HomeMy WebLinkAboutStaff Report 4.A 08/05/2019zssa
DATE,
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FROM:
SUBJECT:
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AgA& da It m #4,A
August 5, 2019
Honorable Mayor and Members of the City Council through Cit
Corey Garberoll'o, Finance Director
y Manager
Resolution Authorizing the Sale and Issuance of Wastewater Revenue Refunding
Bonds to Refinance Outstanding Wastewater Debt; APP roving Official Statement;
and, Approving Related Agreements and Actions
RECOMMENDATION
It is recommended that the City Council adopt the Resolution Authorizing the Sale and Issuance
of Wastewater Revenue Refunding Bonds to Refinance Outstanding Wastewater Debt;
Approving Official Statement -0 and, Approving Related Agreements and Actions.
BACKGROUND
In January 2008, the City of Petaluma borrowed $125 ,964 ,254 from the California State Water
Resources Control Board through its State Revolving Fund (SRF) loan program to finance
construction of the Ellis Creek Water Recycling Facility. The SI''', F Loan is secured by and
payable from net revenues of the wastewater enterprise. Currently, $73 ,587, 664 of the SRF
Loan-remai*ns outstanding.
DISCUSSION
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interest rates have declined during the past several months to near -historic lows, such that the
City can now refinance the outstanding balance of the SRF Loan and realize significant debt
service savings, much the same as when homeowners refinance their mortgages.
At today's relatively low interest rates, the "all-inclusive" interest rate on the proposed refunding
bonds is approximately 1.,45%, as compared to a rate of 2.40% on the SRF Loan being
refinanced.
FINANCIAL IMPACTS
Based on bond market conditions and prevaRk iling interest rates as of Judy 12, 2019, this
refinancing is expected to yieIdd ebt service savings of approximately $4.....5, 0 0 0 per year from
2021-2029, for total savings of approximately $3. 80 million. These savings are net of all
issuance costs and assume no extension of the final maturity.
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Another common measure of the savings that result from the issuance of refunding bonds
LCI. TTS ) [l • 71
is ` net
present value savings' , commonly referred to as iNPV Savings . NPV Savings equals total debt
service savings (e.g. $3.60 million) adjusted for the time value ot money, the costs ot IF
and any up -front contribu
" economic benefit" of i
tion of funds.
NPV SavIs ings is considered a better measure of the
11
ssuing refunding bonds.
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Based on market conditions as of July 12, 2019, the proposed refunding bonds will yield NPV
Savings of approximately $3.50 million or 4.85% of the outstanding SRF Loan being refinanced.
As a rule of thumb, NPV Savings of 3 %-5 % is considered good. In light of the fact that the SRF
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Loan calTies an interest rate of only 2.40%., NPV Savings of 4.85% is very good.
Bear in mind however., the actual amount of savings will not be determined until the refunding
bonds are sold. Thus, if interest rates increase appreciably before the sale date, then it is possible
the savings may be lower than expected, or even insufficient to warrant proceeding, in which
ca -se t
-he refinancing may te carcelled, or delayed until a later date.
The cost of issuing the refunding bonds is expected not -to -exceed $425,000 including fees for
Bond and Disclosure Counsel, Underwriter, Financial Advisor, Rating Agency and
miscellaneous other fees and expenses. All costs of issuance are payable from proceeds of the
refunding t onds upon closing. If for anv reason the refinancing fails to close. then all fees and
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expenses will be waived, and the City will not be b1*11ed, with one exception. A portion of the
Rating Agency Fee estimated at not to approximately $20,000 is non- contingent.
No General Fund expense will be incurred in connection with this refinancing.
ATTACHMENTS
1. Resolution of the City
2. Preliminary Debt Service Savings Analysis
3. Preliminary Official Statement
4. Continuing Disclosure Agreement
5. Indenture of Trust
6. Official Notice of Sale
2
ATTACHMENT 1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF P TA UMA
AUT ORI ING THE SALE AND ISSUANCE OF WASTEWATER REVENUE
REFUNDING BONDS TO REFINANCE OUTSTANDING WASTEWATER SYSTEM
OBLIGATIONS OF THE CITY IN AN AMOUNT NOT TO EXCEED $80,000,000,
APPROVING OFFICIAL STATEMENT AND APPROVING RELATED AGREEMENTS
AND ACTIONS
WHEREAS, the City of Petaluma (the "City") owns and operates a public enterprise for the
collection, treatment and disposal of wastewater within the service area of the Citv (the
"Wastewater System"); and
WHEREAS, to finance Wastewater System improvements, the City entered into an
Interagency Sales Agreement (No. OS -803-550-0) with the State Water Resources Control Board
in 2006, and amended as of October 17, 2007, which is currently outstanding in the amount of
$73,587,664 (the "SRF Loan"); and
WHEREAS, pursuant to the teams of the SRF Loan, the City may prepay the outstanding
principalItiance o f the S RF Loan, in whole or in part, on any date, together with accrued
interest thereon to the prepayment date, without premium; and
WHEREAS, at current market interest rates, the City can refinance the SRF Loan and in so
doing, realize significantinterest cost savings; and
WHEREAS, the City Council wishes at this time to authorize the sale and issuance of City
of Petaluma 2019 Wastewater Revenue Refunding Bonds (the "Refunding Bonds") under the
Bond Law (as herein defined) to provide funds to prepay amounts outstanding under the SRIF
Loan, such Refunding Bonds to be secured by a pledge of the Net Revenues of the Wastewater
System on a parity with the Cily's oulstanding wastewater revenue refunding bonds that were
issued in 2017; and
NOW, THEREFORE, BE IT RESOLVED I y ti e City Council of the City of Petaluma as
follows:
Section 1. Issuance of Refunding Bonds; Approval of Indenture. The City Council hereby
authorizes the issuance of the Refunding Bonds under the provisions of Articles 10 and 11 of
Chapter 3 of Part 1 of Division 2 of T 40 itle 5 of the California Government Com
ode, cmencing
with Section 53570 of said Code (the on Law for the purpose of )rov1ding funds to prepay
3
amounts outstanding under the SRF Loan and to pay the costs of selling and issuing the
Refunding Bonds.
The Refunding Bonds shall be issued under an Indenture of Trust between the City and The
Bank of New York Mellon Trust Company, N,A., as trustee, which is hereby approvedi"n
substantially the form on file with the City Clerk together with any changes therein or additions
thereto deemed advisable by the City Manager or Finance Director, acting alone or together
(each an "Authorized Officer"), and the execution thereof by an Authorized Officer shall be
conclusive evidence of the approval of such changes and additions., The City Council hereby,
go
authorizes and directs an Authorized Officer to execute, and the City Clerk to attest, said form of
the Indenture of Trust for and in the name of the City. The City Council hereby authorizes the
delivery and performance of the Indenture of Trust.
Refinancing of the SRF Loan. The City Council hereby authorizes andSection2. approves
the refinancing of the SRF Loan from the proceeds of the Refunding Bonds. Such refjinancing
shall be accomplished as provided 1"n the Indenture.
Section 3. Sale of Refunding Bonds via Public O......ering. The City Council hereby authorizes
the sale of the Refunding Bonds through a public offering; provided, however, that the principal
4'
amount of the Refunding Bonds shall not exceed $80,000,000, and the net present value savings
from such refinancing shall equal not less than 3.0% of the
outstanding principal amount of the
SRF I oan. Such public offering maybe accomplished by either competitive bidding or through
negotiation with an underwriter, as determined b y an Authorized Officer to be in the best
interests of the City, after consultation with the City's registered municipal advisor.
If a competitive sale is chosen, the sale of the Refunding Bonds shall be undertaken pursuant to
and in accordance with the notice of sale' on file with the City Clerk, together with any changes
therein or additions thereto deemed advisable by the City's municipal a visor and approved by
the City's bond counsel and by an Authorized Officer. The City Council hereby delegates to
each of the Authorized Officers the authority to accept an offer from the winning bidder to
purchase the Refunding Bonds from the City. In the alternative, the City Council hereby
delegates to each of the Authorized Officers the authority to enter into a negotiated sale of the
Refunding Bonds pursuant to a bond purchase agreement with an underwriter selected by an
Authorized Officer.
Section 4. Official Statement; Conti'nui'ng Disclosure Certificate. The City Council hereby
approves the Preliminary Official Statement describing the Refunding Bonds 1"n the form on file
with the City Clerk, and authorizes each of the Authorized Officers to approve revisions to said
Preliminary Official Statement if and to the extent necessary for distribution in connection with a
Public offering of the Refunding Bonds. An Authorized Officer shall execute a certificate
11
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deeming the Preliminary Official Statement, as so revised, to be nearly final within the meaning
of Rule 15c2-12of the Securities Exchange Act of 1934. Distribution of the Preliminary Official
Statement by the underwriter of the Refunding Bonds to prospective purchasers of the Refunding
Bonds is hereby approved. Each of the Authorized Officers is hereby authorized and directed to
t, and. the execution
approve any changes
in or additions to a final form of said Official Statemen
thereof y an AuthorizedbOfficer shall 1p
be conclusive evidence of approval of any,
such changes
and additions. The City Council hereby authorizes the distribution of the final Official Statement
by the underwriter. The final Official Statement shall be executed in the name and on behalf of
the City by an Authorize
d Officer.
The City Council hereby approves the Continuing Disclosure Certificate to be executed by the
City, the form of which is attached as an exhibit to the Preliminary Official Statement . Each of
the Authorized Officerscers is hereby authorized and directed bill") approve any changes in or additions
to a final form of said Continuing Disclosure Certificate, and the execution thereof b
y an
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Authorized Officer shall be conclusive evidence of approval of any such changes and additions.
The final Continuing Disclosure Certificate shall be executed 1"n the name and on behalf o
f the
City by an Authorized Officer.
Section 5. Documents i*n Substantially Final Form; Further Authority. The documents on
file with the City Clerk and herein approved are in substantially final form ; that is , they are final
as to important business teams such as the rate covenant undertaken by the City as to the
wastewater rates the City will enact so long as the Refunding Bonds are outstanding,, and parity
bond restrictions, governing limitations on future issues of bonds secured by net revenues of the
Wastewater System, but do not contain the pricing terms resulting from the sale of the Refunding
Bonds, which teams will be inserted once the Refunding Bonds are sold. This resolution is
intended to be a "parameters resolution," in which the City Council approves a refunding
wastewater revenue bond issue at a not to exceed principal amount and a minimum savings
threshold, payable solely from net revenues of the Wastewater
System.
Section 6. Engagement of Professional Services. In connection with the issuance and sale of
the Refunding Bonds, the City Council hereby authorizes Steven oil er to act as registered
municipal advisor to the City, the firm of Jones Hall, A Professional Law Corporation, to act as
bond counsel to the City, the firm of Norton Rose rig ht US LLP to act as disclosure counsel
to the City, and the firm of Bartle Wells Associates to act as Utility Rate Consultant to the City.
Each of the Authorized Officers is hereby authorized and directed to execute an agreement with
each of the foregoing, in substantially the forms on file with the City
Clerk.
Section 7. Officialal ActiActions.The Mayor, the City Manager, the Finance Director , th
e City
Attorney and the City Clerk are each hereby authorized and directed, for and in the name and on
behalf of the City, to do any and all things and take any and all actions, including execution and
5
delivery of any and all assignments., certificates, requisitions, agreements, notices, consents,
instruments of conveyance, warrants and other documents, which they, or any of them, may
deem necessary or advisable i"n order to refinance the SRF Loan and consummate the
transactions described herein.
Section 8. Effective Date. This Resolution shall take effect from and after the date of its
41
passage and adoption.
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93860798.2
Maturity Date
fMay 11
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
CITY OF PETAI UNTA
2019 WASTEWATER REVNUE REFUNDING BONDS
Principal
Amount
Interest
Q*, M,&4.
CUSIP*
Yield Price (Base No. 716008)
Preliminary, subject to change.
#* CUSIP is a registered trademark of the American Bankers Association. CUSIP data herein is provided by CUSIP
Global Services., managed by Standard & Poor's Financial Services LLC on behalf of The Amei d& ican Bankers
Association. This data 'is not intended to crease a database and does not serve in any way as a substitute for the
CUSIP Services, CUSIP numbers have been assigned by an independent company not affiliated with the City and
are included solely for the convenience of investors. Neither the City I1Qr the Municipal Advisor is responsible for
the selection or uses of these CUSIP numbers, and no representation is made as to their correctness on the 2019
Binds or as included herein. The CUSIP number for a specific maturity is subject to being changed after the
issuance of the Bands as a result of various subsequent actions including, but not limited to, refunding in whale or in
part or as a result of the procurement of secondary market portfolio insurance or other similar enhancement by
investors that �s applicable to all or a portion of certain maturities of the X419 Bonds.
93860798.2
No dealer, broker., salesperson or other person has been authorized by the City, the
Municipal Advisor or the Underwriter to give any information or to make any representations
other than those contained herein and if given or made, such other information or representation
must not be relied upon ashaving been authorized by any of the foregoing. This Official
with the purchasers of the 201
Statement is not to be construed as a contract
contained in this Official Statement which i
nvolve estimates, forecas
are i
ts
whether or not described herein
epresentation;%iof fact. This Official Statemenof fact. This Official Statemen
expressly so
nienctea solely as s
9 Bonds. Statements
matters of opinion,
uch and are not to be
construed as tis submitted i*n connection with the
sale of the 2019 Bonds referred to herein and inay not be reproduced or used, in whole or in part,
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foranyotherpurpose: Theinformationsetforthhereinhasbeenobtainedfrom official sources whic
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believed to be reliable. The information and expressions of opinion herein are subject to change
without notice and neither delivery of this Official Statement nor any sale made hereunder shall,
under any circumstancescreate any implication that there has been no change in the affairs of
All summaries of the Indenture and other documents referred to in
this Official Statement, are made subject to the provisions of such documents, respectively, and
do not purport to be complete statements of any or all of such provisions.
theCity
sincethedatehereof
IN CONNECTIONWITH'PHIS OFFERING,THEUNDERWRITER MAY
OV�,RALLOTOREFFECT r1'iZANSACTIONSWHICHSTABILIZEORMAINTAINTHE
MARKETPRICEOFTHE2019BONDSATALEVELABOVETHATWHICHMIGHT
O"1'HERWISEPREVAILIN THE OPENMARKET.SUCH STABILIZING,IF
COMMENCED,MAYBEDISCONTINUEDATAN
YTIME.
ThisOfficialStatementincludinganysupplementoramendmenthereto,isintendedto
bedepositedwiththeMunicipalSecuritiesRulemakingBoardtluoughtheElectronicMunicipal
MarketplaceAccess("EMMA")website.
TheCitymaintains awebsite.However,theinformationpresentedthereinisnot part of
thisOfficialStatementandshouldnot bereliedupon inmaltinginvestmentdecisions
with
respecttothe2019Bonds.
IL
I'ORWARD-LOOKINGSTATEMENTS
ThisOfficialStatementcontainsceirtain"forwa�•d-loo�Cingstatements"concerningthe
WastewaterSystemandtheoperations,performanceandfinancialconditionofthe City,
includingtheirfutureeconomicperformance,plansandobjectivesandthelikelihoodofsuccess
indevelopingandexpanding.Thesestatementsarebaseduponanumberofassumptionsand
estimateswhicharesubjecttosignificantuncertainties,manyofwhicharebeyondthecontrolof
theCity.Thewords"may,would,""could,""will,""expect,""anticipate," "believe
,""intend,""plan,""estimateandsimilarexpressionsaremeanttoidentifytheseforward-looking
statements.Resultsmaydiffermateriallyfromthoseexpressedorimpliedbytheseforward-
loolcingstatements.
93860798.2
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4 11 6
TABLE OF CONTENTS
1 0$ is
AM
0
INTRODUCTION, * 4 a 0 4 * e 0 • * * a # # # • # # # a 1 # # # 0 # 0 # # # # i i t a a * f * a a * # * * * * * e 4 # 4 # # W 4 0 0 * 4 # # # # # # * # 0 4 * a * * * * * # * * * * * * * * * # # * # 9 4 4 4 4 9 9 9 4 9 9 9 9 9 # 4 * IF 4 # # # * # * # #
Generala a a 64 & a 6*&*46666 0 0 0 0 0 0 Owe 0 4 &4-ffikaalaaa a a 6 6 a d a
# *
Autholl"ty for Issuance and Application of Proceeds
T11e
ctaty 6 a 4 * 4 # a a * a a * # # * # * * * * * * * * * 0� # # # # i i 4 * * i i i i # # * i a 4 * 4 * 4 * * # i # * * * * * * * * 4 4 4 i i i 4 * * 4 * 4 * * * * * * a * * # a * * # * a * * * * * * a * 0 # * * 0 * i 0 i i i ■ * a ■ ■ 4 * # a a ■ ■
The 2019 Bonds
a a a a 6 44444444400 a 00**##490#016&###x66666#a64#40066a00#140 a0i**0**00***aa a a 6 A a a a a a 0 q 2
Securi*ty for the 2019 Bonds 2
No Reserve 2
i 0 #
Acta ions 2
*
Further Infoimatton. * A 6 6 6 6 6 6 A 4 d a a 6;**664*&44064444#*4466#a4##66666***#&66.l66*6*64666*06 & 4 **. * * * * 4 4 * #***
2
THE2019 BONDS@ • 0 4 # * ** 0 0* 1 0** i 6* f 4* f* a*****#*• 0 0 0. 0 0 0 0 0 0 0 0 0 0** 0 0 0 0* 0* 4 4 f 4 a a* 4 0* 4 4 0* 0 0 0*#49* 9 0# 0 0*#*#**** 0 0 0** 0 0# 4 4 0### 0* 0 i i 0 i* 0## i# i i i 3
GeneralA .9 a a a a 6 Q Q 6 * .9 .9 .9 4 0 0 a a 0 0 $ 0 -g 0 0 4 6 a s a a a a :6 A A 0 .6 * .6 .6 * .6 S 6 6 0 6 6 6 4 0 0 6 0 0 0 49 -W 4 4 1W 4t 4 4 A a -a & a & & 0 a a Q a a 0 8 * 0 0 0 0 0 0 0 a a a 0 0 a * a 0 0 * * .6 .6 4 4 & -S -#*44*#44Aaa*a*#saaQaa08*0000000*s#*.a#*****##4#aa*a a a-aaa6aa.a*4*0.000 3
Redempti"on # 0 46 Q * ■ Q 0 0**64 644 0 0 0 * 0 0 0*#* 0 # *##### # f ## * a a Q 0 6 • 4# 0* 0 4 0 0 0 0 0# 0 * 0 ** 0 0-6 0 0 0 0 * ■* 0 6 4# • 6* 0* 6•* 0 6 6**#* 0**00ii##i4#4 0 Fog0 0#• i# 0 3
DEBTSERVICE REQUIREMENTS* 0*0 0 4 4#*# 4 a# a# i i 6* a a a a# A 4 4 a a a a## 4 0 0 0 0 4 0 0 4 0 a 0 6 i* 6 a a s* a# 6 a a a a s a a L# 6## 0 6 6# 4 x 0#* 0 0••• s* 4 0 0. 0#*# 5
ESTIMATED SOURCES AND USES OF FUNDS 5
SECURITY AND SOURCES OF PAYMENT FOR THE'
2019 BONDS6
# f # # # ■
Pledge of Net Revenues. a a a a a a a a a 6 a a 6 0 0 G 6 6 6 * 6 a a 0 0 a 0 * a a a a aa.aa###!#i0aa60.*##009#6a666064000000a04aaaaA6 a a 0 6 d 6
Spect"al 7
No
Reselwe * # 6 * # 4 * * 4 # * # * a a a a * * 0 0 # # 0 0 0 * 0 * * ■ * * i * 4 * i 6 * i i * 4 # 6 6 # # # 4 0 0 4 4 0 * * # 4 0 * 0 # * # a a 0 i * * * * * # a # a * * # a * * # * * * 4 4 * * * # # * i i * 0 0 0 0 # # # 0 # # • • 7
Wastewatel .0 Fund@ Flow of Funds under Indentui 4 e. 6 6 4 6 6 4 4 6 6 6 7
Rate Stabi*ltzation
# #
Rate Covenants, Collecti'on of Rates and Charges 9
9
Insurance; Proceeds................
Parl'ty Debt* * * * * # f * * # * # # # # * # # # # # # * # # # # # # * * # f # # # # i i i * # i # # # * * * * * i i * * # # * * * * * * # * * M # * # * * * * 0 *4 * • 0 * 4 # # # * # # 0 0 0 # 0 0 0 see
State Loansa
aa6##*0aaaa64a0##aa*4#**0#4#i*■ **#*i**#*
No Seni*or Obligattons 1p Subo Adtnate Obligations
3
THE CITY, 1 . 2
General 12
Ci*ty
a
12
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Other PostibEmployment
Benefits. a 9 a 0 * * 4 4 4 4 4 0 0 4 0 9 9 a V 0 6 * * 6 6 6 a 0 a a 0 0 0 % 0 * 9 1. 0 0 v 4 0 0 0 * a * 0 0 0 1 0 * 9 9 0 9 9 9 0 a $ q a a 6 6 4 * 4 t 0 & a -V 6 i*.aa664*.i0**#6** 16
THEWASTEWATER SYSTEM. . a * a* 0 a******## 4* 4*6 0 0*4 4 a z f s# a a*# a 6 a# a•#* 0 0 0 4 0* 0*# 4## 0 0 0 0* 1 0 0# a i 0 0 a i i 6 a a a* a a a* Q Q a a 8 G a# a a• 4** a# 16
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anagementi ## 6****6** 4 6 0 6* 0 4 4 4* a* 4* 4 a** 4#* 4 4 6* 4##* G, #****** 4 4 i i* a a* 4 a i 6# 4# ** 0 i 4 a 0 i 0* a i i* i 0 i*## 0 0** 0 0 0 a 0 0*** i i a i i i i** 6 6 6*!# A a 6 a 16
Wastewater s tems Fac1*1t"t1`es . * s a a a 4 0 4 2 0 a 6 6 a -9 * a a a a 0 0 0 0 .*1#40a6a0a66*a***666*&i**i#00144*0*#44#4f*####*#*9* 17
Anti*ci*pated Wastewater System Capt'ta Improvements. # i 6* a a a a a a* 6& 6&&&**#**64 4*&6 4 4## 4 4 4 4 4 4**** i a i** 4 0 20
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93860798.2
i
TABLE OF CONTENTS]
(continued)
Page
W
General R 22
RE'VENIJES AND DEBT SERVICE COVER.AGE. . 2 4
Wastewater Rates and Charges
Hi*storiocalRates and Charges
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istorical Connections ServiceCl-arges. . a a A a a A a 6 * 6 6 a a a 0 a 0 6 6 6 6666*#a a* 0** 000404 a##! 27
Ten Largest Wastewater System 29
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Wastewater System Summary Financia 33
Informati'on 9 40*1 0 a .966-ka team
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LEGAL 41
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T A X M A T T E R S 4 1
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MUNICIPAL 6a a a 43
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93860798.2
11
TABLE OF CONTENTS
■
con inued)
APPENDIX A GENERAL INFORMATION ABOUT
THE
CITY
OF
PETALLTMA
AND SONONIA COUNTY
A, -ml
APPENDIX B ALJDI'I'ED
'THE
PETALUMA AS OF J'LJNE 30�
� ■ ■ ■ a ■ ■ � a ■ a ■ ■ a a a ■ a @ @ ■ a ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ ■ a a ■ a ■ ■ ■ ■ ■ ■ ■ ■ ■ @ ■ @ @ e @ @ @ a @ e ■
APPEND'IX
THE
�
e @ @ e s @ e ■
APPENDIX D BOOK EN'I'RY
.
� e ■ e , , � � � � ■ � � � � � � � � � � � e ■ s ■ @ @ � � � ■ , e e ■ ■ , ®®, ■ ■ ■ � , , , , , , , , , a ■ ■ � � e � , ■ a e ■ a e ■ ■ a a ■ s ■
APPENDIX E FORM OF BOND COUNSEL OPINION
_
e e @ ■ @ @ @ ■ ■ @ ■ ■ ■ ■ ■ ■ ■ ■ , ■ , ■ , ■ ■ ■ ■ ■ ■ @ , @ ■ ■ a ■ ■ @ @ ■ ■ � � ■ ■ ■ ■ ■ ■ ■ ■ @
�
APPENDIX F FORM OF CONTINUING DISCLOSURE CERTIFICATE
■ ■ ■ @ @ ■ @ ■ a ■ @ ■ s ■ ■ ■ e @ m e � a
OFFICIAL STATEMENT
T
CITY OF P ETALUMA
2019 WASTEWATER REVENUE REFUNDING BONDS
General
This Official. Statement,
certain information in connec
INTRODUCTION
including1lie cover page and appendices hereto, sets forth
tion with the sale of $ 'City of Petaluma 2019
Wiastei4�ater Revenue Refunding Bonds (the "2019 Bonds') that are being issued by the City of
Petaluma, California (the "City"). This introduction i*s not a summary of this Oficial Statement.,
It is only a brief description of and guide to, and i's qualified by more complete and detailed
information contained in the entire Official Staten7en
hereto., and the documents described herein.
t, including the cover page and. appendices
Authority for Issuance and Application of Proceeds
The 2019 Bonds are being issued under the provisions of Articles 10 and I I
Division 2 of Title 5 of the California Government Code (the "Bond Law") and an I
Trust, dated as of Set tember 1, 2019 (the "Indenture"), between the C
York Mellon Trust Company, N.A., as trustee (the "Trustee"). The 20
of Part 1 of
ndenture of
49
ity and The Bank of New
19 Bonds are being issued
to (i) refund on a current basis the principal balance under the Interagency Sales Agreement (No,,
between the City and the State Water Resources Control Board, currently
outstanding in the principal amount of $73 ,587, 664 (the "SRF Loan") and (141) pay the costs of
issuing the 2019 Bonds. See "ESTIMATED SOURCES AND USES OF FUNDS15 and "PLAN
OF REFUNDING. "
OS -803-550-0)
All capitalized terms used and not otherwise defined herein shall have the meanings
assigned to such terms in APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF THE"
INDENTURE" or-, 1"f not defined therein, shall have the meanings assigned to such terms i*n the
Indenture.
The City
The City is located I*n the County of Sonoma (the "County") approximately 40 miles
north of the City of San Franci"sco., Situated along Highway 101, Petaluma is part of the San
Francisco Bay metropolitan area. Incorporated in 1858, its first charter was granted by the State
of California (the "State") I*n 1947, and it continues to operate as a charter city. For additional
information regarding the City. See "THE CITY" and APPENDIX A — " GENERAL
INFORMATION ABOUT THE CITY OF PETALUM.A AND SONONIA COUNTY."
W
Preliminary, subject to change.
93860798.2
1
The 2019 Bonds
The 2019 Bonds will be dated their date of issuance and dell"
rates per annum set
41 9
very, will bear interest at the
iorironme insiae cover page nereor payanie semi
annually on May 1 and
November 1, commencing November 1, 2019 (each
an "Interest Payment Date"),
mature on the dates and in the amounts set forth on the inside cover page hereof.
Bonds will be delivered as fully registered bonds, registered in the name of Cede
and will
The 2019
& Co. as
nominee of The Depository Trust Company, New Yo -%k, New Yorl� ("DTC"), and will be
available to ultimate purchasers (`Beneficial Owners") in the denomination of $5.000 or anv
.11
integral multiple thereof, under the book -entry system maintained by DTC.
will not be entitled to receive delivery of bonds representing their ownership
Bonds. See "THS 2019 BONDS."
Beneficial Owners
interest t*n the 2019
The 2019 Bonds are subject to extraordinary redemption prior to maturity as described
herein. See "1'HE 2019 BONDS — Redemption." The 2019 Bonds are not subject to optional
do redemption prior to their respective stated maturity dates.
Security for the 2019 Bonds
The 2019 Bonds are secured by a pledge of and payable from Net Revenues (as defined
herein) on a parity with the City's 2017 Wastewater Revenue Refunding Bonds (the 2017
Bonds"). See "SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS —Parity
Debt — Existing Parity Debt."
No Reserve Fund
The City has not funded a reserve fund for the 2019 Bonds.
Special Obligations
The 2019 Bonds are special obligations of the City, payable exclusively from Net
Revenues of the Wastewater System (each defined herein) of the City and from amounts on
deposit in certain funds and accounts established under the Indenture. See "SECURITY AND
SOURCES OF PAYMENT FOR THE 2019 BONDS." The 2019 Bonds are not a debt, liability
09
or obligation of the State or any of its political subdivisions other than the City.,
Further Information
The summaries and references of the Indenture and other documents, statutes, reports
and other instruments referred to herein do not purport to be complete, comprehensive or
definitive, and each such summary and reference is qualified i*n its entirety by reference to the
Indenture and each document, statute, report or instrument. The capitalization of any word not
conventionally capitalized or otherwise defined herein, indicates that such word i*s defined in a
particular agreement or other document and-, as used herein, has the meaning given it in such
agreement or document. See APPENDIX C — "SUMMARY OF CERTAIN PROVISIONS OF
THE INDENTURE for summaries of certain of such definitions.
93860798,2
s
2
s
11
THS; 2019 BONDS
General
The 2019 Bonds will be dated thel"r'date of issuance and delivery
rates per
and will
bear interest at the
annum set forth on the inside cover page hereof payable on each Interest Payment Date
mature on the dates and in the amounts set forth on
2019 Bonds will be issued in denominations of $5,000 or any
as no 201
one fully registeredzuiv Bond for each maturity, in the name oii Cede & Co., as nominee for
the inside cover page hereof.
integral multiple thereof, so
ong
9 Bond may have more than one maturity date. The 2019 Bonds will be issued only as
DTC
,asr
egistered owner of a
Ownership may be changed
provided in the Indenture.
11201
9 Bonds. See APPENDIX D
the registratio
only upon
Interest on the 2019 Bonds
date of authenti"cati"on thereof unles
is payable from
s:
on books
"BOOK ENTRY SYSTEM."
maintained by the Trustee as
the Interest Payment Date next preceding the
(a) a 2019 Bond is authenticated between an Interest Payment Date and the
15th calendar day of the month immediately preceding such Interest Payment Date (each,
a "Record Date"),
t"n which event it will bear interest from such Interest Payment Date,
(b)
event 1"nteres
Bonds, or
a 2019 Bond is authenticated on or before the first Record Date, in which
t thereon will be payable from the date of original delivery of the 2019
(c) interest on any 2019 Bond is in default as of the date of authen
thereof, in which event interest thereon will be payable from the date to which
has been paid in fullPayable on each Interest Payment Date.
ti"c at *1 o n
interest
Interest on the 2019 Bonds (including the final interest payment upon maturity or
redemption) is payable when due by check or draft of the Trustee mailed to the Owner thereof at
such Owner's address as I*t appears on the Registration Books at the close of business on the
preceding Record Date; provided that at the written request of the Owner of at least $1,000,000
aggregate principal amount of 2019 Bonds, which written request is on rile with the Trustee as of
any Record Date, interest on such 2019 Bonds will be paid on the succeeding Interest Payment
Date to such account 1*n the United States as specified in such written request.
Redemption
Extraordi.naiy Redemption from Net Proceeds of Insurpaiice or Condemnation. The
2019 Bonds shall be subject to extraordinary redemption prior to their respective stated
Maturities, as a whole or in part on any date, as determined by the City, from Net Proceeds, upon
1k
the terms and conditions of, and as provided for in the Indenture, at a Redemption Price equal to
the principal amount of the 2019 Bonds to be redeemed, without premium, plus accrued interest
thereon to the date fixed for redemption. Whenever any 2019 Bonds are to be selected for
redemption, the Trustee will determine, by lot, the numbers of the 2019 Bonds to be redeemed,
and will notify the City of its determination.
93860798.2
3
rr
No Optional Redemption:. The 2019 Bonds are not subject to optional redemption prior
to their respective stated maturity dates.
Notice of Redemption.
Unless waived by any Ownei.4 of 20 19 Bonds to be redeemed,
notice of any redemption of 2019 Bonds will be, given, at the expense of the City, bl'11111111��1111� Tru��the tee,
by mailing a copy of a redemption notice by first class mail at least 30 days and not more than 60
days prior to the date fixed for redemption to the Owner of the 2019 Bond or 2019 Bonds to be
edeemed at the address shown on the Bond Registration Books; provided, 1
that neither the failure
1'
to receive such notice no
r any immaterial defect in any notice shall affect the sufficiency of the
rroceedinas for the redemption of the 2019 Bonds. All notices of redemption will be dated and
will state: (i) the redemption date
(& * ii) the redemption price of the 2019 Bonds being redeemed
(the "Redemption Price"}, (iii) if fewer than all Outstanding 2019 Bonds are to ],�)e redeemed
identification (and, in the case of partial redemption, the respective principal amounts) of the
the
2019 Bonds to be redeemed, (iv) that on the redemption date the Redemption Price will become
due and payable with respect to each such 2019 Bond or portion thereof called for redemption.,
and that interest with respect thereto shall. cease to accrue from and after said date, and (v) the
place or places where such 2019 Bonds are to be surrendered for payment of the Redemption
Price, which places of payment may include the Office of the Trustee.
RescissioK of Notice of Redemption. The City has the right to rescind any notice of the
redemption of 2019 Bonds by written notice to theT rustee on or prior to the date fixed for
redemption. Any notice of redemption will be cancelled -and annulled I*f for any reason funds will
not be or are not available on the date fixed for redemption for the payment I*n full of the 2019
Bonds then called for redemption, and such cancellation will not constitute an Event of Default
under the Indenture. The C ity and the Trustee have no liability to the 2019 Bond Owners or aIy
other party related to or arising from such rescission of notice of redemption. The Trustee will
mail notice of such rescission of notice of redemption in the same manner as the original notice
of redemption was sent,,
Consequences of Notice. Notice of redemption having been given as required by the
Indenture, the 2019 Bonds or portions of 2019 Bonds so to be redeemed will, on the redemption
date, become due and payable at the Redemption Price, and from and after such date (unless the
City defaults in the payment of the Redemption Price) such 2019 Bonds or portions of 2019
Bonds will cease to have interest accrue thereon. Upon surrender of 2019 Bonds for redemption
in accordance with a redemption notice, the 2019 -Bonds will be paid by the Trustee at the
Redemption Price. Installments of interest due an or prior to the redemption date will be payable
as provided I*n the Indenture. Upon surrender for any partial redemption of any 2019 Bond, there
will be prepared for the Owner a new 2019 Bond or 2019 Bonds of the same maturity 1"n the
amount of the unredeemed principal. All 2019 Bonds which have been redeemed will be
cancelled and destroyed by the Trustee and will not be redelivered.
Partial Redemption of 2019 Bonds. In the event only a portion of any 2019 Bond is
called for redemption, then upon surrender of such 2019 Bond redeemed in part only, I e City
will execute and the Trustee will authenticate and deliver to the Owner, at the expense of the
cl*a new 2019 Bond or 2019 Bonds, of the same serityes and maturity, of authorized
iIions in aggt•egate principal amount equal to the unredeemed portidenomnaon of the 2019 Bond
or 2019 Bonds,,
93860798.2
ri
DEBT SERVICE REQUIREMENTS
The amounts required to be se
interest on the 2017 Bonds and the 20
Fiscal Year
Ending
2017 Bonds
t aside each fiscal year ending June 30 for principal of and
19 Bonds are set forth below.
2019 Bonds
Grand
June 30 Principal, Interest Total Priffimmnmo�ncipal Interest, To....W% ....tal Total
2020 0 $ 805,319 $ 805-5319
2021 0 805,319 805,319
2022 0 805,319 805,319
2023 0 805,319 805,319
2024 0 805,319 805,319
2025 0 805,319 805,319
2026 0 805,319 805,319
2027 0 805,319 805.5319
2028 0 805-5319 805,319
2029 0 805,319 805,319
2030 $3,270,000 805,319 4.50753319
2031 3.14055000 674,519 4,079,519
2032 3 ,540,000 538,319 4,078,319
2033 3,680,000 396,719 4,076,719
2034 3,790,000 286,319 4,076,319
2035 3 ,905,000 172,619 4,077,619
2036 1 ,775,000 55,469 1,830,469
Total $23 ,3 65,000 $10,982,469 $34,347,469
Bonds.
ESTIMATED SOURCES AND USES OF FUNDS
The following sets forth the estimated sources and uses of funds related to the 2019
Sources of Funds:
Principal Amount
Net Original Issue Premium (Discount)
Transfer from SRF Loan Debt Service Fund
Total Sources of Funds
Uses of Funds0
:
Refunding of SRF Loan
Costs of Issuance(l)
Total Uses of Funds
9
(1) Includes fees and expenses of Bond counsel, Disclosure Counsel, the Rating Agency, the Municipal Advisor and
the trustee, Underwriter's discount, printing costs, and other miscellaneous fees and expenses.
938607982
5
W
r
PLAN OF REFUNDING
TI -ie proceeds of the 2019 Bonds, together with other available amounts, will be used to
(i) refund on a current basis all outstanding principal of the SRF Loan and (ii) pay the costs of
issuing the 2019 Bonds. The SRF Loan was made pursuant to Interagency Sales Agreement (No.
OS -803-550-0) i1pn 2006 between the City and the State Water Resources Control Board. On or
about September [4=, 2019, the City intends to refund I*n full the SRF Loan with a portion of the
proceeds of the 2019 Bonds and other available amounts. See "ESTIMATED SOURCES AND
USES OF FUNDS. "
SECURITY AND SOURCES OF PAYMENT FOR THE 2019 BONDS
Pledge of Net Revenues
The 2019 Bonds and all Parity Debt are secured by a first pledge and lien on all of the
Net Revenues., "Net Revenues " means, for any period, an amount equal to all of the Gross
Revenues received during such period minus the amount required to pay all Operation and
Maintenance Costs becoming payable during such period. In addition, the 2019 Bonds are
secured by a pledge of all of the moneys in the Debt Service Fund, including all amounts derived
from the investment of such moneys. So long as any of the 2019 Bonds are Outstanding, the Net
Revenues and such moneys may not be used for any other purpose, except that out of the Net
Revenues there may be apportioned such sums, for such purposes, as are expressly permitted by
the Indenture.
"Gtooss Revenues" means all gross income and revenue received by the City from the
ownership and/or operation of the Wastewater System, including, without limiting the generality
of the foregoing: (a) all amounts levied by the City as a fee for connecting to the Wastewater
System, as such fee is established from time to time under the applicable laws of the State of
California, (b) all income., rents, rates, fees, capital improvement fees (including facilities
capacity and pump zone fees), charges or other moneys deri.ved from the services, facilities and
commodities sold (including recycled water), furnished or supplied tfnough the facilities of the
Wastewater System, (c) the earnings on and income derived from the investment of such income,
rents, rates, fees, charges or other moneys to the extent that the use of such earnings and income
is li'mi'ted by or under applicable law to the Wastewater System., (d) the proceeds derived by the
City directly or indirectly from the sale, lease or other disposition of a pant of the Wastewater
System as permitted under the Indenture, (e) amounts transferred into the Wastewater Fund from
a Rate Stabilization Fund, and (f) amounts received by the City from other public agencies as the
proceeds of tax revenues or other amounts payable to the Catty under contracts for services
provided by the City to users of the Wastewater System,.
The term "Gross Revenues" does not include (I") customers' deposits or any other
deposits subject to refund until such deposits have become the property of the City, (ii) the
proceeds of an y ad valoremproperty taxes levied to pay general obligation bond indebtedness of
the City with respect to ti -le Wastewater System, and (iii) special assessments or special taxes
levied for the purpose of paying special assessment bonds or special tax obligations of the City
relating to the Wastewater System.
93860798.2
"Wastewater System"'means any and all faci'li'ties now existing or hereafter acquired or
constructed which are owned, controlled or operated by the CI*ty for the collection, treatment.,
disposal, recycling or r
euse of wastewater, including sewage treatment plants, intercepting and
collecting sewers,, oullaiii sewers,
ponds, pipes, valves, machinery,
the collection, treatment.. puri
any necessary
therewith.
1
lands, rights
# 0 a 4 40 a
0
torce
and a
mains, pumping stations,, effector stations, oxidation
11 other appurtenances necessary, useful or convenient for
fiication, reclamation or disposal of sewage and storm drainage, and
of way and other real or personal propefty useful i"n connection
"Operat11
ion andMai*iitenance Costs
incur�•ed by the City for maintaining and
accordance with generally accepted accoun
" means the reasonable and necessary costs paid or
operating the Wastewater System, determined in
ting principles, i
reasonable expenses oi management and repair and other expense
preserve the Wastewater System i*n good repair and working orde
irectly or apportioned to the opera
ncludi"ng but not limited to (a) all
costs- of the City that are charged d
s necessary to maintain and
r, and (b) all administrative
tion of the Wastewater
System, such as salaries, wages and retirement benefits of employees, overhead
and insurance.,
taxes (if any)
The term "Operation and Maintenance Costs" does not include (i) administrative costs of
the 2019 Bonds which the City is required to pay under the Indenture, (ii) payments of debt
service on bonds, notes or other obligations issued by the City with respect to the Wastewater
System, (iii) depreciation, replacement and obsolescence charges or reserves therefor, (iv) capital
expenditures made by the City with respect to the Wastewater System, (v) accrual of employee
benefits which are not funded, and (vi) amortization of intangibles or other booldceept*ng entries
of a similar nature.,
Special Obligation
The 2019 Bonds are special obligations of the City and are payable exclusively from Net
Revenues and from amounts on deposit in certain funds and accounts established under the
Indenture. The 2019 Bonds are not a debt, liability or obligation of the State of CaIifornia or any
of its political subdi*visions other than the City.
No Reserve Fund
The City has not funded a reserve fund for the 2019 Bonds'.
Wastewater Fund; Flow of Funds under Indenture
General. The City has previously established the Wastewater Fund, which it will
continue to hold and maintain for the purposes and uses set forth in the Indenture. The City will
deposit all Gross Revenues i"n the Wastewater Fund promptly upon receipt, and will apply
amounts in the Wastewater Fund solely for the uses and purposes set forth i*n the Indenture and
for the uses and purposes set forth in any agreement, indenture of trust, resolution or other
instrument authorizing the issuance of Parity Debt (each a "Parity Debt Document"). In addition
to transfers which are required to be made for repayment of any Parity Debt, the City W1"11
w ithdraw amounts on deposit in the Wastewater Fund and apply such amounts at the trines and
for the purposes, and in the priority, as follows:
93860798.2
7
(i) Operation and Maintenance Costs,. The, City will apply amounts on deposit
in the Wastewater Fund to pay all Operation and Maintenance Costs when due.
I
Debt Service Fund., On or be fore the 3rd Business Day preceding. each
nterest Payment Date, so long as any 2019 Bonds remain outstanding, the City will
withdraw from the Wastewater Fund and pay to the Trustee for deposit into the Debt
Service Fund (which the Trustee will establish and hold
in trust pursuant to the Indenture)
an amount which, together with other available amounts then on deposit 10n the Debt
Service Fund, is at least equal to the aggregate amount of principal
due and payable on the 2019 Bonds on such Interest Payment Date,,
of and interest coming
The Trustee will apf ly amounts in theDebt Servi ce Fund solely for the purpose of (A)
paying the interest on the 2019 Bonds when due and payable (including accrued interest on any
2019 Bonds purchased or redeemed under the Indenture), and (B) paying the principal of the
2019 Bonds at the
maturity t
transfer any moneys remaining
hereof Upon the. payment of all 9.019 Bonds, the. Trustee will
in the Debt Service Fund to the City for deposit into the
Wastewater Fund.
Other Uses of Wastewater Fund. The City will manage
the Wastewater Fund i*n such a manner that all depos
and under any Parity Debt Document, will be made a
,its required
conserve and apply moneys i"n
to be made under the Indenture,
t the times and in the amounts so requ
fired.
So long as no Event of Default has occurred and is continuing under the Indenture, the
City may at any time use and apply moneys in the Wastewater Fund for any one or more of the
following purposes:
(I*) the payment of any subordinate obligations or any unsecured obligations',
(I"I") the acquisition and construction of extensions and improvements to the
Wastewater System;
(.6
iii) the payment or retirement of any of the 2019 Bonds or any other obligations of
the City relating to the Wastewater System; or
(iv) any other lawful purpose of the City relating to the Wastewater System.
Rate Stabilization Fund
The City has established a fund to be held by I*t and administered in accordance with the
Indenture, for ti -le purpose of stabilizing the rates and charges imposed by the City with respect to
the Wastewater System. From time to time the City may deposit amounts i"n the Rate
Stabilization Fund-, from any source of legally available funds., including but not limited to Net
Revenues which are released from the pledge and lien which secures the 2019 Bonds and any
Parity Debt, as the City may determine.
The City may, but is not required to, withdraw from any amounts on deposit I*n the Rate
Stabilization Fund and deposit such amounts i"n the Wastewater Fund in any Fiscal Year for the
P urpose of paying any lawful expense of the Wastewater System, including debt service on the
2019 Bonds and Parity Debt due and payable in such Fiscal Year. Amounts so transferred from
93860798.2
9
L
t
consti'tute G-ross Revenues fot* sucli
and wl"11 be applied for the purposes
TA&W
W4 a-MIJItt �' &VA 15 V 1,
Im balance otaDrroximatel,v
Rate!Co:ven ants's Cloll,ect,t*on of Rates and Cliarges
9
o
W OF
allowancescontingencies and error
Year whichare at least sufficient, after malting
estimates, to yield Gross Revenues sufficient to pay, the 0
of . prioritv
W
owing a,inounts, in t ie o, owing or e,
(a) All Operation and, Maintenance Costs estimated Uy the City to become due
and payable in such Fiscal Year,
._ III
I � r
19 P=
III! LA I
pur OSC.' and
5
10 0
lb prioiri 5 excep
(c) #II INA11 payn�entsrequi*red to meet any other obligations o the City which are
charges, liens, encumbrances upon, or which are otherwise payable from, the Gross
Revenues, orthe Net Revenues duri'ngL SUCh Fiscal Year.
low
Insui,tauce; Net Pt9oceeds
ISM
-W -W W_WM2Sv_W Mi
WAMAIRL
VEITM-
from insurance against accident to or destruction of any portion of the Wastewater System
constitute Gross Revenues and must be used to repair or rebuild such damaged or destroyed
rata
portion of the Wastewater System, and to the extent not so applied, will be applied on a pro
basis to redeem the 2019 Bonds and any Parity Debt i*n accordance with the Indenture and the
related Parity Debt Documents. The City will also maintain, with responsible insurers, worker's
compensation insurance and insurance against public liability and property damage to the extent
reasonably necessary to protect the City, the Trustee and the Owners of the 2019 Bonds.
Parity Debt
Existing Parity Debt. The Bonds are secured by a pledge of and are payable from Net
Revenues on a parity with the 2017 Bonds,,
Additional Parity Debt. The City may issue any bonds, notes or other obligations
Paritv Debt") payable from Net Revenues on a Dari. tv with the 2019 Bonds and the 201.7
Bonds, provided that certain conditt
(a)
which., once
occurred and
1
ons are satisfied, including the following,,
No Event of Default (or no event with respect to which notice has been given and
IF
all notice of grace periods have passed, would constitute an. Event of Default) has
is continuing -o and
(b) The amount of Net Revenues as shown by the books of the City for the most
recent completed Fiscal Year for which audited financial statements of the City are available or
any more recent consecutive 12 1 -month period selected by the City,
iverifiedforn either case by
an Accountant or a Financial Consultant or shown iin the audted financial statements of the City,
plus, at the option of the City, any Additional Revenues (as defined below), are at least equal to
125% of the amount of Maximum Annual Debt Service coming due and payable in the current or
any future Fiscal Year with respect to the 2019 Bonds and all Parity Debt then outstanding
(including the Parity Debt then proposed to be issued).
'I
For purposes of calculating Net Revenues to demonstrate compldF -6
iance with paragraph (b)
above., Gross Revenues does not include connection fees, transfers from the Rate Stabilization
Fund., or interest income on the Wastewater Fund received during the period for which
calculations of Net Revenues are made.
"Additional Revenues" is defined in the Indenture to mean, with respect to the issuance
of any Parity Debt, any or all of the following amounts:
(i) An allowance for Net Revenues from any additions or improvements to or
extensions of the Wastewater System to be made from the proceeds of such Parity Debt
in an amount equal to the estimated additional average annual Net Revenues to be
derived from such additions, improvements and extensions for the first 36 -month period
iin whch each addition, Is or extension is respectively to be i"n operation, all as
shown by the certificate or opinion of a Financial Consultant.
An allowance for Net Revenues arising from any increase in the charges
1b
made for service from the Wastewater System which has been duly approved by the City
Council of the City prior to the incurring of such Parity Debt, but which, during all or any
part of the most recent completed Fiscal Year for which audited financial statements of
93860798.2
10
ry
the City are ava
.6
ilable, or for any more recent consecutive 12 -month period selected bv
the miry, was not in effect, in an amount equal to the total amount by which the Net
Revenues would have been increasedif such
Is in charges had been i
V
the whole of such Fiscal Year or 12, --month period, all as shown by the cer
Parl*ty
abilloty,
n effect during
IN
opinion of a Financial Consultant,,
State Loans
tl*ficate or
The City may borrow money from the State and incur State Loans to finance additional
improvements to the Wastewater System. "State Loans" means loans secured bv a pledge of Net
Revenues of the Wastewater System anandincurred by the City to finance improvements to the
Bated as Parity Debt for
Wastewater System.
long as the City first
A State Loan may, be tr
purposes of the Inde nture, so
complies with the Indenture requirements for issuing
No Senior Obligations; Subordinate Obligations
Debt.
The City may not issue or incur any additional bonds or other obligations having any
rincipal or interest out of the Net Revenues
r., limits or affects the
pt•iority over the 2019 Bonds in the payment of p
Nothinin the Indenture, howeveobligations which are either
of the City tc issue or incu
unsecured or which are secured by an interest in the Net Revenues
which i0s junior and subordinate to the pledge of and Iien upon the Net Reverues established
under the Indenture.
93860798.2
THE CITY
General
The City ts located in Sonoma County approximately 40 miles north of the City of San
Francisco. Situated along Highway 10 1, Petaluma is pail of the San Francisco Bay metropolitan
area. Incorporated in 1858, its ficharter was granted by the State irstn 1947, and it continues to
ap operate as a charter city. Municipal operations are conducted under the Council -Manager form of
government. The six Council Members and the Mayor are elected at large for four-year,
staggered terms., The Mayor presides over all Council meetings. The City Manager is responsible
for the ol eration of all munici pal functions. For addi'ti'onal information regarding the City, see
APPENDIX A — "GENERAL INFORMATION ABOUT '1'
SONONIA COUNTY."
City Council
The current City Council
set forth in the following table.
HE CITY OF PETALUMA AND
members and the expiration dates of their respective terms are
Mayoi* and
Cl* y Council Members
Teresa Barrett — Mayor, Council Member
Kevin MY111-1111)
cDonnell —Vice Mar, Council
D 5 Lynda Fischer — Council Member
Mike Healy — Council Member
Gabe Kearney — Council Member
Dave King —Council Member
Kathy M1*11er — Council Member
City Staff
Member
Expiration of Term
December 20
December 20
December
20,
December
20
December
20
December
20.
December
20..
I&
The City's Proposed Fiscal Year 2020 Budget includes 324.95 full-time equivalent
employee positions, of whom approximately are attributed to the Wastewater System. The
Wastewater System i*s responsible for paying a portion of the City's personnel costs. City
employees belong to one of two labor unions or any of three associations or they
unrepresented., Department directors, including directors of the Wastewater System_,
unrepresented., _The City has not experienced any work stPPoages in recent years._ [confirm]
93860798.2
12
0
are
are
The current status of the City's employment agreements i's set forth below: update]
Oi-vi!aiiization
Unit 1 — confidential
Unit 2 Maintenance
Date of Cuvteent
Cojiti-tact
February 16, 2017
February 16, 2017
Expi'xoatioit of Term
June 30, 2019
July 1, 2019
Unit 3 — Clet-&ical/Technical, represented by American Febivary 16, 2017 July 1, X019
4F -0
Federation of State, bounty and Municipal Employees
Unit 4 — Professional., Unit 9 -- Mid --Managers
& Unit I 1 — Confidential, represented by the
Petaluma Professional and Mid --Managers Association
Unit 6 — Police, represented by the Peace
Officers' Association of Petaluma
Unit 7 — Fire, represented by the International
Association of Firefighters Local, 1415
Unit 10 — Petaluma Public Safety Managers, represented
by The Petaluma Public Safety Mid -Managers Association
Retirement Systems
September 1,, 2016
September 16, 2017
December 5,, 2016
January 5, 2016
June 30, 2019
June 30,, 2017
June 30, 2017
June 30, 2017
California Public Employees Retirement System. All qualified permanent and
probationary employees of the City are eligible to participate in the City's separate Safety (police
and fire) and Miscellaneous (all other) plans (the "Plans"), which Plans are agent multiple -
employer defined benefit pension plans administered by the California Public Employees'
Retirement System ("CaIPERS"), which acts as a common investment and administrative agent
for its participating member employers. Benefit provisions under the Plans'are established by
State statute and City resolution.
CaIPERS provides service retirement and disability benefits, annual cost of living
adjustments and. death benefits to plan members, who must be public employees and
beneficiaries. Benefits are based on years of credited service. Members with five years of total
service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible
for non, -.duty disability benefits after 10 years of service. The death benefit i*s one of the
following: the Basic Death Benefit, the 1957 Survivor Benefit-, or the Optional Settlement 2W
Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public
Employees' Retirement Law.
For a discussion of the Plans, actuarial assumptions and liability of the City, see
APPENDIX B — "AUDITED FINANCIAL STATEMENTS OF 'THE CITY OF PETALUMA
AS OF JUNE 30, 2018,11 Note 9.
93860798.2
13
t
Below is a summary of the deferred outflows of resources, net pension liabilities, and
deferred inflows of resources by Plan for the Fiscal Year ended June 30, 2018:
Miscellaneous
Safety
Total
Deferred Outflows
of Resources
$10,650,764
20,145,591
$30,$05,355
Net Pension
Liability/Proportionate
Share of Net Pension
Liability
$28,943,402
703113, 735
$99,057,137
Deferred Inflows of
Resources
$
993a,032
1-1210-1458
$2,203,490
CaIPERS Contribution J?ate Iiici4eases. On April 17, 2013 the CaIPERS Board of
Administration approved new actuarial policies aimed at fully funding the pension system's
30 years. The new policies include cratemasmoothing obligations within method with a 30 -year
fixed amortization period for gains and losses. CaIPERS announced that, based on investment
return simulations performed for the next 30 years, increasing contributions more rapidly in the
short term is expected to result i"n almost a 25% improvement in funded status over a 30mmyearm
r eriod.
The new amortization schedule was used to set
employers in the State beginning i
i mpact of the changes to be built i
n Fiscal Year 2015-16.
contribution rates for public agency
This delay is intended to allow the
nto th eP ro J0 iection of employer contrbution rates and afford
employers with additional time to adjust to the changes.
According to CaIPERS
peak employer contribution 1
the new policies will result in an increased likelihood of higher
gels in the future but will not significantly increase average
contribution levels. The median employer contribution rate over the next four years is expected
employer
LU DC IlIgIICI-. lil LI]C IUIIgwrLGI-111_, IltJ WG V G1-3 I11gI1G1- 1Llil(.LGCI 1G YGlN 111dy 1 G5U1 L 111 lU WG1
contributions G
Beginning with the June 30, 2013 valuations that set the Fiscal Year 2015-16 rates-,
CaIPERS employed an amorti'zatt*on and rate smoothing policy that pays for all gains and losses
over a fixed 30 -year period with the increases or decreases i*n the rate spread directly over a 5 -
year period. The tables below show projected employer contribution rates (before cost sharing)
for the next live Fiscal Years., assuming CaIPERS earns 12% for fiscal year 2012m-,13 and 7.50%
every fiscal year thereafter, and assuming that all other actuarial assumptions will be realized and
that no further changes to assumptions, contributions, benefits, or funding will occur between
now and the beginning of the fiscal year 20151-16. Consequently, these projections do not take
into account potential rate increases from likely future assumption changes. Nor do they take
IN into account the.positive impact PEPRA is expected to gradually have on the normal cost.
On February 20, 2014, the CaIPERS Board of Administration adopted new mortality and
retirement assumptions as part of a regular review of demographic experi.ence. Key assumption
changes included longer post-retirement life expectancy and earlier retirement ages,. The impact
of the assumption changes will be phased in over five years, with a twentyhm year amortization,
beginning in the 2016- 17 Fiscal Year. The City is monitoring these changes but is not currently
able to predict the level of increases to the City's required contri"buti"ons,,
93860798.2
On December 21 2016 the CaIPERS Board voted to reduce the discount rate to 7.00%
he assumed rate of return i*s expected to result i6n
' s normal costs and unfunded actua
beginning Fiscal
.11,
Year 2019-20. The change, 1"n t
increases in the City
Tial 1i"abi"1i'ti*es,,
Payment of Unfunded Liability. During Fiscal Year 201711111111111111111 18, the City paid down
$7,490, 284 of unfunded accrued II*abiliIt ty with $6,750,330 in loans from the Wastewater Utility
Enterprise Fund, the Water Utility Enterprise Fund and the Risk Managemen
f und and $739, 954 of reserves from the Employee Benefit Interna
1
,198 of the total amount of the
Wastewater System contributed $4,050
t I
nternal Service
Service
Fund. The
oan, which bears an
annual interest rate of 1.75 % and i*s repayable in annual installments through June 3 0, 203 3.
Public Agency Retirement System. The City also contributes
Retirement System/Alternative Retirement PARS "), a pub
employer defined contribution pension trust.,
System ("
System ("
This plan is offered to employees who work less
000 hours per year. PARS provides benefits at the time of retirement, total disability or
PARS acts as a common
than 1,
death.
agencies., Benefit provisions and a
to a Public Agency
If agency multiple-
resolutions.
investment and administrat111 ive agent for participating public
ll other requirements are established by federal statute and city
Participants are required to contribute 7% of their annual salary. The City is required to
trtbution requirements were
June 30, 2018, the City
the total of which met the
contribute 0.5% of the annual salary of covered participant
established on the' Adoption Agreement. For fiscal yf
contributed $2,317 and the covered employees contribute
requirements of the plan.
. The con
ended
d $32,429
California Public Employees' Pension Reform Act of 2013. The Governor signed the
California Public Employee's Pension Reform Act of 2013 (the "PEPRA") I*nto.law on
September 12, 2012., PEPRA affects CalPERS, most substantially as it relates to new employees
hired on or after'January 1, 2013 (the "Implementation Date"). For non -safety CaIPERS
participants hired on or after the Implementation Date, the Reform Act changes the normal
retirement age by increasing the eligibility for the 2% age factor from age 55 to 62 and also
increases the eligibility requirement for the maximum age factor of 2.5% to age 6711111
PEPRA also implements certain other changes to CaIP-ERS including the following: (a)
all new participants enrolled i*n CaIPERS after the Implementation Date are required to
contribute at least 50% of the total annual normal cost of their pension benefit each year as
determined by an actuary, (b) Ca]PERS is required to determine the final compensation amount
for employees based upon the highest annual compensation earnable averaged over a consecutive
36 -month period as the basis for calculating retirement benefits for new participants enrolled
after the Implementation Date, and (c) "pensionable compensati"on" is capped for new
paiticipants enrolled after the Implementation Date at 100% of the federal Social Security
contribution and benefit base for members parti'cipati'ng in Social Security or 120% for CaIPERS
members not participating in social security.
Other Post -Employment Benefits
The City of Petaluma Retiree Healthcare Plan is a single -employer defined benefit
healthcare flan administered by the City. The plan provides healthcare benefits to eligible
93860798.2
15
retirees and their dependents. Benefit provisions are established and may be amended through
1k agreements and memorandums of understanding between the City', its management employees,
and the unions representing City employees. There is no statutory requirement for the City to
pre -fund its Other Post -Employment Benefits ("OPEB") obligation. The City has currently
chosen to pay plan benefits on a pay-as-
you-go basis,. The City has been and is conti"nui"ng to
build up resources in the employee benefits fund to pay down the unfunded OPEB liability.
There are no employee contributions. See APPENDIX B — "AUDI'1'ED FINANCIAL
STATEMENTS OF THS CITY OF PETALUMA AS OF JUNE 30,2018," Note 10.
THE WASTEWAI L ER SYSTEM
General
The Wastewater System provides collection, treatment, disposal and reuse of domestic,
commercial and industrial wastewater generated within the City and within the unincorporated
community of Penngrove. As of June 30, 2019, there were approximately
residential accounts within the borders of the City and approximately
within the unincorporated community of Penngrove.
Management
PeFlynn, City Manager. =bio to come-
C)ICA/
Corey Garberoll'o, Finance Director. _bio to come]
-$
single-family
such accounts
Dan St. John-, F,4SCE, Director of Public Works and Utilities DeIT.artmerrt. Mr. St. John
has been the Public Works and Utilities Director for the City since January 2012, responsible for
overseeing six divisions: development engineering, capital projects engineering, operations ol
water and wastewater utilities and streets, environmental including the Ellis Creek Water
Recycling Facility, Petaluma Transit, and parks and facilities maintenance. Ile previously served
for over 20 years as the Washoe County, Nevada public works di*rector.5Pdeuty city manager for
Carson City, and pubiic works and engineering director for the Incline Village General
Improvement District. Mr. St,, John previously served as a Supervisor and Chairman for the
Nevada Tahoe Conservation District for over 22 years. In the private sector, he was a vice
president for PBS&J (now Atkins) and for Walter P. Moore and Associates, both top 500 ENR
engineering consultant firms. Mr. St. John is a professional engineer registered in Colorado and
Nevada and has technical expertise in water and wastewater treatment; sewer collection and
water distribution; stormwater management; and construction engineering. Mr. St. John
completed a MS in Civil and Environmental Engineering at the University of Colorado, Boulder
and a BA in Mathematics at the University of California, Berkeley. Mi -a. St. John was elected as a
Fellow in the American Society of Civil Engineers in 2010, and designated a Public Works
Leadership Fellow in the American Public Worlcs Association Donald C. Stone Center i*n 2015.
Leah Walker, Environmental Services Manager. Ms., Walker manages operation of the
City's wastewater treatment and sewer pumping facilities, recycled water delivery,
environmental permit compliance, water quality control laboratory, storiuwater compliance,
water conservation, and groundwater studistudies.She was previously the chief of the California
Drinking Water Program with the Department of Public Health. Ms. Walker is a registered Civil
Engineer in California with a BS degree in COb ivil Engineering from the University of California at
93560798.2
16
Berkeley and an MS degree in Civil and Environmental Engineering from Sian Jose State
University.
water distri*but'll'011,'was:te,water co.IIecti`,ons,
NWMIV
management, systems. He has
M
fl
eet, storin, sewer, streets, sigiiag
W 0 40
extensive engincernig experience
�
bi Is I'dt:�aes signals,
with dand
a I on of �water wastewater and drainage studies, water qttality and- detention ponds. Mr.
was previously a sentor en ine�er at the Ci,- beforehand worked as program
manager and,, division manages• for
private engineering companies managing private and public
oCaliforniaTexas. He *is a registeredhngineeiCalifornia
in rastructure ects -in Cali ana in
and Texas with a BS degree in Civil Engineering from Santa Clara University. [still current
OM? i
Wastewatete System Faci*Ii*ti`es,
No Wo
III
N.
ft stations. The CI*t has t
a
mal or se,wer w:atersheds
fi
cl
FM�I��
,,raciect tour o"ie ."ri tations i,or ule coneS'
Jim I
AMOW -INALSM, MXOMIN" &V -j W MW W%LAW �.WMMWWWj,W IL Ms
II
III 117d I 1MIYU44 M! No toWim➢
Ir
iI
IN
discharged to the Petaluma River from October 20 to May 1. In wet weather, flows above 16
mgd are sent directly to the oxidation ponds.
The following table sets foith the historical average daily wastewater flow to the Ellis
Creels Water Recycling Facility for the past five fiscal years.
Table 1
City of Petaluma
Wastewater System
Historical Average Daily Flow
Fiscal Years Ended June 30
Fiscal Year
Ended June 30
a"
2015
2016
2017
2018
2019
Source: The City of Petaluma.
Average Dry
Weather Flow
(MGD)
4.37
4.05
4.28
4.45
4.33
Total Wastewater
Treated
MGD)
1,888
1 ,859
2,247
1,874
2,148
Oxidation Ponds. An oxidation pond system was constructed i*n the 1970s. The oxidation
ponds are on a site located outside the urbanized area on Lakeville Highway, directly south of
the wastewater treatment plant. The pond system consists of one aerated lagoon, followed by an
aerated pond and eight oxidation ponds, covering an area of approximately 154 acres. The
aerated lagoon has four aerators, and Pond 1 is equipped with eight aerators. The ponds are
aD]rroximately 9 feet deep with 2 feet of freeboard and a total capacity of at)t)roximately 4 10
million gallons or 1,260 acre-feet. In addto providing wastewater treatment, the oxidation
ition ition
ponds also provide storage, which in conjunction with the recycling program permits the t,-.iiy to
comply with requirements that permit discharge to- the Petaluma River only during the wet
season. The available capacity of the ponds is approximately 250 million gallons or 770 acre-
feet.
Wetlands. After moving through the oxidation ponds, the effluent flows through 17 acres
of treatment wetlands, which is a low cost, natural method of removing nutrients and metals,. The
effluent is then disinfected with chlorine and discharged to 31 acres of polishing wetlands that
naturally dechlori"nate the water prior to river discharge. When additional discharge capacity is
required, a portion of the disinfected effluent from the treatment wetlands is directed through a
chlorine contact chamber., dechlorinated, and discharged to the river. The polishing wetlands are
home to a wide range of wildlife including ducks, geese, swans, pelicans, egrets, cormorants_,
herons, sandpipers, red-tailed hawks., western pond turtles and marsh wrens. The polishing
wetlands, with walking paths around the four ponds, are an integral part of the facility's setting
w ithin the community adjacent to the Petaluma River and Shollenberger Park.
93860798.2
4
# , * 1"It downstream o,
nit,)! v, �1.1-is a one, m
ju ffk I
M
III, 1H
pi.pe, t,he CI"ty recent,ly installed a temporary bypass, for
*w eva,luati*on of the outfal pi,pele
D i*ge,sted, slu,d,ge
is stored 'in a
b1*'Oso1i*ds that accumulate frona
b 0 is -A 4 M� 'by a gra-v *
iosoii s storacre tank prior to tI'lickent'na ity
a d I I
thi- ckenler, ciew"atereCl Dy a.. owumspee,
belt
rotary screw press, ana y a progress,ive cavity,
1MM, 1-11 W)
Mill
Rig,
I "R 1. 11
SIR
piping,
system. The City is constructing projects to use digester gas for compressed natural gas ("CNG")
vehicle fuel and co -digestion oi high strength waste from the local food and beverage
The recent upgrades have improved treatment reliability by providing redundant
controls, and heating equipment, and replacement of the dewatered bi'osoli"ds conveyance
providing add
the necessary infrastructure to complement the Biomass to B iofuel (`B2B"), which i
iti'onal solids hand1l"
industries.
equipment,
ng capacity for increased operational flexibility, and providing
completion. The
B2B Droiect will cob -digest semi-sol'6
id wastes
beverage i"ndustri"es
1
("H16
igh Strength Waste") with municipal
produced by local
s nearing
food and
wastewater solids in the digesters
thebiithoduction of methane gas. The methane will be scrubbed and converted
in. .6
to CNG to fuel the City's garbage trucks. The project includes construction of the CNG
frastructure) and a High Strength Waste
in part by a $3 million grant from the
trength Waste projects are expected to be
-9 components (gas conditioning system and fueling in
receiving station. The B2B project i*s being funded
California Energy Commission. The CNG and High S
completed i"n late 2019 at a total cost of approximately $13 million. When the project is
complete, project revenues will include tipping fees fro Industries for High Strength Waste,
CNG fuel receipts from the City's garbage hauler, and state and federal fuel credits.
Anticipated Wastewater System Capital Improvements
The City intends to continue with upgrades of sewer liftstations, in addition to
replacement and rehabilitation of sewer mains and manholes to improve capacity, reduce inflow
and infiltration, and to minimize the risk of sanitary sewer overflows. The City recently,
constructed a small bridge to connect the treatment facility to the oxidation ponds to increase
efficiency and reduce vehicle trips on Lakeville Highway. The City has begun planning to
replace the river outfall pipe, to upgrade chemical feed equipment near the oxidation ponds, to
replace and/or upgrade the Primat•y Influent Pump Station ("PIPS"), and the transmission force
main from PIPS to the treatment facility. The City has no plans to incur indebtedness for the
Wastewater System during the next five years. The City plans to finance its five-year capital
improvement program from funds on -hand, cash-flow from operations, and grants.. Nonetheless,
the City
iisPermtted to incur indebtedness for the Wastewater System i"n accordance with the
Indenture. See "SECURITY AND SOURCES OF PAYMENT FOR THS; 2019 BONDS — Parity
Debt — Additional Parity Debt."
93860798.2
20
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The fol,lowingtable sets forth the planned
fiscal years shown. No
assurance can beprovided
recyc l,ed ivatei capital ii-nprovienients for the
is oll
that, any vartictilar project,wil.1 be comv-&-Nleted
60 x P
CA37, Ox x let'aluma
Wastiew"ater, Systein
Planned Recycled Water Capna�'. ffCprovements
OruIf
Prol,ect
Extension Prop. 1: A/Sonoma
Mtn. Pipeline
Tertiary Filtration System
Expansion
Extension -Phase 1/Maria,
Loop
Turnout And Meter
Replacements
Park Irrigation Upgrades
Expansion for Agriculture
Pump Upgrades
Totals
Source,,& Thil uity of Petaluma.
was
Mv
Dreventi"n -a storm water from enteri sewe
Xlise,ai eat4s Ending June 3�4F
111
M&M
L-�
1)250 ) 0 0 4"F
r�ll
z.000.000
_1,400,000
_ - $41563,000 $41,165051000
UZI
r co: ele; ton
-1:*+
and operation the C 1-ty's 00 a e, t. system
13
•
Its,
M A M
Genet*al Regulatotry Requi"rements
I
V, I Is,
Wastewater System. In 1972 the NationalPollution Discharge Elimination System
("NPDES") .w in IS Was created Section 402 of the Federal Water Pollution Control Act,as amended
(the
"Clean Water Act"). NPDES prohibits 44[discharges] of pollutants from any point source into
the nation's waters except. as allowed under an NPDES permit." The program gives the Uni"ted
States Environmental Protection A,geAgency "USEPA" the authot•ity to regulate discharges into the
nation's waters by setting jinas on the effluent that can be introduce fromInto a body of water
93860798.2
M
an operating and permitted facility. USEPA has granted the California State Water Resources
e tsoard "
Nial ) ovai
the orders that allow dscharge.
adopted on April 13, 2016 and effective June
Control Board
the State Board
0014
(the "`
issues
ority over the NPDES permitting process and
202 1. This Order allows discharge
caPacity for the Ellis Creels Wate
peals
Recycling Facility of 6.7 MGD and up to 36 MGD during
wet weather flow conditions. R2-2012-0096, establishes
'' '' `' Bay. In 2016the mercury
requirements r
concentrations 9
values.
requ
The City is subject to Order No. R2-2016-
1, 2016), which will expire on May 31,
nto the Petaluma River and permits average dry weather flow
Separately, Order
No.
No.
egarding discharges of mercury to San Francisco
and mass loadings remained below Order No. R2 -2012-0096's limit and trigger
In addition to regulation under the Clean Water Act, the City is subject to the
irements of the State of California Porter Cologne Water Ouality Control Act of 1969, as
amended
adversely i
The District is not aware of any environmental or regulatory issues that would
mpact its ability to provide sewer service.
Stoi4mwater. In November 1990, the USEPA published regulations establi'shi'ng NPDES
permit requirements for municipal and industrial stormwater discharges. Phase 1 of the
permitt'i'ng program applied to municipal discharges of stormwater i*n
urban areas where the
population exceeded 100,000 persons, which does not include the City . Phase 1 also applied
to
arge variety of industrial activities, including general construction
stormwater discharges from a 1
activity i*f the project would di's
turb more than 5 acres.
Phase 2 of the NPDES stormwater permit regulations, which became effective in March
2003, required that NPDES permits be issued for construction activity for projects that disturb
between 1 and 5 acres. Phase 2 of the municipal permit system (known as the NPDES General
Permit for Small MS4s) require municipal areas of fewer than 100,000 persons (such as the City)
to develop stormwater management programs. The regional water quality control boards
("RWQCBs55) in CaliforniaCalifornia are responsible for implementing the NPDES permit system. The
San Francisco Bay RWQCB is the regulatory agency having national NPDES permit oversight
authority for the City. As a Small MS4, the City is required to comply with the requirements of
Order No 2013-000 1 *wDWQ. This Order was adopted February 5, 2013, became effective July 1,
2013, and has an expiration date of June 30, 2018, however the permit is s
till in effect until the
RWQCB issues a new permit.
Recycled Water. The CitOb
1h dk
y's recycled water operations are subject to regulation under
Section 402 of the Clean Water Act, implementing regulations adopted by the EPA, the
California Water Code and regulations promulgated by the Drinking Water Division of the State
Board. The City operates pursuant to Order No. 96-011 of the San Francisco Bay RWQCB. This
OrderselvesasaGeneralWaterReuseOrderauthorizing municipal wastewater reuse by
producers, distributors, and users of non -potable recycled wastewater throughout the region. As
the City is a producer-, distributor, and user of nonampotable recycled wastewater, this Order serves
as the City's permit to use recycled water. However, the City is only required to comply wi*th'the
Order No. 96-011 when discharging wastewater for irrigation. In 2019 the State Board amended
its Policy for Water Quality Control for Recycled Water . As pant of the amended policy
, all
agencies permitted under 96-011 will need to be enrolled under the statewide water reclamation
permit for non -potable recycled water use by 2020.
93860798.2
1 auth
23
REVENUES AND DEBT SERVICE COVERAGE
Wastewater Rates and Charges
In 2016, the City retained Bartle Wells Associates (`Bartle
utility rate consultant, to conduc
t a wastewater rate study. The City is r
ot the Government Lode ot.tt e State ot Ca
five years if it wishes to rely on automa
Wells"), an independent
squired by Section 53756
I i'forni'a to adopt a schedule of fees or charges every
tic cost adjustments.conductThe City expects to retain a
Key elements of the 2016 rate
consultant to a wastewater rate studyevery five years.
study included 1 0 -year financial projections of annual wastewater system revenue requirements
Final rate recommenda
and rate recommendations.
tions were developed with input from City
staff and from the City Council at two public workshops. The final rate study recommended a
0
series of annual rate increases over thefive year period from 20
increase funding for capital improvements while aligning rates w
17 to 2021 i*n order to gradually
ith the cost of service.
Specifically, the wastewater rate study recommended (a) a series of -five successive
r, plus (b) additional automatic annual rate
adjustments based on the increase in the C11:41111)1sumer Price Index, resulting in total annua
annual 1.5% rate increases effective July 1 of each yea
increases projected by Bartle Wells to be in the 3.5% range for each of the next five years
study also recommended modifications to the rate structure i"n order to increase the share of
revenues generated from fixed monthly, sewer charges and thereby improve revenue stability.
1 rate
. The
On May 15, 2017, City Council adopted the new schedule of rates and charges set forth
go
on the following page.
93860798.2
Remainder of page intentionally left blank._
24
Base Wastewater Rates Effective on or After(')
July 1 July 1
2019 2020
July 1
2Q17
July 1
2018
FIXED MONTHLY CHARGES
Fixed nionthli, chalye billed to i-vesidentr'al chvellrng unit at• based on non--i•esrdential inetei q size.
RESIDENTIAL
Fixed monthly charge per clsvelling amit
Single Family Residential
Multi -Unit Residential
Unmetered Residential
NON-RESIDENTIAL
Fixed tnonthTy change based on meter size
Up .to 314 --inch meter
�
ls-inch meter
1- 1 12 inch meter
2 -inch meter
3 -inch meter
4 -inch meter
6 -inch meter
METERED INDUS'1'tiIAL
k
Fixed trot?thly chai*ge based on tnetet• size
20 -inch ultrasonic meter
10-inch ultrasonic meter
2 -inch magnetic meter
3 --inch magnetic meter
4 -inch magnetic meter
6m -inch magnetic meter
July 1
2021
W I
$23.41
$26-017
$28.81
$3 13 3
$33,74
19-690
22-124
24-049
26.63
28.68
86.69
87.42
88.24
88.94
89.74
WASTEWATER COMMODITY CHARGES
Volumetric charge billedpei* hundred cubic.feet (hqf) of estimated lvastelvater discharge.
RESIDENTIAL
Based an estrmated i-slasteivatet•
Single Family residential
MultILUni"t Residential
discharge
COMMERCIAL
Billed based on metered water use
$9.04
9.04
$8.75
8.75
$8423
8.023
I
$8.00 i
.00 .
Low Strength 8.83 8.54 8.26 7.98 7.70
Medium Strength 11.04 11.12 11.20-- 11-628 11.34
High Strength 14.51 14.74 14.97 15-020 15.41
METERED INDUSTRIAL
Based on ►petered use & estimated wastei-tiatei-t loadings
Flow ($/I-icf) 7.13
BOD ($/lb) 0.79
SS ($/Ib) 0.091
7.00
6.87
6.75
.62
0.89
$23.41
$26.17
$28.81
$3 1.33
$33.74
36.33
414,45
46.36
51.06
55.53
68.45
79.52
90.13
100.29
110.00
107.09
125.26
142,.69
159.37
175.37
197.29
232.06
265.39
29732
327-691
326.13
384.61
440-667
494.38
545.82
648.05
765.84
878.77
986.97
1.1090.57
$293.89
$346.45
$396.84
$445. 12
$491.34
648.08
765.86
878.78
986.97
1,090.57
197.29
232.06
265.39
297.32
327a.91
425-804
503,58
578.87
651.02
720. 14
681-047
804.86
923.15
1,036.50
1, 145.05
1,519.78
1,724.77
1,921.15
2,109.15
2,289.05
WASTEWATER COMMODITY CHARGES
Volumetric charge billedpei* hundred cubic.feet (hqf) of estimated lvastelvater discharge.
RESIDENTIAL
Based an estrmated i-slasteivatet•
Single Family residential
MultILUni"t Residential
discharge
COMMERCIAL
Billed based on metered water use
$9.04
9.04
$8.75
8.75
$8423
8.023
I
$8.00 i
.00 .
Low Strength 8.83 8.54 8.26 7.98 7.70
Medium Strength 11.04 11.12 11.20-- 11-628 11.34
High Strength 14.51 14.74 14.97 15-020 15.41
METERED INDUSTRIAL
Based on ►petered use & estimated wastei-tiatei-t loadings
Flow ($/I-icf) 7.13
BOD ($/lb) 0.79
SS ($/Ib) 0.091
7.00
6.87
6.75
.62
0.89
0. 99
1.609
1.21
1.02
1.13
1.24
1.37
The Base Wastewater Rakes will be adjusted each year to account for annual cost inflation. Eachyear, the Base
Wastewater Rates effective July I will be adjusted by the percentage change in the Consumer Price Index from the
December 2 0 16 index to the index for D ec em b er immediately preceding the upcaining fiscal dear.
93860798.2
25
11
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o,
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�o
i
The following table sets forth the historical single-family residential wastewater- usage for
the respective years shown as of each January 1.
Source:
r
Table 5
City of Petaluma
Wastewater System Wastewater System
Historical Service Charge
Single -Family Residential Wastewater Usage
As of
January 1,
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
The pity of Petaluma.
5 CF
Monthly, Billed
:Wastewater Usage
0
Historical Connections and Service Charges
50.05
54.54
56.05
58.44
60.52
63.24
65.83
65.83
68.61
71 .98
Percent
Chane
13.01
8.697
2.77
4.26
3.656
4-t49
4.10
0.00
4.22
4.91
The following table provides a summary of residential connections to the Wastewater
System for the fiscal years shown.
Table 6
City of Petaluma
Wastewater System
Historical Residential Wastewater Connections
Fiscal Year Petaluma
Ended June- 30 Accounts
2015
2016
2017
2018
2019
Source: The pity of Petaluma.
93860798.2
23,031
23,314
23,467
23,557
27
Penngrove
Accounts
526
531
541
544
Total
Accounts
23,557
23 ,845
24,008
24,101
I tea.;Ii"eves ti-iat,, due to the cost
v -or waste-watei'l treatme
9
i
High 3
sUser ,2015 21016 2017 201,8 2019
SSingle-Family Residential 165993 175068 1731.43 17,168Utw+'tami Y "Resl enti,a 2 6 oj24 638
..CCommercial and IndustrialZ-1Aow �S rengt 86 866 86
e IUm Streing23 22 23 2
Total 2114.5074 24,365 24,520 24,605
Source. The City of Petaluma.
Ten Largest Wastewater System Customers
The following table shows the ten largest custome
measured bN charges for the fiscal Near ended June 30, 201819
mrs of the Wastewater System as
These customers were re-snonsible
for approximately 13.93% of Wastewater SN stem service charge
4 0
revenue during such period. The
A 41
City is currently expanding the Wastewater System to handle more High strength Waste from its
industrial customers. See
Ellis Creek Water Recycli
Customer
"THE WASTEWATER SYSTEM
ng Facility Upgrades."
Petaluma Poultry Processors
Petaluma Creamery
Clover Stornetta Farms
Lagunt"tas Brewery
Sheraton Petaluma Hotel
Lace House Linen
La Cumbre Management
Vineyard Post Acute
Table 8
City of Petaluma
Wastewater System
— Wastewater System Facilities —
Ten Largest Customers
Fiscal Year ended June 30, 2018
Company
Addison Ranch Apartments
Sandalwood Estates LLC
Total, Top Ten
Total, All Customers
Source: The City of Petaluma.
(1) Includes discharge revenue and samp
Type o f usiness,
Industrial
Industrial
Industrial
Industrial
Commercial
Commercial
Multi -family
Commercial
Multi -family
Multi -family
Revenues(l)
$ 1,597,887
703.5067
385.5207
205,862
116,020
106.5670
98.5937
86,209
62.5041
59,773
$ 42 73
$24,564,808
of Total
Revenues
6.50%
2,686
1.657
0.84
0.47
0.43
0.940
0-635
0.25
0,024
13.93%
100.0%
ling fines, but does not include company specific capacity charges.
The Ellis Creek Water Recycling Facility receives wastewater from six significant
industrial users comprising 12% of the total influent flow with the remaining flow constituting
residential and small commercial users. While only 12% of the flow is a result of large industrial
discharges, 30% of the loading for Biochemical Oxygen Demand ("BOD") at the facility comes
from the largest industrial users.. The majority of the influent BOD received at the facilityis from
4
the food processing facilities. The four largest food processers include Petaluma Poultry
Processors ("Petaluma Poultry"), Petaluma Creamery, Clover Stornetta Farms ("Clover
Stornetta"), and- Laguni"tas Brewery ("Laguni^tas").
Petaluma Poultry was founded I*n 1969. Petaluma Poultry offers free range and organic
chicken, only raised in and around the County. The processing plant has been in operation since
i 6 ts founding and is currently operated by Perdue Farms Inc. Petaluma Poultry chicken is raised
on an all vegetarian diet with no animal by' -products and no antibiotics, artificial hormones or
4'
steroids. The chickens are also provided an environment that allows thein snore room to roam
93860798.2
29
41
4
naturally. Petaluma Poultry is devoted to sustainability; non-compliance with local regulations is
rare and is proactively remedi"ated.
Due to higher product demands, Petaluma Poultry planned to increase its workforce by
adding a second shift resulting in increased discharges to the sanitary sewer,, The pretreatment
system was adequate to treat the increase in flow discharged to the sewer while discharge
concentrations for other pollutants of concern have remained consistent. As a result of the
expansion in operations and increase in discharges, Petaluma Poultry was required to pay a total
capacity fee of $3 ,600,186.40. Petaluma Poultry has paid 10% of the capacity fee and is malting
monthly payments on the remainder of the fee for the next 20 years at an interest rate of 3.27%.
The monthly payments are $18,4104.984
expand production as expected. In 2019,
Due to difficult41 ies in hiring, Poultry was unable to
Poultry requested a reduction in their vested capacity
back to the historic values and a return of the additional capacity fee payments. The City agreed
and returned $821,628, which was the amount of payments less interest charges.,
Petaluma Creamery started operations in the current location in 2007 after the prior
operator of the facility ceased production in 2003. Petaluma Creamery t"s a dairy manufacturing
plant, specializing in the projection of skim powder, whey powder, cheese butter, yogurt, sour
cream, milk blends, and ice cream. Petaluma Creamery has had compliance issues in meeting
wastewater discharge requirements but has been working with City staff to correct problems with
the facility's pretreatment system., The City is negotiating with Petaluma Creamery to determine
if a capacity fee should be required because the facility ' s wastewater flow and loading has
increased substantially i*n recent years.
Clover Stornetta started operation at the 91 Lakeville Street facility i*n 1991 and has
remained in continual operation. Clover -Stornetta is a milk processing and distribution facility
46
specializing in receiving, blending, processing, bottling, and distribution of fluid milk and cream
products. Clover Stornetta updated its pretreatment systems in 2007 to meet local limits and has
remained compliant with such limits after installation of the pretreatment system., When
violatonsiy do occur the companworks quickly to investigate and solve issues within the facility.
The discharges from Clover Stornetta have remained consistent in the last 10 years and the
facility is not expecting to increase capacity to the sanitary sewer.
Lagunitas moved to its current location in 1993 and has remained in continual operation.
Lagunitas is focused on beer production with brewing and fermentation i*n one building and
bottling and wastewater treatment i*n a second building. Lagunitas has seen significant growth in
the last five years and has installed pretreatment and paid for additional capacity during this
period. Lagunitas recently installed a pretreatment system that reduced the loading from
Lagunitas significantly and enabled discharge of treated high-strength waste to the sewer in
qr
compliance with local limits. Prior to the new system, Lagunitas was hauling approximately half
of the wastewater generated at its facility to the East Bay Municipal Utility District for treatment,,
The installation of the system allowed Lagunitas to discharge its waste to the sewer but increased
the overall flow of wastewater to the Ellis Creels Water Recycling Facility. Heineken purchased
a 50% interest in Lagunitas in September of 2015.
93860798..2
30
-Ikw--bk
Revenue by Customel is 'Type
The following table sets foilll revenues of the Wastewater System by customer type foi-
tlie
fiscal years shown.
retalunia
Wastewaterm System
JOI
Gtooss Revenues b U'usitomets T
Y YV!4
I I
W1 Iwo
aNt
lilt 'IF M 01
Iff I
Single -Family Residential
Multi -Family Residential
Commercial,
Industrial
Total
The City of"Pe,taluma.
MW
I r
rr
IC I
I
in a
;AI
93860798.2
The following table sets forth histo
fiscal years shown.
Tical billings, collecti
Table 10
City of Petaluma
Wastewater System
ons and delinquencies for the
.6 IN
Historical B11ings,iCollections and Delinquencies
Fiscal Year Ended June 30
The following table is a comparison of the Ci'ty's.typt"cal monthly
Fiscal Year Ended
June 30
2015
45.31
2016
67.22
2017
95.70
2018
44,656
2019
54.74
Source: The City of Petaluma.
Annual
BIUIIOIIEFs
$24-50263660
23,510,108
23,446,370
25,477,641
Annual
Collections
$24.5001.5582
23,94771901
23,409,931
25,456,843
}
K
Delinquency
Rate
0410%
0,614
0. 16
0.08
Comparative Single -Family Resi'denti'al Wastewater and Water Service Chargessingleo*
fami'ly
wastewater and water service charges with those of other surrounding cities.
Table 11
City of Petaluma
Wastewater System
Comparison of Average Monthly
Single -Family Residential Wastewater and Water Service Charges
City of Vallejo
Town of Windsor
City of Rohnert Park
City of American Canyon
City of Napa
City of Petaluma
City of Santa Rosa
City of Benicia
City of Sonoma
City of Healdsburg
City of St. Helena
Source; The City of Petaluma.
Flat rate or 5 hcf monthly winter use,
r
M 7 hcf monthly use.
93860798.2
Wastewater(O Water(2) Total
48m,78
45.31
94.09
67.22
28.48
95.70
56.12
44,656
100.68
54.74
4931
104.05
59. 18
58.40
117.58
76.64
42.05
118.69
83.23
4736
130.59
67.33
66.87
134.20
85. 63
61.31
146:v94
89.38
59.96
149-634
81.30
97.08
17838
32
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d
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un
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ep �
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10 "let
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ft
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The foil
the fiscal years
owing table presents the projected financial results of the Wastewater System for
shown., The debt service coverage is preliminary and subject to change,,
Table 13
City of Petaluma
Wastewater System
Projected Revenues, Expenses and Pro Forma Debt Service Coverage, Fiscal Years Ending June 30
Revenues:
Sewer Service Cliarges
Reclaimed
WaterInterest Eai*nings
Connection Fees/
- rapacity Charges
B iosolids to B iagas �z-b)B Revenues
from Police/Fire)
Interfund Loan-Pymts
Other/Miscellaneous
Total
Operating & Maintenance Expenses:
Administration
Collection System
Sewage Pump Stations
Customer Service
Industrial
Reclamation
Storm Drain
Ellis Creek operations
WWT'P ElectricityNatural Gas
Supplemental Maintenance
Biosolids to Bi*ogas (B2B) Expenses
Pavement Management Program
Total
Revenues minus Expenses
Debt Service Expense:
SRF Loan
2017 Bonds
2019 Bonds (estimate)
Total
Debt Setavice Covei-mage
Net Casli Flow
Source: The City of Petaluma,
93860798.2
2020
2021
2022
2023
2024
BudgetProjection
192,000
Projection
Proj*ectioii
Pro'ec� t... ion
$29,631,000 $31,281,000 $33,024,000 $33,706,000 $33,728,000
.3005000
300,000
300,000
300,000
300,000
134,000
192,000
205,000
213,000
248,000
409,000
417,000
425,000
434,000
443,000
480,000
1 ,030,080
1 ,049, 153
1, 117,765
1, 138,872
398,000
398,000
398,000
398,000
398,000
133 ,502
133 ,502
133 ,502
133 ,502
133, 502
$31,485,502
$33,751,582
$35,534,655
$36,302,267
$36,389,374
$ 1,925,047 $ 2,002,000 $ 2,082,000 $ 2,165,000 $ 2,252,000
1,221,000
1,270,000
1,321,000
1,374,000
1,490,000
624,000
649,000
675,000
702,000
730,000
118,000
123,000
128,000
133,000
138,000
603,000
627.5000
652,000
678,000
705,000
1,15 1,000
1 , 197,000
1,245,000
1,295,000
1,347,000
183,000
190,000
198,000
206,000
214,000
5,246,000
5,456,000
5,674,000
5,901,000
6, 137,000
1,632,000
1,697,000
1,765,000
1,836,000
1,909,000
770,000
805,000
837,000
870,000
905,000
750,909
765,180
779,871
794-5994
810,563
341,000
355,000
369,000
3 84,000
399,000
$14,564,956
$15,136,180
$15,725,871
$16,338,994
$17,036,563
$16,920,546 $18,615,402 $19,808,784 $19,963,273 $19,352,811
$ 588,701 0 0 0 0
805,319 $ 8051L319 $ 805,319 $ 805,319 $ 805,319
7,772,871 7,903,750 7,904,000 7,901,500 7,905,750
$9,166,891 $8,709,069 $8,709,319 $8,706,819 $8,711,069
1.85
2.14
2.27
2.29
2.22
$7,753,655
$9,906,333
$11,099,465
$11,256,454
$10,641,742
34
Took
cr� �OA
II -10 k ^
to �O� Q ^ t�
r
00
00
CA
N d
J
y
00% M 00
M r,
M
Vl-
(74� ."A 00 Vol
Vol C -A
M 00 Vol � N
�O ap °A� C% p 16N
pO^ r
r �
r, pO °�°
d. M
A
Revenues Advanced to the City for Capital Projects
During Fiscal Year 2017- 18, the Wastewate
General Fund for
46
interest rate of I Rk
costs relating to the LED Streetlight
25% and is due i"n annua
and any future potential advances]
Wastewater System Demand
r Utility Fund
Retrofit Project.
1 installments by -June 3 0,=
RISK FACTORS
0
oaned $1,490,000 to the
The loan bears an annual
2026. [discuss lien level
i r ere can be no assurance that the demand for wastewater services will occur as
described in this Official Statement. Reduction in levels ot demandemandcouto require an increase in
16
rates or charges to comply with the covenants to fix rates and charges.,
Wastewater System -Expenses
There can be no assurance that the City's expenses will be consistent with the
-5 descriptions iin ths Official Statement. Increases in expenses could require an increase in rates
or charges to comply with the rate covenant.
Regulatory Requirements
The operations of the
regulations, particularly with r
more stringent 1
Wastewater System are subject to state and federal laws and
espect to water quality discharge requirements. The adoption of
aws or regulations may cause the City to incur greater expenses for the operation
of the Wastewater LosvctPm
,,....,, .. �....,,......,. .,,,��...... No assurance can he. given that the, costs of complying with any such
new laws or regulations will not adversely affect the City's ability to generate sufficient Net
Revenues in the amounts or on the schedule required by the Indenture.
Natural Disasters
General. From time to time, the service area of the City is subject to natural calamities
that may adversely affect economic activity in the City, which could have a negative impact on
Wastewater System finances. There can be no assurance that the occurrence of any natural
calamity would not cause substantial damage to the Wastewater System, or that the City would
have' insurance or other resources available to make repairs to the Wastewater System t"n order to
generate sufficient Net Revenues to pay debt service on the 2019 Bonds when due. The casualty
and liability insurance maintained by the City may not cover damages and losses to the
Wastewater System due to earthquake, fire or flood.
Seismic. The following information is excerpted from the City's General Plan 2025 (May
2008), revised on January 11, 2012. Two active faults � the San Andreas Fault and the
Heal ds burgmRodgers Creek Fault - can be expected to affect the City. The major fault zones of
the San Andreas Fault System have been the source of almost all the earthquakes felt I'*n the City
and are expected to be the sources of future earthquakes. The United Stated Geological Survey
has concluded that there is a 62% probability of a strong earthquake striking the San Francisco
Bay region within the 30 -year period between 2003 and 2032. During this time frame., the
93860798.2
36
probability of having a large earthquake (magnitude 6.7 or greater) generated from the
Healdsburg--,Rodgers Creek Fault is estimated at about 27% and 21 % percent for the San Andreas
Fault. Potential
along the fault
failures
hazards related to ma0
jor earthquakes include ground shaking,, surface rupture
zone, and related secondary ground failures. T ypical seismicaliN-induced ground
include liquefaction, lateral spreading, ground lurching, landslides, inundation, and
settlement.
Flood. The following information is excerpted from the City's General Plan 2025
2008), revised on January
watershed.
or less. or
11;I 2012. The City sits within the 113 scivarep-tMI"le Petaluma
Floods in the Petaluma River Basin are normally of short duration, 1
(May
.River
astt'ng 3 to 4
days Tributaries of the Petaluma Ri'ver can begin to rise within f ours after a heavy
event has begun if antecedent soil moisture content is already high. Typically floods
storm
occur
between December and March. Flooding has taken place in the City, to the extent that at least
some street flooding occurs, on average once per year over the past 20 years. Recent significant
flooding events (meaning street and property flooding) have occurred 1"n the City I&n 1982, 1983,
1986, 1995, 1996, 1998, and 2005. The largest flood of record in the City occurred from January
3 through 5, 1982. A significant flood event occurred on December 30b-,31, 2005, overtaxing
both piped and op -en channel systems. Including the Petaluma River. There are approximately 18
miles of channels that have been studied in detail by the Federal Emergency Management
Agency ("FEMA") within the City. Based on the historic records of flood events and the detail to
which streams have been studied and floodplains delineated within the City by FEMA,. it is clear
that flooding is a significant problem. The Ellis Creek Water Recycling Facility is built above the
base flood elevation and is not expected to incur any damage or i"nterrupti"on in service during
significant flood events. The plant is built to operate during a 1 00 -year flood event affecting the
City., Major improvements to pumping stations are either currently underway or 1"n the, capital
improvement program to meet similar operational standards.
Wildfire. The City and its Fire Department do not consider wildfire to be likely to
negatively impact the Net Revenues of the Wastewater System. There is no historical knowledge
of a wildfire affecting the site of the Ellis Creek Water Recycling Facility. However, the City
4k maintains the following precautionary measures in place:, sufficient separation of critical
facilities from grassland; hardscape or irrigated 141,111w -level landscaping adjacent to the facility
itself, fire suppression systems and adequate fire hydrants .placed throughout the facility, and
trained staff to respond to any fire related emergency.
Limited Recourse on Default
If the City defaults on its obligation to make the debt service payments under the
Indenture, the Trustee has the right to accelerate the total unpaid principal amount of such
payments. However, in the event of a default and such acceleration there can be no assurance
that the City W1"11 have sufficient funds to pay the accelerated payments.
Limitations on Remedies
The ability of the City to comply with its covenants under the Indenture and to generate
Net Revenues sufflicient to pay principal of and interest on the 2019 Bonds may be adversely
affected by actions and events outside of the control of the City, and may be adversely affected
by actions taken (or not taken) by voters, property owners, taxpayers or payers of assessments,
93860798.2
37
fees and charges. See "-
Furthermore, any remedies
Constitutional Limitations on Appropriations and Fees" below.
available to the Owners of the 2019 Bonds union the occurrence of an
Indenture are in many respects dependent upon judicial actions,
discretion and delay and could prove both expensive and time
Event of Default under the
which
are
0
consuming
often. subject to
to o btain.
In addition to the limitations on Bond Owner remedies contained in the Indenture, the
rrunts obnaations uncter the zuv) tronas andtthe Indenture may be subject to the ioowina..6 ll
.0 1
the United
moratorium
generally, r
States Bankruptcy Code and41t
a�
or similar laws relating to or
row or hereafter i*n effect; usual
iicable bankruptcy, insolvency, reorganization,
affecting the enforcement of creditors' rights
eaultv rrincinles which may limit the specific
enforcement under State law of certain remedies
the powers delegated to it by the Fede
exercise, in certain exceptional situations,
11;
State of California and its governmental
legiIIIti�
a III ID
state9 overnment, ii initiated, could subject the Owners ooftne 20 19 Bondna
i � ■ 1
;the exercise bY the Unit
ed States of America of
ral Constitution; and the reasonable and necessary
of the police power inherent 1"n the,
bodies in the interest of serving
sovereignty of the
a significant and
nate public purpose. Bankruptcy proceedings, or the exercise of p
owers by the federal or
and interpretation of their rights in banluuptcy or otherwise,
delay, limitation or mo dification of their rights,.
Articles XIIIC and XIIID
s to J"
udicial discretion
110
and consequently may entail risks of
General. An initiative measure entitled the "Right to Vote on Taxes Act" (the
"Initiative") was approved by the voters of the State of California at the November 5, 1996
general election. The Initiative addedArtic1 e XIIIC and AUticle XIIID to the California
Constitution.. According tothe "Title and Summary" of the Initiative prepared by the California
Attorney General, the Initiative limits "the authority of local governments to impose taxes and
property related assessments, fees and charges."
Article X[IID. Article XIIID defines the terms "fee " and " charge " to mean " any levy
other than an -ad valorem tax, a special tax or an assessment, imposed by an agency upon a parcel
or upon a person as anci.dent of property ownership, including user fees or charges for a
property related service." A "property related service" is defined as "a public service having a
direct relationship to property owners]ip." Article XIIID further provides that reliance I y an
agency on any parcel map (including an assessor's parcel map) may be considered a significant
factor in determining whether a fee or charge is imposed as an incident of property ownership.
Article XIIID requires that any agency imposing or increasing any property -related fee or
charge must provide written notice thereof to the record owner of each identified arcel upon
which such fee or charge is to be imposed and must conduct a pUblic hearing with respect
thereto. The proposed fee or charge may not be imposed or increased 1"f a majority of owners of
the identified parcels file written protests against it. As a result, i*f and to the extent that a fee or
charge imposedy a local government for wastewater service is ultimately determined to be a
"fee" or "charge" as defined 1"n Article X111D, the local government's ability to increase such -fee
or charge may, be limited by a majority protest.
In addition, Article XIIID includes a number of limitations applicable to existing fees and
charges including provisions to the effect that: (a) revenues derived from the fee or charge may
93860798.2
is actualINused b-\
the fee or charge was imposed; (c) the amount
of a fee or charge imposed upon any parcel or person as an incident of property ownership may
not exceed the proportiona ributable to the parcel; (d) no such fee or charge
is used
not exceed the funds required t
be used for any purpose other t
o provide the property-related service; (b) such revenues may not
han that for which
1costoftheserviceattmay be imposed for a seryice unless that seryice , or immediately available to,
the owner of the property in question. Property related fees or charges based on potential or
future use of a service are not permitted; and (e) no fee or change may be imposed for general
1costoftheserviceatt
governmental purposes,,
Based
Association v.
upon the California Court of Appeal
Ci ofosLAngeles, 85 Cal. App 4th 79
State Supreme Court, it was generally believedthat Article XIIID did not apply to charges for
1P
decision in HolNard Jarvi"s
Taxpayers
(2000), which was denied review by the
waters
ervicesthat
are"primarilybasedon
which had been held to be commodity charges related
the amount consumed" (i.e.metered Ovate
to consumption of the s
rrates),
eivice, not
property ownership. The Supreme Court stated in Bigho�•n-Deservt VieN) WaterAgency v. Verjil,
39 Cal. 4th 205 (2006) (the `Bighorn Case")howeverthat fees.for ongoing water service
through an existing connection were property-related fees and charges. The Supreme Count
specifically disapprovedtheholdinginHoia�ardJarvis Taxpayei�sAssociationv.Cityof
Los
Angeles that metered water rates are not subject to Proposition 218. The City has complied with
the notice and public hearing requirements o r System
rates and charges.
fArticleXIIIDinestablishingWastewate ICcepovidesthattheinitiativepowermaynotbeprohibitedor
otherwiselimitedinmattersofreducingorrepealinganylocaltax,assessment,feeorchargeand
thatthepowerofinitiativetoaffectlocaltaxes,assessments,feesandchargesisapplicabletoall
localgovernments.ArticleXIIICdoesnotdefinetheterms"localtax,""assessment,""fee"or-
"charge,"soitwasunclearwhetherthedefinitionssetforthin Article XIIIDreferredtoabove
areapplicabletoArticleXIIIC.Moreover,theprovisionsofArticleXIIICarenotexpressly
limitedtolocaltaxes,assessments,feesandchargesimposedafterNovember6,1996.OnJuly
242006theSupremeCourtheldintheBighornCasethattheprovisionsofArticleXIIIC
includedratesandfeeschargedfordomesticwateruse.Inthedecision,theCountnotedthatthe
decisiondidnotaddresswhetheraninitiativetoreducefeesandchargescouldoverridestatutory
ratesettingobligations.Inanyevent,theCity doesnot believethat Article XIIICgrants tothe
voterswithintheCitythepowertorepealorreduceratesandchargesforthewastewaterservice
inamannerwhichwouldbeinconsistentwiththecontractualobligationsoftheCity.However,
therecanbenoassuranceoftheavailability ofparticularremedies adequate toprotect the
beneficialownersofthe2019Bonds.Remediesavailabletobeneficialownersofthe2019
BondsintheeventofadefaultbytheCity aredependentupon judicialactions whichar
eoften
subjecttodiscretionanddelayandcouldprovebothexpensiveandtimeconsumingtoobtain.
Solongasthe2019Bondsareheldinbook-entryform,DTC(oritsnominee)wildbethesole
registeredownerofthe2019BondsandtherightsandremediesoftheBondOwnerswillbe
exercisedthroughtheproceduresofDTC.
Proposition26
Proposition26wasapprovedbytheelectorateattheNovember2,2010electionand
amendedCaliforniaConstitutionArticlesXIIIAandXIIIC.Thepropositionimposesatwo-thirds
voterapprovalrequirementfortheimpositionoffeesandchargesbytheState.Italsoimposesa
93860798.2
39
IP
majority voter approval requirement on 1
general purposes, and a two-thi6rds voter
purposes. Proposition 26, according
for special
d a
ocal governments with respect to fees and charges fog -
approval requirement with respect to fees and charges
supporters, is intended to prevent the
circumvention oii tax limitations imposed by the voters in Cali
fn r nin Constitution Articles X I T T A,
i n
XIIIC and XIIID pursuant to Proposition 131, approved in 1978, Proposition 218, approved
1996
and other measures through the use of nonk-t
excludes from its scope a charge
directly to the payor that i*s not
reasonable cost to the State or iocai government oi providing the service or f roauct to the I ayor..
ax fees and charges. Proposition 26 expressly
imposed for a specific government service or product provided
provided to those not charged, and which does not exceed the
Proposi"ti"on 26 applies to charges
approval. The
Proposition 26
by the courts o
City believes its
dk a
imposect or increasea Dy local
Wastewater System rates ar
governments after the' date of its
charges are not taxes under
. The City is unable to predict at this time how Propos
r what its ultimate impact will be.
Constitutional Limitations on Appropriations and Fees
iti'on 26 will be interpreted
Under Article XIIIB of the California Constitution, as amended, state and local
government entities have an annual "appropriations limit" which limits their ability to spend
certain moneys called "appropriations subject to limitation," which consist of tax revenues,
certain state subventions and certain other moneys, including user charges to the extent they
exceed the costs reasonably borne by the entity in providing the service for which 1"t is levying
the charge. The City is of the opinion that the user charges of the Wastewater System imposed
by the City do not exceed the costs the City reasonably bears i*n providing the Wastewater
ServiService.In general terms, the " appropriations limit" is to be based on certain 1978/79
expenditures, and is to be adjusted annually to reflect changes i"n the consumer price index,
population, and services provided by these entities. Among other provisions of Article XIIIB, if
an entity's revenues in any year exceed the amount permitted to be spent, the excess would have
-6 to be returned by revising tax rates or fee schedules over the subsequent two years.
Future Initiatives
Articles X111B, X111C and X111D were adopted as measures that qualified for the ballot
pursuant to California's initiative process. From time to time other initiatives have been and
could be proposed and adopted affecting the Wastewater System's revenues or ability to increase
revenues. Neither the nature and impact of these measures nor the likelihood of qualification for
ballot or passage can be anticipated by the City.
4 CONTINUING DISCLOSURE
The City has covenanted for the benefit of owners of the 2019 Bonds to provide certain
financial information and operating data relating to the City and the Wastewater System by not
later than eight months after the end of the City's fiscal year (presently June 30) in each year
4k
commencing with its report for the fiscal year ended June 30, 2019 (the "Annual Report"') and to
provide notices of the occurrence of certain enumerated events. The City has retained W1*11dan
Financial Services ("Wl'lldan") to serve as its Continuing Disclosure Consultant and
Dissemination Agent i"n connection with the 2019 Bonds. The Annual Reports and notices of
enumerated events will be filed with the Municipal Securities Rulemaking Board (the "MSRB")
by Willdan on behalf of the City. These covenants have been made in order to assist the
93860798.2
4
r
V
Underwriters in c omplying with Securities and Ex
change Commission Rule 15c2v-12 (the
nformation to be contained in the Annual Report and the
"FORM OF
" Rule "). Thpecifii
enumerated events
c nature of the i
is summarizes
DISCLOSURE AGREEMENT. "
in APPENDIX F —
As an obligated party under the Rule, the City was r
for providing conti"nui"ng disclosure
CONTINUING
estonsible during the, past five years
with respect to the 2003 Certificates of Participation
(Refunding Certificates and Airport Project) (the "2003 Certificates") (defeased on March 22.,
timely file a notice of rating
fled to comply under the Rule
o file annual reports or notices of enumerated events during the past five
2016). r
n connection with t
.0
change. Other than with rest ec
0
he 2003 Certificates, the City did not
W11n the requirements t
years:, _Confirm_
t to such notice, the City has not fa
LEGAL OPINIONS
Legal matters incident to the authorization and issuance of the 2019 Bonds are subject to
the at Drovilna opinion of Jones Hall, A Professional Law Corporation, San Franc
rs will
Bond Counsel, and certain other conditions. Certain legal matte
City by the City
isco.W California
be passed upon fo
Attorney and for the City by Norton Rose Fulbrt'ght US LLP
-5
Cot nsel. The compensation of Bond Counsel, Disclosure Counsel and the Municipal Advisor for
Disclosure
this issue is contingent on the successful sale of the 2019 Bonds.
TAX MATTERS
In the op41
inion of Jones Hall, A Professional Law Corporation, San Francisco, Cali*fornt*a-,
Bond Counsel, subject-, however to the qualifi cat 'tons set forth below, under existing law, the
interest on the 2019 Bonds is excluded from gross income for federal income tax purposes and
such interest is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, provded,ihowever-, that, for the PPurose of computing
the alternative minimum tax imposed on corporations (as defined for federal income tax
purposes), such interest i*s taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the
City comply with all requirements of the Internal Revenue Code of 1986., as amended (the "Tax
Code"), that must be satisfied subsequent to the issuance of the 2019 Bonds. The City has
covenanted to complywith each such requirement. Faiylure to complwith certain of such
requirements may cause the inclusion of such interest in gross income for federal income tax
purposes to be retroactive to the date of issuance of the 2019 Bonds.
If the initial offering price to the public (excluding bond houses and brokers) at which a
2019 Bond is sold is less than the amount payable at maturity thereof, then such difference
constitutes "original issue discount" for purposes of federal income taxes and State of California
personal income taxes. Ii the initial offering }rice to the public ('excludi'ng bond houses and
brokers) at which a 2019 Bond is sold is greater than the amount payable at maturity thereof,
then such difference constitutes "original issue premium" for purposes of federal income taxes
and State of California personal income taxes. De mininiis original issue discount and original
41 4P issue premium is disregarded.
93860798.2
41
5
r
the
Disclosure
this issue is contingent on the successful sale of the 2019 Bonds.
TAX MATTERS
In the op41
inion of Jones Hall, A Professional Law Corporation, San Francisco, Cali*fornt*a-,
Bond Counsel, subject-, however to the qualifi cat 'tons set forth below, under existing law, the
interest on the 2019 Bonds is excluded from gross income for federal income tax purposes and
such interest is not an item of tax preference for purposes of the federal alternative minimum tax
imposed on individuals and corporations, provded,ihowever-, that, for the PPurose of computing
the alternative minimum tax imposed on corporations (as defined for federal income tax
purposes), such interest i*s taken into account in determining certain income and earnings.
The opinions set forth in the preceding paragraph are subject to the condition that the
City comply with all requirements of the Internal Revenue Code of 1986., as amended (the "Tax
Code"), that must be satisfied subsequent to the issuance of the 2019 Bonds. The City has
covenanted to complywith each such requirement. Faiylure to complwith certain of such
requirements may cause the inclusion of such interest in gross income for federal income tax
purposes to be retroactive to the date of issuance of the 2019 Bonds.
If the initial offering price to the public (excluding bond houses and brokers) at which a
2019 Bond is sold is less than the amount payable at maturity thereof, then such difference
constitutes "original issue discount" for purposes of federal income taxes and State of California
personal income taxes. Ii the initial offering }rice to the public ('excludi'ng bond houses and
brokers) at which a 2019 Bond is sold is greater than the amount payable at maturity thereof,
then such difference constitutes "original issue premium" for purposes of federal income taxes
and State of California personal income taxes. De mininiis original issue discount and original
41 4P issue premium is disregarded.
93860798.2
41
Under the Tax Code, original issue discount i*s treated as interest excluded from federal
gross income and exempt from State of California personal income taxes to the extent properly
allocable to each owner thereof subject to the limitations described in the first paragraph of this
section. The original issue discount accrues over the term to maturity of a 2019 Bond on the
basis of a constant interest rate compounded on each
straight-line interpolations between compounding dates
interest or principal payment date (with
). The amount of original issue discount
accruing during each period is added to the ad justed basis of such 20
taxable gain upon disposition (including sale1P, redemption, or payment on maturity)ty)
The Tax Code contains certain provisions relating to the accrual of original i
19 Bonds to determine
Bond.
i n the
of such 2019
ssue discount
case of purchasers of the 2019 Bonds who purchase the 2019 Bonds after the initial
offering of a substantial amount of such maturity. Owners of such 2019 Bonds should consult
6
their own tax advisors with respect to the tax consequences of ownership of 2019 Bonds with
original issue discount, including the treatment of purchasers who do not purchase in the original
offering, the all
owance of a deduction for any loss on a sale or other disposition, and the
ria-inal issue discount on such 201 9 Bonds under federal individual and
treatment of accrued o
corporate alternative minimum taxes.
Under the Tax Code, original issue premium is amortized on an annual basis over the
term of a 201.9 Bond (said term being the shorter of the 2019 Bond's maturit1P y date or its call
date). The amount of original issue premium amorsk
tized each year reduces the adjusted basis of
the owner of the 2019 Bond for purposes of determining taxable gain or loss upon disPosition.
The amount of original issue premium on a 2019 Bond i*s amortized each year over the term to
maturitqP y of the 2019 Bond on the basis of a constant interest rate compounded on each interest or
principal payment date (with straistraight-lineinterpolations between compounding dates).
Amortized 201 9 Bond premium is not deductible forfederal income tax purposes . Owners of
premium 2019 Bonds, includiincludingPurchasers who do not purchase in the original offering, should
consult their own tax advisors with respect to State of Cali*fomi'a personal income tax and
federal
income tax consequences of owning such 2019 Bonds.
In the further opinion of Bond Counsel, interest on the 2019 Bonds is exempt from
California personal income taxes. 'I
a 0
Owners of the 2019 Bonds should also be aware that the ownership or disposition of, or
the accrual or receipt of interest on, the 2019 Bonds may have federal or state tax consequences
other than. as described above. Bond Counsel expresses no opinion regarding any federal or state
tax consequences arising with respect to the 2019 Bonds other than as expressly described above.
10 The form of the proposed opinion of Bond Counsel is attached a
s Appendix E.
NO LITIGATION
There is no action, suit, or proceeding known by the City to be pending or threatened at
the present time restraining or enjoining the delivery or in any way contesting or affecting the
vall.dity of the 2019 Bonds, tile Indenture or the proceedings of the City taken with respect t
o the
execution or delivery thereof.
93860798.2
42
S&P Global Rating
assigned the 2019 Bonds
organization and any desir
RATINGS
S, a Standard & Poor's Financial Services LLC business ("S&P") has
a rating of ." Such rating reflects only the views of such
ed explanation of the significance of such rating should be obtained
from S&P, at the following address: Standard & Poor's Ratings Services, 55 Water Street, New
York, New York 10041. The City has furnished to S&P certain materials and information with
respect to the City and the 2019 Bonds., Generally,a rating agency bases its ratings on the
information and materials furnished to it and on investigations, studies and assumptions of its
own. There i*s no assurance such ratings will continue for any given period of time or that such
ratings will not be revised downward or withdrawn entirely bv the rating aaencv., if in the
judgment of such rating agency
ft
undertake no responsibility to
circumstances so warrant. The Citv and the Municiral Advisor
oppose
any such proposed revision or withdrawal. Any such
downward change in or withdrawal of any
price or marketability of the 2019 Bonds.
rating might have an adverse effect on the market
MUNICIPAL ADVISOR
The City has retained Steven Gortler as municipal advi"so
connection with the issuance of the 2019 Bonds., The Municipal
r (the "Municipal Advisor ") in
Advisor has not been engaged,
nor has i*t undertaken, to audit, authenticate or otherwise verify the information set forth
in this
Official Statement, or any other related information available to the City, with respect to
accuracy and completeness of disclosure of such information. The Municipal Advisor has
reviewed this Official Statement but makes no guaranty, warranty or other representation
respecting accuracy and completeness of the information contained in this Official Statement.
UNDERWRITING
(the "Undeitivriter") has purchased the 2019 Bonds from the City at a
.0 competitive sale for a purchase price of $ (representing the aggregate principal amount
of the 2019 Bonds, plus a premium of $ ,and less an discount of
$ ). The public offering prices may be changed from time to time by the Initialt*al
Purchaser. The Underwriter may offer and sell the 2019 Bonds to certain dealers and others at
prices lower than the offering prices shown on the inside cover page hereof.
MISCELLANEOUS
Any statement 1"n this Official Statement involving matters of opinion, whether or not
expressly so stated, are intended as such and not as representations of fact. This Official
Statement i*s not to be construed as a contract or agreement between the City and the purchasers
or Holders ofany of the 2019 Bonds.
93860798-.2
43
the CIIL
ple�alat1on
4
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[insert Appendix C]
93860798.2 C- 1
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Sim
MA
Is NAM
Illiq 11
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--ve to be tsel,lablel Cl) tvIfe no ivWonsi 1110.�
(``DTC"), New York., NY, will
,;zct as secur.1-fieS
I
aggregate pri`ncipa.11 aniount, of such
Boll S, in the n
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93860798.2 D-1.
of the
iliroldings, from the. Direct or Indirect Participant through which the, Beneficial Owner
entered i
accompli
nto the transaction.
Transfers
1
of ownership interests i"n the 2019
shed by entries made on the books of Di'rect and Indirect Participants acting on bet alf
Beneficial Owners will not receive certificates representing their
19 Bonds, except 1"n the event that use of the book -entry system for the
Bonds are to be
of Beneficial Owners,.
40
ownership interests
in 20
2019 Bonds is discontinued.
To facilitate subsequent transfers, all 2019 Bonds deposited by Direct Participants with
DTC are registered in the name of DTC ' s tartnership nominee, Cede & Co., or such other name
as may be requested by, an authorized representative of DTC. The deposit of 2019 Bonds with
DTC and their registration in the name of Cede & Co. or such otherDTC nominee do not effect
any change in beneficial ownership. DTC has no knowledge of the actual
the 2019 Bonds;accounts such 201
DTC's records reflect only the identity of the Direct
9 Bonds are creditedwhich may or may not
esponsible for keeping account of their holdings on
Direct and Indirect Participants will r
behalf of their customers.
Conveyance
oIndirectof noticf
Indirect
emain r
Participants,s and other
Participants,
Beneficial Owners of
Participants to whose
be the Beneficial Owners.
The
communications by DTC to Direct Participants, by
Direct Participants t and by Direct Participants and Indirect Participants to
Beneficial Owners will be governed by arrangements among them, subject to any statutory or
reguiaiory requ
irements as may be in effect from time to time.
Redemption notices shall be sent to DTC. If less than all of the 2019 Bonds within an
issue are being redeemed, DTC's practice is to determine by lot the amount of the interest of
each Direct Participant in such issue to be redeemed.Neither• DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to 2019 Bonds unless authorized by a Direct Participant in accordance with DTC's MMI
Procedures. Under its usual procedures, DTC mails an Omnibus Proxy as soon as possible after
the record date. The Omnibus Proxy assigns Cede & Co.'s consenting or voting rights to those
Direct Participants to whose accounts 2019 Bonds are credited on the record date (identified in a
listing attached to the Omnibus Pt•oxy).
Principal, premium, if any, and interest payments on the 2019 Bonds will be made to
Cede & Co.or such other nominee as may be requested by an authorized representative of DTC.
DTC's practice is to credit Direct Participants' accounts upon DTC's receipt of funds and
corresponding detail information from the City or the Trustee, on a payable date in accordance
with their �•espective holdings shown on DTC's records. Payments by Participants to Beneficial
Owners will be governed by standing instructions and customary practices, as is the case with
securities held for the accounts of customers in bearer form or registered in "street name," and
will be the responsibility of such Participant and not of DTC nor its nominee, the Trustee, or the
City, subject to any statutory or regulatory requirements as may be in effect from time to time.
Payment of principal, premium, if anyand interest payments to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the responsibility of the
City or the Trustee, disbursement of such payments to Direct Participants will be the
responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the
responsibility of Direct and Indirect Participants.
93860798.2 Do -w2
DTC maN discontinue providing its services as der osI"toiw with rest ect to the 20
at any time by giving reasonable notice to the City or the Trustee. Under such circumstances, i4n
the event that a successordepository is not
and delivered.
19 Bonds
obtained, bond certificates are required'to be p
The City may decide to discontinue use of the system of book -entry transfie
itoi•y). In that event, bond certificates will be printea and
DTC (ori
delvered0
a successor securities depos
rs
Tinted
through
93860798.2 D-3
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v
FORM OF CONTINUING DISCLOSURE CERTIFICATE
Attachment 4
Norton Rose Ftilbright US LLP — Draft of 0 7/3 0/19
CONTINUING DISCLOSURE CERTIFICATE
This Continuing Disclosure Certificate (this "Disclosure CertiCertificate")is executed and
delivered by City of Petaluma,
$ City of Petaluma 201
California (the "City") in connection
with the issuance of
9 Wastewater Revenue Refunding Bonds (the "Bonds").
The
Bonds are being issued under the provisions of Articles 10 and I I of Part 1 of Division 2 of Title
5 of the California Government Code and an Indenture of Trust,, dated as of September 1., 2019
(the "Indenture"), between the City and The Bank of New York Mellon Trust Company, N.A., as
trustee. The City covenants and agrees as follows:
SECTION 1. Purpose of the Disclosure Certificate.. This Disclosure Certificate is being
executed and delivered by the City for the benefit of the Holders and Beneficial Owners of the
Bonds and in order to assist the Participating Underwriter in complying with S.E.C.
Rule 15c2 -12(b)(5).
SECTION 2. Definitions. In addition to the definitions set forth in the Indenture, which
apply to any capitalized team used in this Disclosure Certificate unless otherwise definedin this
Section, the following capitalized terms shall have the following meanings:
"Annual Report" shall mean any Annual Report provided by the City pursuant to, and as
described1"n. Sections 3 and 4 of this Disclosure Certificate.
"Beneficial Owner" shall mean any person which (a) has the power, directly or indirectly,
to vote or consent with respect to, or to dispose of ownership of, any Bonds (including persons
holding Bonds through nominees, depositories ar other intermediaries), or (b) is treated as the
owner of any Bonds for federal income tax purposes.
"Dissemination Agent" shall mean W1*11dan Financial Services, or any successor
Dissemination Agent designated by the City.
"Financial Obli"gati"on" means a (1") debt obligation; (ii) derivative instrument entered into
in connection with, or pledged as security or a source of payment for, an existing or planned debt
obligation., or (iii) guarantee of {i} or (ii). The term "financial obligation" shall not include
-P 4h municipal securities as to whchi: a final official statement has been provided to the MSRB
consistent with the Rule.
"Listed Events" shall mean any of the events listed in Section 5(a) of this Disclosure
Certificate.
{
2019.
"MSRB'shall mean the Municipal Securities Rulemaking Board.
"Official Statement" shall mean the Official Statement relating to the Bonds, dated,
3
"Participating Underwri"ter" shall mean the original purchasers of the Bonds required to
IP comply with the Rule in connection with offering of the Bonds.,
74850942.2
1
r]
"Rule" shall mean Rule 15c2 -12(b)(5) adopted by the Securities and Exchange
Commission under the Securities Exchange Act of 1934, as the same may be amended from time
to time.
"State" shall mean the State of California.
SECTION 3. Provision of Annual Re -ports,
(a) The City shall, or shall cause the Dissemination Agent to, not later than eight
months after the end of each Fiscal Year of
the next succeeding business day i*f that day
the City (presently such fiscal year ends June 30) or
is not t usiness day, commencing with the report for
the fiscal year ending June 30, 2019, provide to the MS" an Annual Report which is consistent
with the requirements of Section 4 of this Disclosure Certificate. The Annual Report may be
submitted as a single document or as separate documents comprising a package, and may cross-
reference other information as provided in Section 4 of this Disclosure Certificate; provided, that
the audited financial statements of the City may be submitted separately from the balance of the
Annual Report and later than the date required above for the filing of the Annual Report if theythey
are not available by that date. If the City's fiscal year changes, it shall give notice of such
change in the same manner as for a Listed Event under Section. 5(c),,
(b) Not later than fifteen (15) Business Days prior to said date, the City shall provide
the Annual Report to the Dissemination Agent (if other than the City). If the City is unable to
provide
a notice
to the MSRB an Annual Report by the date required in subsection (a), the City shall send
to the MS RB in substantia1ylthe form attached as Exhibit A.
(c) The Dissemination Agent shall (if the Dissemination Agent is other than the
City), file a report with the City certifying that the Annual Report has been provided pursuant to
this DIsclosureCertificate, stating the date it was provided to the MS".
SECTION 4. Content of Annual Reports. The City's Annual Report shall contain or
include by reference the:
1.6 The auditedfinancial statements of the City for the prior fiscal year, prepared i*n
accordance Wl'th9enerally accepted accounting Principles as Promulgated to apply to
governmental entities from time to time by the Governmental Accounting Standards Board. If
the City's audited financial statements are not available by the time the Annual Report is
required to be filed pursuant to Section 3(a).35 the Annual Report shall contain unaudited financial
statements in a format similar to the financial statements contained in the final Official
Statement, and the audited financial statements shall be filed in the same manner as the Annual
Report when they become available.
2,P An update as of the most recently ended Fiscal Year of the City for the following
tables 1, 6-5 7, 83 93 10, and 13 (actual, not budget).
3.5 Any rate increases that became effective on July 1 of the preceding calendar.
Any or all of the items listed above- may be included by specific reference to other
documents, including official statements of debt issues of the City or related public entities,
74850942..2
2
Which have been submitted to each of the MSRB or the Securities and Exchange Commission
the document included by reference is a final official statement, it must be available from
MSRB. The City shall clearly i
dentify each such other document so included ])y reference.
SECTION 5. Reporting of Significant
Events.
(a) Pursuant to the provisions of this Section 5, the City sha
given, notice of the occurrence of any of the following events with respec
obligations in relation to the Bonds:
(1)
(2)
(3)
(4)
(5)
(6) Adverse tax opinions, the issuance, by the Internal Revenue Service of proposed
or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other
material notices of determinations with respect to the tax status of the Bonds, or other material
Principal and interest payment deli nquencies;
Nonpayment related defaults, 1"f materl'al;
I I give,
t to the I
. If
the
or cause to be
ndenture or lets
Unscheduled draws on debt service reserves reflecting financial difficulties;
Unscheduled draws on credit enhancements reflecting financial di*fficulti"eso
Substitution of credit or liquidity providers, or their failure to perform;
events affecting the tax status of the Bonds.;
(7) Mod ifications to the rights of Bondholders, if material;
(8) Bond calls, if material, and tender offers;
(9) Defeasances;
(10) Release, substitution, or sale of property securing repayment of the Bonds, if
material;
(11) Rating changes;
(12) bankruptcy, insolvency, recevership ior similar event of the ci"tye
(13) the consummation of a merger, consolidation, or acquisition involving the City or
the sale of all or substantially all of the assets of the City, other than in the ordinary course of
business, the entry into a definitive agreement to undertake such an action or the termination of a
definitive agreement relating to any such actions, other than pursuant to its terms, if material;
(14) appointment of a successor or additional trustee or the change of name of a
trustee, if material.
(15) i1pnew7rence of a financial obligation of the District, if material, or agreement to
covenants, events of default, remedies, priority rights, or other similar terms of a financial
of thDitrisct, any of which affeobligationct security holders, if material; and
74850942.2
3
(16) default, event of acceleration, termination event, modification of terms, or other
similar events under the terms of a financial obligation of the District, any of which reflect
financial difficulties.
(b) If a Listed Event occurs, the City shall provide, in a timely manner and in no
event in excess of ten (10) Business Days after the occurrence of such Listed Event, notice of
such Listed Event with the MSRB.
SECTION 6. Termination of Reporting Obligation. The City's obligations under this
Iisclosure Certificate shall terminate upon the legal defeasance, prior ri"edempton or payment 14'n
full of all of the Bonds. If such termination occurs prior to the final maturity of the Bonds., the
C ishall give notice of such termination in the same manner as forty a Listed Event under
Section 5(c).
SECTION 7. Dissemination Agent. W1*11dan Financial Services will serve as the initial
Dissemination Agent hereunder. The City may, fiom time to time_, appoint or engage a different
Dissemination Agent to assist it in carrying out its obligations under this Disclosure Certificate,
and may discharge any such Agent., with or without appointing a successor Dissemination Agent.
The Dissemination Agent shall not be responsible in any manner for the content of any notice or
report prepared by the City pursuant to this Disclosure Certificate.
SECTION 8. Additional Information. Nothing in this Disclosure Certificate shall be
deemed to prevent the City from disseminating any other information, using the means of
dissemination set forth in this Disclosure Certificate or any other means of communication, or
including any other information in any Annual Report or notice of occurrence of a Listed Event,
in addition to that which is required by this Disclosure Certificate. If the City chooses to include
any information in any Annual Report or notice of occurrence of a Listed Event in addition to
that which is specifically required by this Disclosure Certificate, the City shall have no
obligation under this Certificate to update such information or include it i*n any future Annual
Report or notice of occurrence of a Listed Event.
The C ity acknowledges and understands that other state and federal laws, including but
not limited to the Securities Act of 1933 and Rule l0b-5 promulgated under the Securities
Exchange Act of 1934, may apply to the City, and that under some circumstances compliance
with this Disclosure Certificate, without additional disclosures or other action, may not fully
discharge all duties and obligations of the City under such laws.
SECTION 9. Default. In the event of a fa"Ilure of the City to comply with any provision
of this Disclosure Certificate, the sole legal remedy of any Holder or Beneficial Owner of the
Bonds or the Pailicipating Underwriter shall be an action to compel performance. A default
under this Disclosure Certificate shall not be deemed an Event of Default under the Indenture.
No Bondholder or Beneficial Owner may institute such action, suit or proceeding to
compel er ormance unless they shall have first delivered to the City satisfactory written
evidence of their status as such, and a written notice of and request to cure such failure, and the
City shall have refused to comply therewith within a reasonable time.
74850942.2
r.�
SECTION 10. Duties, Immunities and
D issemination Agent shall have only such duties as are specifically set forth
10
Liabilities of Dissemination
_Agent. The
in this Disclosure
Certificate, and the City agrees, by law., to indernnify and s ave the
Dissemination Agent, its officers, directors, employees and agents, harmless against any loss,
to the extent permitted
expense and liabilities which
powers and duties hereunder
defending against any claim
Agent's
survive resignation or removal ot the Dissemination Agent and payment ot the Bonds.
it may incur arising out of or 1"n the exercise or performance of its
including the costs and expenses (including attorneys' fees) of
of liability, but excluding liabilities due to the Dissemination
negligence or willful misconduct. The obligations of the City under this Section shall
SECTION 11. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the City may amend this Disclosure Certificate, and any provision of this
Disclosure Certificate may be waived, provided that, i"n the opinion of nationally recognized
bond counsel, such amendment or waiver is permitted by the Rule. In the event of any
amendment or waiver of a provision of this Disclosure Certificate, the City shall describe such
amendment in the same manner as for a Listed Event under Section 5(c). The City shall obtain
the consent of the Dissemination Agent for any amendment of the Disclosure Certificate that
affects the duties or obligations of the ]Dissemination Agent.,
SECTION 12. Transmission of Notices, Documents and Information.
(a) Unless otherwise required by the MSRB, all notices, documents and information
provided to the MSRB shall be provided to the Msim s Electronic Municipal Markets.,.-ccess
(EMMA) system, the current Internet Web address of which is vrww.e=a-.msrb.org,,
(b) All notices, documents and information provided to the MSRB shall be provided
in an electronic format as prescribed by the MSRB and shall be accompanied by identifying
information as prescribed by the MSRB..
SECTION 13. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the City, the Dissemination Agent, the Participating Tnderwriter and Holders and Beneficial
Owners from time to time of the Bonds, and shall create no ri'ghts in any other person or entity.
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Jones Hall, A Professional Law Corporation
Attachment 5
Draft Ot July 1612019
INDENTURE OF TRUST
between the
CITY OF PETALUMA
and
NEW YORK MELLON TRUST COMPANYN.A.THE BANK OF as Tru1^fls
Dated as of September 1,2.019
Relating to
0'
of PetalumaCity Bands
2019 Wastewater Revenue Refunding
1
.0
TABLE OF CONTENTS
ARTICLE I
Definitions; Rules of Construction
SECTION 1 a0i Definitions *i#iiiRii#i assesses* ■ oases bottom ■■ii#ia*t4i0***4**R****6*4**i***.*#*#4 *gore *# #i*#f*##■#■.##stow■■ ■ Son t9tt9# i
* #*#♦ t t t■ ao i i i a 0 0 0 t■# t t
2
SECTIONAuthorization.............. .*#**#*.**.0**0*t**#it*taitt**iteam veto ■iiii#tfttiii■i■■ii
* tt ***+** t i i i i i i### a 0 t t t■# 0 6 9
SECTIONt te tio f i f t a t t t t t■ i Eta # 0■ i i 9* i i 9 r# t t■# a t s 0 9* i** i* *** 0********** i#* t# 6. 7 i# 0 i 9 t t t 10# t t i W 1 9 1 1 1# 6# 0 0 0 0■■■#* 9** s a i* i
4#*# 4 f* t t f f# t t f t t W i i i f t■# i
2
ARTICLE 11.
Issuance of
SECTION01 Y Authorization Purpose of Bonds 0 *0*** ■■a#i■i
SECTION of the Bonds........ .**:6#v**.##that##tfatti#i#icoon ■tti***a■■ttai#artt 06000W*000*oasm a saadap 0 P 3
SECTIONRedemption Bonds......,,,,,,,,,, . 0 0******0v*qao*Wo #vl WEISS seem 0 *am#a#q*wo �#e 0 V#60#q 0000091 goes 0 a ma06.66660.**am#a#q**44�*e***#*#**■#0091gf■i■■■i#aa*
SECTIONBook Entry ****4000**#4* ftt#Siff#iii■■miss 0%to#60666#66000,&&t■rii■#,*4eel 0**■1.06#66##■i a a#0a0 0 #t a * 4� q. 06
SECTION Form and Execution of Bonds. t * ** t * 6 t t■ ■ 1 # 0 # 0 # 0 0 0 a # a # 0 0 # 1 1 a a a a a Goo as oast01ataiiii** 6***4*******.*** f#lift#■#iataattti i l i i
SECTION 24rO69 Transfer Exchange Bonds........... 0*990000■■ 0191919019.0 asset 0040ilii*ii*00000******i*t#*it##ttfftt■ft#iyittirrrii i
*
SECTION RegIstration Books... oil mass 0 Nam Roalsee4goto *6*64 WWOV**W*9*****♦*#1*****t*iii#t*1#tt■tiittitaiiiiii i
SECTION Destroyed �tt#00069600■r;i#}i**##******i****#i*#•tiifi,i■ii#t■,i9t*i*•ti
ARTICLE III
ISSUE OF BONDS; PDEBT
SECTION Issuance i***** 4 i**** W##* 4 4 0 0*****i0t ti*#■a#i■i00a000t■■ii*t ii*
4 i i ii at i 4 * 9* * e. * a a t * a t t t ■ 1 1 10
#
SE
CTIA 3.02., Deposit Application of Proceeds," Transfer of Fund0 * 4 6 6 6 6 r 0 4 9 a * a 10
SECTION Costs Issuance Fund. i** 6 0 0 0*** **##1******** i#iii#tttt■NSA gown rttt9■i#0i i
1 0
SECTION i Issuance i t* f t■ i# t t t t t r t■# t o r s■# a t t t t t t t# a a t t t a a i r***+** 4***# t t t t t r■ i t f t t# i i t i r i t# t f■ r r
10
SECTION 3,,,0 State
R � #tat■iiiitiiii#t#i#t■666#ii#**■******�*�#****i*�**************#*666060660#0666#■��40tf9tttf9i*9i*#******i****i#****�*ii*.#tt■#■ii#aatf
V
lidity
SECTION 3 * 0 ***********#*91*6t0*tiaf86811ttriii■00.60*.4#99994*i0******t4iii*ff#i##tttt■
ARTICLE IV
Revenues; w Of Funds
SECTION01 Pledge Revenues, . * * 6 * * 0 0. & r 0- 0 0 4 4 4 4 6 4 -0 4 0 6 * W * & I V * t 4 m: 0 W W I a * 6 6 0 6 0 V I * o 0 a o o 0 a * o o o a a e a a 4 * * W 4 * 0 0 * * ttaa*094**R4*##**0 **0Vt***0**IFVq*#t#iiiiiiaa*airi
*
11
Application SECTI #■ Receipt, s 0 a a a 0 a 9 * 4 0 0* ***44*#4.004#6*t 060aa0a00000aaaa 11
il
SECTION Establishment Stabization * s*a*#.** *****11#*tttt#9tr■■i ■it
12
SECTION4,04. *********4**f*t***#*#0*#tt■*ti668660#rr99■i#a*ii*i9*ii*i****** *i■#*t#iiii9000t 13
r
S
14
EGTA i ValuationDisposti6
n Investments...... 0*009 &ON 108I.I000069M 699999999*ii****t*194#aaittttttt■
ARTICLE V:
Financial Covenan
Wj'th
01
15
SECTION * Punctual Compliance Documents...... 6804.**6*444***•#t*�ttt*t*t,t#t■tttta■, iiiia0i 9
SECTION5,0D10scharge 09■ii■#a##a a42a96*4■14i40ii*04*4**04**000**i0a*aatt 019018tiiliii0000■■■0aa%a9aa*9i*6#**R0000*60*ata#■1 15
SECTIONOperationWastewaterin emEfficient
Manner........ 0*00060ge a a1 h *ti##ti#i#t■■est■f#t aso* att■ see son ■000000*0#aaa*0aiiii■9*i9*ii****i*
5
SECTION Sa/e or min Domain Wastewater eta
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SECTION
SECTION
SECTION
SECTION
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5.08.
5.09:.
5.
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16
Rates and Charges........ *W*04 ***4006■
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Tax Covenants Relating t R t i i# t t t R*■■■# t■ R i i R t t t# t 0 a i# a t a■ t■ i* t** 4 i* 4 4*** i** t**■ 4***** 4** 4* R■■ i# i■■ i# 4*■ i■■ i i i i i;
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SECTION 5.12.
SECTION 6.01.
SECTION 6.02.
SECTION 6,,03.
SECTION 6.04.
SECTION 6.05.
SECTION 6.06.
ff
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ARTICLE VI:
The Trusteet
Duties.,
and 18
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23
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ARTICLE #■##•ti•##■fit#■lit*##4.t■t#e1#1########■###i■i■■e#9#f■##•4.t
VII:
Modification and Amendmentthis Indenture:
SECTION 7.01 i Arnendments # # # # ■ R * t * * * • i * R • * # t * * # * * * i t i t t * ■ # t * * i t t t * • 4 * , * t * * ■ i # i t * t * * * * f # # t # t # # t * i i #
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SECTION 7.03t End25
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SECTION 7.05Trustee's Relnce i9*******0 * W■a
ARTICLE V111:
EventsRemedies of Bond Owners:
SECTION 8.01. Events of Default and Acceleration
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ARTICLE IX:
Miscellaneous:
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SECTION 9:,07,
SECTION 9,,08,
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SECTION 9. 1 0.
SECTION 9.11.
SECTION 9.123.
Parties,
30
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32
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APPENDIX
As.
DEFINITIONS
APPENDIX
B:
FORM
OF BOND
* i
a.1& 11 -
N
INDENTURE OF TRUST
Th*ls INDENTURE OF TRUST, dated as of September 1, 2019, is between the CITY
OF PETALUMA, a charter city and municipal corporation organized and existing under the
Constitution and laws of the State of California (the "City"), and THE BANK of NEW YORK
MELLON TRUST COMPANY, N.A., a national banking association organized and existing
under the laws of the United States of America, with a corporate trust office in San
Francisco, California, and being qualified to accept and administer the trusts hereby
created (the "Trustee").
14, The
(No. 05-803-550-0)
BACKGROUND:
City has previously entered into an Interagency Sales Agreement
with the State Water Resources Control Board in 2006. and
amended as of October 17, 2007, which
of $73,587,664 (the "SRF Loan").
2. Pursuant to the
outstanding r)rincipal balance of t
with accrued interest thereon
is currently outstanding in the principal amount
terms of the
he SRF Loan, i
to the prepayment
3. The City wishes at this time to pr
SRF Loan,
n whole or in
date, without
the City may prepay the
part, on any date, together
premium.
epay, in full, amounts outstanding under
ine arcr
roan,
iogeiner witn accruea interest inereon to
the prepayment aate, ana in
order to
provide
funds for that purpose, the City Council
of the City has authorized the
issuance of the City of Petaluma 2019 Wastewater Revenue
aggregate principal amount of $,
Articles 10 and 11 of Chapter 3 of Part 1 of Division 2 of Title 5 of the California
Refunding Bonds in the
ine tionas ) unaer the provisions oT
Governmen
t Code, commencing with Section 53570 of said Code (the "
Bond Law ").
4. The City has previously issued its 2017 Wastewater Revenue Refunding
Bonds in the aggregate principal amount of $23,365, 000 (the "2017 Bonds ") under the
provisions of the Bond Law and an Indenture of Trust, dated as of June '[, 2017, by and
between the City and The Bank of New York Mellon Trust Company, N.A., a s trustee
(the "2017 Indenture ").
5. The 2019 Bonds will be secured by a pledge of and lien on the Net
Revenues derived by the City from the operation of its Wastewater System, on parity
with the 2017 Bonds.,
6. In order to provide for the authentication and delivery of the Bonds, to
establ'i'sh and declare the terms and conditions upon which the Bonds are to be issued
and secured and to secure -the payment of the principal thereof and of the interest and
premium, if any, thereon, the City Council of the City has authorized the execution of this
Indenture.
AGREEMENT:
In order to secure the payment of the principal of and the interest on all the
Bonds under this Indenture according to their tenor, and to secure the performance and
observance of all the covenants and conditions therein and herein set forth, and to
declare the terms and conditions upon and subject to which the Bonds are to be issued
and received, and in consideration of the premises and of the mutual covenants herein
contained and of the purchase and acceptance of the Bonds bv the Owners thereof, and
the City
for other valuable considerations, the receipt of which is hereby acknowledged
and the Trustee hereby covenant and
respective Owners from time to time of t
agree with one anothe
he Bonds, as follows:
ARTICLE
DEFINITIONS; RULES OF CONSTRUCTION
SECTION 1..01. Definitions. Unless the
unless otherwise defined herein, the capitalized t
this Indenture have the r
Indenture.
SECTION 1,.02..
warrants that it has full
r, for the benefit of the
context clearly otherwise requires or
erms defined in Appendix A attached to
espective meanings specified in Appendix /-\ when used in this
r
Authorization. Each of the parties hereby represents and
egal authority and is duly empowered to enter into this Indenture,,
ano nas taKen ani actions necessary to autno
persons signing it.
SECTION 1.03. Interpretation.
rize the execution hereof by the officers and
(a) Unless the context otherwise indicates, words expressed in the
vice versa and the use of the neuter, masculine, or f
I the plural and
gender is for convenience only and
appropriate.
(b)
are solely for
singular
eminine
X
nclude the neuter, masculine or feminine gender, as
Headings of articles and sections
convenience of reference. do not
the meaning, constructs
on or effect hereof.
herein and the table of contents hereof
constitute a part hereof and do not affect
(c) All references herein to "Articles," "Sections" and other subdivisions are to
the corresponding Articles, Sections or subdivisions of this Indenture; the words "herein ,"
"hereof," "hereby," "hereunder" and other words of similar import refer to this Indenture
as a whole and not to any particular Article, Section or subdivision hereof.
ARTICLE If
ISSUANCE OF BONDS
SECTION 2.01. Authorization and Purpose of Bonds. The City has reviewed all
proceedings heretofore taken and has found, as a result of such review, and hereby
finds and determines that all things, conditions and acts required by [aw to exist, h appen
or be performed precedent to and in connection with the issuance of the Bonds do exist,
have han pened and have been performed in due time, form and manner as required by
law, and the City is now duly empowered, under each and every requirement of law, to
issue the Bonds in the manner and form provided in this Indenture.
r
The City hereby
amount of $
prepay, in full, amounts
authorizes the issuance of Bonds
in the
aggregate
under the Bond Law for the purposes of providing
outstanding
principal
funds to
under the SRF Loan, and thereby discharge the
City's obligations with respect to the SRF Loan. The Bonds are autho
under, and are subject to the terms of, this Indenture and the Bond Law
designated the "City of Petaluma 2019 Wastewate
rized and issued
. The Bonds are
r Revenue Refunding Bonds".
SECTION 2.02. Terms of the Bonds. The Bonds are issuable in fully registered
form without coupons in denominations of $5,000 or any integral multiple thereof, so
long as no Bond has more than one maturity date:,
Closing Date, nnd will mature on
and bea
amounts
t
t
May 1 in the yea
r interest (calculated on the basis
weive 30 -day months) at the respective rates pe
able:
the Bonds will be dated as of the
rs and in the respective principal
of a 360 -day year comprised of
r annum, as set forth
Maturity Date Princ19
ipal Interest
A.May 1) _Amount Rate
I %
Interest on the Bonds is payable
the date of authentication thereof unless
from the Interest
in the following
Payment Date next preceding
(a) a Bond is authenticated on or before an Interest Payment Date and
after the close of business on the preceding Record Date, in which
event it w'111 bear interest from such Interest Payment Date,
(b) a Bond is authenticated on or before the first Record Date, in which
event interest thereon will be payable from the Closing Date, or
(c) interest on any Bond is in default as of the date of authentication
thereof, in which event interest thereon will be payable from the date
to which interest has been paid in full, payable on each Interest
Payment Date.
Interest is payable on each Interest Payment Date to the persons in whose
names the ownership of the Bonds is registered on the Registration Books at the close
of business on the immediately preceding Record Date, except as provided below.
Interest on any Bond which is not punctually paid or duly provided for on any Interest
Payment Date is payable to the person in whose name the ownership of such Bond is
registered on the Registration Books at the close of business on a special record date
for the payment of such defaulted interest to be fixed bY the Trustee, notice of which is
given to such Owner by first-class mail not less than 10 days prior to such special record
date.
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ky\e
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a�� p°s e addC Re��Cd feast � ustee w �n �mm pme��ca SG�nded e
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busineg SO
gee as o� ash Payment�a�eWi�h+U st 4 e
v emh��gond sn,twn and su
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e*ach ch ��oCeaues< .��ustee cK °{ tre ondsarto Su �tte Owbe by she the B dates.
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Unk\n ite Stades Office Ok th Bonds s s etfo� e�tNe
o� at the Redempt�� onf Ex�epoC to <he�r ve;p� e
tkie�enN 2�3,.�
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(iv) that on the redemption date the Redemption Price will become
due and payable with respect to each such Bond or portion thereof called for
redemption, and that interest with respect thereto shall cease to accrue from and
after said date, and
(v) the place or places where such Bonds are to be surrendered
payment of the Redemption Price, which places of payment may include
Office of the Trustee.
(f) Additional. Notice. In
be given by the Trustee as set out
for
the
addition to the foregoing notice, further not ice shall
below*, provided, that, without limiting the proviso in
clause (d) above, no defect in said further notice nor any failure to give all or any portion
of such further notice shall in any manner defeat the effectiveness of a call for
redemption if notice thereof is given as above prescribed:
(i) Each further notice of redemption given hereunder
the information required above plus (A) the CUSIP numbers of all
redeemed; (B) the stated interest rate with respect to each
redeemed; (C) the maturity date of each
other descriptive information needed to
redeemed'.
shall contain
Bonds being
Bond
being
Bond being redeemed; and (D) any
identify accurately the Bonds being
ii) Each further notice of redemption shall be sent on the date notice
is mailed to Bond Owners by registered or certified mail or overnight delivery
service to all registered securities depositories then in the business of holding
substantial amounts of instruments of types comprising the Bonds.
(iii) Upon the payment of the Redemption Price of the
redeemed, each check or other transfer of funds issued for such
bear the CUSIP number identifying, by issue and maturity, the
redeemed with the proceeds of such check or other transfer.
Bonds being
purpose shall
Bonds being
(g) Rescission of Notice of Redemption,. The City has the right to rescind any
notice of the redemption of Bonds given under Section 2.03(d) by written notice to the
Trustee on or prior to the date fixed for redemption. Any notice of optional redemption
shall be cancelled and annulled if for any reason funds will not be or are not available on
the date fixed for redemption for the payment in full of the Bonds then called for
redemption, and such cancellation shall not constitute an Event of Default. The City and
the Trustee have no liability to the Bond Owners or any other party related to or arising
from such rescission of notice of redemption. The Trustee shall mail notice of such
rescission of notice of redemption in the same manner as the original notice of
redemption was sent under Section 2.03.
(h) Deposit of Money. On or prior to any redemption date, the City shall
deposit with the Trustee an amount of money sufficient to pay the Redemption Price of
all the Bonds or portions of Bonds which are to be redeemed on that date,,
(VL
i) Consequences of Notice. Notice of redemption having been given as
aforesaid, the Bonds or portions of Bonds so to be redeemed shall, on the redemption
date, become due andp ayable at the Redemption Price therein specified, and from and
after such date (unless the City shall default in the payment of the Redemption Price)
such Bonds or portions of Bonds shall cease to have interest accrue thereon. Upon
surrender of suc
shall be paid by t
h Bonds for redemption in accordance with said notice, such Bonds
he Trustee at the Redemption Price. Installments of interest due on or
prior to the redemption date shall be payable as herein provided for payment of interest.
Upon surrender for any partial redemption of any Bond, there shall be prepared for the
Owner a new Bond or Bonds of the same maturity in the amount of the unredeemed
principal. All Bonds which have been redeemed shall be cancelled and destroyed bv the
Trustee and shall not be redelivered:,
(j) .Partial Redemption of Bonds.,
called for redemption, then upon surrender of
In the event only a portion of any Bond is
such Bond redeemed in part only. the Citv
snail execute ana the irustee snail auTnenTicate and deliver to the uwne
expense of the City, a new Bond or
authorized denominations in aggregate
portion of the Bond or Bonds.
r
r
(k) Manner of
edemption, the Trustee
r, at the
Bonds, of the same series and .maturity, of
principal amount equal to the unredeemed
Redemption. Whenever any Bonds are to be selected for
shall determine, by lot, the numbers of the Bonds to be
edeemed, and shall notify the City thereof.
(I) Purchase of Bonds in lieu of Redemption. In lieu of redemption of any
Bonds pursuant to 2.03(b), amounts on deposit in the Redemption Account may also be
used and withdrawn by the City at any time for the purchase of such Bonds at public or
private sale as and when and at such prices (including brokerage and other charges and
including accrued interest) as the City may in its discretion determine. The par amount
of any of such Bonds so purchased by the City in any twelve-month period ending on
March 1 in any year shall be credited towards and shall reduce the par amount of such
Bonds required to be redeemed pursuant to Section 2.03(b) on the next succeeding
May 1,..
All Bonds redeemed pursuant to this Section and all Bonds purchased by the
City pursuant to this subsection (I) shall be cancelled and destroyed pursuant to Section
9. 07.
SECTION 2.04. Book Entry System.
(a) Original Delivery,. The Bonds will be initially delivered in the form of a
separate single fully registered bond (which may be typewritten) for each maturity of the
Bonds. Upon initial delivery, the Trustee shall register the ownership of each Bond on
the Registration Books in the name of the Nominee. Except as provided in subsection
(c), the ownership of all of the Outstanding Bonds shall be registered in the name of the
Nominee on the Registration Books.
With respect to Bonds the ownership of which is registered in the name of the
IF
Nominee, the City and the Trustee has no responsibility or obligation to any Depository
System Participant or to any person on behalf of which the Nominee holds an interest in
the Bonds. Without limiting the generality of the immediately preceding sentence, the
City and the Trustee has no responsibility or obligation with respect to (i) the accuracy of
the records of the Depository, the Nominee or any Depository System Participant with
respect to any ownership interest in the'Bonds, (ii) the delivery to any Depository System
Participant or any other person, other than a Bond Owner as shown in the Registration
6d
d
Books, of any notice with respect to the Bonds, (iii) the selection by the Depository of the
beneficial interests in the Bonds to be redeemed if the City elects to redeem the Bonds
in part, (iv) the payment to any Depos'i'tory System Participant or any other person, other
,.,�,, � �...,� �..,.... �., ,,,........,, „.......�.....�.._.. ___.._,
nT any amount W!Tn respect Tn
principal, premium, if any, or interest on the Bonds or (v) any consent given or other
action taken by the Depository as Owner of the Bonds. The City and the Trustee may
treat and consider the person in whose name each Bond is registered as the absolute
owner of such Bond for the purpose of payment of principal of and premium, if any, and
interest on such Bond, for the purpose of giving not'i'ces of matters with respect to such
Bond, for the purpose of registering transfers of ownership of such Bond, and for all
other purposes whatsoever:. The Trustee -shall pay the principal of and the interest and
premium, if any, on the Bonds only to the respective Owners or their respective
attorneys duly authorized in writing, and all such payments shall be valid and effective to
fully satisfy and discharge all obligations with respect to payment of principal of and
interest and premium, if any, on the Bonds to the extent of the sum or sums so paid. No
person other than a Bond Owner shall receive a Bond evidencing the obligation of the
City to make payments of principal, i nterest and premium, if any, under this Indenture.
Upon delivery by the Depository to the City of written notice to the effect that the
Depository has determined to substitute a new Nominee in its'place, and subject to the
provisions herein with respect to Record Dates, such new nominee shall become the
Nominee hereunder for all purposes; and upon receipt of such a notice the City shall
promptly deliver a copy of the same to the Trustee.
than a Rnnri 0vvnt=_r ac chnwn in thin- Rim_ni_cztrqfinn Rnnk..q
(b) Representation Letter. In order to qualify the Bonds for the Depository's
book -entry system, the City shall execute and deliver to such Depository a letter
representing such matters as shall be necessary to so qualify the Bonds. The execution
and delivery of such letter shall not in any way limit the provisions of subsection (a)
above or in any other way impose upon the City or the Trustee any obligation
whatsoever with respect to persons having interests in the Bonds other than the Bond
Owners. Upon the written acceptance by the Trustee, the Trustee shall agree to take all
action reasonably necessary for all representations of. the Trustee in such letter with
respect to the Trustee to at all times be complied with. In addition to the execution and
delivery of such letter, the City may take any other actions, not inconsistent with this
Indenture, to qualify the Bonds for the Depository's books -entry program,,.
(c) Transfers Outside Book -Entry System. If either (*I) the Depository
determines not to continue to act as Depository for the Bonds, or (ii) the City determines
to terminate the Depository as such, then the City shall thereupon discontinue the book -
entry system with such Depository. In such event, the Depository shall cooperate with
the City and the Trustee in the issuance of replacement Bonds by providing the Trustee
with a list showing the interests of the Depository System Participants in the Bonds, and
by surrendering the Bonds, registered in the name of the Nominee, to the Trustee on or
before the date such replacement Bonds are to be issued. The Depository, by accepting
delivery of the Bonds, agrees to be bound by the provisions of this subsection (c). If,
prior to the termination of the Depository acting as such, the City fails to identify another
Securities Depository to replace the Depository, then the Bonds shall no longer be
required to be registered in the Registration Books in the name of the Nominee, but shall
be registered in whatever name or names the Owners transferring or exchanging Bonds
shall designate, in accordance with the provisions hereof.,
r 4.r
f
If the City determines that it is in the best interests of the bene
ficial owners of the
Bonds that they be able to obtain certificated Bonds, the City may notify the Depository
ificated Bonds through the Depository.
and exchange Bonds as requ
Depository and others in appropriate amounts; and whenever the Deposit
System Participants of the availability of such cert
ill issue, transfer
In such event, the Trustee w
fired by the
ory requests,
the Trustee and the City shall cooperate with the Depository in taking appropriate action
(i) to make available one or more separate certificates evidencing the Bonds to any
Depository System Participant having Bonds credited to its account with the Depository,
or (ii) to arrange for another Securities Depository to maintain
certificate evidencing such Bonds, all at the City's expense.
custody of a single
(d) ,Payments to the Nominee. Notwithstanding any other provision of this
Indenture to the contrary, so long as any Bond is registered in the name of the Nominee,
all payments with respect to principal of and interest and premium, if any, on such Bond
and all notices with respect to such Bond shall be made and given, respectively, as
provided -in the letter described in subsection (b) of this Section or as otherwise
instructed by the Depository.
SECTION 2.05., Form and Execution of Bonds. The Bonds, the form of Trustee's
certificate of authentication, and the form of assignment to appear thereon, are set forth
in Appendix B attached hereto and by
or approp
Indenture.
riate variations, omissions
this reference incorporated herein, with necessary
and insertions, as permitted or required by this
The Mayor of the City shall execute, and the City Clerk of the City shall attest
each Bond. Either or both of such signatures may be made manually or may be affixed
by facsimile thereof. If any officer whose signature appears on any Bond ceases to be
such officer before the Closing Date, such signature will nevertheless be as effective as
if the officer had remained in office until the Closing Date., Any Bond may be signed and
attested on behalf of the City by such persons as at the actual date of the execution of
such Bond are the proper officers of the City, duly authorized to execute debt
instruments on behalf of the City, although on the date of such Bond any such person
was not an officer of the City.
Only those Bonds bearing a certificate of authentication in the form set forth in
Appendix B, manually executed and dated by the Trustee, are valid or obligatory for any
purpose or entitled to the benefits of this Indenture, and such certificate -of the Trustee is
conclusive, evidence that such Bonds have been duly authenticated and delivered
hereunder and are entitled to the benefits of this Indenture.
SECTION 2.,06. Transfer and Exchange of Bonds.
(a) Transfer. Any Bond may, in accordance with its terms, be transferred, upon
the Registration Books, by the person in w.hose name it is registered, in person or by a
duly authorized attorney of such person, upon surrender of such Bond to the Trustee at
its Office for cancellation, accompanied by delivery of a written instrument of transfer in a
form acceptable to the Trustee, duly executed. The Trustee shall collect any tax or other
governmental charge on the transfer of any Bonds under this Section 2.06. Whenever
any Bond or Bonds shall be surrendered for transfer, the City shall execute and the
Trustee shall authenticate and deliver to the transferee a new Bond or Bonds of like
series, interest rate, maturity and aggregate principal amount. The City s
hall pay the
cost of printing Bonds and any services
connection with any tr
P1
provisions of this Secti
anGfp.r nf Rnnrl..q
rendered or expenses incurred by the Trustee in
�.._._. _. . The Trustee may refuse tn transfer, under the
ion 2.06, either (a) any Bonds during the per'i'od 15 days prior to
the date established by the Trustee for the selection of Bonds for redemption, or (b) any
Bonds.selected by the Trustee for redemption.
(b) Exchange. The Bonds may be exchanged at the Office of the Trustee for a
like aggregate principal amount of Bonds of other authorized denominations and of the
same series, interest rate and maturity. The Trustee shall collect any tax or other
governmental charge on the exchange of any Bonds under this subsection (b). The City
shall pay the cos
t of printing Bonds and any services rendered or expenses incurred bv
the i rustee in connection with
anv PxrhannP nf Rnndc;
The Trustee may refuse tC)
exchange, under the provisions of this Section 2.06, either (a) any Bonds during the 15
days. prior to the date established by the Trustee for the selection of Bonds for
redemption or (b) any Bonds selected by the Trustee for redemption.
SECTION 2.07., Registration Books. The Trustee will keep or cause to be kept, at
its Office, sufficient records for the registration and registration of transfer of the Bonds,
which must at all times during normal
nnen tn incnertinn hv thp- r,.*1tv* and
business hours,, and upon reasonable notice, be
,.r..,. ,......,r....,...,. �, ,,... _..,, , upon presentation for such
shall, under such reasonable regulations as it may Presc
cause to be r
provided.
i purpose, the Trustee
ribe, register or transfer or
eaistered or transferred, on the Registration Books
Bonds as hereinbefore
SECTION 2.08. Bonds Mutilated, Lost, Destroyed or Stolen. If any Bond is
mutilated, the City, at the expense of the Owner of such Bond, shall execute, and the
Trustee shall thereupon authenticate and deliver, a new Bond of like tenor in exchange
and substitution for the Bond so mutilated, but only upon surrender to the Trustee of the
Bond so mutilated. The Trustee shall cancel every mutilated Bond surrendered to it and
deliver such -mutilated Bond to, or upon the order of, the City. If any Bond is lost,
destroyed or stolen, evidence of such loss, destruction or theft may be submitted to the
Trustee and, if, such evidence is satisfactory and if indemnity satisfactory to the Trustee
is given, the City, at the expense of the Owner, shall execute, and the Trustee shall
thereupon authenticate and del'i'ver, a new Bond of like tenor in lieu of and in subst*itution
for the Bond so lost, destroyed or stolen. The Trustee may require payment of a sum
not exceeding the actual cost of preparing each new Bond issued under this Section and
of the expenses which may be incurred by the Trustee in connection therewith. Any
Bond issued under the provisions of this Section in lieu of any Bond alleged to be lost,
GL destroyed or stolen will constitute an original additional contractual obligation on the part
of the City whether or not the Bond so alleged to be lost, destroyed or stolen be at any
time enforceable by anyone, and shat[ be equally and proportionately entitled to the
benefits of this Indenture with all other Bonds issued under this Indenture.
Notwithstanding. any other provision of this Section 2.08, in lieu of del ivering a
new Bond for which principal has become due for a Bond which has been mutilated, lost,
destroyed or stolen, the Trustee may make payment of such Bond in accordance with its
terms upon receipt of indemnity satisfactory to the Trustee.
F;
Inden
to t
ARTICLE III
ISSUE OF BONDS -N3 PARITY DEBT
SECTION 3.01. Issuance of Bonds. Upon the execution and delivery of this
ture, the City shall execute and deliver Bonds in the aggregate principal amount of
to the Trustee and the Trustee shall authenticate and deliver the Bonds
he Original Purchaser upon receipt of a Request of the City therefor.
SECTION 3,,,.02., Deposit and Application of Proceeds; Transfer of Funds. On the
Closing Date, the Trustee shall apply the proceeds of the Bonds received from the
original Purchaser in the amount of $
of the bonds ($r _
$, _ , less an underw
9
(calculated based on the par amount
.00), plus/less 'net] original issue
0
riter's discount of $
(a) The Trustee sha
Costs of Issuance Fund.
(b) The Trustee
constituting the remainder of t
Control Board for t
as
premium/discount of
follows:
.)
II deposit the amount of $
0
to the
shall transfer the amount of $ ,
he Bond proceeds, to the State Water Resources
he prepayment, in full, of the SRF Loan.
SECTION 3.03. Costs of Issuance Fund. There is hereby established a separate
fund to be known as the "Costs of Issuance Fund ", to be held by the Trustee in trust.
The Trustee shall disburse moneys in the Costs of Issuance Fund from time to time to
pay Costs of Issuance upon submission of a Request of the City stating (a) the person to
whom payment is to'be made, (b) the amounts to be paid, and (c) the purpose for which
h a statement or invoice for
the obligati
amount reg
n was incurred; in each case together wit
Aested thereunder., On March 1, 2020, the
F 9 9 9 IF JOM% I r, I
Trustee shall transfe
ssuance Tuna io the Debt Service
applied to pay a portion of the interest next coming due and payable on the
Fund
Bonds.
each
r any
to be
SECTION 3.04,. Issuance of Parity Debt. The City may issue Parity Debt in such
or
principal amount as it determines, subject to the following conditions precedent:
(a) No Event of Default (or no event with respect to which notice has
been given and which, once all grace periods have passed, would
constitute an Event of Default) has occurred and is continuing.
(b) The amount of Net Revenues, as shown by the books of the City for
the most recent completed Fiscal Year for which audited financial
statements of the City are available, or for any more recent
consecutive 12 -month period selected by the City, in either case
verified by an Accountant or a Financial Consultant or shown in the
audited financial statements of the City, plus, at the option of the
City any Additional Revenues, are at least equal to 125°/o of the
IL
amount of Maximum Annual Debt Service coming due and payable
in the current or any future Fiscal Year with respect to the Bonds
and all Parity Debt then outstanding (including the Parity Debt then
proposed to be issued); and
-10-
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(i) Operati
deposit
m
on and Maintenance Costs. The City shall apply amounts on
in the Wastewater Fund to pay all Operation and
Maintenance Costs when due.
(ii) Debt Service Fund. On or before the 3rd Business Day preceding
each
Interest
Payment Date. so Iona as anv Bonds remain
Outstanding hereunder, the C
2
itv shall withdraw from the Wastewater
Fund and pay to the Trustee for deposit into the Debt Service Fund
II establish and hold in trust hereunde
which the Trustee sha
amount which, together with other available
deposit in the Debt Service Fund, is at least equal to the aggregate
amounts then on
amount of principal of and
r) a n
interest coming due and payable on the
Bonds on such Interest Payment Date.
The Trustee shall apply amounts in the Debt Service Fund solely for
the purpose of (A) paying the interest on the Outstanding Bonds
when due and payable (including accrued interest on any Bonds
purchased o
the Bonds
r redeemed hereunder), and (B) paying the principal of
at the maturity thereof. Upon the payment of all
Outstanding
remaining in t
Bonds, theTrustee
he Debt Service Fund
Wastewater Fund.
shall transfer any moneys
to the City for deposit into the
(c) Other Uses of Wastewater Fund,. The City shall
apply moneys in the Wastewater Fund in such a manner that all
made under this Sect'i'on and under any Parity Debt
times and in the amounts so required.
any
So long as no Event of Default has occurred and is continuing, the City may at
t
manage, conserve and
deposits r
Documents will be
eq u i red
to be
made at the
ime use and apply moneys in the Wastewater Fund for any one or more of the
following purposes:
(i) the payment of any.. subordinate
obligations or any unsecured
obligations;
(ii) the acquisition and construction of extensions and improvements to
the Wastewater System;
(iii) the payment or retirement of any of the Bonds or any other
obligations of the City relating to the Wastewater System; or
(*Iv)
any other lawful purpose of the City relating to the Wastewater
System.
SECTION 4.03. Establishment of Rate Stabilization Fund. The City has
established a fund to be held by it and administered in accordance with this Section
4.03, for the purpose of stabilizing the rates and charges imposed by the City with
respect to the Wastewater System'.
From time to time the City may deposit amounts in
the Rate Stabilization Fund, from any source of legally available funds, including but not
limited to Net Revenues which are released from the pledge and lien which secures the
Bonds and any Parity Debt, as the City may determine.
-12-
The City may, but is not required to, withdraw from any amounts on deposit in the
Rate Stabilization Fund and deposit such amounts in the Wastewater Fund in anv. Fiscal
Year for the purpose of paying Debt Service coming
Year. Amounts so transferred from the Rate Stabilizati
shall constitute Gross Revenues for such Fiscal Yea
herein), and shall be applied for the purposes of the
deposit in t'
due and payable in such Fiscal
on Fund to the Wastewater Fund
r (except as otherwise provided
Wastewater Fund. Amounts on
ne Kate titaDiiization Tuna snaii not De Dleaaea to or otherwise secure the
bonas or any
Parity Debt. The City has the right at any time to wit
amounts on deposit in the Rate Stabilization Fund and apply such
lawful purposes of the City relating to the Wastewater System.
SECTION 4.04. Investments.
hdraw any or all
amounts for any
(a) .Investment of Funds Held bv City. All moneys in the Wastewater Fund and
the Rate Stabilization Fund shall be invested by the City from time to
securities in which the City may legally invest funds subject to its control.,
time i n any
(b) Investment of Funds Heid by Trustee:. The Trustee shall invest moneys in
the funds and accounts held by it hereunder in Permitted Investments specified in the
Request of the City delivered to the Trustee at least two Business Days in advance of
the making of such investments. The Trustee may rely conclusively upon the investment
direction of the City as to the suitability and legality of the directed investments. In the
absence of any such direction from the City, the Trustee shall invest any such moneys
solely in Permitted Investments described in clause (e) of the definition thereof;
provided, however, that any such investment shall be made by the Trustee only if, prior
to the date on which such investment is to be made, the Trustee shall have receiver! a
Request of the City specifying a specific money market fund that satisfies the
requirements of said paragraph in which such investment is to be made and, if no such
Request of the City is so received, the Trustee shall notify the City that a Request of the
City is Weeder!.
(c) General Investment Provisions. Obligations purchased as an investment of
moneys in any fund or account shall be deemed to be part of such fund or account.
Whenever in this Indenture the City is required to transfer any moneys to the Trustee,
such transfer may be accomplished by transferring a like amount of Permitted
investments:, All interest or gain derived from the investment of amounts in any of the
funds or accounts held by the Trustee hereunder shall be retained in the respective fund
or account from which such investment was made. For purposes of acquiring any
investments hereunder, the'Trustee may commingle funds held by it hereunder upon
receipt by the Trustee of the Request of the City. The Trustee or an affiliate may act as
principal or agent in the acquisition or disposition of any investment and may impose its
customary charges therefor. The Trustee has no liability for losses arising from any
OL
investments made under this Section:.
The City acknowledges that to the extent regulations of the Comptroller of the
Currency or other applicable regulatory entity grant the City the right to receive
brokerage confirmations of security transactions as they occur, the City specifically
waives receipt of such confirmations to the extent permitted by law. The Trustee w'111
furnish the City periodic transaction statements which include detail for all investment
transactions made by the Trustee hereunder.
-13-
q.
The Trustee
connection with any
or any of* its affiliates may act as sponsor, advisor or manager in
investments made by the Trustee hereunder.
SECTION 4.05,, Valuation and Disposition of Investments.
(a) Except as otherwise provided in subsection (b) of this Section, the City
covenants that all investments of amounts deposited in any fund or account created by
or under this Indenture, or otherwise containing gross proceeds of the Bonds (within the
meaning of Section 148 of the Tax Code) shall be acquired, disposed of and valued (as
of the date that valuation is required bv this Indenture or the Tax Code) at Fair Market
Value as such term is defined in subsection (d) below.
(b) Investments in funds or accounts (or portions thereof that are subject to a
yield restriction under applicable provisions of the Tax Code shall be valued at cost
thereof (consisting of present value thereof within the meaning of Section 148 of the Tax
Codeprovided that the City must inform the Trustee which funds are subject to a yie.-
))
restriction, and must provide the Trustee with any necessary valuation criteria or
formulae.
(c) Except as provided in the proceeding subsection (b), for the purpose of
determining the amount in any fund, the Trustee shall value Permitted Investments
credited to such fund at least annually at the Fair Market Value thereof, on May 1 of
each year. The Trustee shall have no duty in connection with the determination of Fair
Market Value other than to follow: (i) its normal practices in the purchase, sale and
determining the value of Permitted Investments; and (ii) the investment directions of the
City. The Trustee may utilize and rely on computerized securities pricing services that
may be available to it, including those available through its regular accounting system. If
and as directed by the City in writing, the Trustee shall sell or present for redemption any
Permitted Investment so purchased by the Trustee whenever it is necessary to provide
moneys to meet any -required payment, transfer, withdrawal or disbursement from the
fund to which such Permitted Investment is credited, and the Trustee has no liability or
responsibility for any loss resulting therefrom. in determining the market value of
Authorized Investments, the Trustee may use and rely conclusively and without liability
upon any generally recognized pricing information service (including brokers and dealers
in securities) available to it.
(d) For purposes of this Section 4,,:05, the term "Fair Market Value" means the
price at which a willing buyer would purchase the investment from a willing seller in a
bona fide, arm's length transaction (determined as of the date the contract to purchase
or sell the investment becomes binding) if the investment is traded on an established
securities market (within the mean ing of Section 1273 of the Tax Code) and, otherwise,
the term "Fair Market Value" means the acquisition price in a bona fide arm's length
transaction (as referenced above) if (i) the investment is a certificate of deposit that is
acquired in accordance with applicable regulations under the Tax Code, (ii) the
investment is an agreement with specifically negotiated withdrawal or reinvestment
provisions and a specifically negotiated interest rate (for example, a guaranteed
investment contract, a forward supply contract or other investment agreement) that is
acquired in accordance with applicable regulations under the Tax Code, or (iii) the
investment is a United States Treasury Security -- State and Local Government Series
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a
E
which is acquired in accordance with applicable regulations of the United States Bureau
of Public Debt.
ARTICLE V
FINANCIAL COVENANTS
SECTION 5.01. Punctual Payment; Compliance With Documents. The City shall
punctually pay or cause to be paid the interest and principal to become due with respect
to all of the Bonds in strict conformity with the terms of the Bonds and of this Indenture,
and will faithfully observe and perform all of the conditions, covenants and requirements
of this Indenture and all Supplemental Indentures.
SECTION 5.02. Discharge of Claims. The City covenants that in order to fully
preserve and protect the priority and security of the Bonds the Citv shall r)av from the
Net Revenues and discharge all lawful claims for labor. mate
for or in connection with the Wastewate
charge upon the Net Revenues prior or
security of t
■
rials and supplies furnished
r System which, if unpaid, may become a
superior to the lien of the Bonds and i
ne tronas. i ne amity snarl also pay, from the Net Revenues, all t
lien or
mpair the
axes and
assessments or other governmental charges lawfully levied or assessed upon or in
respect of the Wastewater System or upon any part thereof or upon any of the Net
Revenues therefrom.
SECTION 5.03., Operation of Wastewater System in Efficient and Economical
Manner. The City covenants and agrees to operate the Wastewater System in an
efficient and economical manner and to operate, maintain and preserve the Wastewater
System in good repair and working order.
SECTION 5,,04., Sale or Eminent Domain of Wastewater System. Except as
jp
provided herein, the City covenants that the Wastewater System will not be
encumbered, sold, leased, pledged, any charge placed thereon, or otherwise disposed
of, as a whole or substantially as a whole, if such encumbrance, sale, lease, pledge,
charge or other disposition would materially impair the ability of the City to pay the
principal of or interest on the Bonds or any Parity Debt, or would materially adversely
affect its ability to comply with the terms of this Indenture or any Parity Debt Documents.,
The City may not enter into any agreement which impairs the operation of the
Wastewater System or any part of it necessary to secure adequate Net Revenues to pay
the Bonds and any Parity Debt, or which otherwise would impair the rights of the Bond
Owners with respect to the Net Revenues.
The Net Proceeds received as awards as a result of the taking of all or any part
of the Wastewater System by the lawful exercise of eminent domain, if and to the extent
that such right can be exercised against such property of the City, shall either (a) be
used for the acquisition or construction of improvements and extension of the
Wastewater System, or (b) be applied on a pro rata basis to redeem the Bonds and any
Parity Debt in accordance with this Indenture and the related Parity Debt Documents.
SECTION 5,,05,, Insurance. The City will at all times maintain with responsible
insurers all such insurance on the Wastewater System as is customarily maintained with
respect to works and properties of like character against accident to, loss of or damage
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x
to the Wastewater System. The
worker's compensation i
nsurance
damage to the extent reasonably
City sha
and i
II also maintain, with responsible insurers,
nsurance against public liability and property
necessary to protect the CitV, the Trustee and the
Owners of the Bonds. The Trustee has no liability t
jp
compliance with the provisions of this Section 5.05.
o determine whether the City is in
The Net Proceeds collected by the City from insurance against accident to or
destruction of any portion of the Wastewater System shall be used to repair or rebuild
IN
such damaged or destroyed portion of the Wastewater System, and to the extent not so
rata basis to redeem the Bonds and any Parity Debt in
accordance with this Indenture and the related Parity Debt Documents.
applied
, shall be applied on a pro
SECTION 5.06. Records and Accounts. The City will keep proper books of record
and accounts of the Wastewater System, separate from all other r
in which complete and co
rrect entries shall
ecords and accounts,
be maae or aii transactions relating to the
Wastewater System. Said books shall, upon reasonable request, be subject to the
inspection of the Trustee and the Owners of not less than 10% of t
or their representatives authorized in writing.
he Outstanding Bonds
The City shall cause the books and accounts of the Wastewater System to be
for inspection by
audited annually by an Independent Accountan
the Trustee,
t
r
he Bond Owners at the Office of
eport of such Independent Accountant.
t and will make available
upon reasonable request, a copy of the
SECTION 5,,07. Rates and Charges. The City shall fix, prescribe, revise and
collect rates, fees and charges for the services and facilities furnished by the
Wastewater System during each Fiscal Year, which are at least sufficient, after making
allowances for contingencies and error in the estimates, to yield Gross Revenues
sufficient to pay the following amounts in the following order of priority:
(a) All Operation and Maintenance Costs estimated by the City to
become due and payable in such Fiscal Year;
(b) The principal of and interest on the Bonds and any Parity Debt as
they become due and payable during such Fiscal Year, without
preference or priority, except to the extent such interest is payable
from proceeds of Parity Debt deposited for such purpose;
(c) All payments required to meet any other obligations of the City
which are charges, liens, encumbrances upon, or which are
otherwise payable from, the Gross Revenues or the Net Revenues
during such Fiscal Year.
In addition, the City shall fix, prescribe, revise and collect rates, fees and charges
for the services and facilities furnished by the Wastewater System during each Fiscal
Year which are sufficient to yield Net Revenues which are at least equal to X20% of the
amount described in the preceding clause (b) for such Fiscal Year. For purposes of this
paragraph, the amount of Net Revenues for a Fiscal Year will be computed on the basis
that (a) any transfers into the Wastewater Fund in such Fiscal Year from the Rate
Stabilization Fund are included in the calculation of Net Revenues, as provided in
Section 4.03, (b) any deposits into the Rate Stabilization Fund in such Fiscal Year are
-16
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deducted from the amount of Net Revenues to the extent such deposits are made from
Gross Revenues received by the City during that Fiscal Year, and (c) Gross Revenues
shall not include connection fees or interest income expected to be received in such
Fiscal Year'.
S ECT1oN 5. 08. Superior and Subordinate Obligations
incur any additional bonds or other obligations having any priority over the Bonds in the
payment of principal or interest out of the Net Revenues. Nothing herein limits or affects
The Citv may not issue or
the ability of the City to issue or incur oblIt
igations which are either unsecured or which
are secured bv an interest in the Net Revenues which is junior and subordinate to the
pledge of and lien upon the Net Revenues established hereunder.
SECTION 5.09. Tax Covenants Relating to Bonds.
(a) Generally.. The City shall not take any ac
action within its control which would cause or which,
cured would cause, interest on the Bonds to become
federal income tax purposes.
ion or permit to be taken any
pith the passage,of time if not
ncludable in gross income for
(b) Private Activity Bond Limitation,. The City shall assure that the proceeds of
the Bonds are not used in a manner which would cause the Bonds to become " private
activity bonds" wsithin the meaning of section 141(a) of the Tax Code
private loan financing test of Section 141 (c) of the Tax Code.
(c)
or to meet the
Federal Guarantee Prohibition. The C*Itv shall not take anv action or permit
or suffer any action to be taken if the result of the same would be to cause the Bonds to
be " federally guaranteed " within the meaning of Section 149(b) of the Tax Code.
(d) No Arbitrage. The City shall not take, or permit or suffer to be taken by the
Trustee or otherwise, any action with respect to the Bond proceeds which, if such action
had been reasonably expected to have been taken, or had been deliberately and
intentionally taken, on the Closing Date, would have caused the Bonds to be "arbitrage
bonds" within the meaning of Section 148 of the Tax Code.
(e) Rebate of Excess, Investment Earnings. The City shall calculate or cause
to be calculated all amounts of excess investment earnings with respect to the Bonds
which are required to be rebated to the United States of America under Section 148( of
the Tax Code, at the times and in the manner required under the Tax Code. The City
shall pay when due an amount equal to excess investment earnings to the United States
of America in such amounts, at such times and in such manner as may be required
under the Tax Code, such payments to be made from any source of legally available
funds of the City. The City shall keep or cause to be kept, and retain or cause to be
retained for a period of six years following the retirement of the Bonds, records of the
lk
determinations made under this subsection (e).
The Trustee has no duty to monitor the compliance by the City with any of the
covenants contained in this Section 5.09.
SECTION 5.10. [Reserved].
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0
SECTION 5.11. Continuing Disclosure. The City will comply with and carry out all
of the provisions of the Continuing Disclosure Certificate which has been executed and
delivered by the City on the Notwithstanding any other provision hereof,
failure of the City to comply with the Continuing Disclosure Certificate does not constitute
Closing Date.
i
an Event of Default hereunder; provided, however, that any Participating Underw
such term is defined in the Continuing Disclosure Certificate) or any Owner or
owner of the Bonds may take such actions as may be necessary and appropriateincluding seeking specific performance by court order, to cause the City to comply with
its obligations under this Section 5.11.
titer (as
;neficial
SECTION
deliver any and
reasonably necessary or proper to carry out the intention or to facilitate the performance
Further Assurances.
The City will adopt, make, execute and
all such further resolutions, instruments and assurances as may be
� a r
of this Indenture, and for the better assuring and confirming unto the
Bonds and the Trustee the rights and benefits provided in this Indenture.
ARTICLE VI
THE TRUSTEE
SECTION 6.01. Duties, Immunities and Liabilities of Trustee.
Owners of the
a) Performance of Duties. The Trustee shall,prior.to the occurrence of an
Event of Default, and after the curing or waiving of all Events of Default which may have
occurred, perform such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or duties will be read into this Indenture against the
Trustee. The Trustee shall, during the existence of any Event of Default (which has not
been cured or waived), exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a reasonable
corporate trustee would exercise or use.
(b) Removal of Trustee. The City may remove the Trustee upon 30 days' prior
notice, and shall remove the Trustee (i) if at any time requested to do so by an
instrument or concurrent instruments in writing signed by the Owners of not less than a
majority in aggregate principal amount of the Bonds then Outstanding (or their attorneys
duly authorized in writing) or (ii) if at any time, the Trustee ceases to be eligible in
accordance with subsection (e) of this Section 6.01, or becomes incapable of acting, or
is adjudged a bankrupt or insolvent, or a receiver of the Trustee or its property is
appointedor any public officer takes control or charge of the Trustee or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation. The City may
accomplish such removal by giving 30 days written notice to the Trustee, whereupon the
City will appoint a successor Trustee by an instrument in writing.
(c) Resignation by Trustee. The Trustee may at any time resign by giving
written notice of such resignation to the City, and by giving notice of such resignation by
first class mail, postage prepaid, to the Bond Owners at their respective addresses
shown on the Registration Books. Upon receiving such notice of resignation, the City
will promptly appoint a successor Trustee by an instrument in writing.
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(d) Appointment of Successor Trustee.
Trustee and appointment of a successor Trustee becomes effective upon acceptance of
appointment by the successor Trustee. If no successor Trustee has been appointed and
Any removal or resignation of the
accepted appointment within 45 days following giving notice of removal or notice of
resignation
as aforesaid, the resigning Trustee, any Owner (on behalf of such Owner
and all other Owners
may petition any
successor Trustee, and such court may
deem proper, appoint
this Indenture shall
delivering to the City
federal or
thereupon
such successor Trustee
signify its acceptance
state court for the appointment of a
after such notice (if any) as it may
Any successor Trustee appointed under
of
such appointmen
and to its predecessor Trustee a w
, without any f
such successor Trustee
vested with all the moneys,
estates,
urther act,
properties
o bligations or sucn predecessor Trustee, with li
deed
ri
ritt
or
t by
en acceptance
ghts, powers, trusts
ke effec
(ecut'ing and
thereof, and
;hall become
duties and
t as if originally named Trustee
Herein; but, nevertheless, upon the receipt by the predecessor Trustee o
the City or the r
f t
equest of the successor Trustee, such predecessor
he Request of
Trustee shall
execute and deliver any and all instruments of conveyance or further assurance and do
such other things as may reasonably be required for more fully and certainly vesting in
and confirming to such successor Trustee all the right, title and interest of such
predecessor Trustee in and to any property held by it under this Indenture and shall pay
over, transfer, assign and deliver to the successor Trustee any money or other property
subject to the trusts and conditions herein set forth. Upon request of the successor
Trustee, the City will execute and deliver any and all instruments as may be reasonably
required for more fully and certainly vesting in and confirming to such successor Trustee
all such moneys, estates, properties, rights, powers, trusts, duties and obligations. Upon
acceptance of appointment by a successor Trustee as provided in this subsection, the
City shall mail or cause the successor Trustee to mail, by first class mail postage
prepaid, a notice of the succession of such Trustee to the trusts hereunder to each rating
agency which then maintains a rating on the Bonds, and to the Owners at the addresses
shown on the Registration Books. If the City fails to mail such notice within 15 days after
acceptance of appointment by the successor Trustee, the successor Trustee shall cause
such notice to be mailed at the expense of the City..
(e) Qualifications of Trustee. Any Trustee appointed under the provisions of
"mw�
this Section in succession to the Trustee must:
(i) be a company, national banking association or bank having trust
powers,
(*Ii) have a corporate trust office in the State of California,
(iii) have (or be part of a bank holding company system whose bank
holding company has) a combined capital and surplus of at least
$75,000,000, and
(iv) be subject to supervision or examination by federal or state
authority.
If such bank, national banking association or company publishes a report of
condition at least annually, under law or to the requirements of any supervising or
examining authority above referred to, then for the purpose of this subsection the
combined capital and surplus of such bank, national banking association or company
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t
0
shall be deemed to be its combined capital and surplus as set forth in its
:R
report of condition so published. In case at any time the Trustee shall
eligible
in accordance with t
immediately
f
most recent
cease to be
II resign
he provisions of this subsection (e), the Trustee sha
W
n the manner and with t
he effect spec
ified in subsection (c) of t
his Section.
The City will maintain a Trustee which is qualified under the provisions of the
oregoing provisions ot this subsection (e), so long as any Bonds are Outstanding.
SECTION x.02.
or compan
them may
resulting fr
9
Merger or Consolidation. Any bank, nationa
into which the Trustee may be merged or converted o
be consolidated or any bank, national banking
om any merger, conversion or consolidation to which
I banking association or company to wh'i'ch the Trustee may sell or transfer
DanK, nationa
all or substantially all of its corporate trust business,bank, national
banking association or company shall be eligible underSection 6.01shall be the successor to such Trustee without the execution or filing of any paper or any
I banking.associ*at*io n
r with which either of
association or company
it shall be a party or any
providedsuch
subsection(e)of subsection (e) of
further act, anything herein to the contrary notwithstanding.
6ECTION 6.03. Rights andLian1lities of Trustee.
(a) The recitals of facts herein and
in . the Bonds contained are taken as
statements of the City, and the Trustee has no responsibility for the correctness of the
same, nor does it have any liability whatsoever therefor, nor make any representations
as to the validity or sufficiency of this Indenture or of the Bonds nor shall it incur any
responsibility in respect thereof, other than as expressly stated herein. The Trustee is,
however, responsible for its representations contained in its certificate of authentication
on the Bonds. The Trustee is not liable in connection with the performance of its duties
hereunder, except for its own negligence or willful misconduct. The Trustee is not liable
for the acts of any agents of the Trustee selected by it with due care:. The Trustee may
become the Owner of any Bonds with the same rights it would have if it were not Trustee
and, to the extent permitted by law, may act as depository for and permit any of its
officers or directors to act as a member of, or in any other capacity with respect to, any
committee formed to protect the rights of the Owners, whether or not such committee
shall represent the Owners of a majority in principal amount of the Bonds then
Outstanding. The Trustee, either as pr incipal or agent, may engage in or be entrusted in
any financial or other transaction with the City.
(b) The Trustee has no liability with respect to any action taken or omitted to be
taken by it in accordance with the direction of the Owners of a majority in aggregate
principal amount of the Bonds at the time Outstanding relating to the time, method and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred upon the Trustee under this Indenture.
(c) The Trustee has no liability for any action taken by it in good faith and
believed by it to be authorized or within the discretion or rights or powers conferred upon
it by this Indenture, except for actions arising from the negligence or willful misconduct of
the Trustee:, The permissive right of the Trustee to do things enumerated hereunder is
not. -construed as a mandatory duty-,
(d) The Trustee will not be deemed to have knowledge of any Event of Default
hereunder unless and until a responsible officer of the Trustee has actual knowledge
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J
Q
thereof, or unless and until a responsible officer of the Trustee has received written
notice thereof at its Office. Except as otherwise expressly provided herein, the Trustee
is not bound to ascertain or inqu
ire as to the performance or observance of anv of the
terms, conditions, covenants or agreements herein or of any of the documents executed
in connection with the Bonds, or as to the existence of an Event of Default hereunder or
thereunder. The Trustee is not responsible for the City's payment of principal and
interest on the Bonds, the C*1tv's observance or performance of anv other covenants.
conditions or terms
g iven to or held
contained herein, or the validity or effectiveness of any
0
collateral
ay it. vviinoui iimuing the generamy or the Toregoing,
and
notwithstanding anything herein to the contrary, the Trustee is not responsible for
reviewing the contents of any financial statements furnished to the Trustee under
Section 5.06 and may rely conclusively on a Certificate of the City (if any) to establish
the City's compliance with its financial covenants hereunder, including, without limitation,
its covenants regarding the deposit of Gross Revenues into the Wastewater Fund and
the investment and application of moneys on deposit in the Wastewater Fund (other than
its covenants to transfer such moneys to the Trustee when due hereunder).
(e) No provision in this Indenture requires the Trustee to risk or expend its own
funds or otherwise incur any financial liability -hereunder. The Trustee is entitled to
receive interest on any moneys advanced ov iT hereunder, aT the maximum rate
permitted by law.
(f) The Trustee may establish additional accounts or subaccounts of the funds
established hereunder as the Trustee deems necessary or prudent in furtherance of its
duties under this Indenture.
(g) The Trustee has no responsibility or liability whatsoever with respect. to any
information, statement, or recital in any official statement, offering memorandum or any
other disclosure material prepared or distributed with respect to the Bonds, nor shall the
Trustee have any obligation to review any such material, and any such review by the
Trustee will not be deemed to create any obligation, duty or liability on the part of the
Trustee.
(h) At any and all reasonable times the Trustee, and its duly authorized agents,
attorneys, experts, engineers, accountants and representatives, have the right (but not
the duty) fully to inspect the Wastewater System, including all books, papers and records
of the City pertaining to the Wastewater System and the Bonds, and to take such
memoranda from and with regard thereto as may be desired but which is not privileged
by statute or by law.
(i) Before taking any action under Article VIII or this Article VI, the Trustee may
require indemnity satisfactory to the Trustee be furnished to it to hold the Trustee
harmless from any expenses whatsoever and to protect it against any liability it may
incur hereunder.
(j) The immunities extended to the Trustee also extend 'to
officers, employees and agents.
(k) The permissive right
Indenture is not construed as a duty.
its directors,
of the Trustee to do things enumerated
in this
(I) The Trustee may execute any of the trusts or powers hereof and perform
any of its duties through attorneys, agents and receivers and
conduct of the same if appointed by it with reasonable care.
(m) The Trustee shall not be considered
obligations hereunder or progress in respect thereto
is not answerable for the
in breach of or in default in its
in the event of enforced delay in the
performance of such obligations due to unforeseeable causes beyond its control and
without its fault or negligence, including, but not limited to, Acts of God or of the publ'i'c
enemy or terrorists, acts of a government, acts of the other party, fires, floods,
epidemics, quarantine restrictions, strikes, freight embargoes,
mob violence, riot, inability to procure or general sabotag
earthquakes,
s
in the open
or rationing
in the open
xpiosion,
of labor,
eq uipment, facilities, sources of energy, material or supplies market,
litigation or arbitration involving a party or others relating to zoning or other governmental
action or inaction pertaining to the project, malicious mischief, condemnation, and
unusually severe weather or delays of suppliers or subcontractors due to such causes or
any similar event and/or occurrences beyond the control of the Trustee.
SECTION 6:,04. Right to Rely on Documents. The Trustee is protected in acting
upon any notice, resolution, requisition, request, consent, order, certificate, report,
opinion, facsimile transmission, electronic mail or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or parties. The
Trustee may consult w'i'th counsel, including,. without limitation, Bond Counsel or other
counsel of or to the City, with regard to legal questions, and the opinion of such counsel
shall be full and complete authorization and protection in respect of any action taken, or
suffered by the Trustee hereunder in accordance therewith.
The Trustee is not bound to recognize any person as the Owner of a Bond
unless and until such Bond is submitted for inspection, if required, and such person's
title thereto is established to the satisfaction of the Trustee.,
Whenever in the administration of the trusts imposed upon it by this Indenture the
Trustee deems it necessary or desirable that a matter be proved or established prior to
taking or suffering any action hereunder, such matter (unless other evidence in respect
thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a Certificate of the City, which shall be full warrant to the Trustee for any
action taken or suffered in good faith under the provisions of this Indenture in reliance
upon such Certificate, but in its discretion the Trustee may (but has no duty to), in lieu
thereof, accept other evidence of such -matter or may require such additional evidence
as to it may deem reasonable. The Trustee may conclusively rely on any certificate or
report of any Independent Accountant appointed by the City.
The Trustee shall have the right to accept and act upon instructions, including
funds transfer instructions ("Instructions") qivenP ursuant to this Indenture and delivered
using Electronic Means ("Electronic Means" means the following communications
methods: e-mail, facsimile transmission, secure electronic transmission containing
applicable authorization codes, passwords and/or authentication keys issued by the
Trustee, or another method or system specified by the Trustee as available for use in
connection with its seryices hereunder); provided, however, that the City shall provide to
the Trustee an incumbency certificate listing officers with the authority to provide such
Instructions ("Authorized Officers") and containing specimen signatures of such
Authorized Officers, which incumbency certificate shall be amended by the City,
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whenever a person is to be added or deleted from the listing.
If the City elects to give
the Trustee Instructions usina Electronic Means and the Trustee in its discretion elects to
act upon such Instructions, the Trustee's understanding of such Instructions shall be
deemed controlling. The City understands and agrees that the i rusiee cannot
determine the identity of the actual sender of such Instructions and that the Trustee shall
conclusively presume that directions that purport to have been sent by an Authorized
Officer listed on the incumbency certificate provided to the Trustee have been sent bv
such Authorized Off'i'cer- The City shall be responsible for ensuring that only Authorized
Officers transmit such Instructions to the Trustee and that the City and all Authorized
Officers are solely responsible to safeguard t
and authorization codes, passwords and/o
he use and confidentiality of
applicable user
r authentication keys upon receipt by the City.
i tie i rustee snaii not De BaDle for any losses, costs or expenses arising directly or
ind'i'rectly from the Trustee's reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written
instruction. The City agrees: (i) t o assume all risks arising out of the use of Electronic
Means to submit Instructions to the Trustee, including without limitation the risk of the
Trustee acting on unauthorized Instructions, and the risk of interception and misuse by
third parties; (ii) that it is fully informed of the protections and risks associated with the
various methods of transmitting Instructions to the Trustee and that there may be more
secure methods of transmitting Instructions than the method(s) selected by the City; (iii)
that the security procedures (if any) to be followed in connection with its transmission of
Instructions provide to it a commercially reasonable degree of protection in light of its
particular needs and circumstances; and (iv) to notify the Trustee immediately upon
learning of any compromise or unauthorized use of the security procedures.
The Trustee shall not be concerned with or accountable to anyone for the
subsequent use or application of any moneys which shall be released or withdrawn in
accordance with the provisions hereof.
SECTION 6,05,, Preservation and Inspection of Documents. All documents
received by the Trustee under the provisions of this Indenture shall be retained in its
possession and shall be subject during normal business hours, and upon reasonable
prior written notice, to the inspection of the City and any Owner, and their agents and
representatives duly authorized in writing'.
SECTION 6-.06. Compensation and Indemnification. Absent any agreement to the
contrary, the City shall pay to the Trustee from time to time compensation for all services
rendered under this Indenture and also all expenses, charges, legal and consulting fees
and other disbursements and those of its attorneys ('I'ncluding any allocated costs of
internal counsel), agents and employees, incurred in and about the performance of its
powers and duties under this Indenture. The Trustee has a first lien on the Net
Revenues and all funds and accounts held by the Trustee hereunder to secure the
payment to the Trustee of all fees, costs and expenses, including compensation to its
experts, attorneys and counsel incurred in declaring such Event of Default and in
exercising the rights and remedies set forth in Article VIII. Any such expenses incurred
by the Trustee shall be deemed to constitute a substantial contribution to the trust estate
which secures the Bonds.
The City further covenants and agrees to indemnify and save the Trustee and its
officers, directors, agents and employees, harmless against any loss, expense, including
legal fees and expenses, and liabilities, whether or not litigated, suits, actions,
-23-
judgments, which it may incur arising out of or in the exercise and performance of its
powers and duties hereunder, including the costs and expenses of defending against
any claim of liability and
of enforcing any remedies hereunder and under any related
documents, but excluding any and all losses, expenses and liabilities which are due to
the negiigence or willful misconduct of the Trustee, its officers, directors, agents or
employees. The obligations of the City under this Section 6.06 shall survive resignation
or removal of the Trustee under this Indenture and r)avment of the Bonds and discharge
of this Indenture.
SECTION 6.07
. Accounting Records and Financia
at all times Keep, or cause to De Kept, proper DOOKS or i
accordance with corporate trust industry standards, in
entries shall be made of all transactions made bV it relati
r
Statements. The Trustee shall
cord and account, prepared in
which complete and accurate
g to the proceeds of the Bonds
end all tunas ana accounts estaDiisnea ana neia ay the i rusiee unaer inis indenture.
N
uch books of record and account shall be available for inspection by the City at
easonable hours, during regular business hours, with reasonable prior notice and under
reasonable circumstances. ine i rustee snail turnisn to the uitv, at yeast semiannually,
an accounting (which may be in the form of its customary statements) of all transactions
relating to the proceeds of the Bonds and all funds and accounts held bv the Trustee
under this Indenture.
ARTICLE VII
MODIFICATION AND AMENDMENT OF THIS INDENTURE
SECTION 7. 01. Amendments Permitted.
(a) Amendment With Bond Owner Consent. This Indenture and the rights and
hNNOMMW
obligations of the City and of the Owners of the Bonds may be modified or amended by
the City and the Trustee upon Request of the City at any time by the execution of a
Supplemental Indenture, but only with the written consent of the Owners of a majority in
aggregate principal amount of the Bonds then Outstanding with respect to all Bonds then
Outstanding, exclusive of Bonds disqualified as provided in Section 9..05. Any such
Supplemental Indenture becomes effective upon the execution and delivery thereof by
the parties thereto and upon consent of the requisite Bond Owners. No such
modification or amendment may'.
(i} extend the maturity of any Bond or reduce the interest rate thereon,
or otherwise alter or impair the obligation of the City to pay the
principal thereof, or interest thereon, at the time and place and at
the rate and in the currency provided therein, without the written
consent of the Owner of such Bond, or
permit the creation by the City of any mortgage, pledge or lien upon
the Gross Revenues or Net Revenues superior to or on a parity with
the pledge and lien created for the benefit of the Bonds (except as
expressly permitted by this Indenture), or reduce the percentage of
Bonds required for the affirmative vote or written consent to an
amendment or modification, or
-24 .
(iii) modify any of the ri
written consent:.
(b)
and obligati
amended at
Amendment Withou
ons of the Citv and
ghts or obligations of the Trustee without its
t Bond Owner Consent. This Indenture and the rights
of the Owners of the Bonds may also be modified or
anv time bv a SUDDlemental Indenture. without the consent of
of the Bonds, for
.1
any one or more of the following purposes:
any Owners
(i) to add to the covenants and agreements of the City contained in this
Indenture, other covenants and agreements thereafter to be
observed, or to limit or surrender any rights or power herein
reserved to or conferred upon the City;
to cure any ambiguity, or to cure, correct or
defective provision
respect whatsoeve
supplement
contained in this Indenture, or in
r as the Citv deems necessary or
any
any
other
desirable,
proviaea unaer any circumstances that such modifications or
amendments do not materially adversely affect the interests of the
Owners in the opinion of Bond Counsel filed with the City and the
Trustee;
to provide for the issuance of Parity Debt under Section 3,,04, and to
provide the terms and conditions under which such Parity Debt may
be issued, including but not limited to the establishment
funds and
accounts relating thereto and any other
relating solely thereto, subject to .and in accordance
provisions of Section 3.04; and
of special
provisions
with the
(iv) to amend any provision hereof to assure the exclusion from gross
income of interest on the Bonds for federal income tax purposes
under the Tax Code, in the opinion of Bond Counsel filed with the
City and the Trustee.
(c) Notice of Amendments. The City shall deliver or cause to be delivered a
draft of any Supplemental Indenture to Moody's and S&P, at least 70 days prior to the
effective date of such Supplemental Indenture under this Section 7.01.
SECTION 7..02. Effect of Supplemental Indenture. From and after the time any
Supplemental Indenture becomes effective under this Article VII, this Indenture shall be
deemed to be modified and amended in accordance therewith, the respective rights,
duties and obligations of the parties hereto or thereto and all Owners, as the case may
be, shall thereafter be determined, exercised and enforced hereunder subject in all
respects to such modification and amendment, and all the terms and conditions of any
Supplemental Indenture shall be deemed to be part of the terms and conditions of this
Indenture for any and all purposes.
SECTION 7.03. Endorsement or Replacement of Bonds After Amendment. After
the effective date of any amendment or modification hereof under this Article VII, the City
may determine that any or all of the Bonds shall bear a notation, by endorsement in form
approved by the City, as to such amendment or modification and in that case upon
demand of the City the Owners of such Bonds shall present such Bonds for that purpose
-25-
i
at the Office of the Trustee, and thereupon a suitable notation as to such action shall be
made on such Bonds. In lieu of such notation, the City may determine that new Bonds
shall be prepared and executed in exchange for any or all of the Bonds and in that case
upon demand of the City the Owners of the Bonds shall present such Bonds for
exchange at the Office of the Trustee without cost to such Owners.
SECTION 7,,04, Amendment by Mutual Consent. The provisions of this Article VII
shall not prevent any Owner from accepting any amendment as to the particular Bond
held by such Owner.
SECTION 7.,05,, Trustee's Reliance. The Trustee may conclusively rely, and is
protected in relying, upon a Certificate of the City and an opinion of counsel stating that
all requirements of this Indenture relating to the amendment or modification hereof have
been satisfied and that such amendments or modifications do not materially adversely
affect the interests of the Owners..
ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES OF BOND OWNERS
SECTION 8.01.
following events constit
Events of Default and Acceleration
utes an Event of Default hereunder.-
(a)
Failure to pay any installment of the principal
due, whether at maturity as therein expressed,
acceleration, or otherwise.
of Maturities. Each of the
of any Bonds when
by proceedin.gs for
(b) Failure to pay any installment of interest on the Bonds when due.
(c) Failure by the City to observe and perform any of the other
covenants, agreements or conditions on its part contained in this
Indenture or in the Bonds, if such failure has continued for a period
of 30 days after written notice thereof, specifying such failure and
requiring the same to be remedied, has been given to the City by
the Trustee; provided, however, if in the reasonable opinion of the
City the failure stated i n the notice can be corrected, but not within
such 30 -day period, such failure shall not constitute an Event of
Default if the City institutes corrective action within such 30 -day
period and thereafter diligently and in good faith cures the failure
within 60 days after the written notice of default thereof.
(d) The City commences a voluntary bankruptcy case under Title 11 of
the United States Code or any substitute or successor statute.
If an Event of Default occurs and is continuing, the Trustee may, and at the
written direction of the Owners of a majority in aggregate principal amount of the Bonds
then Outstanding the Trustee shall (a) for any default listed in Section 8.01 (a), (b) or (d)
only, declare the principal of the Bonds, together with the accrued interest thereon, to be
due and payable immediately, and upon any such declaration the same will become
immediately due and payable, anything in this Indenture or in the Bonds to the contrary
-26-
notwithstanding, and (b) subject to the provisions of Section 8-.06, exercise any other
emedies available to the Trustee and the Bond Owners in law or at eauitv to enforce the
ghts of the Bond Owners under this I
ursuant to the California Code of Civil
r
ri
ndenture, including
the right, by action brought
Procedure, or as otherwise provided by law, to
obtain the issuance of a writ of mandamus enforcing the duty of the City to take all steps
necessary for t
due hereunder.
he payment of principal of and interest on the Bonds, and other amounts
Immediately upon becoming aware of the occurrence of an Event of Default, but
It no event later than five Business Days following becoming aware of such occurrence,
the Trustee shall give no
in writing.. Such notice
declared to be or have
t1i'ce of such Event of Default to the City bv telephone confirmed
shall also state whether the principal of the Bonds has been
immediately become due and payable. With respect to any
Event of Default described in clauses (a) or (b) above the Trustee shall. and with respect
to any Event of Default descr*1
bed in clause (c)
0
above the Trustee in its sole discretion
may, also give such notice to the Owners, which sha
on the Bonds shall cease to accrue from and after t
declares the Bonds to become due and payable under the preceding paragraph (but
II include the statement that interest
e date, if any, on which the Trustee
only to the exten
t that principal and any accrued, but unpaid, interest on the Bonds is
actually paid on such date).
This provision, however, is subject to the condition that if, at any time after the
principal of the Bonds has been so declared due and payable, and before any judgment
or decree for the payment of the moneys due has been obtained or entered, the City
shall deposit with the Trustee a sum sufficient to pay all principal on the Bonds matured
prior to such declaration and all matured installments of interest (if any) upon all the
Bonds, with interest on such overdue installments of principal and interest at an interest
rate of 10% per annum, and the reasonable fees and expenses of the Trustee, including
fees and expenses of its attorneys, and any and all other defaults known to the Trustee
(other than in the payment of principal of and interest on the Bonds due and payable
solely by reason of such declaration) has been made good or cured to the satisfaction of
the Trustee or provision deemed by the Trustee to be adequate has been made therefor,
then, and in every such case, the Owners of at least a mJaority in aggregate principal
amount of the Bonds then Outstanding, by written notice to the City and to the Trustee,
may, on behalf of the Owners of all of the Bonds, rescind and annul such declaration
and its consequences. However, no such rescission and annulment shall extend to or
shall affect any subsequent default, or shall impair or exhaust' any right or power
consequent thereon.
SECTION 8,,02. Application of Funds Upon Acceleration. All amounts received by
the Trustee under any right given or action taken by the Trustee under the provisions of
this Indenture shall be applied by the Trustee as follows and in the following order0
:
(a) First, to the 'payment of any fees, costs and expenses incurred by
the Trustee to protect the interests of the Owners of the Bonds;
payment of the fees, costs and expenses of the Trustee (including
fees and expenses of its counsel, including any allocated costs of
internal counsel) incurred in and about the performance of its
powers and duties under this Indenture and the payment of all fees,
costs and expenses owing to the Trustee under Section 6.06,
-27.
}
0
together with interest on all such amounts advanced by the Trustee
at the maximum rate permitted by law.
(b) Second, to the payment of the whole amount then owing and unpaid
upon the Bonds for interest and principal, with interest on such
overdue amounts at the respective rates of interest borne by those
Bonds, and in case such moneys shall be insufficient to pay in full
the whole amount so owing and unpaid upon the Bonds, then to the
payment of such interest, principal and interest on overdue amounts
without preference or priority among such interest, principal and
V
nterest on overdue
interest, principal and
amounts ratat3iy to the aggregate or sucn
interest on overdue amounts.
SECTION 8,,03, Power of Trustee to Control Proceedings
the happening of an Event of Default'. takes anv action., bv
otherwise, in the performance o
.9
1
. If the Trustee, upon
udicial proceedings or
t its autres nereunaerI wnetner upon its own discretion9 a 4 a .0.
upon the request ot the owners of a majority in aggregate principai amount of the Bonds
then Outstanding, it has full power, in the exercise of its discretion for the best interests
4L
of the Owners of the Bonds, with respect to the continuance, discontinuance, withdrawal,
compromise, settlement or other disposal of such action and the Trustee has been
indemnified to its satisfaction. The Trustee may not, unless there no longer continues an
Event of Default, discontinue, withdraw, compromise or settle, or otherwise dispose of
any litigation pending at law or in equity, if at the time there has been filed with it a
written request signed by the Owners of a majority in principal amount of the
Outstanding Bonds hereunder opposing such discontinuance, withdrawal, compromise,
settlement or other disposal of such litigation. `
SECTION 8.04. Limitation on Owners'Right to Sue. No Owner of any Bond has
the right to institute any suit, action or proceeding at law or in equity, for any remedy
under or upon this Indenture, unless:
(a) said Owner has previously given to the Trustee written notice of the
occurrence of an Event of Default;
(b) the Owners of a majority in aggregate principal amount of all the
Bonds then Outstanding have requested the Trustee in writing to
exercise the powers hereinbefore granted or to institute such action,
suit or proceeding in its own name;
(c) said Owners have tendered to the Trustee indemnity reasonably
acceptable to the Trustee against the costs, expenses and liabilities
to be incurred in compliance with such request; and
(d) the Trustee has failed to comply with such request for a period of 60
days after such written request has been received by, and said
tender of indemnity has been made to, the Trustee.
Such notification, request, tender of indemnity and refusal or omission are hereby
declared, in every case, to be conditions precedent to the exercise by any Owner of any
remedy hereunder; it being understood and intended that no one or more Owners has
any right in any manner whatever by his or their action to enforce any right under this
-28-
a
Indenture, except in the manner herein provided, and that all proceedings at law or in
equity to enforce any provision of this Indenture shall be instituted, had and maintained
in the manne
Bonds.
The
premium, if
r herein provided and for the equal benefit of all Owners of the Outstanding
right of any Owner of any Bond to receive payment of the principal of and
any, and interest on such Bond as herein provided, shall not be impaired or
affected without the written consent of such Owner, notwithstanding the foregoing
provisions of this Section or any other provision of this Indenture.
SECTIO►v 8.05. Non -waiver. Nothing in this Artici
shiall
rt
e VIII or in any other provision of
this Indenture or in the Bonds, affects or impairs the obligation' of the City, which is
absolute and unconditional, to pay from the Net Revenues and other amounts pledged
hereunder, the principal of and interest on the Bonds to the Bond Owners when due and
payable as herein provided, or affects or impairs the right of action,
absolute and unconditional, of the Bond Owners
by virtue of the contract embodied in the Bonds.
impa
A waiver of any default by any Owner
itanyrightsorremediesonthe
which is
also
to institute suit to enforce such payment
subsequent not affect any subsequent default or
default. No delay or omission of any
Owner to exercise any right or power accruing upon any default shall imps
'beawaiver of any such default or an
remedyconferred upon the Owners by the
r by this Article VIII may be enforced and exercised from time to time and as
SIIbedeemedexpedientbytheOwners.
itanysuch
runt or Howerorsha
IIbeconstruedtoacquiescencetherein,andeverypowerand
BondLawo
oftenassha
Ifasuit,actionorproceedingtoenforceanyrightorexerciseanyremedyis
abandonedordeterminedadverselytotheOwners,theCityandtheOwnerswillbe
restoredtotheirformerpositions,rightsandremediesasifsuchsuit,actionor
proceedinghadnotbeenbroughtortaken.
SECTION8.06.ActionsbyTrusteeasAttorney-in-Fact.Anysuit,actionor
proceedingwhichanyOwnerhastherighttobringtoenforceanyrightorremedy
hereundermaybebroughtbytheTrusteefortheequalbenefitandprotectionofall
Ownerssimilarlysituatec!andtheTrusteeisherebyappointed(andthesuccessive
respectiveOwnersbytakingandholdingtheBondsshallbeconclusivelydeemedsoto
haveappointedit)thetrueandlawfulattorney-in-factoftherespectiveOwnersforthe
purposeofbringinganysuchsuit,actionorproceedingandtodoandperformanyand
allactsandthingsforandonbehalfoftherespectiveOwnersasaclassorclasses,as
maybenecessaryoradvisableintheopinionoftheTrusteeassuchattorney-in-fact,
subjecttotheprovisionsofA
icleVI.Notwithstandingtheforegoingprovisionsofthis
Section8.06theTrusteehasnodutytoenforceanysuchrightorremedyunlessithas
beenindemnifiedtoitssatisfactionforanyadditionalfees,chargesandexpensesofthe
Trusteerelatedthereto,includingwithoutlimitation,feesandchargesofitsattorneysand
advisors.
SECTION8.07.RemediesNotExclusive.Noremedyhereinconferreduponor
reservedtotheOwnersisintendedtobeexclusiveofanyotherremedy.Everysuch
remedyshallbecumulativeandshallbeinadditiontoeveryotherremedygiven
hereunderornoworhereafterexisting,atlaworinequityorbystatuteorotherwise,and
-29-
di
may be exercised without exhaus
by the Bond Law or any other law.
q
ting and without regard to any other remedy conferred
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Limited Liability of the City. Notwithstanding anything in this
Indenture contained, the City is not required to. advance any moneys derived from any
source of income other than the Net Revenues for the payment of the principal of or
interest on the Bonds, or for the performance of any covenants herein contained (except
to the extent any such covenants are expressly payable hereunder from the Net
Revenues). The City may, however, advance funds for any such purpose, provided that
such funds are derived from a source legally available for such purpose and may be
used by the City for such purpose without incurring indebtedness.
The Bonds are revenue bonds, I
nthr fHnd-q a� ian thiq 1nrJPntHrt=. nrnvidpwi
Dyable exclusively from the Net Revenues and
...,,.,. ,�..M„ The Wastewater F Hnd nf the. City is not liable,
and the credit of the City is not pledged, for the payment of the interest on or principal of
the Bonds. The Owners of the Bonds have no riaht to compel the forfeiture of anv
property of the City. The principal of and
City, or a legal or equitable pledg(
the City or upon any of its income
other funds pledged to the paymen
interest on the Bonds are not a debt of the
a, charge, lien or encumbrance upon any property of
receipts or revenues except the Net Revenues and
t thereof as provided in this Indenture.
SECTION 9.02. Benefits of Indenture Limited to Parties Nothing in this
Indenture, expressed or implied, gives to any person other than the City and the Owners
of the Bonds, any right, remedy or claim under or by reason of this Indenture. Any
covenants, stipulations, promises or agreements in this Indenture contained by and on
behalf of the City shall be for the sole and exclusive benefit of the Trustee and the
Owners of the Bonds.
SECTION 9.03. Defeasance of Bonds.
(i) If the City pays and discharges the entire indebtedness on any Bonds in any
one or more of the following ways:
(a) by paying or causing to be paid the principal of and interest on such
Bonds, as and when the same become due and payable;
(b) subject to the conditions set forth in subsection (ii) below, by
irrevocably depositing with the Trustee or an escrow bank, in trust,
at or before maturity, an amount of cash which, together with the
available amounts then on deposit in the funds and accounts
established under this Indenture, in the opinion or report of an
Independent Accountant is fully sufficient to pay such Bonds,
including all principal and interest;
(c) subject to the conditions set forth in subsection (ii) below, by
V
rrevocably depositing with the Trustee or an escrow bank,
-30-
Defeasance Securities in such amount as an Independent
Accountant determines will, togethe
r with the interest to accrue
thereon and available moneys then on deposit in any of the funds
and accounts established under this Indenture, be fully sufficient to
pay and discharge the indebtedness on such Bonds (including all
principal and interest) at or before maturity; or
(d) by purchasing such Bonds prior to maturity and tendering such
Bonds to the Trustee for cancellation;
then, at the election of the City, and notwithstanding that any such Bonds have not been
surrendered for payment, the pledge of the Net Revenues and other funds provided for
in this Indenture and all other obligations of the Trustee and the City under this Indenture
with respect to such Bonds shall cease and terminate, except only: the obligations of the
City under Section 5.09 (Tax Covenants), the obligation of the Trustee to transfer and
exchange Bonds hereunder, the obligation of the City to pay or cause to be paid to the
from the amounts so deposited with t
Owners of such Bonds
thereon, and the obliga
Section 6.06.
The
any funds t
its order.
he Trustee, all sums due
tions of the City to compensate and indemnify the Trustee under
City must file notice of such election with the Trustee. The Trustee shall pay
hereafter held by it, which are not required for said purpose, to the City or to
(ii) To accomplish defeasance pursuant to paragraphs (i) (b) or (i) (c) above, the
City shall cause to be delivered (a) a report of an Independent Accountant verifying the
sufficiency of the escrow established to pay the Bonds in full on the maturity date
("Verification"), (b) an escrow agreement, and (c) an opinion of Bond Counsel to the
effect that the Bonds are no longer "Outstanding" under this Indenture; each Verification
and defeasance opinion to be acceptable in form and substance, and addressed, to the
City and Trustee,,
(iii) In the case of a defeasance or payment of all of the Bonds Outstanding in
accordance with this Section 9.03, the Trustee shall pay all amounts held by it in any
funds or accounts hereunder, which are not required for said purpose or for payment of
amounts due the Trustee under Section 6.06, to the City.
(iv) Bonds shall be deemed "Outstanding" under this Indenture unless and until
they are in fact paid and retired or the above criteria are met.
SECTION 9.Q4. Execution of Documents and Proof of Ownership by Owners.
Any request, consent, declaration or other instrument which this Indenture may require
or permit to be executed by any Owner may be in one or more instruments of similar
tenor, and shall be executed by such Owner in person or by their attorneys appointed in
writing. Except as otherwise herein expressly provided, the fact and date of the
execution by any Owner or his attorney of such request, consent, declaration or other
i nstrument, or of such writing appointing such attorney, may be proved by the certificate
of any notary public or other officer authorized to take acknowledgments of deeds to be
recorded in the state in which he purports to act, that the person signing such request,
declaration or other instrument or writing acknowledged to him the execution thereof, or
by an affidavit of a witness of such execution, duly sworn to before such notary public or
-31-
ownership thereof are conclusively proved iDy the Registration Books. Any request,
declaration or other instrument or writing of the Owner of any Bond binds all.future
Owners of such Bond in respect of anything done or
the Trustee in good faith and in accordance therewith.
SECTION 9.05
requjsite aggregate principal amount of
direction, consent or waiver under this I
for the account of the City (but
must be disregarded and deemed not to be Outstanding for the purpose of any such
determination. The Trustee will not be deemed to have knowledge that any Bond is
owned or held by the City unless the City is the Registered Owner or the Trustee has
received written notice to that effect.
SECTION 9.06. Waiver of Personal Liability. No member, officer, agent or
employee of the City shall be individually or personally liable for the payment of the
principal of or interest or any premium on the Bonds; but nothing herein contained shall
relieve any such member, officer, agent or employee from the performance of any official
duty provided by law.
Disqualified Bonds.,
suffered to be done by the City or
In determining whether the Owners of the
Bonds have concurred in any demand, request,
ndentureI Bonds which are owned or held bv or
' retirement fund)
excluding Bonds held in any employees
SECTION 9,,07., Destruction of Canceled Bonds. Whenever in this Indenture
provision is made for the surrender to the City of any Bonds which have been paid or
canceled under the provisions of this indenture, a certificate of destruction duly executed
by the Trustee shall be deemed to be the equivalent of the surrender of such canceled
Bonds and the City shat[ be entitled to rely upon any statement of fact contained in any
certificate with respect to the destruction of any such Bonds therein referred to. The City
shall pay all costs of any microfilming of Bonds to be destroyed.
.5
SECTION 9,08., Funds and Accounts. Any fund or account required by this
Indenture to be established and maintained by the City or the Trustee may be
established and maintained in the accounting records of the City or the Trustee, as the
case may be, either as a fund or an account, and may, for the purpose of such records,
any audits thereof and any reports or statements with respect thereto, be treated either
as a fund oras an account. All such records with respect to all such funds and accounts
held by the City shall at all times be maintained in accordance with generally accepted
accounting principles and all such records with respect to all such funds and accounts
held by the Trustee shall be at all times maintained in accordance with corporate trust
industry practices; in each case with due regard for the protection of the security of the
Bonds and the rights of every Owner thereof.,
0
SECTION 9.09. Notices. All written notices to be given under this Indenture shall
be given by first class mail or personal delivery to the party entitled thereto at its address
set forth below, or at such address as the party may provide to the other party in writing
from time to time., The City or the Trustee may, by written notice to the other parties,
from time to time modify the address or number to which communications are to be
given hereunder.
-32-
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G �yEng ash
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p,ttent\I I g 442
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h e T
rUstee.
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a
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e afy
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Go r "� � ta�r�en0�cia�rPon� p P�`1th'ng s of the achTexa d 6\\ae
vs' e �r tru onds
14\4N\ rer`kum a�, or f 01, as e
VVI e .�Custe of eg �ntereeak Such date t
th a\
aikelth m
oN g gyp, ,c,lalflned
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s�ds have b e TOO
SE��� any m �fi any Pd by v��th gor e�eng � m umen ky\e as he os�te {sup roP otwfihesoC Ce ate vdh money v�o�ey de'Pin��pa� � bsolute P CesPeCX te�est
r the nkel after the �� such Such m and p as Nts ed with o{ d
in
01ioC ore `1ea� e t�ayab`edep°S�� Oj
cif any ° to tre G�tyard Aws�h�he prin��pa`
a\Je e�� e ake ��d percm�u e
.\,Skeee re \easedayr�ent of ma`1 be
eaT
aik,e intevest veC�a�d b`l ky\ereuC�°nGity {ot the � �ndentuCe ai\dor ahenha\\be Stee Sha\iray to <he arts �N�ste��a�'S S o{ them a!&
e
q uSa `and eeC sha�� �0�k 0 eSe�erai C Ll esu13y\
�U� a ions Lute U{ON
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IN WITNESS WHEREOF, the City of Petaluma has caused this Indenture to be
signed in its name by its City Manager and attested by its City Clerk, and The Bank ot
New York Mellon Trust Company, N.A., in token of its acceptance of the trust created
hereunder, has caused this Indenture to be signed in its corporate name by its officer
identified below, all as of the day and year first above written.
Attest:
r *k"AWOM
City Clerk
h
CITY OF PETALUMA
By'
City Manager.
THE BANK OF NEWYORK MELLON
TRUST COMPANY, N.A., as Trustee
�J
-34-
Authorized Office
r
y
any o
APPENDIX A
"Additional Revenues" means
r all of the following amounts:
(b) any
nationa
DEFINITIONS
with respect to the issuance of any Parity Debt,
(i) An allowance for Net Revenues from any additions or improvements
to or extensions of the Wastewater System to be made from the
n an amount equal to the estimated
Revenues to be derived from such
extensions for the first 36 -month
proceeds of such Parity Debt i
additic
additic
period in which each addition, improvement or extension
respectively to be in operation, all as shown bv the certificate
opinion of a Financial Consultant.,
nal average annual Net
is, improvements and
is
or
An allowance for Net Revenues arising from any increase in the
charges made for service from the Wastewater System which has
been duly approved by the City Council of the City prior to the
incurring of such Parity Debt, but which, during all or any part of the
most recent completed Fiscal Year for which audited financial
statements of the City are available, or for any more recent
consecutive 12 -month period selected by the City under Section
3.04(b), was not in effect, in an amount equal to the total amount by
which the Net Revenues would have been increased if such
increase in charges had been in effect during the whole of such
F'i'scal Year or 12 -month period, all as shown by the certificate or
opinion of a Financial Consultant.
"Bond Counsel" means (a) Jones
other attorney or firm of attorneys
Ily-recognized experience in the issuance of obligations the interest on which is
excludable from gross income for federal income tax purposes under the Tax Code.
Hall, A Professional Law Corporation, or
appointed by or acceptable to the City of
"Bond Law." means the provisions of Articles 10 and 11 of Chapter 3 of Part 1 of
Division 2 of Title 5 of the California Government Code, commencing with Section 53570
of said Code, as in effect on the Closing Date or as thereafter amended in accordance
with its terms.
"Bonds" means the City of Petaluma, 2019 Wastewater Revenue Refunding
Bonds issued and at any time Outstanding hereunder.
"Business Day" means a day (other than a Saturday or a Sunday) on which
banks are not required or authorized to remain closed in the state in which the Office of
the Trustee is located, and on which the Federal Reserve Bank system is not closed.
"Certificate of the Cit " means a certificate in writing signed by the Mayor, the
City Manager of the City, the Finance Director of the City, or any other officer of the City
duly authorized by the City Council for that purpose.
A-1
"Closing Date" means , 2019, being the date of delivery of the Bonds
to the Original Purchaser.
"Continuing Disclosure
described in Section 5.11
Certificate" means the Continuing Disclosure Certificate
WMW
"Costs of Issuance" means all items of expense directly or indirectly payable by
or reimbursable to the City relating to the authorization, issuance, sale and delivery of
the Bonds and the refunding of the SRF Loan, including but not limited to printing
expenses, rating agency fees, filing and recording fees, initial fees, expenses and
charges of the Trustee and its counsel, fees, charges and disbursements of attorneys,
financial advisor, placement agent, accounting firms, consultants and other
professionals, and any other cost, charge or fee in connection with the original issuance
of the Bonds and the refunding of the SRF Loan.
"Costs of Issuance Fund" means the fund by that name established and held by
the Trustee under Section 3.03.
"Debt Service" means, with respect to any Fiscal Year, the sum obtained by
totaling the following amounts for such Fiscal Year: Lk
(a) the aggregate amount of principal of and interest on the
Outstanding Bonds coming due and payable in such Fiscal Year;
(b) the principal amount of all outstanding Parity Debt, if any, coming
due and payable by their terms in such Fiscal Year; and
(c) the amount of interest which would be due during such Fiscal Year
on the aaaregate Principal amount of all outstanding Parity Debt, if
any, which would be outstanding in such Fiscal Year if such Parity
Debt are retired as scheduled; provided, however, that with respect
to any Parity Debt which bears interest at an adjustable rate, such
interest shall be calculated at an assumed rate equal to the average
J1
rate of interest per annum for each of the five previous whole
calendar years as shown by the J. J. Kinney Index (or, if and to the
extent such index is not maintained for all or any portion of such
period, any similar index of variable rate interest for tax-exempt
obligations selected by the City in its sole discretion).
",Debt Service Fund" means the fund by that name established and held by the
Trustee under Section 4-.02(b)(ii)er
"Depositor " means (a) initially, DTC, and (b) any other Securities Depository
acting as Depository under Section 2.04.
"Depository System Participant" means any participant in the Depository's book -
entry system.
41
"C�" means the City of Petaluma, a charter city and municipal corporation
organVC
ized and existing under the Constitution and laws of the State of California, and
any successor thereto,
A-2
",Defeasance Securities" means (1) cash, (2) non callable direct obligations of the
United States of America ("Treasuries"), (3) evidences of ownership of proportionate
interests in future interest and principal payments on Treasu
company as custodian, unde
interest and has
ries held by a bank o
r trust
r which the owner of the investment is the real party in
-W
the right to proceed directly and individually against the obligor and the
GL
OL
underlying Treasuries are not available to anV person claiming through the custodian or
to whom the custodian may be obligated, (4) pre -refunded municipal obligations rated
"AAA" and "Aaa" by 6&[J and MIDody's, respectively, or (5) securities eligible for "AAA"
defeasance under then existing criteria of S&P or any combination thereof, shall be used
to effect defeasance of the Bonds.
"DTC" means The Depos
successors and assigns.
are
itory Trust Company, New York, New York, and its
"Event of Default" means any of the events described in Section 8.01.
"Federal Securities" means any of the following which at the time of investment
e.qal investments under the laws of the State of California for the funds purported to
be invested therein". (a) d irect general obligations ot the United States ot Ame
rica
(including obligations issued or held in book entry form on the books of the Department
of the Treasury of the United States of America); and (b) obligations of any agency,
department or instrumentality of the United States of America the timely payment of
principal of and interest on which are fully secured or guaranteed by the full faith and
credit of the United States of America.
"Financial Consultant" means any consultant or firm of such consultants
_ONN*W
appointed by the City and who, or each of whom: (a) is judged by the City to have
experience in matters relating to the financing of wastewater systems; (b) is in fact
independent and not under domination of the City; (c) does not have any substantial
interest, direct or indirect, with the City; and (d) is not connected with the City as an
officer or employee of the City, but who may be regularly retained to make reports to the
City.
"Fiscal Year means the period commencing on July 1 of each year and
0**"
terminating on the next succeeding June 30, or such other period as may be established
by the City as its official fiscal year period (written notice of which shall be given by the
City to the Trustee).
"Gross Revenues" means all gross income and revenue received by the Coity
IANfrom the ownership and/or operation of the Wastewater System, includ*ing, without
limiting the generality of the foregoing :
(a) all amounts levied by the City as a fee for connecting to the
Wastewater System, as such fee is established from time to time
under the applicable laws of the State of California;
(b) all :income, rents, rates, fees, capital improvement fees (including
facilities capacity and pump zone fees), charges or other moneys
derived from the services, facilities and commodities sold (including
A-3
U
recycled water), furnished or supplied through the facilities of the
Wastewater System,
(c) the earnings on and income derived from the investment of such
A
ncome, rents, rates, fees, charges or other moneys to the extent
that the use of such earnings and income is limited by or under
applicable law to the Wastewater System,
(d) the proceeds derived by the City directly or indirectly from the sale,
lease or other disposition of a part of the Wastewater System as
permitted hereunder,
(e) amounts transferred into the Wastewater Fund from the Rate
Stabilization Fund under Section 4.03, and
amounts received bv the City
proceeds
under con
of tax revenues or
from other PL
_ other amounts payable
tracts for services provided by the City to
Wastewater System.
lic agencies as the
to the City
users of the
The term "Gross Revenues" does not include (i) customers' deposits. or any other
*0I
deposits subject to refund until such deposits have become the property ot the City,
he proceeds of any ad valorem property taxes levied to pay general obligation bond
t # s
indebtedness ot the (.I:y wan respect io the vviasiewaie
assessments or special taxes levied -for the purpose of
bonds or special tax obligations of
"Indenture" means
from time to time be supplemented, modified or amended
Indenture under the provisions hereof.
r System, and. (iii) special
paying special assessment
the City relating to the Wastewater System.
this Indenture of Trust, as originally executed or as it may
by any Supplementa
"Independent Accountant." means any accountant or firm of such accountants
No "vp
appointed and paid by the City, and who, or each of whom (a) is in fact independent and
not under domination of the City; (b) does not have any substantial interest, direct or
indirect, with the City; and (c) is not connected with the_City as an officer or employee of
the City, but who may be regularly retained to make annual or other audits of the books
of or reports to t he City.
"Interest Payment Date" means November 1 and May 1 in each year, beginning
November 1, 2019, and continuing so long as any Bonds remain Outstanding,.
"Maximum Annual Debt Service" means, as of the date of any calculation, the
maximum amount of Debt Service on the Outstanding Bonds and all outstanding Parity
Debt for the current or any future Fiscal Year.
"Mood" means Moody's Investors Services, and its successors and assigns.
" Net Proceeds" means, lhen used with respect to any casualty insurance or
condemnation award, the proceeds from such insurance or condemnation award
remaining after payment of all expenses (including attorneys' fees) incurred in the
collection of such proceeds.
A-4
i
"Net Revenues" means, for any period, an amount equal to all of the Gross
Revenues received during such period minus the amount required to pay all Operation
and Maintenance Costs becoming payable during such period.
"Nominee" means (a) initially, Cede & Co. as nominee of DTC, and (b) any other
nominee of the Depository designated under Section 2.04(a).
"Office" means, with respect to the Trustee, the corporate trust office of the
Trustee at the address set forth in Section 9.09, or at such other or additional offices as
may be spec'i'fied by the
presentation of Bonds for
Trustee
paymen
in writing to the City; except that with respect to
t or for registration of transfer and exchange, such
term means the ottice or agency of the Trustee ai which, at any
corporate trust agency business is conducted.
"Operation and Maintenance Costs" means
paid or incurred by the City for maintaining and
particular time, its
the reasonable and necessary costs
operating the Wastewater System,
determined in accordance with generally accepted accounting principles, including but
not limited to (a) all reasonable expenses of management and repair and other
expenses necessary to maintain and preserve the Wastewater System in good repair
and working order, and (b) all administrative costs of the City that are charged directly or
apportioned to the operation of the Wastewater System, such as salaries wages and
retirement benefits of employees, overhead, taxes (*If any) and insurance. "Operation
and Maintenance Costs" do not include (*i) administrative costs of the Bonds which the
City is required to pay hereunder, (ii) payments of debt service on bonds, notes or other
obligations issued by the City with respect to the Wastewater System, (iii) depreciation,
replacement and obsolescence charges or reserves therefor, (iv) capital expenditures
made by the City with respect to the Wastewater System, (v) accrual of employee
benefits which are not funded, and (vi) amortization of intangibles or other bookkeeping
entries of a similar nature.
"Original Purchaser" means ,, as the original }purchaser of
the Bonds upon their delivery by the Trustee on the Closing Date.
"Outstanding", when used as of any particular time with reference to Bonds,
means all Bonds theretofore, or thereupon being, authenticated and delivered by the
Trustee under this Indenture except: (a) Bonds theretofore canceled by the Trustee or
surrendered to the Trustee for cancellation; (b) Bonds with respect to which all liability of
the City has been discharged in accordance with Section 9,.03; (c) Bonds for the transfer
or exchange of or in lieu of or in substitution for which other Bonds shall have been
authenticated and delivered by the Trustee under this Indenture; and (d) Bonds which
are required to be disregarded and not deemed Outstanding under Section 9.05.
"Owner", when used with respect to any Bond, means the person in whose name
the ownersh'i'p of such Bond is registered on the Registration Books.
" Parity Debt" means the 2017 Bonds, and all other bonds, notes, loan
agreements, installment sale agreements, leases or other obligations of the City payable
from and secured by a pledge of and lien on any of the Net Revenues issued or incurred
on a parity with the Bonds. under Section 3.04 or 3.05.
A-5
"Parity Debt Documents" means the 2017 Indenture and any other agreement,
indenture of trust, resolution or other instrument authorizing the issuance of Parity Debt,
"Permitted Investments" means
investment are legal investments under the laws of the State of California for the moneys
any ot the following
which at the time of
proposed to be invested therein'.
(a)
(b)
Federal Securities;
obligations of any federal agency which either (a) represent full faith
and credit of the United States of America, or (b) are rated "AA" or
betterbyS&P and "Aa" by Moody's;
(r.) Bank deposit products, trust funds, trust accounts, certificates of
by a third party pursuant to an
overnight bank
money market
denominated deposit accounts, federal funds
and banker's acceptances with domestic commerc*lal banks, which
deposit (including those placed
agreement between
deposits, interest bea
accounts, U.S. dollar
the City and the Trustee),
ring depos
its, interest bea
ring
may include the Trustee, its parent holding company, if any, and
their affiliates which (i) have a ratina on their short term certificates
of deposit on the date of purchase of "A" or better by
Moody's, maturing no more than 360 days after the
S&P and
date of
purchase, provided that ratings on holding companies are not
nsured by the
considered as the rating of the bank or (ii) are fully i
Federal Deposit Insurance Corporation;
(d) commercial paper which is rated at the time of purchase
single highest classification, "A" or.better by S&P and Moody's, and
in the
which matures not more than 270 calendar days after the date of
purchase;
(e) investments in a money market fund, including those of an affiliate
of the Trustee, rated in the highest short-term rating category by
S&P and Moody's, including funds for which the Trustee, its parent
holding company, if any, or any affiliates or subsidiaries of the
Trustee or such holding company receives and retains a fee for
services provided to the fund, whether as a custodian, transfer
agent, investment advisor or otherwise;
(f) investment agreements with financial institutions whose long-term
general credit rating is "AA—" or better from S&P, by the terms of
which the Trustee may withdraw funds if such rating falls below
" AA—"; and
(g) the Local Agency Investment Fund of the State of California,
created under Section 16429.1 of the California Government Code,
to the extent the Trustee is authorized to register such investment in
its name.
mA@
"Rate Stabilization Fund" means the fund by that name established and held by
the City under Section 4-.03.
"Record
AV"F"*WN%H*"W
calendar day of t
Date" means, with respect to any Interest Payment Date, the 15th
VW
he month preceding such interest Payment Date.
"Registration Books" means the books maintained by the Trustee under
MW
2,.07 for the registration and transfer of ownership of the Bonds.
Section
"Request of the City" means a request in writing signed bv the Mayor, the City
Manager of the City, or any other officer of the City duly authorized by the City Council
for that purpose.
" Securities W.Depositories" means DTC; and, in
guidelines of the Securities and Exchange Commission
r securities depositories as the City may designate in a Request of the City
delivered by the City to the Trustee.
such othe
accordance with then current
such other addresses and/or
"S&P"
Services LLC
"SRF
means S&P Globa
and its successors..
Loan" means
between the City and
amended as of Octobe
the
r 17,
Ratings, a division of Standard & Poor's Financial
the Interagency Sales Agreemen
State Water Resources Control Boa
2007.
t (No. 05-803-550-0),
rd made in 2006, and
"State Loans" means loans secured by a pledge of Net Revenues of the
Wastewater System and incurred by the City to finance improvements to the Wastewater
System pursuant to Section 3.05.
"Supplemental Indenture" means any
instrument hereafter duly adopted or executed
indenture, agreement, resolution or other
in accordance with Section 7.01.
"Tax Code" means the Internal Revenue Code of 1986 as in effect on the Closing
Date or (except as otherwise referenced herein) as it may be amended to apply to
obligations issued on the Closing Date, together with applicable temporary and final
regulations promulgated, and applicable official public guidance .published, under said
Code.
"Trustee " means The Bank of New York Mellon Trust Company, N.A., as Trustee
hereunder, or any successor thereto appointed as Trustee under Article VI.
"2017 Bonds " " means the City of Petaluma 2017 Wastewater Revenue Refunding
Bonds, issued in theaggregate principal amount of $23,365 , 000.
"2017 Indenture" means the- Indenture of Trust, dated as of June -
1, 2017, by and
between the City and The Bank of New York Mellon Trust Company, N.A., as trustee,
pursuant to which the City issued the 2017 Bonds.
"Wastewater Fund" means the fund established and held by the City with respect
HM
to the Wastewater System for the deposit of Gross Revenues.
A-7
"Wastewater Stem" means any and
acquired or constructed which are
collection, treatment.
treatment plants
4L
pumping stations
■
■
owned, con
disposai, recycling or r
intercepting and collecting
ejector stations, oxidation ponds, pipes, valves, machinery, and all
useful or convenient for the collection, treatment,
all facilities now existing or hereafter
trolled o r operated by the City for the
use of wastewater, including sewage
sewers. outfall sewers, force mains,
other appurtenances necessary,
purification, reclamation or disposal of sewage and storm drainage, and any necessary
lands, rights of way and other real or personal property useful in connection therewith.
"MI, I 'Eel
11
No. R-
INTEREST RATE:
APPENDIX B
FORM OF BOND
CITY OF PETALUMA
2019 WASTEWATER REVENUE REFUNDING BOND
MATURITY DATE:
ISSUE DATE:
_ % May .1, _ _ , 2019
REGISTERED OWNER:
PRINCIPAL AMOUNT:
CEDE & CO.
0
DOLLARS
CUSIPA
The City of Petaluma, a charter city and municipal corporation organized and
unaer
::L.11('i+3)fI
2XISLIIIq ine uons1i1U110H allu laVV6 ul uie JLaLC tai k-+aluuiiiia kL t:; y ), ul vacua
receivedpledged t
registeredabove in lawful money of the United States of America; and to pay interest thereon in
hereby promises to pay
neretor as hereinafter mentioned) io the Registered Owner stated above, or
(but only out of the Net Revenues and other assets
assigns, on the Maturity Date stated above, the Principal Amount stated
like lawful money fromthe Interest Payment Date next
____ preceding the date of
authentication of this Bond (unless thisBond as of a day during the
period commencing after the fifteenth day of the month preceding an Interest Payment
is authenticated
a
Date and ending on or before such Interest
interest from such Interest Payment Date, or
ayment Date, in which even
t it shall bear
unless this Bond is authenticated on or
before October 15, 2019, in which event it shall bear interest from the Issue Date stated
aPHnfilhnvl n;avment of such DrinC'Dal sum shall be d*scharaed as provided in the
Indenture hereinafter mentioned, at the Interes
semiannual)
an "Interest
t Rate iDer annum stated above., payable
y on each November 1 and Mav 1,, commencing November
Payment Date").
1, 2019 (each,
The principal hereof is payable by check at the Office (as defined in the Indenture
referred to below) of The Bank of New York Mellon Trust Company, N.A. (together with
any successor trustee under the Indenture, the "Trustee"). Interest hereon is payable by
check of the Trustee mailed on each Interest Payment Date to the Registered Owner as
of the 15th day of the month preceding each Interest Payment Date (
except with respect
to payment of defaulted interest as provided in the Indenture hereinafter referred to) at
the address shown on the registration books maintained by the Trustee. Payment of
interest will be made by wire transfer in immediately available funds to an account in the
B-1
United States of America to any Owner of Bonds in the aggregate principal amoun
$1 1000, 000 or more who shall furnish written wire instructions to the I rustee before
15th day of the month preceding the applicable Interest Payment Date.
t of
the
This Bond is one of a duly authorized issue of bonds of the City designated as its
"City of Petaluma 201
ir
9 Wastewater Revenue Refunding Bonds" (the "Bonds
aaare9ate principal amoun
Chapte
r 3 of
IL commencing with Section 53570 0
Indenture of Trust, dated as of September 1, 2019 (the "Indenture" ), netween
t of $ authorized under Articles 10
1 of Division 2 of Title 5 of the Californ'i'a Government Code,
f sa'i'd Code (the "Bond Law" ), and issued
"), in the
ind 11 of
and thi=- Tr"-qtp-p.
under an
the City
�,........ .. . The Bonds have been issued for the purpose of refinancing certain
ons of the City
wastewater collection, ir
IP
obligati
previously incurred to Tinance capital improvements
D . ) 0
eatment and disposal system (the "Wastewater System
Reference' is hereby made to the
Office of the Trustee) and all indentures supplemental t
description of the rights t
of the security. of the rights, duties and immunities of the Trustee and ot the rights and
ndenture (a
to its
copy of which is on file at said
hereto and to the Bond Law for a
hereunder of the owners of the Bonds
of the nature and extent
obligations of the City thereunder.
hereof. assents and agrees to all the provisions of the Indenture,
a
The Registered Owner of this Bond, by acceptance
The Bonds and the interest thereon are payable from Net Revenues (as such
term is defined in the Indenture) of the Wastewater System, and are secured by a
pledge and assignment of said Net Revenues and amounts held in certain funds and
accounts established under the Indenture, subject only to the provisions of the indenture
permitting the application thereof for the purposes and on the terms and conditions set
forth in the Indenture. The City has the right under the Indenture to issue additional
obligations on a parity with the Bonds, subject to the specific conditions set forth in the
Indenture. The Bonds are special obligations of the City and are not a lien or charge
upon the funds or property of the City, except to the extent of the aforesaid pledge and
assignment.
Except as set forth in the following paragraph with respect to Net Proceeds, the
Bonds are not subject to redemption at the option of the City prior to their respective
stated maturity dates.
The Bonds are subject to extraordinary redemption prior to their respective stated
maturities, as a whole or in part on any date, as determined by the City, from Net
Proceeds, upon the terms and conditions of, and as provided for in the Indenture, at a
redemption price equal to the principal amount of the Bonds to be redeemed, without
do
premium, plus accrued interest thereon to the date fixed for redemption.
Unless waived by any Owner of Bonds to be redeemed, notice of any redemption
of Bonds shall be given, at the expense of the City, by the Trustee by mailing a copy of a
redemption notice by first class mail at least 20 days and not more than 60 days prior to
the date fixed for redemption to the Owner of the Bond or Bonds to be redeemed at the
address shown on the Bond Registration Books; provided, that neither the failure to
receive such notice nor any immaterial defect in any notice shall affect the sufficiency of
the proceedings for the redemption of the Bonds.
B--2
If this Bond is called for r
specified in the Indenture, interest
fixed for redemption.
edemption and payment is duly provided therefor as
shall cease to accrue hereon from and after the date
The Bonds are issuable as fully registered Bonds
in denominations of $5,000 and
anv integral multiple thereof. Subject to the IKmitations provided
maybeexchanged,at
Bondsofotherauthori
inthe Indenture
,
said Office ot the Trustee, for a like aggregate principal amount of
zed denominations of the same maturity.
Bonds
This Bond is tr
attorney duly authorize
subject to the limitations provided in the Indenture, and upon surrender and cancellation
ansferable bv the Registered Owner hereof, in person or by his
in writing, at said office ot the i rustee, but only in the manner,
of this Bond. Upon such transfer, a new Bond or Bonds, of authorized denomination or
for the same aggregate principal amount,, will
be issued to the transferee in exchange herefor. The City and the Trustee may treat the
the City
denominations, of the same maturity and
Registered Owner hereof as the absolute owner hereof for all purposes, and
and the Trustee shall not be affected by any notice to the contrary. JP
The Indenture and the rights and obligations of the City and of the owners of the
Bonds and of the Trustee may be modified or amended from time to time and at any
time in the manner, to the extent, and upon the terms provided in the Indenture; provided
that no such modification or amendment shall (a) extend the maturity of or reduce the
interest rate on any Bond or otherwise alter or impair the obligation of the City to pay the
principal or interest at the time and place and at the rate and in the currency provided
therein of any Bond w'i'thout
the express written consent of the owner of such Bond, (b)
reduce the percentage of Bonds required for the written consent to any such amendment
or modification, or (c) without. its written consent thereto, modify any of the rights or
obligations of the Trustee, all as more fully set forth in the Indenture.
Unless this Bond is presented by an authorized representative of The Depository
Trust Company, a New York Corporation ("DTC"), to the Trustee for registration or
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
OR
HEREOF FVALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
inasmuch as the registered owner hereof, Cede & Co., has an interest herein.
It is hereby certified and recited that any and all things, conditions and acts
required to exist, to have happened and 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 manner as required by the Bond Law, and by the constitution and laws of the
State of California, and that the amount of this Bond, together with all other
W
ndebtedness of the City, does not exceed any limit prescribed by the Bond Law and is
not in excess of the amount of Bonds permitted to be issued under the Indenture.
This Bond is not entitled to any- benefit under the Indenture, or is not valid or
obligatory for any purpose, until the certificate of authentication hereon endorsed has
been signed by the Trustee.
B-3
IN] WITNESS WHEREOF, City of Petaluma has caused this Bond to be executed
in its name and on its behalf bv the facsimile signature of the Mayor of the City and
attested tn hv the facsimile signature ot the City Clerk ot the City, all as of the Issue Date
stated above.
Attest:
ow
Dated
t
r
1AW
City Clerk
CITY OF PETALUMA
MW
Mayor
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This'i's one of the Bonds described in the within-mentioned Indenture.
Y
•
THE BANK OF NEW
TRUST COMPANY, N.A.
as Trustee
YORK
Authorized Signatory
MELLON
For value received the
tax Iden
hereby
reg istrati
Dated:
tifying number is
irrevocably
ASSIGNMENT
undersigned hereby sells, assigns and transfers unto
,whose address and social security or other
the within -mentioned Bond and
constitute(s) and appoint(s)
attorney. to transfer the same on the
on books of the Trustee w
Signature Guaranteed-.
ith full power of substitution in the premises.
11
Note: Signatures) must be
guaranteed by an eligible guarantor
institution.
x
Note: The signature(s) on this Assignment
must correspond with the name(s) as written
on the face of the within Bond in every
particular without alteration or enlargement or
any change whatsoever.
B-5
moor "I
Apqk 5: 0 0 0:
b1tolots
CIT'Y OF PETA,LU,MA,, CALIFORNIA
NOW@
2019 ER R.EVENU,E: REt=UN
WASTEWATDIN;G BONDS
,(Boo'k,,-, Entry -Only'
eiii st 2 :01,00"
iff 1 0 1
ime o wimel
p e,
e acce,p d
Septe,11,11ber 4,, 21
and November 1. co,mmencing Noviember� 1,
. ....... .. .
Preliminary, subject to change.
Principal Amounts*
Bond principal shall be payable annually on May. 1 commencing May. 1, 2020, as follows:
Matur*i
ty Due
May 1
2020
2021
2022
2023
2024
4
Pr.8
incipal
Amount
6,060,000
5,575,000
5,800,000
6,035,000
F+
6,275,000
Maturity Due
May 1
2025
2026
2027
2028
2029
Pri'nc'ipal
Amount
6,.525,000
61 785, 000
7,055,000
7,340,000
7,635,000
1
Adjustment of Principal Amounts Not to Exceed 10%
Following the bid award, the City reserves the right to adjust the principal amount of each
Bond maturity in $5,000 increments. In no event shall such adjustment cause the principal
amount of any Bond maturity to change by more than 10%. Such adjustment shall be
made within two hours of the bid award. In the event of any such adjustment, no rebidding
or recalculation of bids will be required or permitted, the winning bid may not be
and the successful bidder will not be permitted to change its bid price or the
withdrawn,
interest rate(s) in its bid.
adjustment on the compensation to the winning
The City shall not be r
2
esponsible
' bidder but
for the effect of any such
will use its best efforts to
maintain a proportionate level of compensation to the winning bidder. Bidders are advised
to consider such a possible change in principal amount when determining their production
on each Bond maturity.
Preliminary, subject to change.
Interest Rates
Bidders may specify any number of separate interest rates, and any rate may be repeated
as often as desired; provided, however, that
(i) Each Bond shall bear interest at a fixed-rate, calculated on a 30/360 basis -6
('1'1) each interest rate must be in a multiple of 1/20 of 1YcO or 1/8 of 1%;
(ni)a zero rate of interest cannot be specified;
(iv)each Bond shall bear interest from its dated date to its stated maturity date at the
interest rate specified in the bid;
(v) all Bonds of the '` same maturity date shall bear the same rate of interest, with the
40 exception of split coupons, which is allowed; and
(vi)any premium must be paid as part of the purchase price, and no bid will be accepted
which provides for the cancellation and surrender of any interest payment or for
ntprp-qt nr other concession bv the bidder as a substitute for
of the purchase p
the waiver of i
'payment in full
Redemption*
rice of the Bond or Bonds.
Optional Redemption: The Bonds are not subject to optional redemption prior to maturity.
Extraordinary Redemption from Net Proceeds of Insurance or Condemnation: The Bonds
are subject to extraordinary redemption in whole or in part on any date from Net Proceeds
of insurance or condemnation proceeds ata redemption pr ice equal to the pr incipal
amount of Bonds to be redeemed, plus accrued interest to the date of redemption, without
premium.
Mandatory Sinking Fund Redemption: Bidders may specify a term bond subject to
mandatory sinking fund redemption on May 1 in consecutive years immediately preceding
the maturity thereof. Term bonds shall be payable at a redemption price equal to the
principal amount thereof plus accrued interest thereon to the date of redemption, without
4b
premium.
Notice of redemption shall be provided as set forth in the Preliminary Official Statement.
* Preliminary, subject to change.
3
Book -Entry For Only
The Bonds will be registered
•
in the name of Cede & Co., as nominee of The Depository Trust
Company, New York, New York ("DTC"). DTC will
I
Ind*lvidua
act as securities depository of the Bonds.
purchases will be made in book -entry form only
Purchasers will not receive certificates representing the
any integral multiples thereof.
interest in the Bonds. Pr'['
States of America and will be paid to DTC which will remit such amounts to the beneficia
owners of the Bonds through DTC's Participants, as described in the Preliminary Otticia
-D
ncipa
in denominations of $5,000 or
I and interest are payable in lawful money of the United
statement.,.
Authority for Issuance; Purpose
The City will issue the Bonds pursuant to an Indenture of Trust by and between The Bank of
New York Mellon Trust Company, N.A., as trustee,, and the City. Bond proceeds together
with other available moneys will be used as follows
(i) To refund on a current basis, all outstanding principal of a Clean Water State
Revolving Fund (CWSRF) loan which the City originated in 2007 and which is
currently outstanding in the aggregate principal amount of $73,587.16641 and
(11), To pay costs of issuance.
Security for the Bonds,; Parity Debt
The Bonds are special obligations of the City, secured by and payable from Net Revenues of
the Wastewater System on parity with the City's 2017 Wastewater Revenue Refunding
Bonds, as more fully described in the Preliminary Official Statement. Additional parity debt
may be issued,, as more fully described in the Preliminary Official Statement. The Bonds are
not a debt, liability or obligation of the State or any of its political subdivisions other than
the City.
CUSIP Numbers; Other Fees
CUSIP numbers will be obtained and paid for by the purchaser of the Bonds. Any delay,
error or omission with respect thereto will not constitute cause for the purchaser to refuse
to accept delivery of and pay for the Bonds. The successful bidder shall also be required to
pay all fees required by The Depository Trust Company, Municipal Securities Rulemaking
21
Board, and any other
Bonds.
similar entity
imposing a fee
in connection W
ith the
I0ssuance of the
Legal Opinion,; Tax -Exempt Status
In the opinion of J
Counsel to the City,
ones
unde
Hall, A Professional
r existing statutes., r
assuming certain representations
interest on the Bonds is excluded from gross income for federal income tax Pu
and
Law Corporation, San Francisco, CA, Bond
egulations, rulings and
with certain
compliance
judicial decisions, and
covenants
of the City,
rposes and is
not an item of tax preference for purposes of the federal alternative minimum tax. In the
further opinion of Bond Counsel, interest on the Bonds is exempt from California personal
V
ncome taxes. In the event that prior to the issuance and delivery of the Bonds (a) the
interest represented bv other obligations oT the same type and character shall be declared
at any Tuture 0aie) under anV federal
or by ruling of a fede
to be taxable (either at the time of such declaration or
I tax laws, either by the terms of such laws
ral income tax
authority or official which is followed by the Internal Revenue Service, or by decision of any
federal court, or (b) any federal income tax law is adopted which will have a substantial
adverse effect upon owners of the Bonds as such, the successful bidder for the Bonds may,
at its option, prior to the issuance and delivery of the Bonds, be relieved of its obligation
under the contract to purchase the Bonds, and in such case the deposit accompanying its
proposal will be returned.
Initial Offering Prices
As soon as the bid is awarded, the winning bidder shall provide initial offering prices for
each maturity of the Bonds.
California Debt and Investment Advisory Commission (CDIAC)
The winning bidder is required to pay any fees owing to the California Debt and Investment
Advisory Commission ("CDIAC"). CDIAC will invoice the winning bidder after closing.
No Lit -0
igation; Tax Certificate
Prior to delivery of the Bonds, the City shall deliver a certificate stating that there is no
action, suit, or proceeding known by the City to be pending or threatened at the present
t'i'me restraining or enjo'in'ing the delivery or in any way contesting or affecting the validity of
the Bonds', the Indenture or the proceedings of the C ity taken with respect to the execution
or delivery thereof. The City shall also deliver a tax certificate attesting to its reasonable
expectations and undertaking certain covenants concerning the Bonds and the use and
investment of Bond proceeds,,
III
G
11
e
and correct 'gin al,l matler*Ial respectl
M'isleading.
a
and
not
t:the Off'I'c'91al' Statemen't does
hat contain any
_j "BUTA
ft I
1114M&MIRID IWO
rc
w A WOR I
MIL
b =A&
its
H.MWM ELMS, M ML
con Inuing:: [SC osure
6
S&P Rat'ing. I"AAO',]
9
Basis of Award — Lowest True Interest Cost (TIC)
The Bonds will be awarded to the bidder whose bid produces the lowest true interest cost.
The true interest cost W'1'11 be that rate which, when .used to compute the present value of
principal and interest to be Daid on a
maturity dates, or mandatory sinking fund redemption dates, produces an amount equal to
II Bonds from the date of delivery to their respective
the purchase price, including any premium specified in such bid. The true interest cost shall
be calculated hV the use of a semi-annual interval of compounding interest based on the
Interest Payment Dates for the Bonds. In the event of a tie the winning bid will be
determined by the toss of a coin by the City among the bidders whose bids produced the
tie.
Firm Offer; All or None Bid
Any bid submitted pursuant to this Notice of Safe shall be considered a firm offer to
purchase all., and not less than all, of the Bonds.
Form of Bid,* Delivery and Payment
All bids for the Bonds must be unconditional and for not less than all of the Bonds.
must be in accordance with the terms and conditions set forth herein. Bids w'111
accepted via PARITY. To the extent any instruct ions or directions set forth in
Each bid
only be
PARITY
conflict with this Notice, the terms of this Notice shall control. Delivery of the Bonds will be
made to the winning bidder on or about August 71 2019. Payment of the purchase price
(less the Good Faith Deposit) must be made in immediately available funds.
1
Warn'i'ng Regarding Electronic Bids
THE CITY WILL ACCEPT BIDS IN ELECTRONIC FORM SOLELY THROUGH PARITY ON THE
OFFICIAL BID FORM CREATED FOR THAT PURPOSE. EACH BIDDER SUBMI I I ING AN
ELECTRONIC BID UNDERSTANDS AND AGREES THAT BY DOING SO IT IS SOLELY RESPONSIBLE
FOR ALL ARRANGEMENTS WITH PARITY, THAT THE CITY NEITHER ENDORSES NOR
EXPLICITLY ENCOURAGES THE USE OF PARITY, AND THAT PARITY IS NOT ACTING AS AN
AGENT OF THE CITY:, INSTRUCTIONS AND FORMS FOR SUBMITTING ELECTRONIC BIDS
MUST BE OBTAINED FROM PARITY, AND THE CITY ASSUMES NO RESPONSIBILITY FOR
ENSURING OR VERIFYING BIDDER COMPLIANCE WITH THE PROCEDURES OF- PARITY. THE
CITY SHALL ASSUME THAT ANY BID RECEIVED THROUGH PARITY HAS BEEN MADE BY A DULY
AUTHORIZED AGENT OF THE BIDDER.
THE CITY WILL MAKE ITS BEST EFFORTS TO ACCOMMODATE ELECTRONIC BIDS; HOWEVER,
THE CITY, THE MUNICIPAL ADVISOR AND BOND COUNSEL ASSUME NO RESPONSIBILITY FOR
ANY ERROR CONTAINED IN ANY BID SUBMITTED ELECTRONICALLY, OR FOR THE FAILURE OF
ANY BID TC) 11111E TRANSMI I I'ED, RECEIVED OR OPENED AT THE OFFICIAL TIME FOR RECEIPT
OF BIDS. THE OFFICIAL TIME FOR RECEIPT OF BIDS WILL BE DETERMINED [BY THE CITY AT
THE PLACE OF BID OPENING, AND THE CITY SHALL NOT BE REQUIRED TO ACCEPT THE TIME
KEPT BY PARITY AS THE OFFICIAL TIME.
Estimated True Interest Cost
Bidders are asked to provide a calculation of the true interest cost of the Bonds on the basis
of their respective bids, which shall be considered as informative only and not binding on
either the b idder or the City. The true i
nterest cost specified in any bid will be that rate
which, when used in computing the present value of a
be acid on all
to
Bonds from the Closing Date to
II payments of principal and interest
their respect ive maturity dates or
mandatory sinking fund redemption dates, produces an amount equal to the purchase pr ice
including any premium) specified in such bid.
Good Faith Deposit ($100,000)
The winning bidder
acceptance of its bid.
is required to submit a Good Faith Deposit within 24 -hours after
The Good Faith Deposit shall equal $100,000.
The Good Faith Deposit must be made i*n good funds by wire transfer too.
Bank:
ABA:0
Account:
Acct. Name:
Atte ntion:
The Bank of New York Mellon
:TBD]
:TBD]
Petaluma Wastewater Good Faith Dep 2019
Gonzalo Urey (tel. 213.630.6237)
If the Good Faith Deposit is not received by the designated time, the underlying bid may be
disqualified at the option of the City.
No interest will be paid on the Good Faith Deposit. The proceeds of the Good Faith Deposit
will be applied to the purchase price of the Bonds, or in the event of the failure of the
winning bidder to pay for the Bonds in compliance with the terms of the bid, at the option
of the City, its Good Faith Deposit may be retained as liquidated damages, as partia
payment of actual damages oras security for any other remedy available to the City.
9
Qualification for Sale; Blue Sky
The Underwriter assumes all responsibility for qualifying the Bonds for offer and sale under
the Blue Skv nr other securities laws and regulations of the states and jurisdictions in which
the
Underw
titer offers or
sells the Bonds, including the payment of fees for such
may the Bonds be sold or offered for sale in any
would be unlawful under the securities laws of the
qualiTicalion, Under no circumstances
jurisdiction i n which such sale or offer
jurisdiction.
Underwriting Group
The winning bidder will be r
hours after receiving a verbal
Additional Information
equired to
award.
submit a list of all syndicate members within 24
Copies of the Indenture, this Official Notice of Sale and the Preliminary Official Statement
will be furnished to any potential bidder ur)on reauest made to the Municipal Advisor.
Right to Modify or Amend
The City reserves the right to modify or amend this Notice, including but not limited to the
right to adjust and change the aggregate principal amount of the Bonds being offered.
Notification of any such modifications or amendments shall be made not less than 24 -hours
pr ior to the time of bid opening, and shall be communicated through Thomson Municipal
News and by telephone to any qualified bidder timely request ing such notice..
Right to Reject Bids, Waive Irregularities, Cancel, Postpone, or Reschedule Sale
The City reserves the right, in lots sole discretion, to reject any and all bids and', to the extent
IP permitted by law, waive any irregularity or informality in any bid,, The City reserves the
right to cancel, postpone or reschedule the Bond sale upon notice given through the
Bloomberg News Service, Thompson Municipal Market Monitor or The Bond Buyer at least
18 hours prior to the time bids are due. Telephone notice of any postponement will be
given to any bidder request ing such notice from the Municipal Advisor.
10
Establishment of Issue Price
To assist the City in establishing the issue price of the Bonds., the winning bidder shall
execute and deliver to the City at closing an " issue price certificate" substantially in the
form attached hereto as Exhibit A., setting forth the reasonably expected initis( offering
price of the Bonds to the Public, together with supporting pricing w ires or equivalent
with such modifications as may be necessary or appropricommunications, ate i*n the
reasonable judgment of Bond Counsel and the City.
For the purpose of establishing the issue price of the Bonds, the City intends to apply the
provisions of Treasury Regulation Section 1,-148-1(f)(3)(1) defining " competitive sale"
because:
(01) The City shall d10
isseminate this Official Notice of Sale to potential underwriters in a
manner that is reasonably designed to reach potential underwriters;
(ii) All potential bidders sha
shall
(iii)The
obli
(I have an equal
be afforded an opportunity to
opporunity toibidandnopotenta!
dder
review othe
City shall have received bids from at least three underwriters ot
gations
who
for underwriting
r bids before a bid
submitting
have established industry
I
obligations;and
issuances of Municipa
b'
reputations
municipal
new
(iv)The City anticipates awarding the Bonds to the bidder who submits a firm offer to
purchase the Bonds at the highest price (or lowest interest cost) as set forth herein.
If the "competitive sale"
and cancel the sale.
requirements are not satisfied, then the City shall reject all bids
1By submitting a bid, each bidder is certifying that (i) the bidder is an underwriter of
municipal obligations who has an established industry reputation for underwriting new
W of municipal obligations, (ii) its bid is a
firm offer to purchase all of the Bonds as
specified in its bid, and (iii) its Iid was prepared ased on the assumption that the issue
price of the Bonds will be the Winning Idder's easonably expected initial offering price to
the public.
11
Dated:
2 0 19
.. .... . Y
By:
mow.
City Manager, City of Petaluma
F
12