HomeMy WebLinkAboutStaff Report 3.G 07/01/2019zss$
DATE: July 1, 2019
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Sue Castellucci, Housing Administrator
SUBJECT: A Resolution Authorizing the Execution and Delivery of a First Supplemental
Indenture Of Trust Relating to the City's $11,500,000 Original Principal Amount
Multifamily Housing Revenue Bonds (Downtown River Apartments) Series
2003A and its $1,300,000 Original Principal Amount Taxable Multifamily
Housing Revenue Bonds (Downtown River Apartments) Series 2003A -T and
Approving Other Actions and Matters Relating Thereto
RECOMMENDATION
It is recommended that the City Council Adopt a Resolution Authorizing the Execution and
Delivery of a First Supplemental Indenture Of Trust Relating to the City's $11,500,000 Original
Principal Amount Multifamily Housing Revenue Bonds (Downtown River Apartments) Series
2003A and its $1,300,000 Original Principal Amount Taxable Multifamily Housing Revenue
Bonds (Downtown River Apartments) Series 2003A -T and Approving Other Actions and Matters
Relating Thereto
BACKGROUND
On September 15, 2003, the City Council adopted resolution No. 2003-187 N.C.S. authorizing the
issuance, execution and delivery of bonds for the purpose of financing construction of Downtown
River Apartments. The City issued the Multifamily Housing Revenue Bonds Series 2003A not to
exceed $11,500,000 (Series A Bonds) and Taxable Multifamily Housing revenue Bonds not to
exceed $1,300,000 (Series A -T Bonds), and together with the Series A Bonds, (the "Bonds") for
the purpose of making a mortgage loan to assist in the financing of the construction of the
Downtown River Apartments, an 81 -unit multifamily affordable rental housing development
located in Petaluma.
According to a loan agreement dated October 1, 2003 between Wells Fargo Bank, California
Community Reinvestment Corporation (CCRC) and Downtown River Apts., L.P., CCRC agreed
to purchase the bonds from Wells Fargo Bank and become the bondowner representative at
permanent close of escrow on or before October 1, 2005. An Assignment and Assumption was
recorded shortly thereafter, documenting the transfer of bondowner representative.
DISCUSSION
CCRC is a non-profit, multi -bank lending consortium providing permanent mortgages on
affordable rental housing throughout the state for 30 years. Their business model is one of
providing forward commitments to developers to allow projects to receive construction financing,
fund when lease up is complete, season the loans and sell to qualified investors, retaining servicing
to support their clients, and recycling that capital into new developments. As noted above, CCRC
purchased the Bonds from Wells Fargo in October 2005.
CCRC is currently working with Freddie Mac to sell $72 million in tax exempt bonds which will
allow CCRC to recycle precious capital back into new affordable housing transactions. The City's
Bonds for Downtown River are part of that sale.
In March of 2019, a representative from California Community Reinvestment Corporation
contacted the City to get consent to transfer their interest as bondowner to the Federal Home Loan
Mortgage Corporation (Freddie Mac). CCRC also requested the City to execute a First
Supplemental Indenture of Trust, dated as of July 1, 2019 (First Supplemental Indenture), to
eliminate the requirement to obtain City consent for future sales of the Bonds.
After legal review, City consented to granting the transfer of the bondowner (See Attachment #2).
The City's outside bond counsel, Jones Hall, has also advised the City that it does not see any legal
risks to the City by executing the First Supplemental Indenture. However, in order the execute the
First Supplemental Indenture, the City Council needs to approve a resolution authorization the
City Manager to sign the supplemental indenture.
PUBLIC OUTREACH
This agenda item appeared on a tentative agenda in the previously -published June 17, 2019
agenda packet, which was publicly noticed through appropriate City communications channels.
FINANCIAL IMPACTS
There are no financial impacts to the City of Petaluma in transferring the bondowner of the
Downtown River bonds from the California Community Reinvestment Corporation to Freddie
Mac. CCRC will still retain servicing the bonds and continue to work, closely with Eden Housing.
ATTACHMENTS
1. Resolution
2. First Supplemental Indenture of Trust
3. Exhibit A - Investor letter
4. Letter of consent
5. Jones Hall Opinion letter - Draft
PA
ATTACHMENT 1
RESOLUTION NO.
A RESOLUTION AUTHORIZING THE EXECUTION AND DELIVERY
OF A FIRST SUPPLEMENTAL INDENTURE OF TRUST RELATING TO
THE CITY'S $11,500,000 ORIGINAL PRINCIPAL AMOUNT
MULTIFAMILY HOUSING REVENUE BONDS (DOWNTOWN RIVER
APARTMENTS) SERIES 2003A AND ITS $1,300,000 ORIGINAL
PRINCIPAL AMOUNT TAXABLE MULTIFAMILY HOUSING
REVENUE BONDS (DOWNTOWN RIVER APARTMENTS) SERIES
2003A -T AND APPROVING OTHER ACTIONS AND MATTERS
RELATING THERETO
WHEREAS, on October 20, 2003, pursuant to Chapter 7 of Part 5 of Division 31 of the
California Health and Safety Code (the "Act") and an Indenture of Trust, dated as of October 1,
2003 (the "Original Indenture"), between the City of Petaluma (the "City") and Wells Fargo
Bank, National Association, as initial bondowner representative, the City issued its City of
Petaluma Multifamily Housing Revenue Bonds (Downtown River Apartments) Series 2003A in
the aggregate principal amount of not to exceed $11,500,000 (the "Series A Bonds") and its City
of Petaluma Taxable Multifamily Housing Revenue Bonds (Downtown River Apartments) Series
2003A -T in the aggregate principal amount of not to exceed $1,300,000 (the "Series 2003A -T
Bonds" and, together with the Series 2003A Bonds, the 'Bonds") and loaned the proceeds from
the sale thereof to Downtown River Associates, L.P., a California limited partnership (the
"Borrower") to finance the rehabilitation and equipping of a 81 -unit multifamily rental housing
development, located in the City of Petaluma known as the "Downtown River Apartments" (the
"Project"); and
WHEREAS, Federal Home Loan Mortgage Corporation has become the successor
bondowner representative for the holders of the Bonds (the "Bondowner Representative"); and
WHEREAS, Section 9.01 of the Original Indenture permits the City and .the Bondowner
Representative fiom time to time and at any time to enter into an indenture or indentures
supplemental to the Original Indenture for the.purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of the Original Indenture or of any
supplemental indenture upon receipt by the Bondowner Representative of a certified resolution
authorizing the execution of any such supplemental indenture, unless such supplemental
indenture affects the rights or obligations of the Borrower or any general partner or limited
partner of the Borrower hereunder or under the Loan Agreement, in which case the Bondowner
Representative may enter into such supplemental indenture only if the Bondowner
Representative has received the Borrower's, or such general partner's or limited partner's, as
applicable, written consent thereto; and
WHEREAS, the Bondowner Representative has requested the City to supplement and
amend the Original Indenture by entering into a First Supplemental Indenture of Trust, dated as
of July 1; 2019 (the "First Supplemental Indenture," and together with the Original Indenture, the
"Indenture"), between the City and the Bondowner Representative; and
WHEREAS, there has been presented to this meeting the proposed form of the First
Supplemental Indenture;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of
Petaluma, as follows:
1. The City hereby finds and declares that the above recitals are true and correct.
2. The First Supplemental Indenture, in the form on file with the City Clerk of the City, is
hereby approved. The City Manager, the Finance Director or the Housing Director of the City
(each, an "Authorized Officer"), each acting alone, are hereby authorized for and on behalf of the
City to execute and deliver the First Supplemental Indenture witji such changes, additions or
deletions as may be approved by such Authorized Officer and legal counsel to the City, such
approvals to be conclusively evidenced by the execution and delivery thereof.
3. All actions heretofore taken by the officers and agents of the City with respect to the First
Supplemental Indenture are hereby approved, confirmed and ratified, and the proper officers of
the City, including the Authorized Officers, are hereby authorized and directed, for and in the
name and on behalf of the Agency, to do any and all things and take any and all actions and
execute any and all certificates, agreements and other documents, which they, or any of them,
may deem necessary or advisable in order to consummate the execution and delivery of the First
Supplemental Indenture in accordance with this Resolution.
4. This Resolution shall take effect immediately upon its adoption.
CITY OF PETALUMA
City Manager
ATTEST:
City Clerk
0
ATTACHMENT #2
FIRST SUPPLEMENTAL INDENTURE OF TRUST
by and between
CITY OF PETALUMA
and
FEDERAL HOME LOAN MORTGAGE CORPORATION,
as Bondowner Representative
dated as of July 1, 2019
relating to:
$11,500,000
Original Principal Amount
City of Petaluma
Multifamily Housing Revenue Bonds
(Downtown River Apartments)
Series 2003A
and
$1,300,000
Original Principal Amount
City of Petaluma
Taxable Multifamily Housing Revenue Bonds
(Downtown River Apartments)
Series 2003A -T
5
FIRST SUPPLEMENTAL INDENTURE OF TRUST
Table of Contents
Page
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section1.1. Definitions ................................................. :................................................. 7
Section 1.2. Rules of Construction................................................................................. 7
ARTICLE II
AMENDMENTS
Section 2.1. Amendment to Article II............................................................................. 8
Section 2.2. Amendment to Exhibit B..........................................•.................................. 8
ARTICLE III
MISCELLANEOUS
Section 3.1. Ratification of the Original Indenture ........ Error! Bookmark not defined.
Section3.2. Severability................................................................................................. 8
Section3.3. Governing Law........................................................................................... 9
Section 3.4. Inclusion as Part of the Indenture............................................................... 9
Section 3.5. Counterparts................................................................................................ 9
3
FIRST SUPPLEMENTAL INDENTURE OF TRUST
This FIRST SUPPLEMENTAL INDENTURE OF TRUST dated as of July 1, 2019 (this
"Amendment"), by and between CITY OF PETALUMA, a chartered city duly organized and
existing.under the laws of the State of California (herein called the "City"), and FEDERAL
HOME LOAN MORTGAGE CORPORATION, as Holder of the Bond described herein
(herein called the "Bondoivner Representative").
A. Pursuant to the terms of that certain Indenture of Trust dated as of October 1,
2003 by and between the City and the Bondowner Representative (the "Original Indenture," and
together with this Amendment, the "Indenture"), the City issued its Multifamily Housing
Revenue Bonds (Downtown River Apartments) Series 2003A in the maximum principal amount
of $11,500,000 (the "Series A Bonds") and its Taxable Multifamily Housing Revenue Bonds
(Downtown River Apartments) Series 2003A -T in the maximum principal amount of $1,500,000
(the "Series A -T Bonds" and, together with the Series A Bonds, the `Bonds").
B. The proceeds of the Bonds were used to fund a loan to Downtown River
Associates, L.P., a California limited partnership (the "Borroiver") pursuant to that certain Loan
Agreement dated as of October 1, 2003, among the City, the Borrower and the Borrower
Representative for the purposes described therein.
C. Federal Home Loan Mortgage Corporation is the Bondowner Representative.
D. Pursuant to Section 9.01 of the Original Indenture, the City and the Bondowner
Representative, may from time to time and at any time, enter into supplemental indentures for
the purpose of modifying and amending the Original. Indenture..
For and in consideration of the mutual agreements hereinafter contained, the parties hereto agree
as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
Section 1.1. Definitions. The capitalized words and terms used in this Amendment
shall have the meanings as set forth in the Original Indenture, unless the context or use indicates
a different meaning or intent, or unless a different meaninj4 is ascribed to them herein.
Section 1.2. Rules of Construction.
(a) The singular form of any word used herein shall include the plural, and vice
versa, unless the context otherwise requires. The use herein of a pronoun of any gender shall
include correlative words of other genders.
(b) All references herein to "Articles," "Sections" and other subdivisions hereof are
to corresponding Articles, Sections or subdivisions of the Indenture as original executed; and
7
the words "herein," "hereof," "hereunder" and other words of similar import refer to the
Indenture as a whole and not to any particular Article, Section or subdivision hereof.
(c) The headings of titles of the several Articles and Sections hereof, and any table
of contents appended to copies hereof, shall be solely for the convenience of reference and shall
not affect the meaning, construction or effect of the Indenture.
ARTICLE II
AMENDMENTS
Section 2.1. Amendment to Article II. Section 2.05 of the Original Indenture is hereby
amended by deleting the following language from Section 2.05(b)(iv):
"wherein the transferee agrees, among other matters, not to sell participating
interests in the Bonds (other than, with respect to CCRC, participations to its
member banks) without the prior written consent of the City"
Section 2.2. Amendment to Exhibit C. Exhibit C to the Original Indenture is hereby
deleted in its entiretv and replaced with the form of Investor Letter attached hereto as Exhibit A.
ARTICLE III
MISCELLANEOUS
Section 3.1. Representations of the Bondowner Representative. The Bondowner
Representative hereby represents, warrants and certified as follows:
(a) it is the dulv appointed and acting Bondowner Representative under the
Indenture,
(b) it has received a Certified Resolution authorizing the execution of this
Amendment; and
(c) if this Amendment affects the rights or obligations of the Borrower or any general
partner or limited partner of the Borrower under the Indenture or under the Loan Agreement, the,
Bondowner Representative has received the Borrower's. or such general partner's or limited
partner's, as applicable, written consent to this Amendment.
Section 3.2. Ratification of the Original Indenture. Except as supplemented and
amended hereby, the Original Indenture is in all respects ratified and confirmed and the Original,
Indenture as so supplemented and amended hereby shall be read, taken and construed as one and
the same. instrument. Except insofar as herein otherwise expressly provided. all the provisions,
definitions, terms and conditions of the Original Indenture as supplemented and amended hereby,
shall be deemed to be incorporated in, and made a part of. this Amendment, and the Original
Indenture as supplemented and amended by this Amendment and as otherwise supplemented and
amended is in all respects ratified and confirmed. Upon receipt by the Bondowner Representative
of a Certified Resolution authorizing the execution of any such supplemental indenture, the
Bondowner Representative may, if it so elects. loin with the City in the execution of such
supplemental indenture, unless such supplemental indenture affects the rights or obligations of
the Borrower or any general partner or limited partner of the Borrower hereunder or under the
Loan Agreement, in which case the Bondowner Representative may enter into such supplemental
indenture only if the Bondowner Representative has received the Borrower's. or such general
partner's or limited partner's, as applicable, written consent thereto
Section 3.3. Severability. If any provision of this Amendment shall be held or deemed
to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other
Provision or provisions herein contained or render the same invalid. inoperative, or of
unenforceable to any extent whatsoever.
Section 3.4. Governing Law. This Amendment shall be governed exclusively by and
construed in accordance with the internal laws of the State of California applicable to contracts
made and performed in the State of California.
Section 3.5. Inclusion as Part of the Indenture. This Amendment on its delivery shall
be a part of the Indenture and all references herein to "Indenture" shall include reference to this
Amendment as well as the Original Indenture.
Section 3.6. Counterparts. This Amendment 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.
we
IN WITNESS WHEREOF, the CITY OF PETALUMA has caused this Amendment to be signed
in its name and FEDERAL HOME LOAN MORTGAGE CORPORATION, in token of its
acceptance of the trust created under the Original Indenture, has caused this Amendment to be
signed in its name, all as of the day and year first above written.
CITY OF PETALUMA
ME
Peggy Flynn, City Manager.
10
FEDERAL HOME LOAN MORTGAGE
CORPORATION, as Bondowner
Representative
I:
11
ATTACHMENT #3
EXIIIBIT A TO
SUPPLEMENTAL BOND INDENTURE
Freddie I °Ma"0.eJ.INA 22 o .°
Mac'll
Multifamily'. - -
April 15, 2019
City of Petaluma
11 English Street
Petaluma, California
Attention: Housing Director
Re: City of Petaluma Multifamily Housing Revenue Bonds (Downtown River
Apartments) Series 2003A
Ladies and Gentlemen:
The undersigned (the "Purchaser"), being the purchaser of the above -referenced
bonds (the "Bonds") does hereby certify, represent and warrant for the benefit of the City of
Petaluma (the "City") that:
(a) The Purchaser acknowledges that the Bonds were issued for the
purpose of making a mortgage loan to assist in the financing of the acquisition and
construction of a certain multifamily rental housing development located in Petaluma,
California (the "Project"), as more particularly described in that certain Loan Agreement,
dated as of October 1, 2003 (the "Loan Agreement") by and among the City, Wells Fargo
Bank, National Association, and Downtown River Associates, LP., a California Limited
Partnership, (the "Borrower"). The Purchaser further acknowledges that the Bonds are
secured by a certain Indenture of Trust dated as of October 1, 2003 (the "Indenture"),
between the City and Wells Fargo Bank, National Association, as Bondowner
Representative (the `Bondowner Representative").
(b) The Purchaser hereby certifies that it is a "qualified institutional
buyer" within the meaning of Rule 144 promulgated under the Securities Act of 1933, as
amended (the "Act").
(c) The Bonds are being acquired by the Purchaser for its own account
for investment purposes and not with a view to or for resale except as permitted by the
Indenture and this letter. The Purchaser does not presently intend to make a public
distribution of, or to transfer, all or any part of the Bonds, except as permitted by the
Indenture. The Purchaser agrees not to sell any participating interests in the Bonds without
the prior written consent of the City which may be given in its sole discretion. The
Purchaser understands that it may need to bear the risks of this investment for an indefinite
time, since any sale, prior to maturity may not be possible.
(d) The Purchaser understands that the Bonds have not been registered
under the Act.
12
f�N
kv.1 The Purchaser acknowledges that it is familiar with the conditions,
financial and otherwise, of the Borrower and understands that the Borrower has no
significant assets other than the Project for payment of the Bonds. Further, the Purchaser
understands that the Bonds involve a high degree of risk. Specifically, and without in any
manner limiting the foregoing, the Purchaser understands and acknowledges that, among
other risks, the Bonds are payable ' solely from the Revenues (as defined in the Indenture).
The ' Purchaser has made such inquiry with respect to all of the foregoing as it believed to
be desirable for its purposes.
(f) It is acknowledged that no written information has been provided by
the City to the Purchaser with respect to the Bonds and that any written information
furnished by any other party to the transaction does not purport to fully disclose all
information pertinent to the Bonds.
(g) The Purchaser is not now and has never been controlled by, or under
common control with, the Borrower. The Borrower has never been and is not now
controlled by the Purchaser. The Purchaser has entered into no arrangements with the
Borrower or with any affiliate in connection with the Bonds, other than as disclosed to the
City.
(h) The Purchaser has authority to purchase the Bonds and to execute
this letter and any other instruments and documents required to be executed by the
Purchaser in connection with the purchase of the Bonds.
(i) In entering into this transaction the Purchaser has not relied upon
any representations or opinions made by the City relating to the legal consequences or other
aspects of the transactions, nor has it looked to, nor expected, the City to undertake or
require any credit investigation or due diligence reviews relating to the Borrower, its
financial condition or business operations, the Project (including the financing or
management thereof), or any other matter pertaining to the merits or risks of the
transaction, or the adequacy of the funds pledged to the Bondowner Representative to
secure repayment of the Bonds. The Purchaser understands and acknowledges that the
obligations of the Borrower under the Loan Agreement are not recourse obligations against
the general assets of the Borrower, but are secured only by the assets of the Borrower
referred to therein.
0) The Purchaser understands that the Bonds are not secured by any
pledge of any moneys received or to be received from taxation by the State of California
or any political subdivision or taxing district thereof, including, without limitation, the
City; that the Bonds will never represent or constitute a general obligation or a pledge of
the faith and credit of the City, the State of California or any political subdivision thereof;
that no right will exist to have taxes levied by the State, of California or any political
subdivision thereof for the payment of principal and interest on the Bonds; and that the
liability of the City with respect to the Bonds is subject to further limitations as set forth in
the Bonds and the Indenture.
13
(k) The Purchaser has been informed that the Bonds (i) have not been
and will not be registered or otherwise qualified for sale under the "Blue Sky" laws and
regulations of any jurisdiction, (ii) will not be listed on any stock or other securities
exchange, and (iii) will carry no rating from any rating service.
(1) The Purchaser acknowledges that it has the right to sell and transfer
the Bonds, subject to compliance with the transfer restrictions set forth in Section 2.05 of
the Indenture, including the requirement for the delivery to the City and the Bondowner
Representative of an investor's letter in the same form as this Investor's Letter, including
this paragraph (1). Failure to deliver such investor's letter shall cause the purported transfer
to be null and void.
(m) The Purchaser hereby agrees to indemnify and hold harmless the
City with respect to any claimed asserted against the City that is based on the Purchaser's
receipt, sale, transfer or other disposition of the Bonds.
Capitalized terms used herein and not otherwise defined have the meanings given
such terms in the Indenture.
FEDERAL HOME LOAN MORTGAGE
CORPORATION
By: 6,4Yk----L
Curtis Melvin
Multifamily, Production Director
14
ATTACHMENT 94
elrL
713 N,
CITY OF PETALUMA
POST OFFICE BOX 61
z $ PETALUMA, CA 94953-0061
Term Darrell
Afaj;or
City of Petaluma Multifamily Housing Revenue Bonds
(Downtown River Apartments)
D'LyndnFiseher
Mike Healy
Series 2003 A
Gabe Kearney
Dave King
(the "Downtown River Bonds')
Kevin McDonnell
Kathy Miller
Conncilmen,hers
Issuer Consent to Requested Transfer
California Community Reinvestment Corporation, a California nonprofit
public benefit corporation ("CCRC') is currently the registered
Bondowner and Bondowner Representative for the City's Downtown
River Bonds and has requested consent of the City, as Issuer, to
CCRC's transfer of the Downtown River Bonds and its role as
Bondowner Representative to the Federal Home Loan Mortgage
Corporation ("Freddie Mac") in connection with a Freddie Mac
City Manager's Office
Il English Strew securitization transaction. The City hereby confirms to CCRC and
Pelnhann, 01 94952 Freddie Mac its consent to the requested transfer.
Phone (107) 778.4345
Far (707) 778-4419
l:�ddail:
cf(}a+gr�e/. peJahun rt. en. les
Date: March 28, 2019
City of Petaluma, as Issuer
L1.)
EconomicDevelopa,enJ J q
Phone (707) 778-4549
hay(707)778-4586
By
Y V
lmnsh,gnn45m„ Peggy Flynn, City Mana6er
Phone (707) 7784555
Fay (707) 778- 4586
L,fnru,nlio,r Terhnalogy Divislon
Phone (707) 778-4417
Far (707) 776-3623
eiro�
15
ATTACHMENT #5
[FORM OF OPINON OF BOND COUNSEL TO BE DELIVERED CONCURRENTLY
WITH EXECUTION AND DELIVERY OF FIRST SUPPLEMENTAL INDENTURE]
July 1, 2019
City of Petaluma
11 English Street
Petaluma, CA 94952
OPINION $11,500,000 City of Petaluma Multifamily Housing Revenue Bonds
(Downtown River Apartments) Series 2003A
$1,300,000 City of Petaluma Taxable Multifamily Housing Revenue
Bonds (Downtown River Apartments) Series 2003A -T
Ladies and Gentlemen:
We have acted as bond counsel to the City of Petaluma (the "City") in connection with the
execution and delivery of a First Supplemental Indenture of Trust, dated as of June 1, 2019 (the
"First Supplemental Indenture"), between the City and Federal Home Loan Mortgage
Corporation, as bondowner representative (the "Bondowner Representative), supplemental to an
Indenture of Trust, dated as of October 1, 2003 (the "Original Indenture," and as supplemented
and amended by the First Supplemental Indenture, the "Indenture"), between the City and a
predecessor as bondowner representative, securing and providing for the issuance by the City of
its $11,500,000 Multifamily Housing Revenue Bonds (Downtown River Apartments) Series
2003A (the "Series 2003A Bonds") and its $1,300,000 Taxable Multifamily Housing Revenue
Bonds (Downtown River Apartments) Series 2003A -T (the "Series 2003A -T Bonds" and,
together with the Series 2003A Bonds, the "Bonds") pursuant to Chapter 7 of Part 5 of Division
31 of the California Health and Safety Code, as amended, as now in effect and as it may from
time to time hereafter be amended or supplemented (the "Act"). We have examined the law and
such certified proceedings and other papers as we deem necessary to render this opinion.
As to questions of fact material to our opinion, we have relied upon representations of the City
and the Bondowner Reprsentative contained in the Indenture and in the certified proceedings and
other certifications of public officials and Downtown River Associates, L.P., a California limited
partnership (the `Borrower"), furnished to us, without undertaking to verify the same by
independent investigation.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and
court decisions and cover certain matters not directly addressed by such authorities. Such
opinions may be affected by actions taken or omitted or events occurring after the date hereof.
We have not undertaken to determine, or to inform any person, whether any such actions are
taken or omitted or events do occur or any other matters come to our attention after the date
hereof, and we disclaim any obligation to update this letter. We have assumed the genuineness
of all documents and signatures presented -to us (whether as originals or as copies) and the due
and legal execution and delivery thereof by, and validity against, any parties other than the City.
We have assumed, without undertaking to verify, the accuracy of the factual matters represented,
warranted or certified in the documents referred to in the fourth paragraph hereof. Furthermore,
we have assumed compliance with all covenants and agreements contained in the Indenture, the
Loan Agreement and the Certificate as to Arbitrage relating to the Series 2003A Bonds,
including without limitation covenants and agreements compliance with which is necessary to
assure that actions, omissions or events on and after the date of issuance of the Series 2003A
Bonds have not caused and will not cause interest on the Series 2003A Bonds to be included in
gross income for federal income tax purposes. We have not undertaken to determine compliance
with any of such covenants and agreements or any other requirements of law, and, except as
expressly set forth below, we have not otherwise reviewed any actions, omissions, or events
occurring after the date of issuance of the Series 2003A Bonds or the exclusion of interest on the
Series 2003A Bonds from gross income for federal income tax purposes. Accordingly, no
opinion is expressed herein as to whether interest on the Series 2003A Bonds is excludable from
gross income for federal income tax purposes or as to any other tax consequences related to the
ownership or disposition of, or the accrual or receipt of interest on, the Series 2003A Bonds.
Nothing in this letter should imply that we have considered or in any manner reaffrm any of the
matters covered in the opinion we rendered in connection with the issuance of the Series 2003A
Bonds.
Based upon and in reliance on the foregoing, as of the date hereof, we are of the opinion, under
existing law, that the execution and delivery of the First Supplemental Indenture, in and of itself,
does not impair the exclusion of interest on the Series 2003A Bonds from gross income for
federal income tax purposes and that such amendment is authorized and permitted by the
Indenture.
We have furnished this opinion as bond counsel solely for purposes of Section 9.03 of the
Indenture. No attorney-client relationship has existed or exists between us and the Trustee or
any owner of the Bonds, in connection with the Bonds or by virtue of this opinion, and we
disclaim any obligation to update this opinion. This opinion is delivered to the City pursuant to
Section 9.03 of the Indenture and is not intended to, and may not, be relied upon by any other
party to whom it is not specifically addressed.
Respectfully submitted,
Jones Hall, A Professional Law Corporation
17