHEREAS, the Authority and the City propose to sell the Bonds to Piper Sandler
& Co. (the "Underwriter") pursuant to a Bond Purchase Agreement (the "Bond Purchase
Agreement"), the form of which is on file with the City Clerk; and
WHEREAS, in order to assist the Underwriter in complying with Rule 15c2-12 of
the Securities and Exchange Commission, the City will undertake certain continuing
disclosure obligations with respect to the Bonds pursuant to a continuing disclosure
certificate to be executed by the City (the "Continuing Disclosure Certificate"), the form
of which is on file with the City Clerk; and
WHEREAS, as a condition precedent to the issuance by the Authority of the
Bonds to provide financing for the Project, Section 6586.5 of the Bond Law requires that
the City approve the proposed lease financing by the Authority and that the City make
certain findings with respect to such financing, and Section 6586.5 further requires that
such approval be given and findings be made only after a noticed public hearing; and
WHEREAS, as required by Section 6586.5 of the Bond Law, the City has caused
publication of a notice of a public hearing on the financing of the Project once at least
five days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the City Council held a public hearing at which all interested persons
were provided the opportunity to speak on the subject of financing the Project; and
WHEREAS, in accordance with Government Code Section 5852.1, the City
Council has obtained and wishes to disclose the information set forth in Appendix A
hereto; and
WHEREAS, the City Council wishes at this time to approve all proceedings to
which it is a party relating to the issuance and sale of the Bonds, the refinancing of the
2012 Bonds and the financing of the Project;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Lodi as
follows:
SECTION 1. Issuance of Bonds. The City Council hereby approves the
issuance of the Bonds by the Authority under the Bond Law in the maximum principal
amount of $30,000,000, for the purpose of providing funds to refinance the 2012 Bonds
and finance the Project.
Pursuant to the Bond Law, and based on the information provided to the City
Council by City staff and consultants, all as set forth in the proceedings and documents
providing for the issuance and delivery of the Bonds, the City Council hereby finds and
determines that the issuance of the Bonds and the transactions related thereto will result
in significant public benefits within the contemplation of Section 6586 of the Bond Law,
namely, demonstrable savings in bond preparation, bond underwriting and bond
issuance costs.
-2-
SECTION 2. Approval of Related Financing Agreements. The City Council
hereby approves each of the following agreements required for the issuance and sale of
the Bonds, the refinancing of the 2012 Bonds and the financing of the Project, in
substantially the respective forms on file with the City Clerk together with any changes
therein or additions thereto deemed advisable by the City Manager, the Deputy City
Manager or the City Attorney (each, an "Authorized Officer"), whose execution thereof
shall be conclusive evidence of the approval of any such changes or additions. An
Authorized Officer is hereby authorized and directed for and on behalf of the City to
execute, and the City Clerk is hereby authorized and directed to attest, the final form of
each such agreement, as follows:
• Site Lease, between the City as lessor and the Authority as lessee,
under which the City leases the Leased Property to the Authority in
consideration of the payment of an amount which will be applied by
the City to refinance the 2012 Bonds and finance the Project.
• Lease Agreement, between the Authority as lessor and the City as
lessee, under which the Authority leases the Leased Property back to
the City and the City agrees to pay semiannual lease payments which
are sufficient to provide revenues with which to pay principal of and
interest on the Bonds when due.
■ i rrevocable Refunding Instructions, to be given by the Authority to the
trustee for the 2012 Bonds, and to be consented to by the City,
providing for the deposit, investment and application of funds to
defease and redeem the 2012 Bonds.
+ Bond Purchase Agreement, among the City, the Authority and the
Underwriter, which establishes the terms under which the Underwriter
will purchase the Bonds from the Authority.
• Continuing Disclosure Certificate, to be executed by the City.
SECTION 3. Negotiated Sale of Bonds. The City Council hereby approves the
negotiated sale of the Bonds by the Authority to the Underwriter. The Bonds shall be
sold pursuant to the terms and provisions of the Bond Purchase Agreement. The Bonds
shall be sold at a true interest cost not to exceed 4.0%. The Underwriter's discount shall
not exceed 1.0%.
SECTION 4. Official Statement. The City Council hereby approves the
preliminary Official Statement describing the Bonds in substantially the form on file with
the City Clerk. An Authorized Officer is hereby authorized and directed to approve any
changes in or additions to said preliminary Official Statement and to execute an
appropriate certificate stating the Authorized Officer's determination that the preliminary
Official Statement (together with any changes therein or additions thereto) has been
deemed nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act
of 1934. Distribution of the preliminary Official Statement by the Underwriter is hereby
approved. An Authorized Officer is hereby authorized and directed to approve any
changes in or additions to a final form of said Official Statement, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such
changes and additions. The City Council hereby authorizes the distribution of the final
-3-
Official Statement by the Underwriter. The final Official Statement shall be executed on
behalf of the City by an Authorized Officer.
SECTION 5. Official Actions. The Mayor, the City Manager, the Deputy City
Manager and the City Attorney and all other officers of the City are each authorized and
directed on behalf of the City to make any and all leases, assignments, certificates,
requisitions, agreements (including an escrow deposit and trust agreement, if needed),
notices, consents, instruments of conveyance or termination, warrants and other
documents, which they or any of them deem necessary or appropriate in order to
consummate any of the transactions contemplated by the agreements and documents
approved under this Resolution, and the City Manager may direct the City Clerk to
execute and deliver such other documents as the City Manager determines are
necessary or appropriate in order to consummate any of the transactions contemplated
by the agreements and documents approved under this Resolution. An Authorized
Officer may revise the identity of the Leased Property as necessary in order to
accomplish the purposes of this Resolution. An Authorized Officer may approve the
purchase of municipal bond insurance or a debt service reserve fund policy if the
Authorized Officer, in consultation with the City's municipal advisor, concludes such
purchase would be economically beneficial for the City. Whenever in this Resolution any
officer of the City is authorized to execute or countersign any document or take any
action, such execution, countersigning or action may be taken on behalf of such officer
by any person designated by such officer to act on his or her behalf in the case such
officer is absent or unavailable.
SECTION 6. Effective Date. This Resolution shall take effect immediately upon
its passage and adoption.
Dated: March 2, 2022
------------------------------------------------------------------
------------------------------------------------------------------
I hereby certify that Resolution No. 2022- was passed and adopted by the City
Council of the City of Lodi in a regular meeting held March 2, 2022 by the following votes:
AYES: COUNCIL MEMBERS —
NOES: COUNCIL MEMBERS —
ABSENT: COUNCIL MEMBERS —
ABSTAIN COUNCIL MEMBERS —
Approved as to Form:
Janice D. Magdich
-4-
Mayor
PAMELA M. FARRIS
Assistant City Clerk
2022-
-5-
APPENDIX A
Government Code Section 5852.1 Disclosure
The good faith estimates set forth herein are provided with respect to the Bonds
in accordance with California Government Code Section 5852.1. Such good faith
estimates have been provided to the City and the Authority by the Underwriter of the
Bonds.
Principal Amount. The Underwriter has informed the City and the Authority that,
based on the financing plan and current market conditions, its good faith estimate of the
aggregate principal amount of the Bonds to be sold is $26,475,000 (the "Estimated
Principal Amount"), which excludes net premium that might be generated in the sale
under current market conditions.
True Interest Cost of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the true interest cost of the Bonds, which means the rate
necessary to discount the amounts payable on the respective principal and interest
payment dates to the purchase price received for the Bonds, is 3.34%.
Finance Charge of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the finance charge for the Bonds, which means the sum of all fees
and charges paid to third parties (or costs associated with the Bonds), is $611,071.
Such fees and charges include fees for bond and disclosure counsel, municipal advisor,
special tax consultant, fiscal agent, rating agencies, City and Authority expenses, City
Attorney and staff time related to bond issuance, printing, and underwriting.
Amount of Proceeds to be Received. The Underwriter has informed the City and
the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold,
and based on market interest rates prevailing at the time of preparation of such estimate,
its good faith estimate of the amount of proceeds expected to be received for sale of the
Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or
capitalized interest paid or funded with proceeds of the Bonds, is $28,330,255.
Total Payment Amount. The Underwriter has informed the City and the Authority
that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith
estimate of the total payment amount, which means the sum total of all payments that
the Authority will make to pay debt service on the Bonds, plus the finance charge for the
Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the
final maturity of the Bonds, is $44,134,950.
A-1
The foregoing estimates constitute good faith estimates only. The actual principal
amount of the Bonds issued and sold, the true interest cost thereof, the finance charges
thereof, the amount of proceeds received therefrom and total payment amount with
respect thereto may differ from such good faith estimates due to (a) the actual date of
the sale of the Bonds being different than the date assumed for purposes of such
estimates, (b) the actual principal amount of Bonds sold being different from the
Estimated Principal Amount, (c) the actual amortization of the Bonds being different than
the amortization assumed for purposes of such estimates, (d) the actual market interest
rates at the time of sale of the Bonds being different than those estimated for purposes
of such estimates, (e) other market conditions, or (f) alterations in the financing plan,
delays in the financing, or a combination of such factors. The actual date of sale of the
Bonds and the actual principal amount of Bonds sold will be determined by the City
based on the timing of the need for proceeds of the Bonds and other factors. The actual
interest rates borne by the Bonds will depend on market interest rates at the time of sale
thereof. The actual amortization of the Bonds will also depend, in part, on market interest
rates at the time of sale thereof. Market interest rates are affected by economic and
other factors beyond the control of the City.
A-2
RESOLUTION NO. 2022 -
A RESOLUTION OF THE BOARD OF DIRECTORS OF LODI PUBLIC FINANCING
AUTHORITY AUTHORIZING THE ISSUANCE AND SALE OF LEASE REVENUE
BONDS TO REFINANCE OUTSTANDING LEASE REVENUE BONDS AND PROVIDE
FINANCING FOR ACQUISITION AND CONSTRUCTION OF AN CAPITAL
IMPROVEMENTS, INCLUDING AN ANIMAL SHELTER AND PARKS AND
PLAYGROUND IMPROVEMENTS AND UPGRADES, AND APPROVING RELATED
DOCUMENTS AND OFFICIAL ACTIONS
WHEREAS, the Lodi Public Financing Authority (the "Authority") previously
issued its $19,080,000 Lodi Public Financing Authority 2012 Refunding Lease Revenue
Bonds (the "2012 Bonds") for the purpose of refinancing outstanding certificates of
participation that were executed and delivered to finance various municipal facilities of
the City of Lodi (the "City"); and
WHEREAS, in connection with the issuance of the 2012 Bonds, the City and the
Authority entered into a Site Lease and a Lease Agreement, each of which was dated as
of September 1, 2012, pursuant to which, respectively, the City leased to the Authority
and subleased from the Authority the land and improvements constituting the City's
police building and Carnegie Forum; and
WHEREAS, in order to take advantage of prevailing bond market conditions, the
City wishes to authorize the refinancing of the 2012 Bonds; and
WHEREAS, the City further wishes to leverage the savings achieved by
refinancing the 2012 Bonds to finance the acquisition and construction of capital
improvements, including a new animal shelter and park and playground improvements
and upgrades (the "Project"); and
WHEREAS, to that end, the City has proposed to lease the land and
improvements constituting the City's police building and its Fire Station #2 (the "Leased,
Property") to the Authority under a Site Lease, the form of which is on file with the
Secretary, in consideration of the payment by the Authority of an upfront rental payment
which is sufficient to provide funds to refinance the 2012 Bonds and finance the
acquisition and construction of the Project; and
WHEREAS, in order to raise funds for the upfront rental payment, the Authority
proposes to issue and sell its Lodi Public Financing Authority 2022 Lease Revenue
Bonds (2012 Refunding; Capital Projects Financing) (the "Bonds") under Article 4 of
Chapter 5, Division 7, Title 1 of the Government Code of the State of California,
commencing with Section 6584 of said Code (the "Bond Law"); and
WHEREAS, in order to secure the payments of principal of and interest on the
Bonds, the Authority proposes to lease the Leased Property back to the City under a
Lease Agreement (the "Lease Agreement"), the form of which is on file with the
Secretary, under which the City is obligated to pay semiannual lease payments as rental
for the Leased Property, and the Authority will assign substantially all of its rights under
the Lease Agreement to U.S. Bank Trust Company, National Association, as trustee for
the Bonds; and
WHEREAS, there has been submitted to the Board of Directors a form of
preliminary Official Statement in connection with the marketing of the Bonds and the
Board of Directors, with the aid of its staff, has reviewed the preliminary Official
Statement to assure proper disclosure of all material facts relating to the Bonds that are
in the personal knowledge of the members of the Board of Directors; and
WHEREAS, the Authority and the City propose to sell the Bonds to Piper Sandler
& Co. (the "Underwriter") pursuant to a Bond Purchase Agreement (the "Bond Purchase
Agreement"), the form of which is on file with the Secretary; and
WHEREAS, as a condition precedent to the issuance by the Authority of the
Bonds to provide financing for the Project, Section 6586.5 of the Bond Law requires that
the City approve the proposed lease financing by the Authority and that the City make
certain findings with respect to such financing, and Section 6586.5 further requires that
such approval be given and findings be made only after a noticed public hearing; and
WHEREAS, as required by Section 6586.5 of the Bond Law, the City has caused
publication of a notice of a public hearing on the financing of the Project once at least
five days prior to the hearing in a newspaper of general circulation in the City; and
WHEREAS, the City Council held a public hearing at which all interested persons
were provided the opportunity to speak on the subject of financing the Project; and
WHEREAS, in accordance with Government Code Section 5852. 1, the Board of
Directors has obtained and wishes to disclose the information set forth in Appendix A
hereto; and
WHEREAS, the Board of Directors wishes at this time to approve all proceedings
to which it is a party relating to the issuance and sale of the Bonds, the refinancing of the
2012 Bonds and the financing of the Project.
NOW, THEREFORE, BE IT RESOLVED by the Board of Directors of the Lodi
Public Financing Authority as follows:
SECTION 1. Issuance of Bonds. The Board of Directors hereby authorizes the
issuance of the Bonds under the Bond Law in the maximum principal amount of
$30,000,000, for the purpose of providing funds to refinance the 2012 Bonds and finance
the Project. The Bonds shall be issued under the Bond Law and the Indenture of Trust
that is approved below.
SECTION 2. Approval of Related Financing Agreements. The Board of
Directors hereby approves each of the following agreements required for the issuance
and sale of the Bonds, the refinancing of the 2012 Bonds and the financing of the
Project, in substantially the respective forms on file with the Secretary together with any
changes therein or additions thereto deemed advisable by the Executive Director, the
Treasurer or the General Counsel (each, an "Authorized Officer"), whose execution
thereof shall be conclusive evidence of the approval of any such changes or additions.
An Authorized Officer is hereby authorized and directed for and on behalf of the
A-2
Authority to execute, and the Secretary is hereby authorized and directed to attest, the
final form of each such agreement, as follows:
• Indenture of Trust, between the Authority and U.S. Bank National
Association, as trustee (the "Trustee"), setting forth the terms and
provisions relating to the Bonds.
• Site Lease, between the City as lessor and the Authority as lessee,
under which the City leases the Leased Property to the Authority in
consideration of the payment of an amount which will be applied by
the City to refinance the 2012 Bonds and finance the Project.
• Lease Agreement, between the Authority as lessor and the City as
lessee, under which the Authority leases the Leased Property back to
the City and the City agrees to pay semiannual lease payments which
are sufficient to provide revenues with which to pay principal of and
interest on the Bonds when due.
■ Assignment Agreement, between the Authority and the Trustee,
whereby the Authority assigns certain of its rights under the Lease
Agreement to the Trustee for the benefit of the Refunding Bond
owners.
• Bond Purchase Agreement, among the City, the Authority and the
Underwriter, which establishes the terms under which the Underwriter
will purchase the Bonds from the Authority.
• Irrevocable Refunding Instructions, to be given by the Authority to the
trustee for the 2012 Bonds, and to be consented to by the City,
providing for the deposit, investment and application of funds to
defease and redeem the 2012 Bonds.
SECTION 3. Negotiated Sale of Bonds. The Board of Directors hereby
authorizes and directs the negotiated sale of the Bonds to the Underwriter. The Bonds
shall be sold at a true interest cost not to exceed 4.0%. The Underwriter's discount shall
not exceed 1.0%.
SECTION 4. Official Statement. The Board of Directors hereby approves the
preliminary Official Statement describing the Bonds in substantially the form on file with
the Secretary. An Authorized Officer is hereby authorized and directed to approve any
changes in or additions to said preliminary Official Statement and to execute an
appropriate certificate stating the Authorized Officer's determination that the preliminary
Official Statement (together with any changes therein or additions thereto) has been
deemed nearly final within the meaning of Rule 15c2-12 of the Securities Exchange Act
of 1934. Distribution of the preliminary Official Statement by the Underwriter is hereby
approved. An Authorized Officer is hereby authorized and directed to approve any
changes in or additions to a final form of said Official Statement, and the execution
thereof by an Authorized Officer shall be conclusive evidence of approval of any such
changes and additions. The Board of Directors hereby authorizes the distribution of the
A-3
final Official Statement by the Underwriter. The final Official Statement shall be
executed on behalf of the Authority by an Authorized Officer.
SECTION 5. Official Actions. The Chair, the Executive Director, the Treasurer,
the General Counsel and all other officers of the Authority are each authorized and
directed on behalf of the Authority to make any and all assignments, certificates,
requisitions, agreements (including an escrow deposit and trust agreement, if needed),
notices, consents, instruments of conveyance and other documents, which they or any
of them deem necessary or appropriate in order to consummate any of the transactions
contemplated by the agreements and documents approved under this Resolution, and
the Executive Director may direct the Secretary to execute and deliver such other
documents as the Executive Director determines are necessary or appropriate in order
to consummate any of the transactions contemplated by the agreements and documents
approved under this Resolution. An Authorized Officer may revise the identity of the
Leased Property as necessary in order to accomplish the purposes of this Resolution.
An Authorized Officer may approve the purchase of municipal bond insurance or a debt
service reserve fund policy if the Authorized Officer, in consultation with the City's
municipal advisor, concludes such purchase would be economically beneficial for the
City. Whenever in this resolution any officer of the Authority is authorized to execute or
countersign any document or take any action, such execution, countersigning or action
may be taken on behalf of such officer by any person designated by such officer to act
on his or her behalf if such officer is absent or unavailable.
SECTION 6. Effective Date. This Resolution shall take effect immediately upon
its passage and adoption.
Dated: March 2, 2022
PASSED AND ADOPTED by the Board of Directors of the Lodi Public Financing
Authority at a regular meeting held this 2nd day of March, 2022, by the following vote:
AYES: COUNCIL MEMBERS —
NOES: COUNCIL MEMBERS —
ABSENT: COUNCIL MEMBERS —
ABSTAIN: COUNCIL MEMBERS —
Approved as to Form:
Janice D. Magdich
A-4
Mayor
PAMELA M. FARRIS
Assistant City Clerk
2022-
A-5
APPENDIX A
Government Code Section 5852.1 Disclosure
The good faith estimates set forth herein are provided with respect to the Bonds
in accordance with California Government Code Section 5852.1. Such good faith
estimates have been provided to the City and the Authority by the Underwriter of the
Bonds.
Principal Amount. The Underwriter has informed the City and the Authority that,
based on the financing plan and current market conditions, its good faith estimate of the
aggregate principal amount of the Bonds to be sold is $26,475,000 (the "Estimated
Principal Amount"), which excludes net premium that might be generated in the sale
under current market conditions.
True Interest Cost of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the true interest cost of the Bonds, which means the rate
necessary to discount the amounts payable on the respective principal and interest
payment dates to the purchase price received for the Bonds, is 3.34%.
Finance Cham of the Bonds. The Underwriter has informed the City and the
Authority that, assuming that the Estimated Principal Amount of the Bonds is sold, and
based on market interest rates prevailing at the time of preparation of such estimate, its
good faith estimate of the finance charge for the Bonds, which means the sum of all fees
and charges paid to third parties (or costs associated with the Bonds), is $611,071.
Such fees and charges include fees for bond and disclosure counsel, municipal advisor,
special tax consultant, fiscal agent, rating agencies, City and Authority expenses, City
Attorney and staff time related to bond issuance, printing, and underwriting.
Amount of Proceeds to be Received. The Underwriter has informed the City and
the Authority that, assuming that the Estimated Principal Amount of the Bonds is sold,
and based on market interest rates prevailing at the time of preparation of such estimate,
its good faith estimate of the amount of proceeds expected to be received for sale of the
Bonds, less the finance charge of the Bonds, as estimated above, and any reserves or
capitalized interest paid or funded with proceeds of the Bonds, is $28,330,255.
Total Payment Amount. The Underwriter has informed the City and the Authority
that, assuming that the Estimated Principal Amount of the Bonds is sold, and based on
market interest rates prevailing at the time of preparation of such estimate, its good faith
estimate of the total payment amount, which means the sum total of all payments that
the Authority will make to pay debt service on the Bonds, plus the finance charge for the
Bonds, as described above, not paid with the proceeds of the Bonds, calculated to the
final maturity of the Bonds, is $44,134,950.
W.
The foregoing estimates constitute good faith estimates only. The actual principal
amount of the Bonds issued and sold, the true interest cost thereof, the finance charges
thereof, the amount of proceeds received therefrom and total payment amount with
respect thereto may differ from such good faith estimates due to (a) the actual date of
the sale of the Bonds being different than the date assumed for purposes of such
estimates, (b) the actual principal amount of Bonds sold being different from the
Estimated Principal Amount, (c) the actual amortization of the Bonds being different than
the amortization assumed for purposes of such estimates, (d) the actual market interest
rates at the time of sale of the Bonds being different than those estimated for purposes
of such estimates, (e) other market conditions, or (f) alterations in the financing plan,
delays in the financing, or a combination of such factors. The actual date of sale of the
Bonds and the actual principal amount of Bonds sold will be determined by the City
based on the timing of the need for proceeds of the Bonds and other factors. The actual
interest rates borne by the Bonds will depend on market interest rates at the time of sale
thereof. The actual amortization of the Bonds will also depend, in part, on market interest
rates at the time of sale thereof. Market interest rates are affected by economic and
other factors beyond the control of the City.
A-7
CITY COUNCIL/PUBLIC FINANCING AUTHORITY MEETING
2022 Lease Revenue Bonds
(2012 Refunding; Capital Projects Financing)
0-1
3/212022
Background
It ', r 4 Z
FO RNIA
In 2012, the Lodi Public Financing Authority ("PFA") issued
its Refunding Lease Revenue Bonds (the "2012 Bonds")
2012 Bonds were issued to refund outstanding certificates of
participation
• The 2012 Bonds are payable from Lease Payments made
by the City to the Authority for the subleasing of the
Leased Property
Leased Property consists of Police Building and Carnegie Forum
The 2012 Bonds are currently outstanding in a par amount
of $13.315 million
Final maturity of the 2012 Bonds is October 1, 2031
Annual debt service of the 2012 Bonds is approx. $1.68 million
2012 Bonds currently rated `A+' from S&P
N
r zi Overview �- LI
CALIFORNIA
In order to take advantage of prevailing bond market
conditions, the City is proposing to refund the 2012
Bonds
Additionally, the City wishes to leverage the savings
achieved by refinancing the 2012 Bonds to finance the
acquisition and construction of capital improvements,
including new animal shelter and parks and
playground improvements and upgrades (the
"Project")
Staff is proposing that the PFA issue lease revenue
bonds (the "2022 Bonds") in order to provide funds for
the refunding of the 2012 Bonds and finance the
Project
3
Estimated Financing Structure
C A L I F O ZRN I A
One series of bonds to refund the 2012 Bonds and to
finance the Project
0 Secured by Lease Payments from City's General Fund and
other available funds for lease of certain pledged assets
Pledged assets comprised of Police Building and Fire Station #2
0 Surety and insurance bids expected
0 Received credit rating on the bonds from S&P
4 Interest payments on April 1; principal and interest on
October 1
3 Final maturity of October 1, 2052
0 2022 Bonds' annual debt service payments not expected to
exceed the 2012 Bonds' max annual debt service payments
4
Estimated Financing Results
$2.0
Sources
ParAmount
Premium
Total Sources
Uses
Escrow Fund
Project Fund
Costs of Issuance
Bond Insurance
Surety
Total Uses
Estimated Sources and Uses*
Refunding New Money Total
$12,315,000 $14,160,000 $26,475,000
1,284,776 1,181,550 2,466,326
$13,599,776 $15,341,550 $28,941,326
$13,330,255
183,794
65,841
19,885
$15,000,000
208,317
110,369
22,865
$13,330,255
15,000,000
392,111
176,210
42,750
$13,599,776 $15,341,550 $28,941,326
Debt Service Comparison*
CO zi
CA L 1 FO ON I q
5
Bond Year
*Preliminary, subject to change `ma 2022 Refunding 2022New Money �2012Bonds
Tonight's Actions
`r
•�a�_iFORNIA
Hold a Noticed Public Hearing
Adopt Resolution of the City Council of the City of Lodi Making
Findings and Approving Documents and Official Actions Relating to
the Proposed Issuance by the Lodi Public Financing Authority of
Lease Revenue Bonds to Refinance Outstanding Lease Revenue
Bonds and Provide Financing for Acquisition and Construction of
Capital Improvements, Including an Animal Shelter and Parks and
Playground Improvements and Upgrades
Adopt Resolution of Board of Directors of the Lodi Public Financing
Authority Authorizing the Issuance and Sale of Lease Revenue
Bonds to Refinance Outstanding Lease Revenue Bonds and Provide
Financing for Acquisition and Construction of Capital
Improvements, Including an Animal Shelter and Parks and
Playground Improvements and Upgrades, and Approving Related
Documents and Official Action
0
Summary of Financing Documents
Official Statement - describes the 2022 Bonds, the
relative risks associated with the purchase and other
necessary information pertinent to investors
Continuing Disclosure Certificate - which requires the
City to submit annual continuing disclosure reports
and notice of certain listed events to the marketplace
as long as the 2022 Bonds are outstanding
Bond Purchase Agreement - among the City, the
Authority and the Underwriter, which establishes the
terms under which the Underwriter will purchase the
2022 Bonds from the Authority
Summary of Financing Documents
a` �M
,Zi Z
A_ i F O R N I A
Site Lease - between the City and Authority whereby the City is
leasing property to the Authority in consideration of the payment
by the Authority of upfront rental payment
Lease Agreement - between the Authority and the City, under
which the City leases property to the Authority and the Authority
leases property back to City
Assignment Agreement— between the Authority and US Bank
whereby the Authority assigns lease payments to US Bank to pay
debt service to bondholders
Indenture of Trust— between the Authority and US Bank, as
Trustee, setting forth the terms and provisions relating to the 2022
Bonds
Irrevocable Refunding Instructions - provides for the deposit,
investment and application of funds to defease and redeem the
2012 Bonds
0
Next Steps*
March 2 (Tonight)
City Council/Board
Approves Financing
Documents
*Preliminary, subject to change
+/- March 10
Pricing Call
a_iFOR N IA
E
SUBJECT:
PUBLISH DATE:
Please immediately confirm receipt
o f this fax by calling 333-6702
CITY OF LODI
P. O. BOX 3006
LODI, CALIFORNIA 95241-1910
ADVERTISING INSTRUCTIONS
NOTICE OF PUBLIC HEARING TO CONSIDER FINANCING FOR
ACQUISITION, DESIGN, AND CONSTRUCTION OF CAPITAL
IMPROVEMENTS
SATURDAY, FEBRUARY 19, 2022
TEAR SHEETS WANTED: One (1) please
SEND AFFIDAVIT AND BILL TO: PAMELA M. FARRIS, ASSISTANT CITY CLERK
LNS ACCT. #5100152 City of Lodi
P.O. Box 3006
Lodi, CA 95241-1910
DATED: THURSDAY, FEBRUARY 17, 2022
ORDERED BY: PAMELA M. FARRIS
ASSISTANT CITY CLERK
00
PAMELA M. FARRIS
ASSISTANT CITY CLERK
KAYLEE CLAYTON
ADMINISTRATIVE CLERK
Emailed to the Sentinel at legals@lodinews.com at '5 time) on 1 ate) (pages)
forms\advins.doc
DECLARATION OF POSTING
NOTICE OF PUBLIC HEARING TO CONSIDER FINANCING FOR ACQUISITION,
DESIGN, AND CONSTRUCTION OF CAPITAL IMPROVEMENTS
On Thursday, February 17, 2022, in the City of Lodi, San Joaquin County, California, a
copy of a Notice of Public Hearing to consider financing for acquisition, design, and
construction of capital improvements (attached hereto, marked Exhibit "A") was posted
at the following locations:
Lodi City Clerk's Office
Lodi City Hall Lobby
Lodi Carnegie Forum
WorkNet Office
I declare under penalty of perjury that the foregoing is true and correct.
Executed on February 17, 2022, at Lodi, California.
PAMELA M. FARRIS
ASSISTANT CITY CLERK
ORDERED BY:
PAMELA M. FARRIS
ASSISTANT CITY CLERK
KAY CLAYTON
ADMINISTRATIVE CLERK
\\cvcfilv01\administration$\Administration\CLERK\Public Hearings\AFFADAVITS\DECPOSTI.DOC
CITY OF LORI
. Carnegie Forum
305 West Pine Street, Lodi
NOTICE OF PUBLIC HEARING
Date: March 2, 2022
Time: , 7:00 p.m.
For information regarding this notice please contact.
Pamela M. Farris
Assistant City Clerk
Telephone: (209) 333-6702
NOTICE OF PUBLIC HEARING
NOTICE IS HEREBY GIVEN that on Wednesday, March 2, 2022, at the hour of
7:00 p.m., or as soon thereafter as the matter may be heard, the City Council will
conduct a public hearing at the Carnegie Forum, 305 West Pine Street, Lodi, to consider
the following matter:
a) Financing for acquisition, design, and construction of Capital
Improvements.
Information regarding this item may be obtained in the City Attorney's Office, 221 West
Pine Street, Lodi, (209) 333-6701. All interested persons are invited to present their
views and comments on this matter, Written statements may be filed with the City Clerk,
City Hall, 221 West Pine Street, 2®d Floor, Lodi, 95240, at any time prior to the hearing
scheduled herein, and oral statements may be made at said hearing. Comments may
be made in person or via the following link:
h tts:11asQ6web.zoom,us/181287658564? wd=VEJ4dm9mcFNYbTJXKzkIYUZX5VRmQT09
If you challenge the subject matter in court, you may be limited to raising only those
issues you or someone else raised at the public hearing described in this notice or in
written correspondence delivered to the City Clerk, 221 West Pine Street, at or prior to
the close of the public hearing.
By Order of the Lodi City Council:
Pamela M. Farris
Assistant City Clerk
Dated: February 16, 2022
Approved as to form:
Janice D. Magdich
Janice D. Magdich
City Attorney
L
Para obtener ayuda interpretativa con esta noticia, por favor Ilame a la oficina de la
aria Municipal, a las (209) 333-6702.
CLERKIPUBHEARINOTICESIPH NOTICE Cap! lallmprovemenlFinancing 2/14/22