HomeMy WebLinkAboutStaff Report 04/26/2017Item # 3
Oversight Board to the Petaluma Community
Development Commission Successor Agency
DATE: April 26, 2017
TO: Members of the Oversight Board
FROM: Ingrid Alverde, Economic Development & Redevelopment Manager
SUBJECT: RESOLUTION OF THE OVERSIGHT BOARD DIRECTING THE PETALUMA
COMMUNITY DEVELOPMENT SUCCESSOR AGENCY TO COMMENCE
PROCEEDINGS FOR THE REFUNDING OF OUTSTANDING OBLIGATIONS OF THE
FORMER PETALUMA COMMUNITY DEVELOPMENT COMMISSION, APPROVING
ISSUANCE OF REFUNDING BONDS, AND MAKING CERTAIN DETERMINATIONS
AND PROVIDING OTHER MATTERS RELATING THERETO
RECOMMENDATION
It is recommended that .the Oversight Board to the Petaluma Community Development
Successor Agency (the Successor Agency) adopt a Resolution authorizing the issuance of
refunding bonds to refinance certain outstanding bonds issued by the Former Petaluma
Community Development Commission and authorizing the Executive Director to execute all
necessary and related documents.
rtary .pni iNn
The former Petaluma Community Development Commission (PCDC) previously issued two
series of tax allocation bonds — $31,825,000 of Series 2007 Bonds in April, 2007 and
$11,369,000 of Series 2011 Bonds in March, 2011 — to finance and refinance redevelopment
activities within the Merged Project Area. Tax allocation bonds were a very common type of
long-term debt issued by redevelopment agencies prior to Dissolution, secured by and payable
from a portion of the property taxes levied and collected from within a redevelopment project
area. Currently, $29,570,000 of the 2007 bonds and $6,968,000 of the 2011 bonds remain
outstanding.
An opportunity now exists for the Successor Agency to issue refunding bonds for the purpose of
refinancing the 2007 and 2011 bonds at lower interest rates, in order to realize significant debt
service savings. The issuance of refunding bonds by successor agencies is very common. Since
Dissolution, approximately $8.0 billion of successor agency refunding bonds have been issued
by over 150 successor agencies, resulting in total debt service savings of more than $1 billion.
Item # 3
Page 2
FINANCIAL IMPACT
Based on bond market conditions and prevailing interest rates as of April 18, 2017, this
refinancing is expected to yield debt service savings of approximately $175,000 per year for 22
years, for total savings of $3.85 million. These savings are net of all costs of issuance.
Another common measure of the savings that result from the issuance of refunding bonds is
'net present value savings", commonly referred to as "NPV Savings". NPV Savings is equal to
total debt service savings (e.g. $3.85 million) adjusted for the time value of money, the costs of
issuance, and any up -front cash contribution of funds. NPV Savings is generally considered to
be a better measure of the true "economic benefit" of issuing refunding bonds.
Based on current market conditions, the expected NPV Savings from this transaction equal
approximately $3.00 million or 8.33% of the par amount of the refunded bonds. Within the
public finance industry, NPV Savings of 5% of the par amount of the refunded bonds is typically
considered a good result. As such, the expected savings from this transaction are very good.
The actual amount of savings will not be determined until the sale date. Moreover, if interest
rates increase appreciably between now and then, it is possible the amount of savings may be
insufficient to warrant proceeding, in which case the refinancing may be cancelled, or delayed
until a later date.
Refinancing tax allocation bonds does not result in lower property taxes for homeowners or any
direct savings for local property taxpayers. Under State law, the savings that result from this
refinancing will be shared among all of the local taxing entities whose territory lies within the
Project Area, roughly in proportion to each local taxing entity's share of the 1% general
property tax that is levied and collections from within the Project Area.
The costs of issuance for the refinancing including fees for bond and disclosure counsel,
financial advisor, rating agency and other related costs and expenses equal approximately
$325,000. In addition, it is expected the Agency will purchase a municipal bond insurance
policy for the bonds at a cost of approximately $280,000. All such costs are payable from
proceeds of the refunding bonds contingent upon closing. In other words, if the refinancing
fails to close then all costs will be waived and the Agency will not be billed, with one possible
exception. A portion of the rating fee estimated at not -to -exceed $10,000 is non -contingent.
No General Fund expense will be incurred in connection with this refinancing.
Item # 3
Page 3
TIMETABLE
Pursuant to State Law, the issuance of these refunding bonds must be approved by the
Successor Agency Board, the Oversight Board and the State Department of Finance (DOF). The
Successor Agency is scheduled to meet on May 15, 2017 to consider this action. In the
meantime, as soon as the Oversight Board approves issuance of the refunding bonds, then a
request for DOF approval will be submitted. By law, DOF has 60 -days to act; however, staff is
hopeful that DOF will grant approval prior to the May 15 Successor Agency Board meeting. If
the financing proceeds according to schedule, then closing will occur on or about June 7.
The attached resolution (Attachment 1) authorizes the execution and delivery of various
Financing Documents including a Fourth Supplemental Indenture (Attachment 2) and Escrow
Agreement (Attachment 3). The Fourth Supplemental Indenture together with the 2007
Indenture and subsequent supplements, are akin to the 'contract' between the Successor
Agency and Bondholders, wherein the rights, responsibilities and remedies of each party are
specified. Attached to this report are drafts of each such Document, which drafts may be
modified prior to execution by authorized Successor Agency staff, as necessary.
ATTACHMENTS
1. Resolution of the Oversight Board
a. Exhibit A to Oversight Board Resolution -Debt Service Savings Analysis
2. Draft Fourth Supplemental Indenture
3. Draft Escrow Agreement
Attachment 1
OVERSIGHT BOARD RESOLUTION NO.
RESOLUTION OF THE OVERSIGHT BOARD FORMED PURSUANT TO HEALTH AND
SAFETY CODE SECTION 34179 DIRECTING THE PETALUMA COMMUNITY
DEVELOPMENT SUCCESSOR AGENCY TO COMMENCE PROCEEDINGS FOR THE
REFUNDING OF OUTSTANDING OBLIGATIONS OF THE FORMER PETALUMA
COMMUNITY DEVELOPMENT COMMISSION, APPROVING ISSUANCE OF REFUNDING
BONDS, AND MAKING CERTAIN DETERMINATIONS AND PROVIDING OTHER MATTERS
RELATING THERETO
WHEREAS, pursuant to Section 34172(a) of the California Health and Safety Code (all
Section references hereinafter being to such Code), the Petaluma Community Development
Commission (the "Former Commission") has been dissolved and no longer exists as a public
body, corporate and politic, and pursuant to Section 34173, the City of Petaluma (the "City") has
become the successor entity to the Former Commission (in such capacity, the "Successor
Agency");
WHEREAS, prior to its dissolution, the Former Commission issued its $31,825,000
aggregate principal amount of Petaluma Community Development Commission Merged Project
Area Subordinate Tax Allocation Bonds, Series 2007 (the "2007 Bonds") pursuant to an
Indenture dated as of April 1, 2007 (the "Master Indenture") by and between the Former
Commission and U.S. Bank National Association for the purpose of financing and refinancing
portions of projects in the Merged Project Area;
WHEREAS, also prior to its dissolution, the Former Commission issued its $11,369,000
aggregate principal amount of Petaluma Community Development Commission Merged Project
Area Subordinate Tax Allocation Bonds, Series 2011 (the "2011 Bonds") pursuant to the Master
Indenture and a supplement thereto for the purpose of financing portions of projects in the
Merged Project Area;
WHEREAS, Section 34177.5 authorizes the Successor Agency to undertake
proceedings for the refunding of outstanding bonds and other obligations of the Former
Commission, subject to the conditions precedent contained in Section 34177.5;
WHEREAS, pursuant to Section 34179, this oversight board (the "Oversight Board") has
been established for the Successor Agency;
WHEREAS, the Successor Agency has caused an analysis (the "Debt Service Savings
Analysis") to be made setting forth the potential savings that will accrue to the Successor
Agency and to applicable taxing entities as a result of refunding the 2007 Bonds and the 2011
Bonds, and has presented the Debt Service Savings Analysis to the Oversight Board for its
consideration and direction;
WHEREAS, the Successor Agency desires to achieve debt service savings on the 2007
Bonds and 2011 Bonds and to that end has requested that the Oversight Board direct the
Successor Agency to undertake refunding proceedings for the 2007 Bonds and 2011 Bonds by
issuance of Tax Allocation Refunding Bonds, Series 2017 (the "Refunding Bonds"), it being
understood that the Successor Agency intends to act upon such direction by undertaking
consideration of a resolution of the Board of the Successor Agency approving such refunding,
and understanding further that such direction by the Oversight Board will enable the Successor
Agency to recover its related costs in connection with the refunding proceedings, as authorized
by Section 34177.5(f);
WHEREAS, the Refunding Bonds are to be issued on parity with the Petaluma
Community Development Successor Agency Tax Allocation Refunding Bonds, Series 2015A,
issued in the original principal amount of $19,545,000 and currently outstanding in the principal
amount of $18,600,000; and on parity with the Petaluma Community Development Successor
Agency Tax Allocation Refunding Bonds, Series 2015B, issued in the original principal amount
of $16,060,000 and currently outstanding in the principal amount of $14,745,000;
WHEREAS, in connection with the Refunding Bonds the Successor Agency has caused
the preparation of a Fourth Supplement to the Master Indenture (the "Fourth Supplement")
providing for the issuance of the Refunding Bonds and an Escrow Agreement (the "Escrow
Agreement") providing for the defeasance of the 2007 Bonds and 2011 Bonds, which Fourth
Supplement and Escrow Agreement are on file with the Secretary of the Oversight Board;
WHEREAS, the Successor Agency has further requested that the Oversight Board make
certain determinations upon which the Successor Agency may rely in undertaking the refunding
proceedings, and the Oversight Board herein makes such determinations as set forth below;
WHEREAS, Sections 34177.5(f) and 34180(b) require the Oversight Board to approve
issuance of the Refunding Bonds (as defined below) for the purpose of refunding the 2007
Bonds and 2011 Bonds;
NOW, THEREFORE, BE IT RESOLVED that the Oversight Board, formed pursuant to
Health and Safety Code Section 34179 to oversee the Petaluma Community Development
Successor Agency, hereby finds, resolves, and determines, as follows:
1. The foregoing recitals are true and correct.
2. The Successor Agency has filed with the Oversight Board a Debt Service
Savings Analysis (the "Debt Service Savings Analysis"), which is attached hereto as Exhibit A,
and the Oversight Board hereby acknowledges that the Debt Service Savings Analysis
demonstrates the following:
(i) total principal plus interest payments to maturity on the Refunding Bonds will not
exceed total remaining principal plus interest payments to maturity on the 2007 Bonds and 2011
Bonds, and
(ii) the principal amount of the Refunding Bonds will not exceed the amount required to
defease the 2007 Bonds and 2011 Bonds, to establish customary debt service reserves, and to
pay related costs of issuance;
(iii) based on estimated interest rates as of the date of the Debt Service Savings
Analysis, the Debt Service Savings Analysis concludes that potential debt service savings
satisfies the savings requirements of Section 34177.5(a).
3. The Oversight Board hereby directs the Successor Agency to undertake
proceedings to refund the 2007 Bonds and 2011 Bonds, subject to its discretion and subject to a
-2-
final determination that said refunding shall in all respects comply with the debt service savings
requirements of Section 34177.5(a).
4. The Oversight Board hereby approves issuance of the Refunding Bonds, and
finds that such issuance is in the financial interests of the taxing entities, so long as the
limitations set forth in Section 34177.5(a)(1) are satisfied with respect to lower debt service on
the Refunding Bonds compared to scheduled debt service on the 2007 Bonds and the 2011
Bonds, as well as the limitations set forth in Section 34177.5(h).
5. The Oversight Board hereby approves the Fourth Supplement prescribing the
terms and provisions of the Refunding Bonds and the execution thereof by the Successor
Agency, with such changes therein, deletions therefrom and additions thereto as the Successor
Agency shall deem necessary and appropriate to accomplish the purpose for which the
Refunding Bonds are issued and within the requirements of Section 34177.5.
6. The Oversight Board hereby approves the Escrow Agreement and the execution
thereof by the Successor Agency, with such changes therein, deletions therefrom and additions
thereto as the Successor Agency shall deem necessary and appropriate to accomplish the
defeasance of the 2007 Bonds and 2011 Bonds.
7. The Oversight Board hereby makes the following determinations upon which the
Successor Agency may rely in its issuance of the Refunding Bonds:
(a) The Successor Agency is authorized, as provided in Section 34177.5(f),
to recover its costs related to the issuance of the Refunding Bonds from the proceeds of
the Refunding Bonds, including the cost of reimbursing the City for administrative staff
time spent with respect to the authorization, issuance, sale and delivery of the Refunding
Bonds;
(b) The application of proceeds of the Refunding Bonds by the Successor
Agency to the refunding of the 2007 Bonds and the 2011 Bonds, respectively, as well as
the funding of a reserve fund for the Refunding Bonds, and payment by the Successor
Agency of costs of issuance of thereof, as provided in Section 34177.5(a), shall be
implemented by the Successor Agency promptly upon delivery of the Refunding Bonds
to their initial purchaser, notwithstanding Section 34177.3 or any other provision of law to
the contrary, without the further approval of the Oversight Board, the California
Department of Finance, the Sonoma County Auditor -Controller or any other person or
entity other than the Successor Agency; and
(c) The Successor Agency shall be entitled to receive its full allocation of
$250,000 Administrative Cost Allowance under Section 34183(a)(3) without any
deductions with respect to continuing costs related to the Refunding Bonds, such as
trustee's fees, continuing disclosure fees, and auditing and fiscal consultant fees
(collectively, "Continuing Costs of Issuance"), and such Continuing Costs of Issuance
shall be payable from property tax revenues pursuant to Section 34183.
8. The Oversight Board hereby authorizes the Successor Agency to authorize and
direct, for and in the name and on behalf of the Successor Agency, Authorized Officers of the
Successor Agency to do any and all things and take any and all actions, which they, or any of
them, may deem necessary or advisable to execute and deliver any and all documents,
assignments, certificates, requisitions, agreements, notices, consents, instruments of
-3-
conveyance, warrants and documents, which they, or any of them, may deem necessary or
advisable in order to consummate the lawful issuance and sale of the Refunding Bonds, the
refunding of the 2007 Bonds and the 2011 Bonds, and the consummation of the transactions as
described herein.
9. This Resolution shall take effect upon its passage and adoption.
PASSED AND ADOPTED this day of , 2017, by the following
vote:
AYES:
NOES:
ABSENT:
-4-
Secretary
EXHIBIT A
DEBT SERVICE SAVINGS ANALYSIS
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Attachment 2
Jones Hall Draft 4.13.17
FOURTH SUPPLEMENT TO INDENTURE
Dated as of 1, 2017
by and between the
PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY
and
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
Relating to
Petaluma Community Development Successor Agency
Merged Project Area
Tax Allocation Refunding Bonds, Series 2017
TABLE OF CONTENTS
ARTICLE XV
THE SERIES 2017 BONDS
Section15.01.
Definitions..... ........................... .................................................................................... 3
Section 15.02.
Authorization of Series 2017 Bonds............................................................................. 3
Section 15.03.
Terms of Series 2017 Bonds........................................................................................4
Section15.04.
Redemption..................................................................................................................6
Section 15.05.
Redemption Procedures...............................................................................................6
Section 15.06.
Application of Proceeds of Sale of Series 2017 Bonds ................................................ 6
Section 15.07.
Series 2017 Expense Account..................................................................................... 7
Section 15.08.
Series 2017 Reserve Subaccount................................................................................7
Section 15.09
Rights of Series 2017 Bond Insurer.............................................................................7
Section 15.10.
Security for Series 2017 Bonds....................................................................................7
Section 15.11.
Continuing Disclosure...................................................................................................8
Section15.12.
Tax Covenants............................................................................................................. 8
Section 15.13.
Benefits Limited to Parties............................................................................................ 8
Section 15.14.
Effect of this Fourth Supplement.................................................................................. 9
Section15.15.
Partial Invalidity............................................................................................................9
Section 15.16.
Further Assurances...................................................................................................... 9
Section 15.17.
Execution in Counterparts............................................................................................ 9
Section15.18.
Governing Law.............................................................................................................9
EXHIBIT A FORM OF SERIES 2017 BOND
014 T114ki11ifol R17=Iki11toll. 4
This Fourth Supplement to Indenture (this "Fourth Supplement"), dated as of
1, 2017, is by and between the PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY, a public entity duly organized and existing under the laws of the State
of California (the "Successor Agency"), as successor to the Petaluma Community Development
Commission (the "Former Commission"), and U.S. BANK NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States of America (the
"Trustee");
WITNESSETH.
WHEREAS, the Former Commission was duly established and authorized to transact
business and exercise powers under and pursuant to the provisions of the Community
Redevelopment Law, being Part 1 of Division 24 (commencing with Section 33000) of the
Health and Safety Code of the State of California (the "Law"), including the power to issue
bonds for any of its corporate purposes;
WHEREAS, pursuant to Section 33640 et seq. of the Law, the Former Commission was
authorized to issue bonds for any redevelopment purpose;
WHEREAS, the Former Commission has previously issued its $31,525,000 aggregate
principal amount of Petaluma Community Development Commission Merged Project Area
Subordinate Tax Allocation Bonds, Series 2007 (the "2007 Bonds") under an Indenture dated as
of April 1, 2007 by and between the Former Commission and U.S. Bank National Association
(as supplemented by a First Supplement, Second Supplement, Third Supplement and this
Fourth Supplement, the "Indenture") for the purpose of providing funds to finance and refinance
redevelopment activities in the Merged Project Area;
WHEREAS, the Former Commission has also previously issued its $11,369,000
aggregate principal amount of Petaluma Community Development Commission Merged Project
Area Subordinate Tax Allocation Bonds, Series 2011 (the "2011 Bonds") pursuant to the
Indenture, as supplemented, for the purpose of providing funds to finance redevelopment
activities in the Merged Project Area;
WHEREAS, the Successor Agency in 2015 issued its $19,545,000 aggregate principal
amount of Tax Allocation Refunding Bonds, Series 2015A, currently outstanding in the principal
amount of $18,600,000; and its $16,060,000 aggregate principal amount of Tax Allocation
Refunding Bonds, Series 20158, currently outstanding in the principal amount of $14,745,000
(together, the "2015 Bonds");
WHEREAS, the 2007 Bonds, 2011 Bonds, 2015 Bonds are all parity obligations,
payable from Pledged Tax Revenues (as such term is defined in the Master Indenture and in
Section 2 of the Second Supplemental Indenture);
WHEREAS, the Indenture permits the issuance of Additional Bonds (as that term is
defined in Article IV of the Master Indenture and in Section 2 of the Second Supplemental
Indenture) on a parity basis with the 2015 Bonds, subject to certain conditions;
WHEREAS, Assembly Bill X1 26, effective June 29, 2011, together with Assembly Bill
1484, effective June 27, 2012 (together, the "Dissolution Act") resulted in the dissolution of the
Former Commission as of February 1, 2012, and the vesting in the Successor Agency of all of
the authority, rights, powers, duties and obligations of the Former Commission;
WHEREAS, Assembly Bill 1484, effective June 27, 2012 ("AB 1484"), authorizes the
Successor Agency to issue bonds pursuant to Article 11 (commencing with Section 53580) of
Chapter 3 of Part 1 of Division 2 of Title 5 of the Government Code (the "Refunding Law") for
the purpose of achieving debt service savings within the parameters set forth in Section 13 of
AB 1484;
WHEREAS, the Successor Agency has determined that it can achieve debt service
savings within such parameters by the issuance pursuant to the Refunding Law of its
$ aggregate principal amount of Petaluma Community Development Successor
Agency Merged Project Area Tax Allocation Refunding Bonds, Series 2017 (the "Series 2017
Bonds") to provide funds to refund the 2007 Bonds and 2011 Bonds;
WHEREAS, the conditions set forth in Section 4.01 and Section 4.02 of the Master
Indenture and in Section 2 of the Second Supplemental Indenture pertaining to the issuance of
Additional Bonds have been satisfied, and the Series 2017 Bonds will therefore be secured by a
pledge of and first lien on Pledged Tax Revenues as defined in the Master Indenture and
Second Supplemental Indenture, on parity with the pledge and lien securing the 2015 Bonds;
and
((WHEREAS, the scheduled payment of principal of and interest due on the Series 2017
Bonds will be guaranteed under an insurance policy (the "Series 2017 Bond Insurance Policy")
to be issued concurrently with the delivery of the Series 2017 Bonds by
(the "Series 2017 Bond Insurer").]]
WHEREAS, the Successor Agency has certified that all acts and proceedings required
by law necessary to make the Series 2017 Bonds, when executed by the Successor Agency,
authenticated and delivered by the Trustee, and duly issued, the valid, binding and legal special
obligations of the Successor Agency in accordance with the Dissolution Act, and to constitute
this Fourth Supplement a valid and binding agreement for the uses and purposes herein set
forth in accordance with its terms, have been done and taken, and the execution and delivery of
the Fourth Supplement have been in all respects duly authorized.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto do hereby agree as follows:
2
ARTICLE XV
THE SERIES 2017 BONDS
Section 15.01. Definitions. Unless the context otherwise requires, the terms defined in
this Section 15.01 shall, for all purposes of this Article but not for any other purposes of this
Indenture, have the respective meanings specified in this Section 15.01. All terms defined in
Section 1.01 and not otherwise defined in Section 12.01 of the First Supplement, Section 13.01
of the Fourth Supplement, Section 14.01 of the Third Supplement, or this Section 15.01 shall,
when used in this Article XV, have the respective meanings given to such terms in Section 1.01.
"Article XV" means this Article XV which has been incorporated in and made a part of
this Indenture pursuant to the Fourth Supplement, together with all amendments of and
supplements to this Article XV entered into pursuant to the provisions of Section 15.01(b)(iii).
"Closing Date" means, with respect to the Series 2017 Bonds, the date on which the
Series 2017 Bonds are delivered to the Original Purchaser thereof.
"Continuing Disclosure Certificate" means, with respect to the Series 2017 Bonds, that
certain Continuing Disclosure Certificate relating to the Series 2017 Bonds executed by the
Successor Agency and dated the date of issuance and delivery of the Series 2017 Bonds, as
originally executed and as it may be amended from time to time in accordance with the terms
thereof.
"Escrow Agent" means U.S. Bank National Association, as escrow agent under the
Escrow Agreement.
"Escrow Agreement" means the Escrow Deposit and Trust Agreement dated as of
, 2017, by and between the Successor Agency and the Escrow Agent with respect
to the refunding of the 2007 Bonds and 2011 Bonds.
"Escrow Fund" means the escrow fund created and held by the Escrow Agent pursuant
to the Escrow Agreement.
"Interest Payment Date" means November 1 and May 1 in each year, commencing
November 1, 2017.
"Original Purchaser" means as the initial purchaser of the Series
2017 Bonds, and its successors and assigns.
"Series 2017 Bonds" means the Petaluma Community Development Successor Agency
Merged Project Area Tax Allocation Refunding Bonds, Series 2017, authorized pursuant to
Section 15.02 and at any time Outstanding under this Indenture.
"Series 2017 Bond Insurer" means
"Series 2017 Bond Insurance Policy" means
Series 2017 Expense Account" means the account by that name established and held
by the Trustee pursuant to Section 15.07.
"Series 2017 Reserve Account" means the account by that name within the Reserve
Account, established and held by the Trustee for the benefit of the Owners of the Series 2017
Bonds only pursuant to Section 15.08.
"Series 2017 Reserve Account Requirement" means, as of any date of calculation, an
amount equal to the lesser of: (i) Maximum Annual Debt Service on the Series 2017 Bonds; (ii)
ten percent (10%) of the original principal amount of the Series 2017 Bonds; or (iii) 125% of
Average Annual Debt Service on the Series 2017 Bonds.
[["Series 2017 Surety Policy" means
"2007 Bonds" means the Former Commission's $31,525,000 aggregate principal amount
of Petaluma Community Development Commission Merged Project Area Subordinate Tax
Allocation Bonds, Series 2007.
"2011 Bonds" means the Former Commission's $11,369,000 aggregate principal amount
of Petaluma Community Development Commission Merged Project Area Subordinate Tax
Allocation Bonds, Series 2011.
"2017 Resolution" means Resolution No. of the governing Board of the
Petaluma Community Development Successor Agency adopted 2017
authorizing issuance of the Series 2017 Bonds.
Section 15.02. Authorization of Series 2097 Bonds. The Series 2017 Bonds have
been authorized to be issued and approved by the Successor Agency pursuant to the 2017
Resolution. The Series 2017 Bonds are issued as Additional Bonds in the aggregate principal
amount of Million Thousand Dollars ($ ) under and subject to
the terms of this Indenture, the Resolution, the Dissolution Act, the Refunding Law and the Law,
for the purpose of providing funds to refund the 2007 Bonds and 2011 Bonds in full. This
Indenture constitutes a continuing agreement with the Owners of all of the Series 2017 Bonds
issued hereunder and at any time Outstanding to secure the full payment when due of principal
of and premium, if any, and interest on all Series 2017 Bonds which may from time to time be
executed and delivered hereunder, subject to the covenants, agreements, provisions and
conditions herein contained. The Series 2017 Bonds shall be designated the "Petaluma
Community Development Successor Agency Merged Project Area Tax Allocation Refunding
Bonds, Series 2017."
The Series 2017 Bonds and the certificate of authentication to be executed thereon shall
be in substantially the form set forth as Exhibit A to this Fourth Supplement.
The Series 2017 Bonds shall be issued in book -entry only form, without coupons, in the
denomination of $5,000, or any integral multiple of $5,000 (not exceeding the principal amount
of Series 2017 Bonds maturing at any one time). The Series 2017 Bonds shall be numbered as
determined by the Trustee. The Series 2017 Bonds shall bear interest from the Interest
Payment Date next preceding the date of authentication thereof, unless such date of
authentication is during the period from the 16th day of the month next preceding an Interest
Payment Date to and including such Interest Payment Date, in. which event they shall bear
interest from such Interest Payment Date, or unless such date of authentication is on or before
the fifteenth day of the month next preceding the first Interest Payment Date, in which event
they shall bear interest from their dated date; provided, however, that if, at the time of
authentication of any Series 2017 Bond, interest is then in default on the Outstanding Series
4
2017 Bonds, such Series 2017 Bond shall bear interest from the Interest Payment Date to which
interest previously has been paid or made available for payment on the Outstanding Series
2017 Bonds. Payment of interest on the Series
Principal on the Series 2017 Bonds due on or before the maturity or prior redemption of
such Series 2017 Bonds shall be made to the person whose name appears on the bond
registration books of the Trustee as the registered owner thereof, as of the close of business on
the applicable Record Date, such interest to be paid by check mailed on each Interest Payment
Date by first-class mail to such registered owner at such Owner's address as it appears on such
books, or, upon written request received by the Trustee prior to the fifteenth day of the month
preceding an Interest Payment Date, of an Owner of at least $1,000,000 in aggregate principal
amount of Series 2017 Bonds, by wire transfer in immediately available funds to an account
within the United States designated by such Owner.
Principal of and redemption premiums, if any, on the Series 2017 Bonds shall be
payable upon the surrender thereof at maturity or the earlier redemption thereof at the principal
corporate trust office of the Trustee or such other place as designated by the Trustee. Principal
of and redemption premiums, if any, and interest on the Bonds shall be paid in lawful money of
the United States of America.
Section 15.03. Terms of Series 2017 Bonds.
(a) The Series 2017 Bonds shall be dated the Closing Date and mature on
November 1 in each of the years and in the amounts, and shall bear interest (calculated on the
basis of a 360 -day year comprised of twelve 30 -day months) at the rates, as follows:
Principal Interest CUSIP
Amount Rate ( )
(b) Upon the execution and delivery of this Fourth Supplement, the Successor
Agency shall execute and deliver Series 2017 Bonds in the aggregate principal amount of
$ to the Trustee and the Trustee shall authenticate and deliver the Series 2017
Bonds to the Original Purchaser, upon receipt of a Written Request of the Successor Agency
therefor.
5
Section 15.04. Redemption.
(a) Optional Redemption. The Series 2017 Bonds maturing on or after November 1,
are subject to redemption, as a whole or in part in such maturities as are selected by
the Successor Agency, prior to their respective maturity dates (or in the absence of such
direction, pro rata by maturity and by lot within a maturity), at the option of the Successor
Agency, on any date on or after November 1, at a redemption price equal to the
principal amount of Series 2017 Bonds called for redemption, together with interest accrued
thereon to the date fixed for redemption, without premium.
(b) Mandatory Sinking Fund Redemption. The Series 2017 Bonds are subject to
mandatory sinking fund 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 May 1 in the respective years as set forth in the following table:
Sinking Fund Principal Amount
Redemption Date To Be Redeemed
Section 15.05. Redemption Procedures. Except as provided in this Fourth Supplement
the contrary, Section 2.04(b) through 2.12 of the Indenture shall also apply to the Series 2017
Bonds.
Section 15.06. Application of Proceeds of Sale of Series 2017 Bonds. Upon the
receipt of payment for the Series 2017 Bonds on the Closing Date, the net proceeds thereof,
being $ (consisting of the aggregate principal amount of the Bonds, less an
underwriting discount of $ , plus net original issue premium of
$ ), less the Series 2017 Bond Insurance Policy premium in the amount of
$ and the Series 2017 Reserve Surety premium in the amount of
$ wired by the Original Purchaser directly to the Series 2017 Bond Insurer,
shall be paid to the Trustee and deposited in a temporary fund (if required by the Trustee to
make the following transfers and deposits, which temporary fund shall be closed after such
transfers and deposits have been made), all of the amounts on deposit in which shall be
transferred on the Closing Date as follows:
(1) The Trustee shall transfer the amount of $ being the
remainder of the proceeds of the Series 2017 Bonds, to the Escrow Agent for deposit in
the Escrow Fund in accordance with the Escrow Agreement.
0
(2) The Trustee shall deposit in the Series 2017 Expense Account within the
Expense Fund an amount equal to $ to pay the costs incurred or to be
incurred by the Successor Agency in connection with the issuance of the Series 2017
Bonds.
Section 15.07. Series 2017 Expense Account. Costs of Issuance incurred in
connection with the issuance of the Series 2017 Bonds shall be paid from the Series 2017
Expense Account in accordance with Section 5.04 of the Indenture.
Section 15.08. Series 2017 Reserve Subaccount. (a) There is hereby established
a separate account within the Reserve Account established under Section 5.06 of the Master
Indenture to be known as the "Series 2017 Reserve Account" and the Trustee shall deposit
therein the Series 2017 Surety Policy, which shall be held by the Trustee in trust solely for the
benefit of the Original Purchaser and Owners of the Series 2017 Bonds. The Trustee shall draw
on the Series 2017 Surety Policy and apply amounts in the Series 2017 Reserve Account solely
for the purpose of making transfers to the Interest Account, the Principal Account and the
Sinking Account, in that order of priority, on any date on which the principal (whether at maturity
or as a sinking account payment) of or interest on the Series 2017 Bonds are due and payable,
if there is a deficiency at any time in any of such accounts related to the Series 2017 Bonds.
The Series 2017 Surety Policy and amounts on deposit in the Series 2017 Reserve Account
shall not secure or be applied to the payment of any obligations of the Successor Agency other
than the Series 2017 Bonds.
(b) Payment Procedure Pursuant to the 2017 Reserve Policy.
[to come from insurer]
(c) The Successor Agency hereby agrees that the 2017 Reserve Policy shall be
deemed to be satisfaction of the Reserve Account Requirement for the Series 2017 Bonds
pursuant to the terms of the Indenture.
Section 15.09. Rights of Series 2017 Bond Insurer. So long as the Series 2017 Bond
Insurance Policy is outstanding, notwithstanding anything to the contrary set forth in the
Indenture, the Successor Agency agrees as follows:
[to come from insurer]
Section 15.10. Security for Series 2017 Bonds. The Series 2017 Bonds are Additional
Bonds within the meaning of such term in Section 1.01 and shall be secured in the manner and
to the extent set forth in the Indenture. As provided in the Indenture, the Series 2017 Bonds
7
shall be secured on a parity with all other Bonds issued under this Indenture, including the 2015
Bonds, by a first pledge of and lien on all of the Pledged Tax Revenues and all money in the
Revenue Fund and in the funds or accounts so specified and provided for in this Indenture, as
well the special fund into which the Commission is required to deposit tax increment revenues
as required under the Law, whether held by the Commission or the Trustee. Pursuant to the
provisions of the Dissolution Act, all Additional Bonds shall also be equally secured by the
pledge and lien created with respect to Additional Bonds by Section 34177(g) of the Law on
moneys deposited from time to time in the Redevelopment Property Tax Trust Fund, as
provided herein and in the Second and Third Supplement to the Indenture. Except for Pledged
Tax Revenues and such moneys, no funds or properties of the Successor Agency shall be
pledged to, or otherwise liable for, the payment of principal of or interest on the Bonds.
Subsequent to the date of the Second and Third Supplement to the Indenture, the
Dissolution Act timing requirement for submission of Recognized Obligation Payment Schedules
was changed from semi-annual submissions to annual submissions. Due to such change, the
second to the last paragraph of Section 13.09 of the Third Supplement and 14.09 of the Third
Supplement is changed to the following:
In furtherance of the foregoing covenant, the Successor Agency covenants that not later
than February 1 of each year, the Successor Agency shall submit to the Oversight Board and to
the State Department of Finance a Recognized Obligation Payment Schedule for the following
fiscal year which shall include all scheduled interest and principal payments on all Outstanding
Bonds that are due and payable on November 1 of such calendar year, to the extent not
already held by the Successor Agency or the Trustee, together with all amounts required to
replenish the Reserve Account and all subaccounts established thereunder to the applicable
Reserve Account Requirement and all policy costs with respect to all Reserve Account Sureties
and other amounts due to any issuer of a Reserve Account Surety. Additionally, such
Recognized Obligation Payment Schedule shall include for disbursement to the Successor
Agency on January 2 of the following calendar year an amount equal to debt service on the
Bonds during such following calendar year, together with all amounts required to replenish the
Reserve Account and all subaccounts established thereunder to the applicable Reserve
Account Requirement and all policy costs with respect to all Reserve Account Sureties and
other amounts due to any issuer of a Reserve Account Surety.
Section 15.11. Continuing Disclosure. The Successor Agency hereby covenants and
agrees that it will comply with and carry out all of the provisions of the Continuing Disclosure
Certificate. Notwithstanding any other provision of this Indenture, failure of the Successor
Agency to comply with the Continuing Disclosure Certificate shall not be considered an Event of
Default; however, any Participating Underwriter or any owner or beneficial owner of the Series
2017 Bonds may take such actions as may be necessary and appropriate, including seeking
specific performance by court order, to cause the Successor Agency to comply with its
obligations under this Section 15.12.
Section 15.12. Tax Covenants. The Successor Agency agrees to comply with the
requirements of Sections 5.12 with respect to the Series 2017 Bonds in addition to the Series
2015 Bonds.
Section 15.13. Benefits Limited to Parties. Nothing in this Fourth Supplement,
expressed or implied, is intended to give to any person other than the Successor Agency, the
Trustee, the Series 2017 Bond Insurer and the Owners of the Bonds, any right, remedy, claim
under or by reason of this Fourth Supplement. Any covenants, stipulations, promises or
agreements in this Fourth Supplement contained by and on behalf of the Successor Agency
shall be for the sole and exclusive benefit of the Trustee and the Owners of the Bonds.
Section 15.14. Effect of this Fourth Supplement. Except as expressly provided in this
Fourth Supplement, every term and condition contained in the Indenture shall apply to this
Fourth Supplement and to the Series 2017 Bonds with the same force and effect as if the same
were herein set forth at length, with such omissions and variations thereof as may be
appropriate to make the same conform to this Fourth Supplement.
This Fourth Supplement and all the terms and provisions herein contained shall form
part of the Indenture as fully and with the same effect as if all such terms and provisions had
been set forth in the Indenture. The Indenture is hereby ratified and confirmed and shall
continue in full force and effect in accordance with the terms and provisions thereof, as
supplemented hereby.
As provided in Section 5.01, Section 5.02 and Section 5.03 of the Master Indenture, the
Series 2017 Bonds shall be secured on a parity with all other Bonds issued under this Indenture
by a first pledge of and lien on all of the Pledged Tax Revenues in the Revenue Fund and all
moneys in the accounts therein, including the Reserve Account.
Section 15.15. Partial Invalidity. If any Section, paragraph, sentence, clause or phrase
of this Fourth Supplement shall for any reason be held illegal, invalid or unenforceable, such
holding shall not affect the validity of the remaining portions of this Fourth Supplement. The
Successor Agency hereby declares that it would have entered into this Fourth Supplement and
each and every other Section, paragraph, sentence, clause or phrase hereof and authorized the
issue of the Series 2017 Bonds pursuant thereto irrespective of the fact that any one or more
Sections, paragraphs, sentences, clauses, or phrases of this Fourth Supplement may be held
illegal, invalid or unenforceable.
Section 15.16. Further Assurances. The Successor Agency will adopt, make, execute
and deliver any and all such further resolutions, instruments and assurances as may be
reasonably necessary or proper to carry out the intention or to facilitate the performance of this
Indenture, and for the better assuring and confirming unto the Owners of the Series 2017 Bonds
and the rights and benefits provided in the Indenture.
Section 15.17. Execution in Counterparts. This Fourth Supplement may be executed in
several counterparts, each of which shall be an original and all of which shall constitute but one
and the same instrument.
Section 15.18. Governing Law. This Fourth Supplement shall be construed and
governed in accordance with the laws of the State of California.
SECTION 2. Attachment of Appendix F.
The Indenture is also hereby further amended by attaching thereto and incorporating
therein an Appendix F setting forth the form of the Series 2017 Bonds, which shall read
substantially as set forth in Exhibit A which is attached hereto and by this reference incorporated
herein.
IN WITNESS WHEREOF, the PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR
AGENCY has caused this Fourth Supplement to be signed in its name by its Executive Director
and attested by its Secretary, and U.S. BANK NATIONAL ASSOCIATION, in token of its
acceptance of the trusts created hereunder, has caused this Fourth Supplement to be signed in
its corporate name by its officers thereunto duly authorized, all as of the day and year first
above written.
ATTEST:
Secretary
10
PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY
IN
Executive Director
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
Authorized Officer
EXHIBIT A
APPENDIX F TO INDENTURE
(FORM OF SERIES 2017 BOND)
UNITED STATES OF AMERICA
STATE OF CALIFORNIA
PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY
MERGED PROJECT AREA
TAX ALLOCATION REFUNDING BOND, SERIES 2017
INTEREST RATE: MATURITY DATE: DATED DATE:
% 2017
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The Petaluma Community Development Successor Agency, a public entity duly
organized and existing under the laws of the State of California (the "Successor Agency"), for
value received, hereby promises to pay to the Registered Owner specified above or registered
assigns (the "Registered Owner"), on the Maturity Date specified above, the Principal Amount
specified above in lawful money of the United States of America, and to pay interest thereon at
the Interest Rate specified above in like lawful money from the Interest Payment Date (as
hereinafter defined) next preceding the date of authentication of this Bond (unless this Bond is
authenticated on or before an Interest Payment Date and after the fifteenth (15th) calendar day
of the month preceding such Interest Payment Date (a "Record Date"), in which event it shall
bear interest from such Interest Payment Date, or unless this Bond is authenticated on or prior
to October 15, 2017, in which event it shall bear interest from the Dated Date specified above;
provided, however, that if, at the time of authentication of this Bond, interest is in default on this
Bond, this Bond shall bear interest from the Interest Payment Date to which interest hereon has
previously been paid or made available for payment), payable semiannually on November 1 and
May 1 in each year, commencing November 1, 2017 (the "Interest Payment Dates"), until
payment of such Principal Amount in full.
This Bond is one of a duly authorized issue of bonds of the Successor Agency
designated as the "Petaluma Community Development Successor Agency Merged Project Area
Tax Allocation Refunding Bonds, Series 2017" (the "Bonds") of an aggregate principal amount
of Million Thousand Dollars ($), all of like tenor and date (except for such
variation, if any, as may be required to designate varying numbers, maturities or interest rates)
and all issued pursuant to the provisions of the Community Redevelopment Law of the State of
A-1
California, constituting Part 1 of Division 24 of the Health and Safety Code of the State of
California (the "Redevelopment Law"), pursuant to an Indenture, dated as of April 1, 2007, as
supplemented and amended, including as supplemented and amended by a Fourth Supplement
to Indenture, dated as of 1, 2017 (as so amended and supplemented, the
"Indenture"), pursuant to the Dissolution Act and pursuant the Refunding Law (as such terms
are defined in the Indenture). The Bonds have been issued on a parity with the certain
outstanding obligations of the Successor Agency as provided in the Indenture. Additional bonds
or other obligations may be issued on parity with the Bonds, but only subject to the terms of the
Indenture. Capitalized terms not otherwise defined herein shall have the meanings given them
in the Indenture.
All Bonds are equally and ratably secured in accordance with the terms and conditions
of the Indenture, and reference is hereby made to the Indenture, to any indentures
supplemental thereto and to the Law for a description of the terms on which the Bonds are
issued for the provisions with regard to the nature and extent of the security provided for the
Bonds and of the nature, extent and manner of enforcement of such security, and for a
statement of the rights of the registered owners of the Bonds; and all the terms of the Indenture
and the Law are hereby incorporated herein and constitute a contract between the Successor
Agency and the registered owner from time to time of this Bond, and to all the provisions thereof
the registered owner of this Bond, by such Owner's acceptance hereof, consents and agrees.
Each registered owner hereof shall have recourse to all the provisions of the Law and the
Indenture and shall be bound by all the terms and conditions thereof.
The Bonds are special obligations of the Successor Agency and are payable, as to
interest thereon, principal thereof and any premiums upon the redemption thereof, exclusively
from the Pledged Tax Revenues (as that term is defined in the Indenture and herein called the
"Pledged Tax Revenues"), and the Successor Agency is not obligated to pay them except from
the Pledged Tax Revenues. The Bonds are equally secured by a pledge of, and charge and lien
upon, the Pledged Tax Revenues, and the Pledged Tax Revenues constitute a trust fund for the
security and payment of the interest on and principal of and redemption premiums, if any, on the
Bonds. Additional tax allocation bonds payable from the Pledged Tax Revenues may be issued
which will rank equally as to security with the Bonds, but only subject to terms and conditions
set forth in the Indenture.
The Successor Agency hereby covenants and warrants that, for the payment of the
interest on and principal of and redemption premium, if any, on this Bond and all other Bonds
issued under the Indenture when due, there has been created and will be maintained by the
Trustee a revenue fund into which all Pledged Tax Revenues shall be deposited, and as an
irrevocable charge the Successor Agency has allocated the Pledged Tax Revenues solely to
the payment of the interest on and principal of and redemption premiums, if any, on the Bonds,
and the Successor Agency will pay promptly when due the interest on and principal of and
redemption premium, if any, on this Bond and all other Bonds of this issue and all additional tax
allocation bonds authorized by the Indenture out of said Revenue Fund, all in accordance with
the terms and provisions set forth in the Indenture.
The Bonds maturing on or after November 1, are subject to redemption, as a
whole or in part in such maturities as are selected by the Successor Agency, prior to their
respective maturity dates (or in the absence of such direction, pro rata by maturity and by lot
within a maturity), at the option of the Successor Agency, on any date on or after November 1,
at a redemption price equal to the principal amount of Bonds called for redemption,
together with interest accrued thereon to the date fixed for redemption, without premium.
A-2
The Bonds are subject to mandatory sinking fund 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 May 1 in the respective years
as set forth in the following table:
Sinking Fund
Redemption Date
Principal Amount
To Be Redeemed
Unless this Bond is presented by an authorized representative of The Depository Trust
Company, a New York corporation ("DTC'), to the Successor Agency or the Trustee for
registration of transfer, exchange, or payment, and any Bond issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the Registered
Owner hereof, Cede & Co., has an interest herein.
As provided in the Indenture, notice of redemption of this Bond shall be mailed by first
class mail not less than thirty (30) days nor more than sixty (60) days before the redemption
date to the registered owner hereof, but failure to receive such notice or any defect therein shall
not affect the sufficiency of such proceedings for redemption. If notice of redemption has been
duly given as aforesaid and money for payment of the above-described redemption price is held
by the Trustee, then such Bonds shall, on the redemption date designated in such notice,
become due and payable at the above-described redemption price; and from and after the date
so designated interest on the Bonds so called for redemption shall cease to accrue and
registered owners of such Bonds shall have no rights in respect thereof except to receive
payment of such redemption price thereof. Notwithstanding anything to the contrary contained in
this Indenture, any notice of redemption may also state that the redemption of the Bonds shall
be conditioned upon receipt by the Trustee on or prior to the redemption date of moneys
sufficient to pay the principal of, premium, if any, and interest on the Bonds to be redeemed and
that, if such money shall not have been received, said notice shall be of no force and effect and
the Trustee shall not be required to redeem such Bonds. Such notice may further provide that if
such moneys are not received, the redemption shall not be made, and the Trustee shall within a
reasonable time thereafter give notice, in the manner in which the notice of redemption was
given, that such moneys were not so received.
If an event of default, as defined in the Indenture, shall occur, the principal of all Bonds
may be declared due and payable upon the conditions, in the manner and with the effect
A-3
provided in the Indenture; except that the Indenture provides that in certain events such
declaration and its consequences may be rescinded by the registered owners of at least a
majority in aggregate principal amount of the Bonds then outstanding.
The Bonds are issuable only in the form of fully registered Bonds in the denomination of
$5,000 or any integral multiple of $5,000 (not exceeding the principal amount of Bonds maturing
at any one time). The Owner of any Bond or Bonds may surrender the same at the above-
mentioned -office of the Trustee in exchange for an equal aggregate principal amount of fully
registered Bonds of any other authorized denominations, in the manner, subject to the
conditions and upon the payment of the charges provided in the Indenture. This Bond is
transferable, as provided in the Indenture, only upon a register to be kept for that purpose at the
above-mentioned office of the Trustee or such other place as designated by the Trustee by the
registered owner hereof in person, or by such Owner's duly authorized attorney, upon surrender
of this Bond together with a written instrument of transfer satisfactory to the Trustee duly
executed by the registered owner or such owner's duly authorized attorney, and thereupon a
new fully registered Bond or Bonds, in the same aggregate principal amount, shall be issued to
the transferee in exchange therefor as provided in the Indenture, and upon payment of the
charges therein prescribed. The Successor Agency and the Trustee may deem and treat the
person in whose name this Bond is registered as the absolute owner hereof for the purpose of
receiving payment of, or on account of, the interest hereon and principal hereof and redemption
premium, if any, hereon and for all other purposes. The Trustee shall not be required to register
the transfer of exchange of any Bond during the period the Trustee is selecting Bonds for
redemption of any Bond selected for redemption.
The rights and obligations of the Successor Agency and of the registered owners of the
Bonds may be amended at any time in the manner, to the extent and upon the terms provided in
the Indenture.
This Bond is not a debt of the City of Petaluma, the State of California or any of its
political subdivisions, and neither said City, and State nor any of its political subdivisions is liable
hereon, nor in any event shall this Bond or any interest hereon or any redemption premium
hereon be payable out of any funds or properties other than those of the Successor Agency.
The Bonds do not constitute an indebtedness within the meaning of any constitutional or
statutory debt limitation or restriction, and neither the members of the Successor Agency nor
any persons executing the Bonds shall be personally liable on the Bonds by reason of their
issuance.
This Bond shall not be entitled to any benefits under the Indenture or become valid or
obligatory for any purpose until the certificate of authentication and registration hereon endorsed
shall have been signed by the Trustee. It is hereby certified that all of the acts, conditions and
things required to exist, to have happened or to have been performed precedent to and in the
issuance of this Bond do exist, have happened and have been performed in due time, form and
mamler as required by law and that the amount of this Bond, together with all other
indebtedness of the Successor Agency, does not exceed any limit prescribed by the
Constitution or laws of the State of California, and is not in excess of the amount of Bonds
permitted to be issued under the Indenture.
A-4
IN WITNESS WHEREOF, THE PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY has caused this Bond to be executed in its name and on its behalf with
the facsimile signature of its Chairman and attested to by the facsimile signature of its
Secretary, all as of the Dated Date set forth above.
ATTEST:
Secretary
PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY
in
CERTIFICATE OF AUTHENTICATION
Chairman
This is one of the Bonds described in the within -mentioned Indenture.
Dated: 2017
A-5
U.S. BANK NATIONAL ASSOCIATION
as Trustee
A
Authorized Signatory
STATEMENT OF INSURANCE
[to come]
A-6
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of this Bond, shall
be construed as though they were written out in full according to applicable laws or Tax
Regulations:
TEN COM -- as tenants in common UNIF GIFT MIN ACT Custodian _
TEN ENT -- as tenants by the entireties (Cust.) (Minor)
JT TEN -- as joint tenants with right under Uniform Gifts to Minors Act
of survivorship and not as (State)
tenants in common
COMM PROP -- as community property
ADDITIONAL ABBREVIATIONS MAY ALSO BE USED
THOUGH NOT IN THE LIST ABOVE
(FORM OF ASSIGNMENT)
For value received the undersigned hereby sells, assigns and transfers unto
(Name, Address and Tax Identification or Social Security Number of Assignee)
the within -registered Bond and hereby irrevocably constitute(s) and appoints(s)
attorney,
to transfer the same on the registration books of the Trustee with full power of substitution in the
premises.
Dated:
Signatures Guaranteed:
Note: Signature(s) must be guaranteed by an
eligible guarantor.
A-7
The signatures(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.
Attachment 3
Jones Hall Draft of March 28, 2017
ESCROW AGREEMENT
Relating to the Redemption of.
Petaluma Community Development Commission
2007 Subordinate Tax Allocation Bonds
and
2011 Subordinate Tax Allocation Bonds
This ESCROW AGREEMENT (this "Agreement"), made and entered into as of
1, 2017, by and between the PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY, a public entity existing under the laws of the State of California (the
"Successor Agency"), as successor to the PETALUMA COMMUNITY DEVELOPMENT
COMMISSION (the "Former Agency") and U.S. BANK NATIONAL ASSOCIATION, a national
banking association organized and existing under the laws of the United States of America, as
trustee (the "Escrow Agent") for the hereinafter defined Prior Bonds.
BACKGROUND:
WHEREAS, the Petaluma Community Development Commission (the "Former Agency")
was a public body, corporate and politic, duly established and authorized to transact business
and exercise powers under and pursuant to the provisions of the Community Redevelopment
Law of the State of California, constituting Part 1 of Division 24 of the Health and Safety Code of
the State (as amended, the "Redevelopment Law"); and
WHEREAS, prior to the dissolution of the Former Agency, the Former Agency issued the
following outstanding series of bonds:
(i) $31,825,000 aggregate principal amount of Petaluma Community
Development Commission Merged Project Area Subordinate Tax Allocation Bonds,
Series 2007 (the "2007 Bonds"), issued pursuant to an Indenture, dated as of April 1,
2007 (the "Original 2007 Indenture"), by and between the Former Agency and U.S. Bank
National Association, as trustee (the "Prior Trustee");
(ii) $11,369,000 aggregate principal amount of Petaluma Community
Development Commission Merged Project Area Subordinate Tax Allocation Bonds,
Series 2011 (the "2011 Bonds," and together with the 2007 Bonds, the "Prior Bonds")
issued pursuant to the Original 2007 Indenture, as supplemented and amended by a
First Supplement to Indenture, dated as of March9 1, 2011, (collectively the "Prior
Indenture") by and between the Former Agency and U.S. Bank National Association, as
trustee; and
WHEREAS, the Successor Agency has determined to defease and redeem the 2007
Bonds and the 2011 Bonds (collectively the "Prior Bonds"); and
WHEREAS, Assembly Bill X1 26, effective June 29, 2011, together with AB 1484,
effective June 27, 2012 ("AB 1484"), codified Part 1.8 (commencing with Section 34161) and
Part 1.85 (commencing with Section 34170) of Division 24 of the California Health and Safety
Code, and resulted in the dissolution of the Former Agency as of February 1, 2012, and the
vesting in the Successor Agency of all of the authority, rights, powers, duties and obligations of
the Former Agency; and
WHEREAS, the Successor Agency has authorized the issuance of the Refunding Bonds
and determined to use the proceeds of the Refunding Bonds to defease and redeem, in
advance of their stated maturities, the Prior Bonds; and
WHEREAS, the Successor Agency wishes to enter into this Agreement to provide for the
proceeds of sale of the Refunding Bonds, together with other funds held by the Escrow Agent,
in its capacity as trustee for the Prior Bonds, to be deposited in an irrevocable special escrow
fund created and maintained with the Escrow Agent for the purpose of providing for the
defeasance and redemption in full of the outstanding Prior Bonds; and
WHEREAS, the Escrow Agent has full powers to act with respect to said escrow fund
and to perform the duties and obligations to be undertaken pursuant to this Agreement;
NOW, THEREFORE, in consideration of the above premises and of the mutual promises
and covenants herein contained and for other valuable consideration the receipt and sufficiency
of which are hereby acknowledged, the parties hereto do hereby agree as follows:
Section 1. Appointment of Escrow Agent. The Successor Agency hereby appoints
the Escrow Agent as escrow agent for all purposes of this Agreement and in accordance with
the terms and provisions of this Agreement, and the Escrow Agent hereby accepts such
appointment.
Section 2. Establishment of Escrow Fund. There is hereby created the Escrow Fund
to be held by the Escrow Agent, separate and apart from any funds or accounts of the Escrow
Agent or the Agency, as an irrevocable escrow securing payment of principal of and interest on
the Prior Bonds as hereinafter set forth.
All cash and Defeasance Securities (as defined herein) in the Escrow Fund are hereby
irrevocably pledged as a special fund for the payment and prepayment of the Prior Bonds in
accordance with the terms hereof. If at any time the Escrow Agent receives actual knowledge
that the cash and amounts in the Escrow Fund will not be sufficient to make any payment
required by Section 4 hereof, the Escrow Agent will notify the Agency of such fact and the
Successor Agency will immediately cure such deficiency from any source of legally available
funds.
As used herein, the term "Defeasance Securities" means the federal securities set forth
on Exhibit A hereto and hereby incorporated herein.
Section 3. Deposit into Escrow Fund; Investment of Amounts.
(a) Concurrently with the execution and delivery of the 2017 Bonds, the Successor
Agency will cause to be transferred to the Escrow Agent for deposit into the Escrow Fund, the
amount of $ , from the following sources, (i) $ of which will be held in a
subaccount of the Escrow Fund hereby created and known as the "2007 Bonds Account," for
the payment and prepayment of the 2007 Bonds, and (ii) $ of which will be held in a
subaccount of the Escrow Fund hereby created and known as the "2011 Bonds Account," for
the payment and redemption of the 2011 Bonds:
2
2007 Bonds Account
(i) from the 2017 Trustee out of the proceeds of the 2017 Bonds, the amount
of $ ; and
(ii) from the Prior Trustee from funds on hand related to the 2007 Bonds, the
amount of $
2011 Bonds Account
(i) from the 2017 Trustee out of the proceeds of the 2017 Bonds, the amount
of $ ; and
(ii) from the Prior Trustee from funds on hand related to the 2011 Bonds, the
amount of $
(b) With respect to the aggregate $ deposited into the 2007 Bonds
Account of the Escrow Fund, the Escrow Agent will:
(i) invest $ of the moneys deposited in the Defeasance
Securities described in Exhibit A hereto; and
(ii) hold the remaining $ in cash uninvested.
(c) With respect to the aggregate $ deposited into the 2011 Bonds
Account of the Escrow Fund, the Escrow Agent will:
(i) invest $ of the moneys deposited in the Defeasance
Securities described in Exhibit A hereto; and
(ii) hold the remaining $ in cash uninvested.
The Defeasance Securities and cash will be deposited with and held by the Escrow
Agent in the Escrow Fund solely for the uses and purposes set forth herein. The Escrow Agent
will have no lien upon or right of set off against the Defeasance Securities and cash at any time
on deposit in the Escrow Fund. The Escrow Agent may create such subaccounts within the
Escrow Fund as it may require to accomplish the purposes of this Escrow Agreement.
Section 4. Instructions as to Application of Deposit. The total amount of
Defeasance Securities and cash deposited in the Escrow Fund pursuant to Section 3 will be
applied by the Escrow Agent to the payment and prepayment of the Prior Bonds in accordance
with the agreements governing the Prior Bonds on the date(s) and in the amounts set forth
on Exhibit B hereto. Any amounts remaining in the Escrow Fund following the full prepayment
of all of the Prior Bonds will be transferred by the Escrow Agent to the 2017 Trustee, for deposit
to the Lease Payment Fund established and held by the 2017 Trustee with respect to the 2017
Bonds.
Section 5. Election to Prepay; Notices. The Successor Agency hereby irrevocably
elects to prepay all of the 2007 Bonds outstanding on , 2017 and to prepay all of the
2011 Bonds outstanding on May 1, 2018.
The Escrow Agent is hereby directed to give a Notice of Defeasance and Prepayment of
the Prior Bonds on the issuance date of the 2017 Bonds, substantially in the form attached
hereto as Exhibit C, to the Municipal Securities Rulemaking Board (MSRB)'s Electronic
Municipal Market Access (EMMA) system accessible at the emma.msrb.org website.
The Escrow Agent is hereby directed to take all steps required to prepay the Prior Bonds
on the date and at the prepayment price set forth in the Prior Indenture. The Successor Agency
hereby irrevocably instructs the Escrow Agent to cause a notice of redemption of the then
outstanding Prior Bonds, substantially in the form attached hereto as Exhibit D (or such form as
the Escrow Agent otherwise deems appropriate), to be given by any means authorized in the
Prior Indenture in a timely manner as set forth in the Prior Indenture, to the registered owners of
the respective Prior Bonds at their respective addresses appearing on the registration books
maintained for the respective Prior Bonds.
Section 6. Compensation to Escrow Agent. From proceeds of the Prior Bonds or
other lawfully available sources, the Successor Agency will pay the Escrow Agent full
compensation for its duties under this Agreement, including out-of-pocket costs such as
publication costs, prepayment expenses, legal fees and other costs and expenses relating
hereto and, in addition, all fees, costs and expenses relating to the purchase of any Defeasance
Securities after the date hereof. Under no circumstances will amounts deposited in or credited
to the Escrow Fund be deemed to be available for said purposes.
Section 7. Immunities and Liabilities of Escrow Agent.
(i) The Escrow Agent undertakes to perform only such duties as are expressly and
specifically set forth in this Agreement and no implied duties or obligations will be read into this
Agreement against the Escrow Agent.
(ii) The Escrow Agent will not have any liability hereunder except to the extent of its
own gross negligence or willful misconduct.
(iii) The Escrow Agent may consult with counsel of its own choice (which may be
counsel to the Successor Agency) and the opinion of such counsel will be full and complete
authorization to take or suffer in good faith any action in accordance with such opinion of
counsel.
(iv) The Escrow Agent will not be responsible for any of the recitals or
representations contained herein.
(v) The Escrow Agent will not be liable for the accuracy of any calculations provided
as to the sufficiency of the moneys or Defeasance Securities deposited with it to pay the
principal of, and interest on, the Prior Bonds.
(vi) The Escrow Agent will not be liable for any action or omission of the Successor
Agency under this Agreement or any related agreement.
(vii) Whenever in the administration of this Agreement the Escrow Agent 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, in the absence of negligence or willful misconduct on the part of the Escrow
4
Agent, be deemed to be conclusively proved and established by a certificate of an authorized
representative of the Successor Agency, and such certificate will, in the absence of negligence
or willful misconduct on the part of the Escrow Agent, be full warrant to the Escrow Agent for
any action taken or suffered by it under the provisions of this Agreement upon the faith thereof.
(viii) The Escrow Agent may conclusively rely, as to the truth and accuracy of the
statements and correctness of the opinions and the calculations provided, and will be protected
and indemnified, in acting, or refraining from acting, upon any written notice, instruction,
request, certificate, document or opinion furnished to the Escrow Agent signed or presented by
the proper party, and it need not investigate any fact or matter stated in such notice, instruction,
request, certificate or opinion.
(ix) The Escrow Agent may at any time resign by giving written notice to the
Successor Agency of such resignation. The Successor Agency will promptly appoint a
successor Escrow Agent by the resignation date. Resignation of the Escrow Agent will be
effective upon acceptance of appointment by a successor Escrow Agent. If the Successor
Agency does not promptly appoint a successor, the Escrow Agent may petition any court of
competent jurisdiction for the appointment of a successor Escrow Agent, which court may
thereupon, after such notice, if any, as it may deem proper and prescribe and as may be
required by law, appoint a successor Escrow Agent. After receiving a notice of resignation of an
Escrow Agent, the Successor Agency may appoint a temporary Escrow Agent to replace the
resigning Escrow Agent until the Agency appoints a successor Escrow Agent. Any such
temporary Escrow Agent so appointed by the Successor Agency will immediately and without
further act be superseded by the successor Escrow Agent so appointed.
(x) The Successor Agency covenants to indemnify and hold harmless the Escrow
Agent against any loss, liability or expense, including legal fees, in connection with the
performance of any of its duties hereunder, except the Escrow Agent will not be indemnified
against any loss, liability or expense resulting from its gross negligence or willful misconduct.
Section 8. Amendment. This Agreement may be amended by the parties hereto,
(i) without the consent of the owners of the Prior Bonds, but only if such amendment is made (a)
to cure, correct or supplement any ambiguous or defective provision contained herein, (b) to
pledge additional security to the payment and prepayment of the Prior Bonds, or (c) to deposit
additional monies for the purposes of this Agreement, or (ii) with the consent of 100% of the
owners of the Prior Bonds outstanding, and only if there will have been filed with the Successor
Agency and the Escrow Agent a written opinion of Jones Hall, A Professional Law Corporation,
as special counsel, stating that any such amendment will not materially adversely affect the
interests of the owners of the Prior Bonds, and that any such amendment will not cause the
portion of lease payments representing interest payable with respect to the Prior Bonds to
become includable in the gross income of the owners thereof for federal income tax purposes.
Section 9. Execution in Counterparts. This Agreement may be executed in several
counterparts, each of which will be an original and all of which will constitute but one and the
same instrument.
Section 10. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of California.
Section 11. Severability. In the event any provision of this Agreement will be held
invalid or unenforceable by any court of competent jurisdiction, such holding will not invalidate
or render unenforceable any other provision hereof.
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement to be
executed by their duly authorized officers all as of the date first above written.
PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY
la
Its:
U.S. BANK NATIONAL ASSOCIATION, as
Escrow Agent
0
Vice President
[Signature Page to Escrow Agreement]
EXHIBIT A
DEFEASANCE SECURITIES
2007 BONDS ACCOUNT
Type of Maturity Par
Securitv Date Amount Rate
Purchase
Date Cost of Securities Cash
2011 BONDS ACCOUNT
Type of Maturity Par
Securitv Date Amount Rate
Purchase
Date Cost of Securities Cash
A-1
Total Cost
Total Escrow Cost
Total Cost
Total Escrow Cost
EXHIBIT B
SCHEDULE OF PAYMENT AND PREPAYMENT/REDEMPTION
Period
2007 Bonds
Principal
Ending Principal Interest Prepaid Total
2011 Bonds
Period Principal
Endina Principal Interest Redeemed Total
9/1/17
EXHIBIT C-1
NOTICE OF DEFEASANCE AND PREPAYMENT
$31,825,000
Petaluma Community Development Commission
2007 Tax Allocation Bonds
Date of Issuance: , 2007
NOTICE IS HEREBY GIVEN, by the PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY (the "Successor Agency") with respect to the captioned securities (the
"Bonds"), that it has defeased the Bonds set forth below as of , 2017 and has
irrevocably elected to optionally prepay such Bonds on , 2017. Amounts sufficient for
such prepayment have been deposited into an escrow fund held by Wells Fargo Bank National
Association, for such purpose.
The Bonds' that have been defeased and that the Successor Agency has elected to
optionally prepay on , 2017 consist of the following:
Outstanding
Principal
Maturity Date Amount Interest Rate *CUSIP No.
* CUSIP data are provided by CUSIP Global Services, which is managed on behalf of
the American Bankers Association by S&P Capital IQ. The Agency and the Trustee shall not be
responsible for the selection or use of the CUSIP numbers listed above, nor is any
representation made as to the accuracy of the CUSIP numbers listed above or as printed on
any Bond; the CUSIP numbers are included solely for the convenience of the owners of the
Certificates.
Dated: , 2017 U.S. BANK NATIONAL ASSOCIATION,
as Trustee for the Certificates and as Escrow Agent
C-1
EXHIBIT C-2
NOTICE OF DEFEASANCE AND REDEMPTION
$11,369,000
Petaluma Community Development Commission
2011 Tax Allocation Bonds
Date of Issuance: , 2011
NOTICE IS HEREBY GIVEN, by the PETALUMA COMMUNITY DEVELOPMENT
SUCCESSOR AGENCY (the "Successor Agency") with respect to the captioned securities (the
"Bonds"), that it has defeased the Bonds set forth below as of , 2017 and has
irrevocably elected to optionally prepay such Bonds on , 2017. Amounts sufficient for
such prepayment have been deposited into an escrow fund held by Wells Fargo Bank National
Association, for such purpose.
The Bonds that have been defeased and that the Successor Agency has elected to
optionally prepay on , 2017 consist of the following:
Outstanding
Principal
Maturity Date Amount Interest Rate *CUSIP No.
* CUSIP data are provided by CUSIP Global Services, which is managed on behalf of
the American Bankers Association by S&P Capital IQ. The Agency and the Trustee shall not be
responsible for the selection or use of the CUSIP numbers listed above, nor is any
representation made as to the accuracy of the CUSIP numbers listed above or as printed on
any Bond; the CUSIP numbers are included solely for the convenience of the owners of the
Certificates.
Dated: 12017 U.S. BANK NATIONAL ASSOCIATION,
as Trustee for the Certificates and as Escrow Agent
C-2
EXHIBIT D-1
NOTICE OF REDEMPTION
TO HOLDERS OF
$31,825,000
Petaluma Community Development Commission
2007 Tax Allocation Bonds (the "Bonds")
Date of Issuance: , 2007
Maturity
(December 1)
Interest
Rate
Principal
Amount
Principal Amount
to be Prepaid
CUSIP*
Notice is hereby given that the Petaluma Community Development Commission (now
succeeded by the PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY (the
"Agency"), has exercised an option to call and redeem on , 2017 (the
"Redemption Date"), all Outstanding Bonds, in accordance with the provisions of that certain
Indenture, dated as of April 1, 2007, as supplemented (the "Indenture"), among the Agency and
the undersigned, as trustee. All capitalized terms used in this Notice not otherwise defined shall
have the meanings ascribed to them in the Indenture.
On the Redemption Date there will become due and payable on the Bonds the principal
amount, without premium (the "Redemption Price"), together with interest accrued thereon to
the Redemption Date, and from and after the Redemption Date interest thereon shall cease to
accrue. Bonds will become due and payable upon presentation and surrender to:
By First Class/Registered/
Certified Mail: Express Delivery Only: By Hand Only:
The Bank of New York The Bank of New York The Bank of New York Mellon
Mellon Mellon
A signed W-9 is required to accompany the Bonds or 31% of the bond redemption
proceeds will be withheld. If you request payment of principal and/or interest via wire transfer,
please be advised there is a $25, 00 fee which will be deducted from your payment.
No representation is made as to the accuracy of any CUSIP number, either in this Notice
of Redemption or as printed on any Bond. CUSIP numbers are included solely for the
convenience of the Bondholder.
D-1
Dated: .2017
By: U.S. Bank National Association, as
Trustee
D-2
EXHIBIT D-2
NOTICE OF REDEMPTION
TO HOLDERS OF
$11,369,000
Petaluma Community Development Commission
2011 Tax Allocation Bonds (the "Bonds")
Date of Issuance: , 2011
Maturity
(December 1)
Interest
Rate
Principal
Amount
Principal Amount+
to be Prepaid
CUSIP*'
Notice is hereby given that the Petaluma Community Development Commission (now
succeeded by the PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY (the
"Agency"), has exercised an option to call and redeem on , 2017 (the "Redemption
Date"), all Outstanding Bonds, in accordance with the provisions of that certain Indenture, dated
as of April 1, 2007, as supplemented (the "Indenture"), among the Agency and the undersigned,
as trustee. All capitalized terms used in this Notice not otherwise defined shall have the
meanings ascribed to them in the Indenture.
On the Redemption Date there will become due and payable on the Bonds the principal
amount, without premium (the "Redemption Price"), together with interest accrued thereon to
the Redemption Date, and from and after the Redemption Date interest thereon shall cease to
accrue. Bonds will become due and payable upon presentation and surrender to:
By First Class/Registered/
Certified Mail: Express Delivery Only: By Hand On
The Bank of New York The Bank of New York The Bank of New York Mellon
Mellon Mellon
A signed W-9 is required to accompany the Bonds or 31% of the bond redemption
proceeds will be withheld. If you request payment of principal and/or interest via wire transfer,
please be advised there is a $25.00 fee which will be deducted from your payment.
No representation is made as to the accuracy of any CUSIP number, either in this Notice
of Redemption or as printed on any Bond. CUSIP numbers are included solely for the
convenience of the Bondholder.
Dated: 2017
By: U.S. Bank National Association, as
Trustee
D-3
D-4